Lessons to Improve the Efficiency and Equity of Health Reform

Abstract

AbstractThe recent Supreme Court decision on several provisions of the Patient Protection and Affordable Care Act provides an opportunity to address two kinds of design flaws in the legislation whose correction would both improve economic efficiency and some important dimensions of equity.The Court's view that the mandate is a tax is consistent with the general economic view that defines a tax as “a compulsory payment for public purposes.” This was the viewpoint I took in my earlier work as well. However, there is considerable difference, disagreement, and ambiguity about the public purpose sought by the ACA payment. The primary purpose of the mandate in my work and in arguments for the mandate in Massachusetts was to try to get as many people as possible to have at least some insurance coverage. A secondary consequence of a mandate is to shore up community rating, although community rating per se does not contribute (and generally is harmful) to the goal of covering a greater proportion of the population.