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The Economists' Voice 2.0The Financial Crisis, Health Care Reform, and More$
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Joseph Stiglitz and Aaron Edlin

Print publication date: 2014

Print ISBN-13: 9780231160155

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231160155.001.0001

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The Simple Economics of Health Reform

The Simple Economics of Health Reform

(p.13) Chapter 2 The Simple Economics of Health Reform
The Economists' Voice 2.0

David M. Cutler

Columbia University Press

This chapter discusses the two features of the Affordable Care Act (ACA) which have particular economic salience: (1) taking steps to insure all Americans and regulating insurance companies so that can happen; and (2) reforming the financing and delivery of medical services. An estimated 47 million people in the United States lack health insurance coverage, and without reform, that figure is projected to rise to 54 million by 2019. The first goal of the ACA is to extend insurance coverage to as many of those individuals as possible. To make insurance accessible, the ACA creates a set of regional health insurance exchanges to certify plans, collect and process contributions, ensure that insurance products are standardized, and distribute risk-adjusted payments to plans. The ACA also mandates that individuals either buy insurance or face a penalty of the greater of $695 per person or 2.5 percent of income. The ACA also attempts to rectify inefficiencies in the delivery of medical care, including the provision of too much care acute settings; underutilization of preventive care and chronic care; and excess layers of administration and wasted resources.

Keywords:   Affordable Care Act, ACA, health care policy, health care reform, health insurance, medical services

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