PPACA won’t reduce rising health care costs – will it?

April 6, 2011

At Extend Health, we’re following the national debate over health care reform very closely, as our readers might not be surprised to learn. We think the original bill got quite a few things right and that there’s room for lots of improvement; the devil is in the details, as they say. How will exchanges be structured? What will the standardized insurance plans look like? What will the effect of various subsidies, fines, and taxes be on individuals and on employers who sponsor health care? Is the individual mandate constitutional? These and a thousand other questions remain to be answered.

One of the more contentious arguments has raged around the issue of the cost of the bill, with some saying it will cost many times more than originally estimated and others saying that it will actually reduce national health care expenditure. Central to the actual outcome is whether reform as enacted will have any impact on the rapid rise of health care costs in the United States.

Two of PPACA’s central provisions make all insurance guaranteed issue – a huge step forward for uninsured individuals – and institute insurance reform via state-run Health Benefit Exchanges that will create competitive health care insurance marketplaces. Less well-known, however, are a number of provisions that are aimed at reducing and moderating the rise of health care costs.

We did a little research to understand more about what’s in the bill that may “bend the cost curve” on the provider side, and we’ve summarized it here. CMS (the Centers for Medicare and Medicaid Services) is the central administrative organization for the two most extensive efforts: the new Center for Medicare and Medicaid Innovation, and Accountable Care Organizations. In our next couple of posts we will talk about some of the innovations introduced as part of PPACA.

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