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Health Care Reform:

Health Insurance & Affordable Care Act

Voter Guide: Costs

The issue:

The United States spends $2.6 trillion on medical care each year, and costs are expected to continue rising. Getting health care spending under control is critical to the health of the U.S. economy. Here are some proposals to do that.


The health reform law, which will extend insurance coverage to millions of uninsured Americans, is expected to cost $1.168 trillion over the next 10 years, according to Congressional Budget Office estimates. New taxes and program savings are expected to offset that spending and reduce the deficit by $84 billion.

Cost-Cutting Plans

The health reform law aims to slow health care spending in a number of ways, including:

  • Accountable Care Organizations (ACOs) – these new organizations within Medicare financially reward doctors and hospitals that partner to deliver more coordinated, higher-quality care at lower costs.
  • Value-based purchasing -- a Medicare program that reimburses hospitals based on the cost and quality of care they deliver, rather than the volume of care they provide.
  • Independent Payment Advisory Board (IPAB) -- a 15-member board -- appointed by the president and subject to Senate confirmation – is charged with keeping Medicare spending down by implementing cost-saving measures if spending rises.
  • The law gives the government greater authority to identify and prosecute for costly fraud and abuse.

Market Competition to Lower Costs

Alternate plans to reduce costs would do so by promoting free markets and competition. This would include:

  • Allowing people to buy insurance across state lines to increase competition among insurance companies and lower costs.
  • Offering tax breaks to people who buy health insurance on the private market. Today, people who get health insurance through an employer receive their benefits tax free. The same is not true for people who buy insurance on the private market.
  • Placing a cap on damages in medical malpractice lawsuits.

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