commentary

(National Journal)

March 26, 2010

Scorecard for New Health Reform Legislation

by Elizabeth A. McGlynn

Following is the full text of a commentary prepared for the National Journal.

How close do you think that the health care reform plan would come, in reality, to achieving each goal? On a scale of 1 to 10, 10 is extremely close, and 1 is not at all close.

THE UNINSURED YOUR SCORE COMMENTS (If you have any)
All Americans would have health insurance. 7 Based on the RAND COMPARE microsimulation modeling estimates, the number of uninsured would be reduced by 53%-57%—or roughly 30 million—which is a substantial improvement but would not achieve universal coverage. A large portion of the uninsured would be eligible for, but not enrolled in, Medicaid.

CONSUMER IMPACT

Increases in patient costs would not cause people to drop health insurance, forgo needed care, or experience financial hardship. 6 We find that premiums in the large-group market would decline by about 2% and premiums in the exchange/non-group market would decline by 3.7%, making coverage more affordable relative to the status quo. We do not estimate significant changes in the proportion of the overall population that will incur health expenditures greater than 10% of income. The reform, however, will not address every aspect of affordability given that some other factors, like out-of-pocket expenses and the overall cost of health care, are likely to continue to rise.
Coverage would be affordable and available for the sickest people. 8 People with high medical expenditures will be more likely to be able to obtain coverage after the reform due to regulatory changes, and, particularly for those purchasing insurance outside of employer-sponsored insurance, rate regulations will result in their premiums effectively being subsidized by others in the risk pool.
Would encourage patients to seek value for money. 3 The legislation provides relatively few new tools to accomplish this goal, so we would expect little change (either positive or negative) from the status quo. Patients would have access to a broad range of providers and facilities.
Patients would have access to a broad range of providers and facilities. 5 This will vary by geographic area and patient characteristics. In areas with existing shortages of personnel and facilities, some patients may experience greater difficulties in obtaining access to the health care system because more people will have the financial means to use services. In areas with no such shortages, however, patients should have easier access to a broader range of providers and facilities.

ECONOMIC IMPACT

Reform would be funded with existing health care dollars. 6 We project that total health spending will increase by about 2%, largely due to increases in utilization. Much of the current flows of dollars will be exactly the same (e.g., employer sponsored insurance), some will be redirected (e.g., uncompensated care), and some will require new dollars (e.g., Medicare tax on unearned income, taxes on pharmaceutical manufacturers, health insurers and others).
Federal government would get its money's worth. 7 In terms of government spending per net newly insured individual, the expected value of the services obtained should exceed the cost to the federal government.
Brings the rate of growth in health care spending in line with economy's growth rate. 3 While the bill contains provisions that may ultimately lead to reductions in the rate of health spending, there is considerable uncertainty around the effectiveness of those elements. Our projections indicate that, with the exception of payment reform options, most would have a relatively small effect on the growth rate in health spending.

EMPLOYER HEALTH CARE

Employers offering insurance would continue to do so or maintain a financial commitment through some form of coverage. 8 The number of employers offering insurance and the portion of cost they cover have been declining in recent years, but the reform would likely arrest those declines and help keep employer offer rates and contribution percentages steady.
Proposal would not cause employers financial hardship. 8 We do not project significant changes in the financial impact on employers.

IMPROVING QUALITY

Would enable consumers to make more-informed choices about medical care. 2 The main focus of the legislation is on coverage expansion, not on improving quality or consumer decision making. The bill contains provisions that would increase the information available to consumers; however, there are no direct incentives for consumers to use that information or to change the decisions they would have otherwise made.
Medical providers would have the tools to improve care, using best practices. 4 The previously passed stimulus bill that contains incentives for meaningful use of health information technology may have more effect on this criterion than the current health reform bill. Considerable work must be done to help physicians who are in solo and small group practice use emerging tools.
Providers would be encouraged to compete for patients based on quality and price. 3 Although the bill contains interesting pilot projects, it is uncertain the extent to which those will prove successful or, even if proven effective, be brought to sufficient scale to observe a significant shift in behavior.

This commentary originally appeared in National Journal on March 26, 2010. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.