A market approach to better care at lower cost.

The Affordable Care Act expanded health insurance coverage in the United States but did little to address the structural problems that plague the U.S. health care system. Controlling cost while maintaining or improving access to quality care requires a more fundamental reform based on market principles. Such an approach means aligning the financial incentives of patients and providers to promote smarter spending. It also requires better information and more flexible regulation to promote well-functioning competitive markets. Key elements of these reforms include setting reasonable limits on subsidies for Medicare, Medicaid, and private health insurance; modernizing the Medicare program and adopting reforms that promote competition between traditional Medicare and Medicare Advantage; allowing greater flexibility for states in running their Medicaid programs; enacting smarter regulations to protect consumers without imposing greater inefficiency on the health market; and promoting more direct consumer involvement in all phases of their health and health care. These changes will challenge academic medical centers as a new era of creativity and competition emerges in the health care market.