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Health Reform: The Coverage, Cost, and Quality Reforms Ahead

  • Karen Davis

    Professor Emerita in the Department of Health Policy and Management, Johns Hopkins Bloomberg School of Public Health

  • Karen Davis

    Professor Emerita in the Department of Health Policy and Management, Johns Hopkins Bloomberg School of Public Health

Despite the stormy politics of health reform, in its first year the initial set of consumer protections and coverage expansions in the Affordable Care Act was welcomed by many American families. These newly enacted reforms include allowing children under age 26 to stay on or join their parents’ health insurance plans, the establishment of state-based insurance plans for people with preexisting conditions, and the availability of tax credits for small businesses that provide coverage to their employees.

In year two, which starts today, the groundwork for further coverage expansions, as well as important quality improvement and cost-control measures, will ramp up. The results of The Commonwealth Fund’s Biennial Health Insurance Survey, released last week, show that the recession has made the need for such reforms even more urgent. Nine million working-age adults became uninsured in the last two years because of the loss of a job, two of five adults had problems with medical bills, and two of five did not get needed health care because it was too expensive, according to the survey.

Encouragingly, the Congressional Budget Office (CBO) estimates that, by 2019 when the Affordable Care Act is fully implemented, 95 percent of Americans will be covered. Many will find affordable options through the state health insurance exchanges. Republican and Democratic state policymakers in 49 states and the District of Columbia have already received federal grant funding to plan for the creation of the exchanges, through which small businesses and individuals will be able to compare and purchase health plans. Federal and state policymakers will also be working to determine the “essential benefits package” for policies sold through the exchanges and in the individual and small-group markets to ensure people no longer buy inadequate coverage that leaves them underinsured.

If skillfully implemented, the exchanges will make insurers compete based on the value of the services they provide. Moreover, the CBO has estimated that the insurance exchanges will lower administrative overhead for individual plans by 7 percent to 10 percent.

The law’s second year will see a number of important changes in Medicare and Medicaid to improve quality and efficiency. By January 2012, Medicare will have a program to encourage groups of providers and suppliers to work together through accountable care organizations (ACOs). Providers that meet quality targets and reduce costs, to be detailed in soon-to-be-released regulations, will be able to share in savings generated for the Medicare program. The new Center for Medicare and Medicaid Innovation within the Centers for Medicare and Medicaid Services will begin implementing payment and service delivery models for testing. And, as of January 2011, Medicare is providing 10 percent bonus payments for primary care for five years.

There also will be several efforts to improve transparency, including a quality reporting system for certain providers; a Physician Compare Web site, with quality and patient experience data; and enhancement of the Nursing Home Compare Web site, with more complaint data. In addition, in the 2011 tax year, employers will be required to disclose the cost of health benefits on employee W-2 forms.

The law is also creating a more level playing field between private and public plans in Medicare. Medicare Advantage payments did not increase in 2011, and beginning in 2012, a new benchmark will be used to determine payments for most Medicare Advantage plans.

These are just a few of the changes under way and ahead—changes that will continue to strengthen the U.S. health system, and begin to control health care costs, at a time when Americans, and the country itself, need health care security the most.

Publication Details



K. Davis, Health Reform: The Coverage, Cost, and Quality Reforms Ahead, The Commonwealth Fund Blog, March 2011.