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Report Second-Guesses Health Reform Laws but Finds Good Bang for the Buck

Cheryl Clark, for HealthLeaders Media, June 8, 2010

Could health reform laws have been structured differently to enable more than 28 million people to become newly insured by 2016, and spend less federal money? Yes, say RAND Health researchers in a new report.

But the consequence would have been politically messy and infeasible, according to the report.

In order to ensure four million more people, the government would have had to increase individual mandate and company penalties for not purchasing insurance. For example, annual penalties assessed people who were supposed to buy health insurance but who did not would have to be raised from about $750 in the new law to $1,200 per person.

"What it would have taken would have meant doubling the penalties and other activities, that would have been untenable, given the political debate that we watched," says Elizabeth McGlynn, the study's lead author and RAND Health senior researcher.

"What we found was that we ended up in a pretty good space; we aren't completely breaking the bank of the government spending while we are maximizing the number of people that are covered," she says.

The report is published in today's issue of the journal Health Affairs. Rand researchers analyzed about 2,000 scenarios that adjusted the many variables in the equation. For example, they looked at Medicaid income eligibility, adjusted the size of companies that are required to cover their employees, and maneuvered the amount of penalties to be assessed companies for not meeting those requirements.

They also evaluated penalties imposed on the uninsured for not purchasing health insurance under the individual mandate as well as variations on who would qualify for government subsidies and looked at varying age-related rate restrictions for premiums in exchanges.

"Enacted health reform legislation can be improved," McGlynn and fellow authors wrote. "For example, the number of newly insured people could be increased by four million without increasing government cost, or the government cost could be reduced by $20 billion a year without decreasing the number of newly insured people.

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