Health Reform Passed Because Lawmakers Trust Young Entrepreneurs

In his recent two-part series, Jacob Shmukler offers a bleak forecast for the Patient Protection and Affordable Care Act (PPACA). The first article claims that expanding Medicaid will mean low-quality care for more Americans and the second argues the PPACA will increase health care spending. If these dire predictions transpire, the health care system of our children will be worse than the one enjoyed/suffered now. Thankfully, though, the health care system of the future won’t be this bad. The reason for optimism? 20-something entrepreneurs.

The health system will improve if entrepreneurs can develop solutions to old problems like misaligned provider incentives and inconsistent patient compliance, and the looming challenges related to chronic disease management in large populations. Few tackle these issues now because powerful stakeholders including payers and providers are invested in the status quo.

But the status quo is primed for change. This change will come because the PPACA and related legislation like the Health Information Technology for Economic and Clinical Health Act (HITECH) empower entrepreneurs interested in changing the health care system with useful tools and attractive market conditions. In addition to these incentives for entrepreneurs of all ages, the PPACA also provides unique encouragement for the next generation of health business people.

Among the tools useful for all entrepreneurs provided by the PPACA and HITECH acts are new incentives for adoption of health information technology (HIT). Increased provider “meaningful use” of HIT will mean more data about more patients. This electronic health care information boon will allow innovators to design improved e-applications to increase access, improve quality, and decrease costs. This might mean large-scale electronic solutions like user-friendly health record databases for accountable care organizations, or smaller applications like Twitter-based platforms for tracking patient behavior.

Another key change to the health care system delivered by reform legislation is market uncertainty. Simply, no one knows exactly what effects these laws will have. For example, some predict the PPACA will cause employer-based health insurance to collapse. Others disagree. What is clear though is that there will be winners and losers. Those that make the right moves will reap rewards and those that misstep will suffer. These high-risk/reward market conditions will attract entrepreneurs and venture capital and boost the pace of health care innovation.

There are several reasons to be especially optimistic about the new generation of entrepreneurs. Specifically, the law allows dependent children to remain covered by parents’ health insurance plans until age 26. By extending this cushion of health insurance, the law removes a significant barrier to entrepreneurship. Now, instead of scrambling to find a job with benefits immediately after college, 20-somethings can focus on raising funds for their health care startup.

20-something entrepreneurs that have grown up using computers will find uses for increasing amounts of electronic health care information and will be attracted to the rewards available for successful health care innovators, but they are uniquely encouraged to participate in improving the health care system by the extension of parental health insurance coverage. This shows that the lawmakers behind the PPACA and related legislation trust entrepreneurs - particularly young entrepreneurs - to improve the health care system status quo. Though the amount these innovators will improve provider quality or decrease health care spending remains uncertain, reform legislation has improved their chances of success and therefore deserves praise.

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