Healthcare reform in the United States is the comprehensive change in the law and conduct of the healthcare system in the United States. Reforms have often been proposed but have rarely been accomplished. In 2010, landmark reform was passed through two federal statutes: the Affordable Care Act (ACA), signed March 23, 2010, and the Health Care and Education Reconciliation Act of 2010 (), which amended the ACA and became law on March 30, 2010.
Future reforms of the American health care system continue to be proposed, with notable proposals including a single-payer system and a reduction in fee-for-service medical care. The ACA includes a new agency, the Center for Medicare and Medicaid Innovation (CMS Innovation Center), which is intended to research reform ideas through pilot projects.
History of national reform efforts
The following is a summary of reform achievements at the national level in the United States. For failed efforts, state-based efforts, native tribes services, and more details, see the history of health care reform in the United States article. 1965: President Lyndon Johnson enacted legislation that introduced Medicare, covering both hospital (Part A) and supplemental medical (Part B) insurance for senior citizens. The legislation also introduced Medicaid, which permitted the Federal government to partially fund a program for the poor, with the program managed and co-financed by the individual states. Robert M. Ball, the then Deputy Director of the Bureau of Old-Age and Survivors Insurance in the Social Security Administration, had defined the major obstacle to financing health insurance for the elderly several years earlier: the high cost of care for the aged and the generally low incomes of retired people. Because retired older people use much more medical care than younger, employed people, an insurance premium related to the risk for older people needed to be high, but if the high premium had to be paid after retirement, when incomes are low, it was an almost impossible burden for the average person. The only feasible approach, he said, was to finance health insurance in the same way as cash benefits for retirement, by contributions paid while at work, when the payments are least burdensome, with the protection furnished in retirement without further payment. 1985: The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) amended the Employee Retirement Income Security Act of 1974 (ERISA) to give some employees the ability to continue health insurance coverage after leaving employment. 1996: The Health Insurance Portability and Accountability Act (HIPAA) not only protects health insurance coverage for workers and their families when they change or lose their jobs, it also made health insurance companies cover pre-existing conditions. If such condition had been diagnosed before purchasing insurance, insurance companies are required to cover it after patient has one year of continuous coverage. If such condition was already covered on their current policy, new insurance policies due to changing jobs, etc... have to cover the condition immediately. 1997: The Balanced Budget Act of 1997 introduced two new major Federal healthcare insurance programs, Part C of Medicare and the State Children's Health Insurance Program, or SCHIP. Part C formalized longstanding "Managed Medicare" (HMO, etc.) demonstration projects and SCHIP was established to provide health insurance to children in families at or below 200 percent of the federal poverty line. Many other "entitlement" changes and additions were made to Parts A and B of fee for service (FFS) Medicare and to Medicaid within an omnibus law that also made changes to the Food Stamp and other Federal programs. 2000: The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) effectively reversed some of the cuts to the three named programs in the Balanced Budget Act of 1997 because of Congressional concern that providers would stop providing services. 2003: The Medicare Prescription Drug, Improvement, and Modernization Act (also known as the Medicare Modernization Act or MMA) introduced supplementary optional coverage within Medicare for self-administered prescription drugs and as the name suggests also changed the other three existing Parts of Medicare law. 2010: The Affordable Care Act, called ACA or PPACA but also known as Obamacare, was enacted, including the following provisions: the phased introduction over multiple years of a comprehensive system of mandated health insurance reforms designed to eliminate "some of the worst practices of the insurance companies"—pre-existing condition screening and premium loadings, policy cancellations on technicalities when illness seems imminent, annual and lifetime coverage caps Expanded Medicaid to cover uninsured working-age adults (18-65) earning under 138% of the Federal Poverty Line (and therefore not eligible for subsidies on the health insurance marketplace) along with some whose existing insurance plans were too expensive based on their income. The ACA expanded Medicaid eligibility in all 50 states and the District of Columbia, however that provision was successfully challenged in NFIB v. Sebelius where the U.S. Supreme Court ruled that individual states could choose whether or not to expand coverage. Initially 25 states and D.C. expanded Medicaid with funding from the federal government provided by the ACA beginning in 2014, and as of Sep 26 2023 there are 41 states (including Washington, D.C.) that have expanded coverage. created health insurance marketplaces with three standard insurance coverage levels to enable like-for-like comparisons by consumers, and a web-based health insurance exchange where consumers can compare prices and purchase plans. mandates that insurers fully cover certain preventative services created high-risk pools for uninsureds tax credits for businesses to provide insurance to employees created an insurance company rate review program allowed dependents to remain on their plan until 26 It also sets a minimum medical loss ratio of direct health care spending to premium income creates price competition created Patient-Centered Outcomes Research Institute to study comparative effectiveness research funded by a fee on insurers per covered life allowed for approval of generic biologic drugs and specifically allows for 12 years of exclusive use for newly developed biologic drugs many changes to the 1997, 2000, and 2003 laws that had previously changed Medicare and further expanded eligibility for Medicaid (that expansion was later ruled by the Supreme Court to be at the discretion of the states) explores some programs intended to increase incentives to provide quality and collaborative care, such as accountable care organizations. The Center for Medicare and Medicaid Innovation was created to fund pilot programs which may reduce costs;Kuraitis V. (2010). Pilots, Demonstrations & Innovation in the PPACA Healthcare Reform Legislation. e-CareManagement.com. the experiments cover nearly every idea healthcare experts advocate, except malpractice/tort reform. requires for reduced Medicare reimbursements for hospitals with excess readmissions and eventually ties physician Medicare reimbursements to quality of care metrics. 2015: The Medicare Access and CHIP Reauthorization Act (MACRA) made significant changes to the process by which many Medicare Part B services are reimbursed and also extended SCHIP 2017: Donald Trump signs Executive Order 13765 in anticipation of a repeal of the Patient Protection and Affordable Care Act, one of his campaign promises. The American Health Care Act is introduced and passed in the House of Representatives and introduced but not voted upon in the Senate. President Donald Trump signs Executive Order 13813 which allows insurance companies to sell low-cost short-term plans with lesser coverage, enables small business to collectively purchase association health plans, and expands health savings accounts. 2021: Joe Biden repeals Trump's Executive Order 13765 and Executive Order 13813. 2022: Joe Biden signs the Inflation Reduction Act into law. The bill allows Medicare to negotiate certain drug prices, caps Part D costs for seniors at $2,000 per month, and provides $64 billion for Affordable Care Act subsidies through 2025, originally expanded under the American Rescue Plan Act of 2021.
Motivation
International comparisons of healthcare have found that the United States spends more per-capita than other similarly developed nations but falls below similar countries in various health metrics, suggesting inefficiency and waste. In addition, the United States has significant underinsurance and significant impending unfunded liabilities from its aging demographic and its social insurance programs Medicare and Medicaid (Medicaid provides free care to anyone that make less than 200% of the Federal Poverty Line). The fiscal and human impact of these issues have motivated reform proposals.
U.S. healthcare costs were approximately $3.2 trillion or nearly $10,000 per person on average in 2015. Major categories of expense include hospital care (32%), physician and clinical services (20%), and prescription drugs (10%). U.S. costs in 2016 were substantially higher than other OECD countries, at 17.2% GDP versus 12.4% GDP for the next most expensive country (Switzerland). For scale, a 5% GDP difference represents about $1 trillion or $3,000 per person. Some of the many reasons cited for the cost differential with other countries include: Higher administrative costs of a private system with multiple payment processes; higher costs for the same products and services; more expensive volume/mix of services with higher usage of more expensive specialists; aggressive treatment of very sick elderly versus palliative care; less use of government intervention in pricing; and higher income levels driving greater demand for healthcare. Healthcare costs are a fundamental driver of health insurance costs, which leads to coverage affordability challenges for millions of families. There is ongoing debate whether the current law (ACA/Obamacare) and the Republican alternatives (AHCA and BCRA) do enough to address the cost challenge.
According to 2009 World Bank statistics, the U.S. had the highest health care costs relative to the size of the economy (GDP) in the world, even though estimated 50 million citizens (approximately 16% of the September 2011 estimated population of 312 million) lacked insurance. In March 2010, billionaire Warren Buffett commented that the high costs paid by U.S. companies for their employees' health care put them at a competitive disadvantage.
Further, an estimated 77 million Baby Boomers are reaching retirement age, which combined with significant annual increases in healthcare costs per person will place enormous budgetary strain on U.S. state and federal governments, particularly through Medicare and Medicaid spending (Medicaid provides long-term care for the elderly poor). Maintaining the long-term fiscal health of the U.S. federal government is significantly dependent on healthcare costs being controlled.
Insurance cost and availability