Katherine Baicker Professor of Health Economics, Harvard School of Public Health Implementation of the ACA: Insurance Expansions and the Value of Care

2 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of HI – Public budgets: key driver of fiscal outlook; tax burden – Recent slowdown gives some hope, but causes unclear Not for Citation or Distribution

3 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Underlying problem: disconnect between costs and benefits – Ample evidence that we could be getting higher value Not for Citation or Distribution

4 Higher Spending Does Not Necessarily Lead to Higher Quality

Implications for Reform How does expanding coverage affect spending and value? – 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effects hard to nail down – magnitudes and even signs uncertain Better evidence from randomized controlled evaluation 5 Not for Citation or Distribution

Utilization Increased use of many types of care – Outpatient and Rx – Hospital – Emergency department Implied 25-35% ↑ spending for Medicaid enrollees 6

Financial Strain Reduction in collections, financial strain No change in employment, earnings 7

Health Large improvements in self- reported health Clinical assessments: more mixed – Depression↓(diagnosis↑) – No detectable effect on BP, HbA1c, cholesterol 8

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 paternalistic) Private side: Value-based insurance design Public side: Rationalize cost-sharing across silos; limit gap coverage 9 Not for Citation or Distribution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 10Not for Citation or Distribution