Health Reform Law Repeats Failed Policies
February 8, 2012
While the Patient Protection and Affordable Care Act (PPACA) has often been touted as the silver bullet to America's health insurance woes, closer examination makes clear that it will accomplish little in terms of successful reform. The PPACA repeats failed policies and allows inefficiencies to continue that drive up prices and force all Americans to pay more for their health insurance, says Scott W. Atlas, a senior fellow at the Hoover Institution.
First, the PPACA fails to address the inability to buy insurance across state lines, allowing barriers to competition to persist.
- The American Medical Association's 2008 Competition in Health Insurance study showed that almost 90 percent of 314 metropolitan areas have a single health plan with a market share greater than 30 percent.
- In two-thirds of those, one health plan has more than 50 percent share, and in just under one-fourth, one health plan has a share greater than 70 percent.
- These quasi-monopolies that benefit from restrictions on interstate competition drive up prices and will continue to do so under the PPACA.
Additionally, the new health care legislation fails to address the government's numerous mandates for required health care provisions. These provisions broaden the comprehensiveness of insurance plans by requiring that they cover certain procedures, but inevitably drive up prices.
- Government mandates have grown from only a handful in the 1960s to 2,156 as of 2010.
- These coverage requirements can be responsible for more than 50 percent of health insurance costs, depending on the state.
- The PPACA will actually introduce several new mandates, such as certain immunizations and screening tests, which are undoubtedly beneficial but also drive up prices and decrease choice.
Third and finally, the PPACA will not embrace the advantages provided by high deductible plans for catastrophic coverage and health savings accounts.
- High deductible plans are cheaper to purchase and therefore attractive to healthier people.
- A 2011 RAND study found that shifting consumers into high deductible plans resulted in a drop in health spending by an average of 14 percent.
- Health savings accounts allow participants to pay for their costs via tax-favored savings accounts, making them more aware of costs and willing to limit consumption.
Source: Scott W. Atlas, "The Car Insurance Model," Defining Ideas, February 2, 2012.
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