Uninsured/Uncompensated Care

Somewhere along its tortuous path to enactment, health care reform turned into health insurance reform. Although providing coverage to more than 30 million uninsured Americans and eliminating the unsavory practices of the insurance industry are major achievements, the Affordable Care Act does not do much — at least in the short term — to change the care most Americans receive or to slow the growth in health care costs. In this article, Robert Berenson presents some of the elements in the legislation that offers the potential for cutting costs, and more pointedly also presents some areas ripe for action that the legislation did not touch. In particular, he points to the growing issue of provider market power in negotiating payment rates with health insurers as one that needs immediate attention.

In this Perspective, Robert Berenson reviews the likely impact of the Patient Protection and Affordable Care Act on the Medicare program. Medicare savings made up more than half of the price tag for the ACA's insurance coverage expansions and extended the solvency of the Part A trust fund by 12 years, to 2029. The article reviews the likelihood that these payment reductions are sustainable and discusses other important innovations that will effect the Medicare program, including the new Center for Medicare and Medicaid Innovation that will test important new approaches for restructuring how health care is delivered and the Independent Payment Advisory Board, which by 2014 will have authority to make spending reductions in Medicare, subject to Congressional review.

Political battles over malpractice reform have recurred for 35 years, starting at the state level. Many states have enacted caps on awards and other tort reforms amid liability insurance crises proclaimed in the mid-1970s, mid-1980s, and early 2000s. Since the mid-1990s, Republicans have unsuccessfully sought similar malpractice limits at the federal level. Sharp run-ups in claims rates preceded the first two crises; the last seemed more driven by increases in awards and other costs, along with insurance market developments. Defensive medicine arose separately as a national policy issue in the late 1960s. At the time, medical liability was expanding from the very low level of the 1950s because of shifts in both tort doctrines and social culture.

Policymakers are trying a wide array of approaches in an attempt to control costs, including competition among health plans, taxes on high-cost plans, delivery system and payment reforms, wellness programs, and controls over Medicare provider payments. The law also creates a board that can directly influence Medicare payments and make recommendations to the private sector. Based on the CMS actuaries, these efforts should allow for a significant expansion in coverage without an acceleration of costs. However, we will not know for if the health reform provisions actually result in slower cost growth and avoid the need for stronger measures.