Beyond Path Dependence: Explaining Healthcare
Reform and Its Consequences

Simon F. Haeder
University of Wisconsin, Madison

This essay reviews recent developments in the field of health policy. It identifies a variety of frameworks brought forward to explain the enactment of health reform, including pivotal politics, path dependence, and multiple streams. It further identifies various challenges for the implementation of reform with a particular focus on state-federal relations and cost containment.


The problem of providing satisfactory medical service to all the people of the United States at a cost which they can meet is a pressing one. At the present time, many persons do not receive service which is adequate either in quantity or quality, and the costs of service are inequably [sic] distributed. The result is a tremendous amount of preventable physical pain and mental anguish, needless deaths, economic inefficiency, and social waste (Committee on the Costs of Medical Care 1932/1972, 2).

These words are part of the Final Report of the Committee on the Costs of Medical Care first released in 1932. The Committee, made up of a diverse group of health professionals, academics, and the public, conducted an extensive analysis of the American healthcare system supported by the most advanced scientific techniques and funded by America’s premier foundations. After five years of research, the Committee released its report containing a series of recommendations that sound rather familiar today. The recommendations included the utilization of provider groups, emphasis of preventive services, universal coverage and access through a combination of insurance payments and taxation, medical research to improve the provision of care, and a significant investment in provider training. With the passage of the Affordable Care Act (ACA) it appears as if almost 80 years later, the ideas propagated by the Committee had evolved into what John Kingdon (2003, 1) termed “an idea whose time has come.”

Health policy scholarship over the past two years has necessarily been dominated by a focus on the enactment of the ACA, its benefits and its problems, and its implications for the American healthcare system. This article follows a similar pattern. First, I provide an overview of the various explanations brought forward by scholars utilizing a variety of conventional approaches, including path dependence, gridlock and pivotal politics theory, presidential power, and multiple streams theory. I then turn toward implementation of health reform with a focus on the interrelationship between the states and the federal government. Third, I present the key feature of health reform that will determine its ultimate success: cost containment. This section also features a potential solution that has received little attention so far, the utilization of stakeholder regulation. Fourth, I address several less researched components of health reform and provide a brief assessment of the reform effort looking back and ahead. I conclude with a discussion of gaps in the literature and fruitful areas for future research.

How Health Reform Came About

The enactment of healthcare reform has been described extensively in other venues (see Altman and Shactman 2011; Jacobs and Skocpol 2010, 2011; McDonough 2011; Starr 2011; The Staff of the Washington Post 2010, for example). For Lawrence Jacobs (2010), the enactment of the ACA serves as an instructional showcase for the contemporary American political system (see also Marmor and Oberlander 2011). First, the ACA highlights the importance of institutions such as Congress and the presidency in explaining policy change as they provide the parameters and structure for action. Second, parties, their competition, their internal divisions, and their platforms, exert key influence. Third, past decisions constrain future actions. In other words, not only do politics make policies but policies also make politics because government actions create constituencies who benefit from the resulting status quo. Fourth, paradoxically, presidential power in the American system is vast yet simultaneously severely constrained by a variety of factors. Fifth, the fight over policies does not end with the presidential signature on a bill. Instead, it merely shifts the conflict into other venues. Over the past two years, policy scholars, economists, and political scientists have provided various accounts aiming to explain how health reform, after decades of failure, finally succeeded. The major academic attempts at explaining the enactment of health reform emphasize one or several of the following components.

Path Dependence and Health Reform

Many of the explanations of the historic development of the American healthcare system brought forward by health policy scholars emphasize the role of path dependence to one degree or another. Yet in the past, possibilities for reform have often been too narrowly confined by the limitations of path dependence. In its strictest form, path dependence so severely limits the range of possible actions that the role of agency becomes inherently negligible because simply “one damn thing follows another” (Brown 2010, 646; see also Wilsford 2010). Even in its weaker forms it often leaves many questions unanswered and is “too shallow to be false” (Brown 2010, 659). In response to these criticisms authors have called for various adjustments. Most prominently, several authors have urged the better integration of ideas (Béland 2010; Feder-Bubis and Chinitz 2010) as well as agency (Wilsford 2010) and their interaction with structure into accounts of policy change in order to create better theory. With these adjustments, policy becomes significantly less deterministic and possibilities are opened for dynamism, contingency, and leadership resulting in both incremental and non-incremental changes.

The accounts of reform presented within this framework build on these adjustments and incorporate more sophisticated versions of path dependence. In addition to the accounts provided below, Jacobs (2011) is perhaps the strongest proponent of this approach when he argues that the ACA serves as a critical juncture, a turning point in the American healthcare system, because it significantly altered the status quo.1 In his reasoning, it will create certain lock-in effects that will be hard to alter in the future. In essence, he argues, the ACA altered the trajectory of health policy by creating access to care as a social right, by widening the arena for public decision making, and by socializing the conflict. However, virtually all authors point to the historic development of the healthcare system and the structure of the U.S. Congress as creating certain boundaries to reform. Nonetheless, they acknowledge the power of agency, mostly personified in Democratic leaders, and ideas about social justice and fiscal acceptability.

Critical Junctures: The Role of Context and Agency

Perhaps in no other substantive field of policy research has Kingdon’s (2003) seminal work played a more prominent role than in health policy. Although not always mentioned by name, Kingdon’s multiple stream approach, in which political, problem, and policy streams merge with the help of policy entrepreneurs at critical moments during windows of opportunity, informs and guides many works in the field. It is not surprising that various accounts of the ACA exhibit the distinct markings of Kingdon’s framework. First, Mark Peterson (2011) proposes a contextual interpretation of health reform in his evaluation of seven episodes of reform from Franklin Roosevelt through Barack Obama. Peterson categorizes the contextual factors as policy problems, institutions, and political resources. His research shows that conditions for reform were favorable during the Obama Administration and often prohibitive during prior presidencies. Nonetheless, leadership is crucial to take advantage of promising conditions.

Jacobs and Theda Skocpol also invoke the notion that contextual factors set the stage for policy change. As they put it, “the stars align[ed] just right” (2010, 17). In their account of healthcare reform, the inherent problems of the status quo led to the inevitability of action. Cost, quality, and access problem created an incentive for Democrats to address health reform once more. Consequently, Democratic presidential candidates prominently featured health reform in their campaigns for the nomination. Moreover, for various reasons candidate Obama, after initial caution, felt particularly drawn to the Democratic crusade. Once in office, President Obama made the deliberate choice, against many of his advisors’ recommendations, to elevate health reform to a priority for his administration. The combination of these two major factors, the broken system and the election for change, serve as the prime explanatory factors for why health reform efforts reemerged. In explaining the successful enactment of reform, Jacob and Skocpol’s account includes references to familiar contributors to the final legislative outcome described elsewhere in this article, such as the power of the Congressional Budget Office (CBO), the role of party leaders in Congress and the White House, media coverage, the bargaining of the administration with industry stakeholders, the role of Progressives and Tea Party activists, and the commitment and persistence of Democrats in Congress.

Jacob Hacker (2011, 2010), a political scientist actively involved in the reform effort, also emphasizes contextual factors that opened the proverbial window of opportunity. For Hacker, four crucial components allowed Democrats to succeed where many of their predecessors had failed. First, the complete and overwhelming Democratic takeover of both houses with resounding majorities and the election of a Democratic president favorable to health reform were indispensable. However, what proved even more essential is the fact the Democratic caucus in the 111th Congress was strikingly different from its predecessor in the 103rd Congress. Years of retrenchment in conservative districts, particularly in the South, had created a Democratic caucus, while still far from homogeneous, that was nonetheless much less divided on crucial issues factoring into health reform. Second, the economic context provided an opportunity for Democrats. Health care costs had risen virtually uninhibited since the 1994 failure and the number of uninsured and underinsured Americans had risen steadily as well. In addition, the recent economic downturn had exacerbated the hardship of many Americans and hence created demand for governmental action. Third, many crucial interest groups had become much more reliant on government payments over the past decade. As a result, they were much more favorably inclined at least not to impede reform efforts if costs and benefits could be adequately balanced. This tendency was further sustained by the decision of the Obama Administration to enter into a variety of agreements with key industry stakeholders.

Most fundamentally, Democrats coalesced around a single dominant solution for health reform based on the successful enactment of reforms in Massachusetts (see also Brasfield 2011; Patel and McDonough 2010). Many Democrats willingly moved away from their preferred choice in 1994, the single-payer system, in lieu of the so-called public option (Gottschalk 2011). This convergence was supported by all three leading contenders in the presidential primaries and strongly advocated for by a variety of liberal interest groups and alliances, such as Health Care for American Now!. Eventually, the public option made it into the campaign platforms of the three leading Democratic presidential candidates and it was included in the bill passed by the House of Representatives (Halpin and Harbage 2010). However, it did not survive bargaining in the Senate and the public debate (Brasfield 2011). Strikingly, supporters of reform led by the White House were even willing to sacrifice this compromise further in order pass anything over nothing. In essence, Democrats pragmatically assessed their past failures and strategically adapted their approach. It is nonetheless striking that reform advocates were able to overcome what has been referred to as Altman’s Law, the assertion that “nearly every major interest group favors universal coverage and health systems reform, but, if the plan deviates from their preferred approach, they would rather retain the status quo” (Altman and Shactman 2011, 44).

Despite the Democratic success in enacting health reform, Hacker further explains why the final legislation is so limited and exhibits a striking resemblance to prior Republican proposals. Part of the explanation can be found in the entrenched power of constituencies created from past policy decisions with significant interest in maintaining the status quo or at least in limiting potential losses. Moreover, a significant number of Americans are rather satisfied with their personal health coverage and do not see any benefit in substantial changes. Perhaps even more importantly, the conservative U.S. Senate with its procedural rules regarding cloture and reconciliation served as an almost insurmountable barrier, strictly limiting the potential for changes. Lastly, the Democrats were severely restrained by the power of economic numbers in the form of CBO scores, PAYGO, and presidential promises about deficits. Finally, Hacker addresses the heated nature of the debate. According to Hacker, the emotions of most Americans were driven by concerns about their personal situation and the impact that health reform would exert on it. In an environment marked by distrust, confusion, and loss aversion, a decidedly vocal minority at the far-right was able to exert disproportionate influence over public opinion. Moreover, Republicans as a party had been steadily steered right by the dominating influence of activists and allied groups within the party.

Partisan Explanations: The Success of the Democratic Party

Various accounts of the enactment of health reforms focus on the ability of the Democratic Party to learn from its failures and mishaps during the Clinton administration and the application of those lessons (Gusmano 2011; Feder 2011; Brown 2011; Oberlander 2010; Marmor and Oberlander 2011; Starr 2011). First, the priority assigned to reform by President Obama focused attention on the subject (Feder 2011). Second, the decision to have Congress take the lead in writing legislation resulted in a large number of legislators becoming personally invested in its success (Feder 2011; Brown 2011). As a result Congress was able to overcome gridlock and enact a significant reform proposal into law. Third, various authors emphasize the importance of political pragmatism at various stages in the effort. This pragmatism becomes evident in the cooptation of industry opposition, various strategic maneuvers to obtain acceptable CBO scores, the willingness to sacrifice the public option, and the numerous inclusions of moderating amendments to the legislation in both chambers (Oberlander 2010; Brown 2011; Feder 2011; McDonough 2011). In particular Max Baucus’ attempts to create a bipartisan bill made the final result moderate enough for the vast majority of moderate and conservative Democrats to come aboard (Feder 2011). Fourth, Democrats were able to avoid past internecine warfare between factions over the details of reform by agreeing early on to a model based on reforms in Massachusetts (Brown 2011; Patel and McDonough 2010; Brasfield 2011; Hacker 2010, 2011; Starr 2011; McDonough 2011). Fifth, Democrats were able to maintain a large degree of organizational unity despite attempts by Republicans to drive wedges in between the different wings of the party. Facilitated by excellent legislative leadership, courage, and an awareness of united Republican opposition, Democrats were able to overcome their notorious infighting just enough to succeed (Oberlander 2010; Brown 2011). Particularly in the final stage of the legislative process, it fell to Democratic leaders to convince their copartisans that, because of their common investment, failure was unacceptable (Feder 2011). Ultimately, moderate House Democrats became convinced that the previous vote on the bill had already exposed them politically and gave their support (Feder 2011). Hence, it was not that the American public had been convinced of the merits of health reform and exerted pressure on its representatives, but instead successful health reform was the result of Democratic cohesion and persistence.

Congressional Lawmaking: Pivotal Politics and Gridlock

Models of Congressional gridlock provide further insights into the enactment of health reform. Craig Volden and Alan Wiseman (2011) evaluate whether gridlock over health policy issues in Congress is particularly ingrained. Moving away from narratives that have been the mainstay of our understanding of major health reform efforts, Volden and Wiseman turn their attention to a quantitative analysis of all health policy bills introduced in Congress from 1973 through 2002. Utilizing data from Scott Adler and John Wilkerson’s Congressional Bills Project database, Volden and Wiseman test a large variety of hypotheses related to health policy. Their findings are consistent with expectations as they assess gridlock over health policy issues to be significantly more severe with fewer health bills enacted, surviving committees, and getting passed in both chambers. They also find that health legislation tends to be carried by more senior legislators and chairmen, members with previous health policy expertise, members of the majority party, and more ideological extreme members. Moreover, legislation has been carried overwhelmingly by such policy entrepreneurs as Henry Waxman (D, California).

Writing prior to the enactment of the ACA, David Brady and Daniel Kessler (2010b) utilize a spatial model to explain why major health reform efforts have failed to pass Congress in the past. Their explanation builds on the earlier work by Brady and Kara Buckley (1995) that analyzed the failure of the Clinton health plan. In both cases, the authors utilize a unidimensional spatial model of Congress based on a variety of assumptions to explain policy gridlock. The familiar model assigns pivotal importance to crucial legislators at the filibuster and veto pivots in relation to shifting policy from the status quo. Gridlock is further hardened by legislators’ uncertainty about policy outcomes, constituent reactions, and the behavior of their colleagues. According to the model, the Clinton health plan never had a chance of passage. Too liberal in its conception, it failed to gain the support of the public and its representatives in Congress because it fell into the gridlock interval in which pivotal legislators preferred the status quo. At the time of writing, Brady and Kessler predicted gridlock because they saw the composition of Congress as inherently similar to that in 1994. As a result they predicted that at best minimal reforms would be able to pass into law. That health reform passed and that the Obama Administration was able to overcome Congressional gridlock hailed in larger part from the utilization of the reconciliation process, which avoids the filibuster pivot and shifts power to the median voter. As Brady and Buckley (1995) demonstrated in their earlier work, the ideological difference between median and filibuster pivot is significant and avoiding the filibuster pivot is crucial. Moreover, it is likely that in order to pass the original Senate version, Democrats made the legislation significantly more conservative in order to gain the 60th vote. Finally, as Joseph White (2011) asserts, it appears plausible that pivotal legislators were confronted with a lose-lose situation, either voting against their constituents and, to a degree, their own preferences, or against any reform at all and for the unsatisfactory status quo. Ultimately, reform in this interpretation occurred because the status quo appeared less preferable than an imperfect reform to enough legislators. It is undeniable that healthcare reform significantly contributed to the resounding defeat of many Democrats in the mid-term elections (Iglehart 2011a; Saldin 2011).2

Presidential Power: The Role of the President

Presidents have long been assigned a crucial role in the policymaking process by political scientists and the public alike. In The Heart of Power, David Blumenthal and James Morone (2010; also see Morone 2010) follow this tradition and develop a framework that utilized “health as a lens on the oval office.” In this framework, health policy changes are the result of ideas, personal biography, institutional arrangements, and existing policies. Analyzing presidential health policy from Franklin Roosevelt through George W. Bush, Blumenthal and Morone distill eight lessons for successful presidents, including the ability to manage Congress, to go public, to learn how to lose, to have passion, to be speedy, to have a plan, to focus on the big picture, and to manage the economists. In their new preface written after the enactment of the ACA, they apply this framework to the Obama presidency and find their recommendations confirmed.3 As a result, they support the conception that the presidency is crucial in any effort of reform. However, they paint the path to reform as necessarily rocky and hazardous. This interpretation is supported by Stephen Wayne (2011), who asserts the importance of presidential character for decision making. Particularly, he emphasizes the role of President Obama and credits his personal beliefs and his refusal to give up as one of the main determinants of reform.

Implementation of the ACA

States did not sit idle as the reform debate swept over America. According to John Dinan (2011), states were particularly concerned about the pivotal role of Medicaid in expanding coverage under any reform proposal because of the potential impact on state budgets. As a result, all states shared universal concerns that they expressed particularly through intergovernmental organizations such as the National Governors Associations. They also skillfully utilized political pressure through the mobilization of public opinion. The threat of lawsuits and noncompliance served as a useful instrument to gain publicity and steer the debate. Moreover, states lobbied their respective Congressional delegations in order to obtain categorical and particularistic benefits. States achieved significant success in all these efforts, shifting the major burden of Medicaid expansion on the shoulders of the federal government and gaining significant leeway in implementing reform.

Yet the role of states will become even more crucial in the years following the enactment of the ACA. Implementation is crucial for every policy enacted but it is particularly important for the ACA because its underlying design and structure heavily rely on the cooperation of the states over long periods of time (see Greer 2011; Kersh 2011; Miller 2010; Miller 2011; Skocpol 2010; Nichols 2010; Weil and Scheppach 2010). Perhaps most substantially, state governments are tasked with the expansion and improvement of their Medicaid programs, the expansion of high-risk insurance pools, the design and operation of health insurance exchanges, and the adjustment of their regulatory frameworks. In all cases, the federal government and the states will have to cooperate closely from the very beginning. A particular challenge for states, even those eager to support health reform, will be the extension of Medicaid, which is expected to cover about half of all newly-insured Americans although projections vary significantly (Ku 2010; Sommers et al. 2011). The massive inflow of newly insured individuals will also likely increase the pressure for states to accelerate their efforts to shift beneficiaries into managed care leading to an expected $40-60 billion in managed care contracts by 2014 (Iglehart 2011b). Moreover, Pizer et al. (2011) expect significant crowd-out effects in the second decade.

Concerns about Medicaid have been extensively documented by Mark Pauly and Thomas Grannemann (2009; 2010) and Laura Olson (2010). Pauly and Grannemann provide two accounts written before the ACA focusing on the crucial role of Medicaid in all reform efforts. Driven by a public choice approach they focus on equity, efficiency, and democracy and aim to provide a set of principles for reforms including accountability, inter-state equity, and value-based cost containment. Their approach revolves around keeping promises to the three major stakeholders in Medicaid––providers, voter-taxpayers, and beneficiaries. However, it appears as if few of their recommendations were incorporated into the ACA. Olson (2010) outlines the historic development of Medicaid from its inception to the present. She describes a program riddled with cost overruns, cost shifting, fragmentation, and inequalities that only partially fulfills its promise of adequate access to quality medical care. Instead, she finds a system dominated by a medical-industrial complex of third-party providers. In particular, changes over the last decade under the guise of flexibility and choice have severely impeded access for many Americans and bode ill for the future. These concerns are largely shared by Frank Thompson (2011) who likens the developments to termite damage: invisible at the surface yet severely degrading the foundation.

The requirements and expectations of the ACA will put a significant administrative burden on states already under fiscal stress from the recent recession. While the federal government will shoulder almost all of the coverage costs for the expansion population, grave concerns remain about the ability and willingness of states to muster the capacity to adjust adequately their Medicaid programs (Ku 2010; Thompson 2011). Democrats were forced into a convoluted structural arrangement for coverage expansion by cost constraints in the form of CBO scores that led to the continued reliance on employer coverage and the extensive utilization of Medicaid with its low reimbursement rates (Miller 2010).

Reliance on these low reimbursement rates has reignited an intense debate about the ability of providers, hospitals in particular, to engage further in cost shifting. Many argue that the low government reimbursement rates have created significant resentment toward government payers in all states because they encourage providers to shift costs to private insurers, in effect serving as a hidden tax on the insured, although empirical evidence is rarely presented (Altman and Shactman 2011; Hadley et al. 2008; McDonough 2011; Olson 2010). At the same time, they provide a scapegoat that allows providers to increase steadily their private reimbursement rates by pointing to low public rates as a justification (Kilbreth 2010). However, a thorough review of the evidence from 2006 to 2011 by Austin Frakt (2011) comes to the conclusion that cost shifting is not pervasive or large and instead varies significantly depending on a variety of factors, including most prominently the local market structure. Others (see Hackbarth 2009; Robinson 2011; Wu 2010) have also pointed toward the importance of market structure and market power in the response of hospitals to fiscal pressures. These finding conceptually match those of Melnick et al. (2011) with concentrated hospital markets driving up costs and concentrated health plan markets reducing them. Pauly and Grannemann (2010) also reject what they refer to as the hydraulic model of cost shifting and see hospitals maximizing their profits in each market segment by adjusting the quality of care.

The crucial role of states in the implementation of health programs has been explored by several scholars in the context of the State Children's Health Insurance Program (SCHIP). Robert McGrath (2009) finds in his case studies of Georgia, Massachusetts, and Ohio that state capacity and programmatic experience exert crucial influence on the implementation and administration of this joint state and federal programs. Colleen Grogan and Elizabeth Rigby (2009) evaluate the impact of state decisions about program structure and eligibility levels during the implementation of SCHIP on the debate during reauthorization of the program. Their findings highlight the importance of policy feedback in state-federal programs as Democrats and Republicans sought to rein in states with whose decisions they disagreed while supporting those whose approaches they favored. Surprisingly, the form of the program, a block grant, garnered little attention during reauthorization. In a similar vein, Kevin Esterling (2009) in his analysis of Congressional hearings in the case of Medicaid prescription drug costs and intergovernmental transfers finds that Congress is only receptive to state expertise when federal and state interests are aligned.

Some observers are particularly concerned about the ability of states to implement portions of the ACA adequately because of capacity and financial issues as well as the fact that many state executives have only recently been elected (Weil and Scheppach 2010). Ironically, many of the low capacity states are solidly Republican and hence it might be hard to disentangle what degree of inadequate implementation hails from noncooperation (Greer 2011). Moreover, states, such as Idaho and Oklahoma, have eagerly publicized their opposition to any implementation efforts and initiated a heated debate over nullification (Nichols 2010). However, as Grogan (2011) points out, despite much front-stage fighting, many states are largely cooperating privately and in less visible forms. It will be particularly crucial to pay attention to implementation decisions by the executive branches in the states as Thompson and Burke (2009) have shown in their analysis of the Section 1915(c) Medicaid State Waiver Program. Their research emphasizes the replacement of picket fence federalism which “assigned considerable importance to federal and state bureaucracies in shaping intergovernmental grant programs,” often frustrating executives due to balkanization and lack of coordination (Thompson and Burke 2009, 38). It is replaced by executive federalism in which the actions by executives have become more potent and often far outweigh state legislatures and bureaucrats.

There are also concerns that the complex regulatory environment of the insurance sector, made even more complex by the ACA, holds great potential for disruption (Jacobson et al. 2011). States will have particularly wide discretion in the implementation of their health insurance exchanges. In many respects, these exchanges are the most crucial components of the ACA. Exchanges are intended to serve as vehicles for individuals and small businesses to access affordable coverage and make sound financial decisions. States are tasked with setting up these exchanges, including their organization and governance structures, risk selection measures, benefit options, and insurance premiums (Ku 2010).

It should be emphasized that states are not the only crucial partners of the federal government in implementing health reform. The ACA also assigns significant responsibilities to private insurers in the implementation process (Brennan and Studdert 2010). While many of the most egregious insurance practices of the past have been limited or eliminated, insurers still may have the potential to achieve market segmentation with continuing risks of adverse selection. Crucial to the process will also be the debate about the regulation of medical loss ratios (Brennan and Studdert 2010; Kersh 2011). Perhaps most importantly, insurers will significantly influence the regulatory framework guiding implementation in the states (Brennan and Studdert 2010).

Lastly, the federalist approach to healthcare can also have striking unintended consequences. Michael Sparer and his colleagues (2011) have argued that the fragmented nature of the U.S. healthcare system has created incremental growth in government involvement that they refer to as catalytic federalism. Joint programs and efforts create incentives for multiple levels of government to become involved in policy decisions. Fragmentation thus increases the number of “opportunity points” for policy involvement as seen in the increasing participation in insurance regulation through the Employee Retirement Income Security Act (ERISA), the Health Insurance Portability and Accountability Act (HIPAA), and now the Patient Protection and Affordable Care Act (ACA). The overall result is greater rather than lesser government involvement in the healthcare system.

Cost Containment: The Achilles Heel of the ACA

Cost containment measures have been the focus of much scrutiny since the enactment of the ACA. These measures include, among others, the so-called Cadillac tax on high-cost insurance plans, delivery system reforms, including improved information and incentive structures, particularly through demonstration projects, and health insurance exchanges (see Oberlander 2011; Gusmano 2011; Pauly 2011). However, any efforts at containing costs will inevitably cut into the profits of powerful interest groups and are bound to create backlash (Luft 2011). Moreover, the power of special interests to impede and interfere with the utilization of effectiveness research has been documented extensively. Most recently, Daniel Fox (2010) describes the controversies surrounding the adoption of Preferred Drug Lists (PDLs) in state Medicaid and CHIP programs. It is also disheartening that the competitive pricing component introduced to Medicare Part C in the original version was struck out in reconciliation as competitive pricing has worked effectively in Part D (Coulam et al. 2011).

Overall, observers are far from convinced that the ACA contains sufficient cost control measures to bend the cost curve (Altman and Shactman 2011; Gusmano 2011; Oberlander 2011; Pauly 2011). Experts point to the lack of hard caps envisioned under the ill-fated reform effort of the Clinton administration or other containment efforts that have proven to work effectively abroad (Marmor and Oberlander 2011; Oberlander 2011). Many observers have criticized the fixation of the American political system on seeking magic bullets in the form of technical and efficiency gains to bend the cost curve (Oberlander 2011). Michael Gusmano and Sara Allin (2011) refer to this approach as the “painless prescription” in comparison to the “painful prescription” approach by the National Health Service in the United Kingdom. Oberlander (2011) is particularly critical of the major mechanisms included in the reform bill, likening them to “throwing darts” hoping for a cumulative miracle. Nonetheless, greater government financial exposure in the future may trigger more interest in cost containment. Ultimately, the appropriate percentage of gross domestic product dedicated to healthcare in this country is not an empirical but a normative and political question (Gusmano 2011).

Medical care in the United States is excessively expensive and, as described above, the ACA does little to control spending but instead enlarges the existing system by adding 0.1 percent to the medical expenditures growth rate annually (Keehan et al. 2011). The biggest cost drivers are technology and providers. For example, proportionally, there are four times as many CT scanners and three times as many MRI machines in the United States than there are in the United Kingdom (Gusmano and Allin 2011, 96). Moreover, there are six times as many intensive care beds (Gusmano and Allin 2011, 95-6). It is far from surprising that this has implications for the provision of care, although not necessarily always as expected. For example, rates of revascularization are between two and six times higher in the United States while access to primary care is significantly better in the UK (Gusmano and Allin 2011). Ultimately, it is not the aging of the population that serves as a cost driver but rather the adoption of new medical technology particularly valued in the American medical community (Gusmano and Allin 2011). At the same time cost containment hinges particularly on the ability to address the issue of provider payments because, as Bruce Vladeck and Thomas Rice (2009) have pointed out, the power of medical providers has led to excessive costs. This disproportionate growth in provider payments in recent decades has resulted in U.S. physicians earning significantly more than their OCED counterparts (Laugesen and Glied 2011). Compared to the impact of provider costs, any technical fix such as the utilization of health information technology or effectiveness research necessarily pales. As a result, Vladeck and Rice urge government buyers to utilize their monopsonistic and oligopsonistic power to rein in provider reimbursements. However, their advice was largely ignored in the healthcare debate.

The Sustainable Growth Rate (SGR) serves as a remarkable example of the failure of the U.S. healthcare system to contain costs that was perpetuated by the ACA. Originally, Congress had envisioned the SGR as a ceiling that would induce providers to utilize effectiveness research to contain costs. Yet over the past decade, the SGR has done little to curb healthcare costs as Congress has reversed proposed cuts every year since 2003 in a process that Miriam Laugesen (2009) likened to singing of the Sirens. Instead, provider reimbursements have shown excessive growth rates since the inception of Medicare in 1965, often exceeding 10 percent annually. However, the incentives for individual providers induce the utilization of creative techniques to maximize payments through volume and intensity of care adjustments. Unfortunately, this second form of “moral hazard” often finds little mentioned in the healthcare literature (see Stone 2011). In the processes of enacting the ACA, the potential opposition by the American Medical Association was neutralized by adjusting the Medicare physician payments in a separate non-connected bill, which removed them from the official CBO analysis (Laugesen 2011). In light of this history it is questionable if the advisory board created by the ACA aiming for a similar goal as the SGR will be able to rein in spending (Gitterman and Scott 2011).

David Weimer (2010a, 2010b) identifies a potential solution to a variety of problems inherent in any cost containment effort. In his analysis of the organ procurement and transplantation system in the United States, Weimer describes the ability of stakeholder rulemaking to bring together evidence-based medicine, competitive values, and divergent interest in the Organ Procurement and Transplantation Network (OPTN).4 Stakeholder rulemaking is conducted by key stakeholders based on a charter and set rules and exhibits a variety of desirable features when compared to agency or even negotiated rulemaking. First, private rulemaking facilitates the utilization of expertise in the rulemaking process by bringing all relevant parties to the negotiating table. Brought together by the high stakes involved for all constituents, stakeholders meet frequently and continuously and hence create mutual trust and respect that enhances cooperation and compromise. Moreover, its private character allows for more flexibility. Expert participation further enhances rulemaking through the application of tacit knowledge. Second, stakeholder rulemaking accommodates competing interests by providing them with the proverbial seat at the table and the ability to influence policy outcomes. A basic charter and set of decision rules create clarity and encourage continuous and incremental rulemaking while simultaneously allowing for the occasional drastic change if necessitated by circumstances. Third, stakeholder rulemaking facilitates the promotion of a variety of social values such as equity and efficiency simultaneously by finding a more appropriate balance. Professionals with the broader, less individualistic perception of beneficial policy drive the entire process. At the same time, rulemakers are sufficiently isolated from political influence while allowing for transparency through openness and frequent monitoring. Stakeholder rulemaking is also politically attractive because it allows politicians to avoid blame and transform political decisions into technical ones. According to Weimer, stakeholder rulemaking, if implemented correctly, proves far superior to traditional approaches in cases with high stakes, limited resources, and the potential for politically-driven results. Weimer, writing before the enactment of the ACA, proposes its application to a Medicare surgery budget, but the American healthcare system under the ACA offers a wide variety of applicable venues.

Looking Backward and Ahead

Despite the public debate’s focus on healthcare, the ACA contains significant improvements for mental health (Mechanic 2011), public health (Pollack 2011), and long-term care (Frankford 2011) which have long been neglected in American politics. However, particularly the issue of long-term care in the United States still requires further attention despite the initial inclusion of the CLASS Act. With Secretary Sebelius halting implementation of the CLASS Act and with Republican efforts to repeal it in Congress the system will remain fragmented between Medicare (short-term care), Medicaid (long-term care), and private insurance. It is hence likely that the unsystematic approach combined with uncertainty will exacerbate the current haphazard system with questionable results for quality, equity, and efficiency (Ogden and Adams 2009).

Certainly, reform efforts were driven overwhelmingly by economic considerations that came to be exemplified by CBO scores. Theodore Marmor (2011) particularly laments the lack of an underlying philosophical debate about justice and fairness, which was the foundation for system reforms in other countries yet was virtually absent from the American debate. As Jill Quadagno (2011) points out, the end result was shaped more by interest group preferences than a focus on reducing the number of uninsured although undeniably the number of Americans without insurance declines significantly. As a result, most potent interest groups gained significant concessions. Nonetheless, health reform, after initially extending state high-risk insurance pools, will significantly limit, or to some extent eliminate, the ability of insurers to take advantage of risk pool segmentation (Chollet 2010). This arguably moves health insurance in America away from the principle of actuarial fairness to the principle of solidarity touted by Deborah Stone, although full social insurance remains elusive (Stone 2009).

It is not surprising that Medicare played a crucial role in the reform of healthcare in America. However, its role was strikingly different from that envisioned by reform proponents who had long hoped for coverage expansion through Medicare or even a full-fledged single-payer system based on Medicare. Instead Medicare served as the Congressional piggy bank to ensure that reform proposals gained the seal of approval from the CBO (Gitterman and Scott 2011). Particularly affected was Medicare Part C, the private managed care component of Medicare, which had significantly expanded since the last round of reforms under the Bush Administration in 2003 (McGuire et al. 2011). However, Medicare Part C has consistently shown its inability to balance the competing goals of increasing choice while curbing costs (McGuire et al. 2011). Nonetheless, about one fourth of all seniors rely on Medicare Advantage for their coverage (Gitterman and Scott 2011), which raised the potential for political conflict and partisan politics that Republicans were more than willing to exploit. Their endeavors were supported by a significant information gap for senior citizens that created an environment of fear and confusion (Gitterman and Scott 2011).

Public opinion played a crucial role in the debate about health reform. Mollyann Brodie and her colleagues (2010) tracked the changes in public opinion during the health reform debate and found that it closely mirrored those of the past: a vast majority of the public supported many of the provisions of reform with specific opposition to certain provisions. Perceptions of the public were shaped by partisan polarization, distrust of government, and most importantly, the implications for the individual. Not surprisingly, Daniel Kahneman and Amos Tversky’s (1984) proposition that losses far outweigh equivalent gains was yet again confirmed in the debate surrounding health reform as individuals showed a particular unwillingness for personal sacrifices (Brodie et al. 2010). This finding is further supported by Brady and Kessler (2010a) who utilize contingent valuation based on an Internet survey to account for the interactive effects among various demographic factors in the support for health reform in the forms of Medicaid expansion or subsidies for private coverage. Their findings point to the dominant factor of income, which overshadows all other explanatory factors even at relatively low economic levels. Moreover, and equally unsurprising, Brady and Kessler find that older individuals are distinctively biased against major changes to the status quo.

It is also remarkable how quietly the goal shifted from universal to near-universal coverage during the debate about enactment. As a result, the ACA leaves a significant number of individuals without coverage and viable solutions will have to be developed in the future (Hall 2011). By design undocumented immigrants are excluded from directly benefiting and there is concern that their health situation could actually have been impaired by the ACA (Zuckerman et al. 2011). Yet despite its title, there also remain considerable questions whether the ACA is really making care affordable for everyone else particularly those individuals above the Medicaid and CHIP thresholds between 200 and 300 percent FPL (Gruber and Perry 2011). The impact of medical debt has been well-documented (Robertson et al. 2008; Himmelstein et al. 2009) yet there was remarkably little debate about the concept of affordability in official deliberations during the reform efforts. However, recently a lively debate about the essential meaning of affordability has presented a variety of diverse methodologies including expert opinions (Muennig et al. 2011), budget- and expenditure-based approaches (Gruber and Perry 2011; Gruber and Seif 2009), insurance pick-up (Gruber and Seif 2009), comparisons between state CHIP programs (Gresenz et al. 2011), fair equality of opportunity (Saloner and Daniels 2011), reasonable trade-offs (see Saenz 2010), and public deliberation (Cook 2011). It appears that the only consensus is that there is no consensus. The question arises whether the ACA was the best possible outcome. Elizabeth McGlynn and her colleagues (2010) utilize the RAND COMPARE Microsimulation Model to evaluate the ACA against a variety of reforms come to the conclusion that most of the other proposal that would have provided more universal coverage were simply unacceptable politically.

Overall, the changes initiated by the ACA are far from the cataclysmic proportions alleged by its opposition. Instead, it largely builds on the existing American healthcare system, only slightly increasing the government’s role while increasing the overall size of the system (Grogan 2011) and using delegation extensively (Morgan and Campbell 2011). It is a system built on the historic combination of joint public and private funding and provision that relegates the assertions of a government takeover into the realm of myth (Grogan 2011). Timothy Jost (2011) instead turns his attention to those aspects of the law that have largely escaped public and political scrutiny including the delegation of vast Congressional powers to the executive, the severe limitations on judicial review, and the questionable impact on the separation of powers.

The extensive use of delegation also means that the battle for reform will continue long after the ACA was signed into law by President Obama. Even under ideal circumstances, it will take years for the ACA to be fully implemented. This cooperative, long-term approach creates a number of vulnerabilities for the ACA. The federalist approach to implementation creates multiple venues for special interests gradually to chip away at the various provisions of the ACA. It has been well established that not all societal interests are granted equal access to the policy making process (Schattschneider 1975). However, the disparity may be particularly striking in the healthcare sector as David Lowery and his colleagues (2009) have shown in their analysis of Health PACs and lobbying in the states. They report that two thirds of all health-related PACs are created by direct care providers and 15 percent are attached to drug and medical device manufacturers while a meager 1 percent belongs to advocacy groups. Moreover, they find that lobbying and PAC contributions are inherently interrelated. Over time, this imbalance and others may accumulate to significant changes to the policy envisioned by Congress, particularly with regard to the redistributional components of reform (Skocpol 2010). As the case of Louisiana’s public hospital system after Hurricane Katrina shows, entrenched interests will continue to play a significant role in shaping the implementation of reform and will utilize their resources to their advantage (Clark 2010). Ultimately, each venue provides the potential for political opposition to stir up public debate and further damage already low public approval ratings of the reform effort (Kersh 2011).

There is reason for cautious optimism about the ability and willingness of states to cooperate with both the federal government and other states to implement health reform successfully. The ACA also creates national standards, a floor for what is acceptable, and allows willing states to expand significantly on this foundation (Greer 2011). The significant federal financial support will facilitate the ability of states to focus on implementation, administration, and experimentation (Greer 2011). Congress also included various fallback options in the legislation that assign powers to the federal government in case states fail to follow through adequately in tasks such as creating health insurance exchanges and high-risk insurance pools. As the experience with high-risk insurance pools has shown, this was a prudent decision (Nichols 2010). Moreover, a significant amount of regulatory authority has been assigned to the Secretary of Health and Human Services accompanied by $1 billion in appropriations for implementation activities (McDonough 2011). By one count the phrase “the secretary shall” occurs 1,563 times in the ACA (Morone 2011). Especially crucial for the ACA will be the early trajectory of implementation efforts (Martin and Keenan 2011). It is hence not surprising that the federal government has issued a significant number of rules ahead of schedule (Kersh 2011).

While Skocpol’s (2010) assertion that Democrats deliberately frontloaded many of the most positive aspects of health reform in order to create a lock-in effect with supportive constituencies may be correct, they undeniably pale in comparison to the major coverage expansions in 2014 through Medicaid and the exchanges. Moreover, implementation may be particularly jeopardized by the failure to provide adequate funding for a wide variety of provisions of the ACA and appropriations might become entangled in partisan fights in Congress (Iglehart 2010; Kersh 2011; McDonough 2011). As many scholars rightfully point out, the ACA remains vulnerable and the prospects for many of the provisions if not the entire law hence remain uncertain (see Jacobs and Skocpol 2011; McDonough 2011; Starr 2011).

Gaps and Future Research

Much has been written about health reform before, during, and after the Affordable Care Act, yet a few issues certainly deserve further research. Particularly, empirical evidence of the role of health reform in the 2010 elections would increase our understanding of electoral accountability. Moreover, the impact of the ACA on the 2012 presidential and Congressional elections should provide a fruitful opportunity for study. Obviously, the influence of the Tea Party movement on the debate about health reform also calls for more research. We should also evaluate what this latest chapter in the long history of health reform efforts does to further our understanding of theories of and in the policy process. Moreover the implementation in the states, resulting from an exogenous shock, will provide excellent opportunities not only for students of health policy but state politics in general. This should include a focus on the potential difference between action and rhetoric. Finally, should the ACA be repealed by either courts or Congress, or at least significant portions of it, this would create an interesting juncture in the future of American health policy much surpassing the infamous Medicare Catastrophic Coverage Act of 1988. Of particular interest would be what would happen to the implementation efforts already initiated by the states and the national government, let alone the future of health reform and the American health care system in general.


I would like to thank Dave Weimer, Deven Carlson, Kathryn Chylla, and the anonymous reviewer for comments on an earlier draft of this essay. Their comments and suggestions undoubtedly improved the quality of this essay.

1 More recent writings of Jacobs (2011) are perhaps less enthusiastic and show more concerns for potential revisions. 

2 The Kaiser Health Tracking Poll by the The Henry J. Kaiser Family Foundation provides more detailed insights. It is available at 

3 Various scholars also provide their own lists including Altman and Shactman (2011) and McDonough (2011)

4 Weimer and his colleagues also provide an innovative and thought-provoking solution to the shortage of kidney transplants through commodification (Rosen et al. 2011).


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