Designed to Fail? The Affordable Care Act: Insurance Coverage, Cost Control, and Quality Improvement

The Affordable Care Act includes insurance reforms, provider payment reforms and patient financial incentives that are designed with the expectation that they will help control health care costs and improve the quality of care.  These incentives include insurance reforms including insurance exchanges and limits on insurance administrative overhead (medical loss ratio).  Provider incentives include bundled payments, accountable care organizations, pay for performance, and price transparency. For patients incentives include shopping for insurance on the exchanges, price and quality transparency and higher co-payments and deductibles for patients including health savings accounts.  The evidence available about these approaches to cost control and quality improvement will be reviewed.  These studies raise serious questions about the effectiveness of these methods of cost control and quality improvement.

Given the evidence to date from these behavioral economics and other studies, the potential harms of applying them to our health care could exceed the benefits.  All of these approaches to cost control and quality improvement rely on the notion that market forces are what are necessary to control costs and improve care despite theoretical and practical evidence to the contrary.

We will compare and contrast the cost control and quality improvement methods embodied in the ACA with alternatives proposed by Physicians for a National Health Program under an improved and expanded Medicare for all.