Modeling the Supply Side of Health Reform
The Affordable Care Act (ACA) significantly expanded health insurance coverage in the U.S., but it also made major changes to how, and how much, health care providers are paid. Those payment changes represent the “supply side of health reform,” and they include the ACA’s across-the-board cuts in Medicare unit prices, and a shift in Medicare away from fee-for-service (“pay-for-volume”) payment systems. The ACA also indirectly affects provider payments by shifting uninsured patients into Medicaid or some form of private insurance. The impacts of the ACA on health insurance coverage and patient demand for services have been extensively studied and are relatively well understood. We have a more meager understanding of the impacts of the supply side of health reform. Researchers at RAND have recently developed the Health Care Payment and Delivery Simulation Model (PADSIM), which is designed to analyze the impacts of changes in provider payment policy. The papers in this session use PADSIM to explore the supply-side impacts of the ACA. The overarching goal of this session is to introduce an integrated approach to modeling health reform, one that recognizes and reconciles the demand-side impacts of coverage expansions and the supply-side impacts of those coverage expansions and changes in payment policy.