Health Reform and the Affordable Care Act: Not Really Trusting the Consumer

37 Pages Posted: 21 Nov 2012

See all articles by Marshall B. Kapp

Marshall B. Kapp

Florida State University - College of Law and College of Medicine

Date Written: November 19, 2012


The Affordable Care Act (ACA), the result of two pieces of legislation passed by Congress in 2010, is likely to produce significant impacts on most aspects of the American healthcare industry. This article focuses on two possible philosophical and operational approaches to healthcare reform: supply-side regulation and demand-side policy interventions. The Author asserts that the general philosophical and operational approach taken in the ACA is that of supply-side regulation. The Author states that this approach is paternalistic (the government knows best and consumers are uneducable) and contends that, for the most part, the ACA fails to allow individual healthcare consumers to take an active role in improving healthcare quality, access, and affordability. This is argued to be a missed opportunity to gain the advantages offered by a robust healthcare marketplace that could be garnered by focusing on demand-side policy interventions rather than supply-side regulation.

The Author begins by giving a background of the supply-side concentration that the ACA has embraced. This background includes specific examples and explanation of this supply-side concentration such as: diminishing Medicare Advantage plans, establishing the Independent Payment Advisory Board, and enacting measures that essentially prohibit private insurers from taking part in traditional underwriting. This provides an outline of the expansion of the federal government’s role in health care financing and delivery under the ACA.

The Article then discusses the ACA’s failure to consider the demand-side of the healthcare debate and to give consumers more respect and involvement in the improvement of healthcare quality, access, and affordability. The Author argues that even if many Medicare beneficiaries do not currently have the education to take part as active healthcare coverage consumers, the correct response is not the ACA’s paternalism, but rather to develop resources to enhance consumer knowledge and create a better environment of information exchange. Next, the Author points out that, although the majority of the ACA focuses on the need for government to take care of consumers who are unable to make their own healthcare choices, the ACA section on Comparative Effectiveness Research and its authorization to financially support a Patient Centered Outcomes Research Institute shows faith in consumer decision making in complex medical decisions.

The Article then uses specific examples of proposals for conversion of the traditional entitlement structure of Medicare to a premium support program to show the possibilities a greater consumer focus could provide. These proposals entail a more positive vision of consumers and their abilities to take part in the healthcare market. These specific proposals are then used to present rationales for demand-side policy interventions. The Article presents the argument that the defined contribution and voucher approaches to healthcare promote respect and self-determination with regard to an individual’s healthcare. Additionally, these programs would allow consumers not traditionally involved in the private health insurance marketplace to enter that marketplace and purchase private insurance coverage, promoting greater equality in medical treatment.

The Author concludes that the paternalist philosophy of the ACA threatens to make the prospect of future market failure in the healthcare arena a reality, and that policy changes can improve the healthcare market, but only if opportunities to focus on the demand side of healthcare are pursued.

Suggested Citation

Kapp, Marshall, Health Reform and the Affordable Care Act: Not Really Trusting the Consumer (November 19, 2012). 42 Stetson Law Review, No. 1 , FSU College of Law, Public Law Research Paper No. 613, Available at SSRN:

Marshall Kapp (Contact Author)

Florida State University - College of Law and College of Medicine ( email )

625 Eagle View Circle
Tallahassee, FL 32311
United States
618-534-1022 (Phone)

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