Eakinomics: Conservative
Health Care Reform
Health care has proven to be an important issue in the presidential campaign,
and the Supreme Court case on the constitutionality of the Affordable Care
Act’s (ACA’s) individual mandate has further raised the issue. For some time,
however, there was no conservative alternative to the ACA that could serve as
a guidepost to legislative reform or as a response to a Supreme Court
verdict.
Recently, however, a group of conservative health
scholars proposed just such an alternative. The stated purpose of their
reform (the Proposal) is the expansion of choice, lowering of costs, and
protection of the vulnerable via safety nets and personalized care. There are
lots of details, but the central aspect of the reform is to take all of the money
currently being spent by ACA programs and send it to the states as a Health
Care Choices Formula Grant, giving states resources and authority to design
their own safety net programs and other reforms aimed at making insurance
more affordable.
The Center for Health and the Economy (H&E) at AAF used its
microsimulation capabilities to take a formal look at the impact of replacing
the ACA with this approach. There are lots of details in the report by Christopher Holt and me,
but the highlights are:
Premium Impact: The
Proposal is projected to decrease the cost of premiums for private individual
market health insurance coverage. Silver plans would see the largest impact,
as premiums would decrease by 18 to 24 percent beginning in 2022 compared to
current law. This is consistent with public’s desire to address the cost of
health care.
Coverage Impact: The
Proposal is projected to result in nearly 4 million more people purchasing
insurance by 2030, with enrollment holding steady earlier in the window. The
Proposal also results in more people enrolling in private coverage versus
public insurance over the same period. A key part of this is the reduction of
premiums making insurance more attractive.
Medical Productivity
Index: The Proposal would lead to a 17 percent increase
in the medical productivity index by 2030. In the work of H&E, care is
taken to look at the kind of pressure placed on providers to reduce the cost
of quality care. Mechanically, better medical productivity allows just
exactly that. It is encouraging that the Proposal finds a way to begin to
“bend the cost curve.”
Provider Access
Index: The Proposal would lead to an 8 percent increase
in the provider access index by 2030. One way to control costs is to have
very tight networks; i.e., insurance coverage applies only to a few hospitals
and other providers with whom the insurer can negotiate favorable rates in
exchange for guaranteeing volume of care. The flip side, however, is that
purchasers of insurance have limited access to providers. The Proposal
increases such access modestly.
Budget Impact: the
Proposal would decrease federal spending by $36 billion from 2022 to 2030. Of
course, the whole point was to spend (essentially) the same money
differently. Mission accomplished.
The debate over health care reform has never really ended. This Proposal is a
valuable contribution to the debate over what should be the next steps in
providing expanded coverage, cost control, and quality care.
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