Health Policy Center, independent research for better health policy: The Urban Institute


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Health Care Reform

On March 23, 2010 the Patient Protection and Affordable Care Act (ACA) was enacted.  This federal law constitutes comprehensive reform of the American health care system, and will have transformative effects on public and private health insurance coverage, operation of health care markets, affordability and accessibility of insurance, and financing of medical care.

Major components of the reform include:

  • Extensive private health insurance regulatory reforms, particularly in the small group and non-group markets;
  • Tax credits to small low-wage employers for the purchase of health insurance;
  • Reductions in cost-sharing associated with recommended preventive care;
  • Establishment of health insurance exchanges for the purchase of private coverage plus subsidies for the individual purchase of exchange-based coverage and cost-sharing by the modest income;
  • Expansion of eligibility for the Medicaid program to all non-elderly with incomes up to 133 percent of the federal poverty level;
  • Phasing out of the Medicare prescription drug benefit "doughnut hole;"
  • A requirement for non-elderly individuals to enroll in qualified health insurance coverage with tax penalties imposed on many of those that do not comply;
  • Financial requirements imposed on large- and medium-sized employers in cases where an employer’s full-time workers obtain subsidized coverage through a health insurance exchange;
  • Establishment of a national, voluntary insurance program for purchasing community living assistance services and supports (CLASS program);
  • An array of initiatives for reducing costs in the Medicare program;
  • Creation of incentives to establish cost-efficient health care systems, such as accountable care organizations and quality improvement initiatives; and
  • Tax changes that will generate revenue to help finance the new programs.

Enactment of the ACA brings extraordinary opportunities for greater security, affordability, adequacy, and equity in health insurance coverage.  However, it also faces very substantial hurdles in both political and practical realms.  These include the challenges of implementing substantial changes to the Medicaid program, significant reforms of private health insurance market regulations, development of new systems for delivering subsidies and enrolling individuals in coverage, creating greater transparency, and promoting efficiency in the delivery of health care.  There is also the threat of repeal if there is a significant change in political leadership, and, at a minimum, there is likely to be opposition to implementation in several states.  The Urban Institute’s Health Policy Center is committed to providing objective analyses of the issues inherent in these reforms.

States will play a vital role in the implementation of these reforms as well as in the design of specific aspects of the changes; consequently, variation across the country is likely to be considerable and coordination with the federal government complex.   Redistribution of financing across states, the federal government, employers, and households means that all Americans and all stakeholders in the health care system will be touched by these changes in some respect.

The Urban Institute’s Health Policy Center recently started a multi-year project for the Robert Wood Johnson Foundation that will analyze the effects of the ACA on governments, employers, and households.  This project will provide a comprehensive quantitative and qualitative assessment of reform-related changes.  Major areas of interest include: coverage, access, utilization, affordability, spending, employer and individual premiums, financing, insurance exchanges, insurance reforms, Medicaid and subsidies, and provider issues.  This work will cover a wide array of implementation issues at the national level, but the project’s central emphasis will be on analyses in ten focal states (Alabama, Colorado, Michigan, Maryland, Minnesota, New Mexico, New York, Oregon, Rhode Island, and California), allowing the research team to highlight the implications of states’ design choices and implementation strategies.  The first two years of the project will be the early stage during which health reform implementation in each state begins. Although the biggest changes will not occur until 2014, what happens before then will be critical in determining the effectiveness of the full implementation.  The project is designed to continue past 2014, allowing sufficient time to assess the fully implemented reforms. 

The Urban Institute’s Health Policy Center staff also provides extensive technical assistance and analytic support to policymakers and others as the options for reform implementation are considered.  Examples of recent work include:

  • Microsimulation analysis and technical assistance for the development of state Exchanges in Missouri, Virginia, and New York;
  • Analysis of policy options available to Massachusetts as they modify their health reforms to be compliant with the ACA;
  • Analysis of additional cost containment strategies beyond those included in the ACA;
  • A legal analysis of state challenges to ACA; 
  • Addressing coverage challenges for children under the ACA;
  • Analyses of the implications of ACA on the states;
  • Analyses of the effects of the ACA on jobs;
  • Analyses of the ACA’s effects on consumers of particular types (e.g., young adults, older adults, children, non-group and small group purchasers);
  • Lessons learned from health care reform in Massachusetts;
  • Analysis of reform options for cross-state pooling of health care risk;
  • Description of those who will be remaining uninsured after reform;
  • Overview of the potential effect of comparative effectiveness analyses for reform; and
  • Microsimulation estimates of the declines in uncompensated care anticipated under reform.


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