Health Reform and Theories of Cost Control

Abstract

Health care costs and affordability are critical issues to consumers. Just as we assess the coverage impacts of a health reform proposal, we should be able to evaluate how the plan will constrain health care costs: its theory of cost control. This essay provides a framework to assess health reform plans on their theories of cost control, identifying the key policy tools to constrain health care costs organized in a two-by-two matrix across the following dimensions: price vs. utilization and public vs. private payers. It then applies the framework to the Affordable Care Act (ACA) and the Republican's 2017 legislative efforts to repeal and replace the ACA to identify their general theories of cost control, revealing on the plans' strengths, blind spots, and incoherence.