Katherine Baicker
Professor of Health Economics, Harvard School of Public Health
Implementation of the ACA:
Insurance Expansions and the Value of Care
Two Goals of Health Reform
• Covering the almost 50 million uninsured
– Problem exacerbated by economy and rising costs
– Goal of improving access and outcomes
• Bringing spending growth under control
– Private budgets: employees bear cost of HI
– Public budgets: key driver of fiscal outlook; tax burden
– Recent slowdown gives some hope, but causes unclear
Not for Citation or Distribution
High Spending ↔ High Value?
• Stemming spending growth focus of reform debate,
but right metric?
– Reasons we might want to spend more & reasons for concern
• Consequence of low-value spending
– Productive and allocative inefficiency
– Strained public budgets, tax pressures
• Underlying problem: disconnect between costs and
– Ample evidence that we could be getting higher value
Not for Citation or Distribution
Higher Spending Does Not Necessarily Lead to Higher Quality
Implications for Reform
• How does expanding coverage affect spending and
– Expanding coverage: Incentives and subsidies
• Mandate; Medicaid expansion; Exchange subsidies;
Employer requirements; Insurance market reforms
– Costs and benefits of insurance expansions?
• Uninsured report worse access and outcomes
• But causal effects hard to nail down – magnitudes and
even signs uncertain
• Better evidence from randomized controlled evaluation
Not for Citation or Distribution
• Increased use of many
types of care
– Outpatient and Rx
– Hospital
– Emergency department
• Implied 25-35% ↑ spending for
Medicaid enrollees
Financial Strain
• Reduction in collections, financial strain
• No change in employment, earnings
• Large improvements in selfreported health
• Clinical assessments: more
– Depression↓(diagnosis↑)
– No detectable effect on BP,
HbA1c, cholesterol
Implications for Reform
• Expanding existing plans likely to generate mix of value
• Aligning patient cost-sharing with value
– For insurance
• Private side: Reform tax code, regulations
• Public side: Improve benefit design
– For care
• Cost-sharing tied to value of care; wellness (inherently
• Private side: Value-based insurance design
• Public side: Rationalize cost-sharing across silos; limit gap
Not for Citation or Distribution
Implications for Reform
• Potential for ACA
– Public side
• Integrated plans like ACOs could facilitate patient choice and competition
• Innovative coordinated care could improve value
– Private side
• Exchanges could promote competition based on value
• Enrollment challenges threaten future risk-pooling and premium stability
• Will have to wrestle with tough choices
– Reform doesn’t pay for itself
– Tough choices about whom and what services to cover/subsidize
Not for Citation or Distribution

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