Health reform promises to overhaul the US health care system, but the law does not do enough to reduce the steady growth of health care costs, according to an article published online and in the September 2010 issue of Health Affairs.

The article, "Assessing Health Reform's Impact on Four Key Groups of Americans," was written by Joseph P. Newhouse, PhD, professor in the Division of Health Policy Research and Education at Harvard University. In the report, Newhouse examines health care reform from the perspectives of four groups: those who are uninsured or eligible for Medicaid or the Children's Health Insurance Program, those in the individual or small-group markets, those in the midsize or large-group markets, and those on Medicare.

Newhouse contends that two of these four groups of Americans will see positive gains from federal health care reform. Two-thirds of the uninsured population will receive insurance coverage as Medicaid is expanded to include low-income parents of Medicaid-eligible children and low-income adults without dependent children. People with individual or small-group insurance could rise to 50 million strong or more as reform restructures the functioning of these markets. However, those insured through midsize and large employers will see little effect for several years.

For Medicare recipients, reform will close the drug benefit "doughnut hole" and establish a voluntary long term care benefit, but future administrations and Congresses will likely need to address Medicare spending. The reform law calls for cuts in the rate of growth of Medicare. If these cuts are not carried out, taxes will have to rise, although ultimately the implied tax rates are implausible. If the cuts are carried out, Medicare reimbursement rates will fall below commercial insurance reimbursement rates, and Medicare beneficiaries will likely face access issues. Assuming commercial insurance spending continues to increase, Newhouse concludes that the only feasible solution may be all-payer rate setting.

The article is based on Newhouse's May 2010 presentation "Why Is Health Reform Such a Sisyphean Task?," given at the University of California, San Francisco, as part of an annual lecture series honoring John Eisenberg, MD, MBA, who directed the Agency for Healthcare Research and Quality from 1997 to 2002. The article and lecture were supported by the California HealthCare Foundation (CHCF).

The complete article is available free of charge on the Health Affairs site through the link below.