U.S. Health Reform: Governmentʼs Role Under the Patient Protection and Affordable Care Act (PPACA) Health Economics and Policy- HSM 544-61599 DeVry University- Keller Graduate School of Management
Case Study 2 Professor Alan Fowler December 3, 2012
Respectfully Submitted by Wanda H. Jones
The quality and cost problems of the U.S. health care system are not going away. The
Institute of Medicine (IOM) proclaims that the system is in need of “fundamental change” and that “patients, doctors, nurses, and health care leaders are concerned that the care delivered is not, essentially, the care we should receive. Healthcare costs and reform will continue to grab more and more headlines in 2013. Any
service that is on track to consume approximately 40% of the gross national product of the worldʼs largest economy by the year 2050 will be hard to ignore. Business management already feels the effects of healthcare costs more acutely than most consumers. Several recent studies and proposals shed light on the problems and possible solutions. To put things in perspective, U.S. healthcare currently costs about $2 trillion per year.1 Of
this more than $600 billion (31%) is never seen by recipients. It goes for administration. On a per capita basis, it is roughly $280 billion more than is spent for the administration in other twenty-one countries whose life expectancies exceed those in the U.S., all of whom have some taxpayer-ﬁnanced; single-payer system (socialized medicine).2 Yet, the current system leaves more than 40 million Americans without health insurance. Because many are not employed or have very low incomes, programs that provide incentives through employers and tax relief don't help them. The problems of quality and cost in US health care system are unlikely to be solved
without strong leadership from the federal government, which can mobilize action to set national priorities for quality; develop and promulgate standards for care; and stimulate implementation of performance measures and standards for providers. Only with strong federal leadership can Americans be assured of receiving the best care in the world.
Schoenbaum, S., et al. “Obtaining Greater Value from Health Care: The Role of the US Government” Ibid
QUESTION 1: How will the role of government likely to change? Will government be more or less involved in the health sector? The Patient Protection and Affordable Care Act could transform state governmentʼs role
in the provision of healthcare, increasing the involvement of the government (both state and federal) in the health sector. One of the major components of the Act is the creation of health beneﬁt exchanges.3 The law states that "each State shall establish an American Health Beneﬁt Exchange for the state by January 1, 2014 or the Federal government will provide an exchange for states that choose not to establish their own exchange." 4 On January 1, 2013, HHS will be making a determination about the state's readiness to implement the exchange. While federal regulations will deﬁne key elements of the ACA, each state will be able to design critical aspects of the operation and ﬁnancing of its Exchange and will continue to make decisions about the regulation of its insurance markets. 5 The creation of an exchange may vary from state- to state. States with small populations
may wonder if the ﬁxed costs of setting up an Exchange can be recouped if a limited number of health care consumers participate. In addition, some states may be skeptical about the value of an Exchange and prefer to let the federal government perform that task. These exchanges will have several functions for health care consumers. The exchanges
will be the place where consumers ﬁnd out whether they are eligible for assistance in paying for insurance and the exchanges will provide information in determining what healthcare plans are available to them.6
QUESTION 2: What...
References: 2. Grayson, M., Pennington, R. “The Patient Protection and Affordable Care Act (ACA):
Implications for State Procurement Ofﬁcials.” Retrieved from www.naspo.org/whitepapers/ healthcare_July2011.cfm December 1, 2012.
5. Hilstead, R., Bigelow, J., Bowler, A., Girosi, F., Meeli, R., Scoville, R., Taylor, R. “ Can
Electronic Medical Records Transform Healthcare: Potential Health Beneﬁts, Savings and Costs.” Health Affairs (2005) Vol 24
7. Schoenbaum, S., Audet, A,J., Davis, K. “ Obtaining Greater Value from Health Care: The
Role of the US Government.” Health Affairs (2003), vol
8. Wiener, J.M, (2010) What does health reform mean for long-term care? Public Policy &
Aging Report, 20 (2) 8-15.
10. Are Home Health Agencies Still a Good Investment? August 6, 2010 Retrieved from
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