Executive Summary

The move to the cloud is one of the defining information technology trends of the early 21st century. By providing businesses, universities, government agencies, and other entities with access to shared and often physically dispersed computing resources, cloud computing can simultaneously offer increased flexibility, reduced cost, and access to a wider array of services.

Cloud computing has also created a set of new challenges. For example, the issues of privacy and security in the cloud are well recognized and have been extensively discussed in the business and popular press. However, one critical issue that has received very little attention with respect to cloud computing is export control.

In the broadest sense, export control relates to regulations that the United States and many other countries have put in place to restrict the export of various sensitive items, information, and software.

There is an inherent tension between cloud computing and export control. While the concept of the cloud is centered on the premise of removing the need to track the details of data movement among various destinations, export control regulations are built largely around restrictions tied to those very movements.

If cloud computing is to reach its full potential, it is critical for providers and users of cloud services to address its implications with respect to export control. It is equally important to adapt the export control regulations to reflect the increasing prevalence of cloud computing in a manner that preserves the ability of American companies to benefit from the efficiencies of the cloud while also ensuring that American national security and foreign policy interests are adequately protected.

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For decades, we have been hearing that the baby-boom generation was like a pig moving through a python–bigger than the generations before and after.

That’s true. But that’s also a very misleading metaphor for understanding the demographic forces that are driving up federal spending: They aren’t temporary. The generation born between 1946 and 1964 is the beginning of a demographic transition that will persist for decades after the baby boomers die, the consequence of lengthening lifespans and declining fertility. Putting the federal budget on a sustainable course requires long-lasting fixes, not short-lived tweaks.  

First, a few demographic facts.

As the chart below illustrates, there was a surge in births in the U.S. at the end of World War II, a subsequent decline, and then an uptick as baby boomers began having children.

Although the population has been rising, the number of births in the U.S. the past few years has been below the peak baby-boom levels, possibly because many couples chose not to have children during bad economic times. More significant, fertility rates–roughly the number of babies born per woman during her lifetime–have fallen well below pre-baby-boom levels.

Meanwhile, Americans are living longer. In 1950, a man who made it to age 65 could expect to live until 78 and a woman until 81. Social Security’s actuaries project that a man who lived to age 65 in 2010 will reach 84 and a woman age 86.

Put all this together, and it’s clear that a growing fraction of the U.S. population will be 65 or older.   

The combination of longer life spans and lower fertility rates means the ratio of elderly (over 65) to working-age population (ages 20 to 64) is rising. As the chart below illustrates, the ratio will rise steadily as more baby boomers reach retirement age–and then it levels off.  

Simply put, this doesn’t look like a pig in a python.  

So what do these demographic facts portend for the federal budget?  In simple dollars and cents, the federal government spends more on the old than the young. More older Americans means more federal spending on Social Security and Medicare, the health insurance program for the elderly. On top of that, health care spending per person is likely to continue to grow faster than the overall economy.

The net result: 85 percent of the increase in federal spending that the Congressional Budget Office projects for the next 10 years, based on current policies, will go toward Social Security, Medicare and other major federal health programs, and interest on the national debt.

Restraining future deficits and the size of the federal debt mean restraining spending on these programs or raising taxes–and probably both. One-time savings or minor tweaks won’t suffice. Nor will limiting the belt-tightening to annually appropriated spending.

The fundamental fiscal problem is not coping with the retirement of the baby boomers and then going back to budgets that resemble those of the past. The fundamental fiscal problem is that retirement of the baby boomers marks a major demographic transition for the nation, one that will require long-lived changes to benefit programs and taxes.

In last Thursday’s GOP debate, Marco Rubio, Ted Cruz, Jeb Bush and Chris Christie managed to avoid mentioning their common proposal to “reform entitlements” by raising the Social Security retirement age from 67 to 70. That was probably a good idea. Their proposal only demonstrates their lack of understanding about the demographics of older Americans, especially the dramatic disparities in their life expectancy associated with education and race. Recent research on life expectancy indicates that their proposed change would effectively nullify Social Security for millions of Americans and sharply limit benefits for many millions more.. While many people in their 30s and 40s today can look forward to living into their 80s, the average life expectancy for the majority of Americans who do not hold a college degree hovers closer to 70, or the average life expectancy for all Americans in 1950.

The Widening Inequalities in the Life Spans of Americans

This research, summarized recently in a study published in Health Affairs, found that life expectancy for various age cohorts of Americans is closely associated with both educational achievement and race. For example, the average life expectancy for college-educated American men who were age 25 in 2008, or age 33 today, is 81.7 years for whites and 78.2 years for blacks. (Table 1, below) By contrast, the projected, average life span of high-school educated males, also age 25 in 2008 or 33 today, is 73.2 years for whites and 69.3 years for blacks. Women on average live longer than men; but similar disparities based on education and race are evident. The average life expectancy of women age 25 in 2008, or 33 years old today, was 79 years for whites and 75.4 years for blacks for those with a high school diploma, and 84.7 years for whites and 81.6 years for blacks with college degrees. Most disturbing, the average life expectancy of Americans age 25 in 2008 without a high school diploma is just 68.6 years for white men, 68.2 years for black men, 74.2 years for white women, and 74.9 years for black women. Surprisingly, the researchers found that Hispanics in this age group have the longest life expectancies, even though they also have the lowest average levels of education. Since these data are anomalous and may reflect sampling problems, we will focus mainly on the life-expectancy gaps between African American and white Americans.

Tallying How Many People Are Adversely Affected

Census data on the distribution by education of people age 25 to 34 in 2010 (ages 30 to 39 in 2015) provide a good estimate of how many Americans are adversely affected by these growing differences. Overall, 56.3 percent of all Americans currently in their 30s fall are high school graduates or left school without a high school diploma, educational groups with much lower average life expectancies. (Table 2, below) More precisely, 10.1 percent or almost 4.8 million Americans in their 30s today lack a high school diploma, and 46.2 percent or 18.9 million thirty-somethings have high school diplomas and no further degrees. All told, they account for 23,702,000 Americans in their 30s; and among older Americans, the numbers and percentages are even higher.

Since race as well as education are major factors associated with differences in life expectancy, we turn next to education by race (Table 3, below). The totals differ modestly from Table 2, because Census data on education by race cover ages 30-39 in 2014, while Table 2 covers age 30-39 in 2015 (ages 25-34 in 2010).

• Among people in their 30s today, 45.4 percent of whites or 10,613,000 Americans have a high school degree or less – and their average life expectancy is 9.4 years less than whites in their 30s with a college or associate degree.
• Among people in their 30s todays, 64.4 percent of blacks or 3,436,000 Americans have a high school degree or less – and their life expectancy is 8.6 years less than blacks in their 30s with an B.A. or associate degree, and 11.6 years less than whites with a college or associate degree..
• Among people in their 30s today, 75.6 percent of Hispanics or 6,243,000 Americans have a high school degree or less – and their life expectancy is 5.0 years less than Hispanics in their 30s with a college or associate degree.

As a policy matter, these data tell us that across all communities—white, black, Hispanic—improvements in secondary education to prepare everyone for higher education, and lower-cost access to higher education, can add years to the lives of millions of Americans.

Preserving Meaningful Access to Social Security Benefits

The widening inequalities in average life expectancy associated with race and education have more direct policy implications for Social Security, because the number of years that people can claim its benefits depends on their life spans. The growing inequalities in life expectancy translate directly into growing disparities in the years people can claim Social Security benefits, based on their education and race. Assuming that Americans in their 30s today retire at age 67 (the age for full benefits for this age group), they can expect to claim retirement benefits, on average, ranging from 1.2 years to 19.3 years, based on their education and race. (Table 4, below)

The most pressing issues of life expectancy and Social Security involve white males, black males, and black females without college degrees: Among Americans age 33 today, white and black men without high school diplomas and black males with high school degrees, on average, can expect to live long enough to collect benefits for less than three years. Similarly, white and black women without high school diplomas and black women with high school degrees, on average, can expect to collect benefits for less than eight years. Together, they account for 25.2 percent of whites and 64.4 percent of blacks in their 30s today. By contrast, male and female white college graduates age 33 today, on average, can expect to collect Social Security for between 14.7 and 17.7 years, respectively; and 33-year old black men and women with college degrees, on average, will claim benefits for 11.2 to 14.6 years, respectively.

These findings dictate that proposals to raise the Social Security retirement age should be rejected as a matter of basic fairness. Among this year’s presidential hopefuls, as noted earlier, Ted Cruz, Marco Rubio, Jeb Bush and Chris Christie all have called for raising the retirement age to 70 years. Under this policy, black men in their 30s today without a college degree and white men now in their 30s without a high school diploma, on average, would not live long enough to collect any Social Security. The change would reduce the average number of years of Social Security for Americans in their 30s today,

• From 1.6 years to -1.4 years for white men with no high school diploma,
• From 1.2 years to -1.8 years for black men with no high school diploma, and
• From 2.3 years to – 0.7 years for black, male high-school graduates.

Furthermore, among Americans in their 30s today, white and black women without a high school diploma, white male high school graduates, and black female high school graduates, would live long enough, on average, to collect Social Security for just 3.2 to 5.4 years. The GOP change reduce the average number of years of Social Security for Americans in their 30s today,

• From 6.2 years to 3.2 years for white, male high school graduates,
• From 7.2 years to 4.2 years for white women with no high school diploma,
• From 7.9 years to 4.9 years for black women with no high school diploma, and
• From 8.4 years to 5.4 years for black, female high-school graduates.

All told, proposals to raise the retirement age to 70 years old would mean, based on the average life expectancy of Americans in their 30s today, that 25.2 percent of whites in their 30s and 64.4 percent of blacks of comparable age, after working for 35 years or more, would receive Social Security benefits for 5.4 years or less.

Gary Burtless, a senior fellow in Economic Studies, explains new research on the growing longevity gap between high-income and low-income Americans, especially among the aged.

“Life expectancy difference of low income workers, middle income workers, and high income workers has been increasing over time,” Burtless says. “For people born in 1920 their life expectancy was not as long typically as the life expectancy of people who were born in 1940. But those gains between those two birth years were very unequally distributed if we compare people with low mid-career earnings and people with high mid-career earnings.” Burtless also discusses retirement trends among the educated and non-educated, income inequality among different age groups, and how these trends affect early or late retirement rates.

Also stay tuned for our regular economic update with David Wessel, who also looks at the new research and offers his thoughts on what it means for Social Security.

Show Notes

Later retirement, inequality and old age, and the growing gap in longevity between rich and poor

Disparity in Life Spans of the Rich and the Poor Is Growing

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Researchers have long known that the rich live longer than the poor. Evidence now suggests that the life expectancy gap is increasing, at least here the United States, which raises troubling questions about the fairness of current efforts to protect Social Security.

There's nothing particularly mysterious about the life expectancy gap. People in ill health, who are at risk of dying relatively young, face limits on the kind and amount of work they can do. By contrast, the rich can afford to live in better and safer neighborhoods, can eat more nutritious diets and can obtain access to first-rate healthcare. People who have higher incomes, moreover, tend to have more schooling, which means they may also have better information about the benefits of exercise and good diet.

Although none of the above should come as a surprise, it's still disturbing that, just as income inequality is growing, so is life-span inequality. Over the last three decades, Americans with a high perch in the income distribution have enjoyed outsized gains.

Using two large-scale surveys, my Brookings colleagues and I calculated the average mid-career earnings of each interviewed family; then we estimated the statistical relationship between respondents' age at death and their incomes when they were in their 40s. We found a startling spreading out of mortality differences between older people at the top and bottom of the income distribution.

For example, we estimated that a woman who turned 50 in 1970 and whose mid-career income placed her in the bottom one-tenth of earners had a life expectancy of about 80.4. A woman born in the same year but with income in the top tenth of earners had a life expectancy of 84.1. The gap in life expectancy was about 3½ years. For women who reached age 50 two decades later, in 1990, we found no improvement at all in the life expectancy of low earners. Among women in the top tenth of earners, however, life expectancy rose 6.4 years, from 84.1 to 90.5. In those two decades, the gap in life expectancy between women in the bottom tenth and the top tenth of earners increased from a little over 3½ years to more than 10 years.

Our findings for men were similar. The gap in life expectancy between men in the bottom tenth and top tenth of the income distribution increased from 5 years to 12 years over the same two decades.

Rising longevity inequality has important implications for reforming Social Security. Currently, the program takes in too little money to pay for all benefits promised after 2030. A common proposal to eliminate the funding shortfall is to increase the full retirement age, currently 66. Increasing the age for full benefits by one year has the effect of lowering workers' monthly checks by 6% to 7.5%, depending on the age when a worker first claims a pension.

For affluent workers, any benefit cut will be partially offset by gains in life expectancy. Additional years of life after age 65 increase the number years these workers collect pensions. Workers at the bottom of the wage distribution, however, are not living much longer, so the percentage cut in their lifetime pensions will be about the same as the percentage reduction in their monthly benefit check.

Our results and other researchers' findings suggest that low-income workers have not shared in the improvements in life expectancy that have contributed to Social Security's funding problem.

It therefore seems unfair to preserve Social Security by cutting future benefits across the board. Any reform in the program to keep it affordable should make special provision to protect the benefits of low-wage workers.

Editor's note: This piece originally appeared in The Los Angeles Times. 

Editor's note: On March 1, Alice Rivlin testified before the U.S. House of Representatives Committee on Energy and Commerce Subcommittee on Health on the financing and delivery of long-term care in the US. 

Chairman Pitts, Ranking Member Green: I am happy to be back before this Subcommittee, which is never afraid to take on complex issues of great importance to millions of Americans. I have worked on long-term services and supports (LTSS) for a long time and have recently had the privilege of co-chairing the Long-Term Care Initiative at the Bipartisan Policy Center (along with former Senators Bill Frist and Tom Daschle and former Governor and Secretary of Health and Human Services, Tommy Thompson). Our February 2016 report, Initial Recommendations to Improve the Financing of Long-Term Care, appended to my testimony, outlines a set of doable, practical changes in both public and private programs that could improve the availability and affordability of long-term services and supports.

I don’t need to remind this committee that Americans are living longer, and many of us will need help with the ordinary activities of daily living and suffer cognitive impairments that make it dangerous for us to cope alone. The number of people needing LTSS is rising and expected to double in the next 35 years or so.

Responsibility for LTSS is shared among seniors and people with disabilities themselves, family, friends, and volunteer care-givers; communities, state, and federal government. This shared-responsibility system is severely stressed, and will become increasingly unable to cope as the numbers needing care increase. Growing burdens fall on families, often daughters and daughters-in-law, who must manage daily conflicts between earning a living, caring for children, and meeting the needs of elderly or disabled relatives. Growth in Medicaid, the largest payer of long-term services and supports at about $123 billion per year, stresses state and federal budgets as spending for older Americans and individuals with disabilities competes with budgets for education and other investments in young people.

Many efforts to find a comprehensive solution to long-term care financing have failed—evidenced by passage and subsequent repeal of the Community Living Assistance Services and Supports (CLASS) Act and failure of the federal Long-term Care Commission to reach consensus on financing recommendations. Recently, however, a growing consensus has emerged around a set of incremental steps, which, if taken together could greatly improve the availability and affordability of long-term services and supports to America’s most vulnerable populations and take some of the burden off families and Medicaid in a fiscally responsible way. In recent weeks, The Bipartisan Policy Center and The Long-term Care Collaborative have offered similar sets of recommendations, as has LeadingAge, a key provider association.

While policymakers failed to agree on big legislative solutions, amazing progress has been made at the community level in finding new ways of keeping older Americans and people with disabilities out of institutions and in the community where they are happier and less isolated and can be served more effectively and cheaper. There has been an explosion of assisted living facilities, continuing care communities, senior villages, senior centers, senior daycare, and use of home health aides of various sorts. Growth in home and community-based services (HCBS) has been rapid, while the population served by traditional nursing homes has been virtually flat. Medicaid, with the support of both parties in Congress, has moved to increase the availability of home and community-based services.

The group working on the Bipartisan Policy Center’s Long-Term Care Initiative addressed the question: Is there a set of practical policies that could command bipartisan support that would improve the care of older Americans with disabilities, take significant pressure off families and Medicaid, and not break the bank? We came up with four proposals.

Make private long-term care insurance more affordable and available. Long term care ought to be an insurable risk. If more people bought Long-Term Care Insurance (LTCI) in their earning years, there would be less pressure on their savings and family resources and Medicaid when they became disabled. But both demand and supply of LTCI are weak and falling. Potential customers are reluctant to buy because it is costly and the need seems remote and hard to think about. Carriers find it difficult to price a product that will be used far in the future and fear losing money if customers live and use services for a long time. Many insurance companies have stopped offering LTCI.

Our report recommends developing a new type of private insurance product: “retirement long-term care insurance,” which would cover long-term care for a limited period (2-4 years) after a substantial deductible or waiting period and would have coinsurance. The insurance would provide inflation protection, which helps to ensure benefits keep pace with the rising costs of care, and a non-forfeiture benefit, which allows lapsed policyholders to access a limited benefit. Employers would be encouraged to offer such policies as a default option as part of a retirement plan. These policies, if offered through employers and public and private insurance exchanges, could cut premiums in half according estimates done by Milliman, LLC, for the Bipartisan Policy Center and other organizations. Penalty-free withdrawals would be allowed from retirement plans, such as 401(k) plans and IRAs, beginning at age 45, exclusively for the purchase of retirement LTCI.

Design a federal long-term care insurance option for those with catastrophic costs. Part of the reluctance of carriers to offer LTCI relates to the difficulty of predicting costs far in the future and the fact that a few policy holders may have extremely high costs for a very long time. A public program, covering truly catastrophic long-term care spending, could overcome this reluctance and reduce the cost of private LTCI. Catastrophic insurance, combined with retirement LTCI from the private market, could substantially relieve families and Medicaid. The cost of this program should be fully offset so as not to add to the deficit.

Streamline Medicaid home and community-based care options to encourage more effective care in lower-cost settings. While Congress has been proactive in encouraging state Medicaid programs to shift care settings from institutions to home and community-based care, states continue to face a daunting federal waiver process and multiple state options. Securing waivers requires complex negotiations between states and the federal government, and each of the existing state options have disincentives. Home and community-based options should be simplified into a single streamlined state plan amendment process.

Ensure that working people with disabilities in need of long-term services and supports do not lose access to their long-term services and supports as earnings increase. Individuals with modest employment incomes risk losing access to services that permit them to remain on the job. Existing Medicaid “buy-in” programs are often costly. Building on the “Achieving a Better Life Experience,” or “ABLE” Act, states could be given the option to offer a lower-cost, Medicaid buy-in for long-term services and supports designed to “wrap around” private health insurance or Medicare. Under this option, working individuals with disabilities would pay an income-related, sliding-scale premium.

Mr. Chairman and members of the Committee, thank you again for the opportunity to share my thoughts on this issue. It is one of America’s big challenges, but it’s an even bigger opportunity for a constructive bipartisan policy process. I look forward to continued dialogue and will keep you apprised of forthcoming recommendations by BPC’s Long-Term Care Initiative in 2016 and 2017.

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Health reform (aka Obamacare) is entering a new stage. The recent announcement by United Health Care that it will stop selling insurance to individuals and families through most health insurance exchanges marks the transition. In the next stage, federal and state policy makers must decide how to use broad regulatory powers they have under the Affordable Care Act (ACA) to stabilize, expand, and diversify risk pools, improve local market competition, encourage insurers to compete on product quality rather than premium alone, and promote effective risk management. In addition, insurance companies must master rate setting, plan design, and network management and effectively manage the health risk of their enrollees in order to stay profitable, and consumers must learn how to choose and use the best plan for their circumstances.

Six months ago, United Health Care (UHC) announced that it was thinking about pulling out of the ACA exchanges. Now, they are pulling out of all but a “handful” of marketplaces. UHC is the largest private vendor of health insurance in the nation. Nonetheless, the impact on people who buy insurance through the ACA exchanges will be modest, according to careful analyses from the Kaiser Family Foundation and the Urban Institute. The effect is modest for three reasons. One is that in some states UHC focuses on group insurance, not on insurance sold to individuals, where they are not always a major presence. Secondly, premiums of UHC products in individual markets are relatively high. Third, in most states and counties ACA purchasers will still have a choice of two or more other options. In addition, UHC’s departure may coincide with or actually cause the entry of other insurers, as seems to be happening in Iowa.

The announcement by UHC is noteworthy, however. It signals the beginning for ACA exchanges of a new stage in their development, with challenges and opportunities different from and in many ways more important than those they faced during the first three years of operation, when the challenge was just to get up and running. From the time when HealthCare.Gov and the various state exchanges opened their doors until now, administrators grappled non-stop with administrative challenges—how to enroll people, helping them make an informed choice among insurance offerings, computing the right amount of assistance each individual or family should receive, modifying plans when income or family circumstances change, and performing various ‘back office’ tasks such as transferring data to and from insurance companies. The chaotic first weeks after the exchanges opened on October 1, 2013 have been well documented, not least by critics of the ACA. Less well known are the countless behind-the-scenes crises, patches, and work-arounds that harried exchange administrators used for years afterwards to keep the exchanges open and functioning.

The ACA forced not just exchange administrators but also insurers to cope with a new system and with new enrollees. Many new exchange customers were uninsured prior to signing up for marketplace coverage. Insurers had little or no information on what their use of health care would be. That meant that insurers could not be sure where to set premiums or how aggressively to try to control costs, for example by limiting networks of physicians and hospitals enrollees could use. Some did the job well or got lucky. Some didn’t. United seems to have fallen in the second category. United could have stayed in the 30 or so state markets they are leaving and tried to figure out ways to compete more effectively, but since their marketplace premiums were often not competitive and most of their business was with large groups, management decided to focus on that highly profitable segment of the insurance market. Some insurers, are seeking sizeable premium increases for insurance year 2017, in part because of unexpectedly high usage of health care by new exchange enrollees.

United is not alone in having a rough time in the exchanges. So did most of the cooperative plans that were set up under the ACA. Of the 23 cooperative plans that were established, more than half have gone out of business and more may follow. These developments do not signal the end of the ACA or even indicate a crisis. They do mark the end of an initial period when exchanges were learning how best to cope with clerical challenges posed by a quite complicated law and when insurance companies were breaking into new markets. In the next phase of ACA implementation, federal and state policy makers will face different challenges: how to stabilize, expand, and diversify marketplace risk pools, promote local market competition, and encourage insurers to compete on product quality rather than premium alone. Insurance company executives will have to figure out how to master rate setting, plan design, and network management and manage risk for customers with different characteristics than those to which they have become accustomed.

Achieving these goals will require state and federal authorities to go beyond the core implementation decisions that have absorbed most of their attention to date and exercise powers the ACA gives them. For example, section 1332 of the ACA authorizes states to apply for waivers starting in 2017 under which they can seek to achieve the goals of the 2010 law in ways different from those specified in the original legislation. Along quite different lines, efforts are already underway in many state-based marketplaces, such as the District of Columbia, to expand and diversify the individual market risk pool by expanding marketing efforts to enroll new consumers, especially young adults. Minnesota’s Health Care Task Force recently recommended options to stabilize marketplace premiums, including reinsurance, maximum limits on the excess capital reserves or surpluses of health plans, and the merger of individual and small group markets, as Massachusetts and Vermont have done.

In normal markets, prices must cover costs, and while some companies prosper, some do not. In that respect, ACA markets are quite normal. Some regional and national insurers, along with a number of new entrants, have experienced losses in their marketplace business in 2016. One reason seems to be that insurers priced their plans aggressively in 2014 and 2015 to gain customers and then held steady in 2016. Now, many are proposing significant premium hikes for 2017.

Others, like United, are withdrawing from some states. ACA exchange administrators and state insurance officials must now take steps to encourage continued or new insurer participation, including by new entrants such as Medicaid managed care organizations (MCOs). For example, in New Mexico, where in 2016 Blue Cross Blue Shield withdrew from the state exchange, state officials now need to work with that insurer to ensure a smooth transition as it re-enters the New Mexico marketplace and to encourage other insurers to join it. In addition, state insurance regulators can use their rate review authority to benefit enrollees by promoting fair and competitive pricing among marketplace insurers. During the rate review process, which sometimes evolves into a bargaining process, insurance regulators often have the ability to put downward pressure on rates, although they must be careful to avoid the risk of underpricing of marketplace plans which could compromise the financial viability of insurers and cause them to withdraw from the market. Exchanges have an important role in the affordability of marketplace plans too. For example ACA marketplace officials in the District of Columbia and Connecticut work closely with state regulators during the rate review process in an effort to keep rates affordable and adequate to assure insurers a fair rate of return.

Several studies now indicate that in selecting among health insurance plans people tend to give disproportionate weight to premium price, and insufficient attention to other cost provisions—deductibles and cost sharing—and to quality of service and care. A core objective of the ACA is to encourage insurance customers to evaluate plans comprehensively. This objective will be hard to achieve, as health insurance is perhaps the most complicated product most people buy. But it will be next to impossible unless customers have tools that help them take account of the cost implications of all plan features and report accurately and understandably on plan quality and service. HealthCare.gov and state-based marketplaces, to varying degrees, are already offering consumers access to a number of decision support tools, such as total cost calculators, integrated provider directories, and formulary look-ups, along with tools that indicate provider network size. These should be refined over time. In addition, efforts are now underway at the federal and state level to provide more data to consumers so that they can make quality-driven plan choices. In 2018, the marketplaces will be required to display federally developed quality ratings and enrollee satisfaction information. The District of Columbia is examining the possibility of adding additional measures. California has proposed that starting in 2018 plans may only contract with providers and hospitals that have met state-specified metrics of quality care and promote safety of enrollees at a reasonable price. Such efforts will proliferate, even if not all succeed.

Beyond regulatory efforts noted above, insurance companies themselves have a critical role to play in contributing to the continued success of the ACA. As insurers come to understand the risk profiles of marketplace enrollees, they will be better able to set rates, design plans, and manage networks and thereby stay profitable. In addition, insurers are best positioned to maintain the stability of their individual market risk pools by developing and financing marketing plans to increase the volume and diversity of their exchange enrollments. It is important, in addition, that insurers, such as UHC, stop creaming off good risks from the ACA marketplaces by marketing limited coverage insurance products, such as dread disease policies and short term plans. If they do not do so voluntarily, state insurance regulators and the exchanges should join in stopping them from doing so.

Most of the attention paid to the ACA to date has focused on efforts to extend health coverage to the previously uninsured and to the administrative stumbles associated with that effort. While insurance coverage will broaden further, the period of rapid growth in coverage is at an end. And while administrative challenges remain, the basics are now in place. Now, the exchanges face the hard work of promoting vigorous and sustainable competition among insurers and of providing their customers with information so that insurers compete on what matters: cost, service, and quality of health care.

Editor's note: This piece originally appeared in Real Clear Markets. Kevin Lucia and Justin Giovannelli contributed to this article with generous support from The Commonwealth Fund.

In advance of President Obama’s trip to Panama later this week, Brookings experts Richard Feinberg, Ted Piccone, and Harold Trinkunas discuss expectations for the Seventh Summit of the Americas. Obama will arrive holding a strong hand given recent policy changes that have addressed historic obstacles, such as relations with Cuba. However, a slowing regional economy and U.S.-Venezuela tensions may yet cast a shadow over the proceedings.

Read the transcript » (PDF)

Improved United States-Latin America relations

“The United States is going into this next Summit of the Americas in a somewhat improved position compared to the summits in both Cartagena in 2012 and in Trinidad in 2009, where there was a considerable amount of friction among the countries on issues related to Cuba, to counter narcotics policy, to immigration policy. Broadly speaking, I think the Obama administration has done something incredible on each of these fronts, which the countries will recognize and which will help clear the air.”  —Harold Trinkunas

Friction with Venezuela?

“There are 35 countries. At any given time, there's going to be some friction. At the last summit, the Argentines raised the Malvinas issue.  At previous summits, the Bolivians raised the outlets of the sea issue. So there's always a little bit of this. But whether or not [Venezuela] dominates the summit is an issue largely for the Latin Americans to decide. And my guess is the Latin Americans in general will not want to follow Maduro over the cliff. I don't even think that the Cubans will want Maduro to take the summit over the cliff. So therefore, I think we have this sort of tremendous irony in which the country that adds -- that dampens the dissident voices of ALBA will actually be Cuba, because Cuba wanted to demonstrate that it can be a constructive voice in regional diplomacy, that they're not just the force of disruption and therefore, the U.S. all these years was right to keep them out because they would just be disruptive if you let them in. They've already demonstrated they're a mature country that can engage constructively.”  —Richard Feinberg

Dialogue with Cuba

“It's in our interest, U.S. national interest, to have this dialogue process with our close neighbor, Cuba. And to, frankly, bring them back towards the inter-American community, where they've been missing for all these years. [The U.S. rapprochement with Cuba] is also going to raise the question of shifting attention to the role of the rest of the region vis-à-vis Cuba; that it's not just the United States. It's actually the other countries in the hemisphere that could help Cuba come along, as I said, modernize, update its economy, and hopefully at some point, engage more formally in the inter-American system.”  —Ted Piccone

Sub-regional groupings

“This is a much more diverse hemisphere than we saw 20 years ago... In fact, we may see that there's sort of a broad agreement on general themes and then much more sub-regional groupings that work on issues like the Northern Triangle, for example, or Caribbean Energy Security, which was an initiative of the vice president last year.”  —Harold Trinkunas

Summit side events with the private sector and civil society

“You have the leaders representing the executive branches of their governments, but you also have the CEO Summit. Seven hundred corporate executives will be there. There will be interaction between the leaders and the corporate executives...It's indicative of the rise of the private sector and the corporate sector in Latin America as part of a dynamic growing region economically.

Throughout the hemisphere, the acceptance of Civil Society as a concept, as an actor, adds depth to democracy. Democracy is not just elections or that's important, but an active, vibrant Civil Society. And that's what you'll see at the Civil Society meeting. And President Obama personally we're told will interact with Civil Society leaders, as will other leaders present there.”  —Richard Feinberg

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• Media roundtable discussion