The Affordable Care Act (ACA) got a couple of things right, so right that we should not throw the baby out with the bathwater if we want to move towards a cost-effective, value-driven, and equitable healthcare system. There are four parts of healthcare insurance reform: private insurance reform; subsidies for low-income individuals who cannot otherwise afford insurance; government coverage (such as Medicare and Medicaid); and operation of markets (exchanges) where insurance is purchased. The ACA scored high grades on the first three elements and poor grades on the latter. Let’s examine why. Private insurance reform included adding children up to age 26 in insured groups (also called pools). Including young people improved the risk diversification of the pool, which was good for everyone’s rates as those twenty-year-olds are so healthy. This policy also kept more young people insured. Pre-ACA private insurance benefited insurers’…
Don’t let paradigms preclude business model innovation
Business model innovation lessons abound in the daily news, and not just in the business section. CNN and Fox News provide recent examples. Both offered breaking but inaccurate news that the US Supreme Court ruled Obama’s signature healthcare reform – the Affordable Care Act (ACA) – as unconstitutional. Their paradigm – a mental model for how things work – coupled with competition to offer breaking news resulted in their reporting mistake. Most of the courtroom and media debate about the ACA centered on whether the US Constitution’s commerce clause allowed the federal government to mandate insurance coverage. This discussion produced a paradigm that the case would be ruled on this clause. Chief Justice Robert’s reading of the majority decision even started with the mandate not being constitutional under the commerce clause. So CNN and Fox jumped to a false conclusion. That’s what paradigms…