NCPA - National Center for Policy Analysis

Affordable Care Act Will Inevitably Face More Reforms

March 23, 2011

Given the sharp and unpredictable fiscal risks that the Affordable Care Act (ACA) imposes on the federal budget, a second round of reforms is inevitable.  The only question is whether they will be enacted before the United States faces a fiscal crisis or in the midst of one.  The sooner real reforms are implemented, the less painful they will be, says Paul Howard, a senior fellow at the Manhattan Institute.

What approach should a future Congress and President take to put the U.S. health care system on a sustainable path without forcing draconian cuts in patient access or strangling medical innovation?

  • Tax reform should be the first order of business.
  • Health insurance markets should also receive a powerful dose of competition: either through pure interstate insurance sales or through an optional federal charter for health insurance.
  • Well-funded and well-designed high risk pools could provide a solution for the chronically ill who cannot currently afford insurance at market rates, without distorting the entire market through community rating and guaranteed issue regulations.
  • The states should be encouraged to experiment with additional innovations -- reforms in Utah, Massachusetts and elsewhere should be allowed to flower or fail before the entire nation is committed to one state's work in progress.

Finally, we should face the reality that there is no administrative "silver bullet" for fixing health care.  Every wealthy country is faced by the triple challenge of aging populations, rapidly advancing health care technology and a shrinking workforce to pay for it.  Individuals will need to assume more responsibility for their own health and plan for long-term health care expenses that will accrue with a substantially lengthened lifespan.  As a society, our assumptions about health and work will have to adapt to these new realities, says Howard.

Source: Paul Howard, "Reforming the Reforms: Why the Patient Protection and Affordable Care Act Will Require Substantial Reform," Manhattan Institute, March 17, 2011.

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