Does Health Care Reform Help U.S. Business?

The health care reform law passed last March promises to do more than enough harm to the quality and cost of U.S. health care, as well as the wallets of taxpayers and consumers, without adding its less significant indirect effects on business competitiveness to the economic toll. Many more important factors (not necessarily limited to the latest tweaks of other public policies) determine the competitive fates of American firms in global markets.

But for those keeping score at home, the law at best will keep the health cost curve on its previous trajectory rather than bend it any lower. It further disconnects the consumers and purchasers of health care from the full costs and real value of the health care decisions they face. The health law's purported cost savings and delivery system improvements are a desperate mix of unsustainable provider reimbursement cuts (an old standby), formulaic out-year assumptions (to infinity and beyond), unproven science fair projects, and wishful sightings of health reform unicorns. Much more certain to occur will be various tax and regulatory disincentives that mean slower growth by smaller businesses, reduced labor participation and working hours by lower-wage workers, and less saving and investment by higher-income taxpayers facing new Medicare taxes on their capital income. Other taxes in the law initially imposed on a medley of health industry sectors will eventually be passed through to the pockets of patients and consumers.

The new law should be repealed and replaced--not to boost "competitiveness"--but rather to improve the value of our health care, produce better population health, and free some resources for other important purposes. The building blocks of a new reform strategy should include a transition to defined contribution financing (PDF) for taxpayer subsidies devoted to health care, more targeted protection of vulnerable populations, realigned incentives that reward better decision-making, more effective competition in measuring and reporting relative performance by health care providers, and enhanced insurance portability advantages for those who responsibly seek and maintain continuous insurance coverage.

Thomas P. Miller is a resident fellow at AEI.

Photo Credit: Tom Grill/Corbis

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Thomas P.
Miller

What's new on AEI

AEI Election Watch 2014: What will happen and why it matters
image A nation divided by marriage
image Teaching reform
image Socialist party pushing $20 minimum wage defends $13-an-hour job listing
AEI on Facebook
Events Calendar
  • 27
    MON
  • 28
    TUE
  • 29
    WED
  • 30
    THU
  • 31
    FRI
Monday, October 27, 2014 | 10:00 a.m. – 11:30 a.m.
State income taxes and the Supreme Court: Maryland Comptroller v. Wynne

Please join AEI for a panel discussion exploring these and other questions about this crucial case.

Tuesday, October 28, 2014 | 9:30 a.m. – 12:15 p.m.
For richer, for poorer: How family structures economic success in America

Join Lerman, Wilcox, and a group of distinguished scholars and commentators for the release of Lerman and Wilcox’s report, which examines the relationships among and policy implications of marriage, family structure, and economic success in America.

Tuesday, October 28, 2014 | 5:30 p.m. – 7:00 p.m.
The 7 deadly virtues: 18 conservative writers on why the virtuous life is funny as hell

Please join AEI for a book forum moderated by Last and featuring five of these leading conservative voices. By the time the forum is over, attendees may be on their way to discovering an entirely different — and better — moral universe.

Thursday, October 30, 2014 | 2:00 p.m. – 3:00 p.m.
A nuclear deal with Iran? Weighing the possibilities

Join us, as experts discuss their predictions for whether the United States will strike a nuclear deal with Iran ahead of the November 24 deadline, and the repercussions of the possible outcomes.

Thursday, October 30, 2014 | 5:00 p.m. – 6:15 p.m.
The forgotten depression — 1921: The crash that cured itself

Please join Author James Grant and AEI senior economists for a discussion about Grant's book, "The Forgotten Depression: 1921: The Crash That Cured Itself" (Simon & Schuster, 2014).

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.