In 2010, President Obama enacted into law the Patient Protection and Affordable Care Act (popularly abbreviated as ACA). The ACA also referred to as Obama Health Care (Obama care), is among the most comprehensive reforms in the U.S medical system’s history (Jones 11). The ACA is regarded by many in the United States as a disruptive agency for the non-group insurance sector. The Act requires all American residents provide insurance policies which also plans for the biggest health insurance plan in America to minimise and reorganise expenditures. The Act further seeks to collect money from many avenues of taxes. In the immediate future, the healthcare system is projected to experience a drastic makeover if the ACA is completely introduced (Economic Report of the President 111).
The Congressional Budget Office (CBO) anticipated that by the year 2020, ACA would increase the nationwide health insurance coverage by 32 million people. They, therefore, projected that this would raise the spending by the federal government by almost $1 trillion. However, the federal government would, in the decade, increase revenues and lower expenditure by even more, so the bill would reduce the overall federal budget deficit (Economic Report of the President 112).
The paper explores the effects that Obama Health Care has made over four years since its inception on the lives of American citizens. In spite of the effects of the ACA, the report would also aim into the potential of health care. The argument would often reflect on other topics, such as the impact of the legislation on the economy, who pays for the plan and who is most impacted by the law.
The Affordable Health Care Act
The ACA comprises of a very detailed compilation of legislation that caters for numerous aspects of America’s health care system. According to CBO, United States currently spends about a sixth of its gross domestic product (GDP) on healthcare. With the primary source of insurance coverage being employer-sponsored insurance (ESI), the ACA is seen as a plan to cater for all regardless of age or employment status. Consequently, the ACA is largely intended to cater to the less-attended non-employer insurance market and, as a consequence, to broaden health insurance coverage.
The act outlaws the common discriminatory practices such as consideration of the pre-existing conditions during application of an insurance cover. The legislation also imposes restrictions on the capacity of the insurer to charge differential rates by health or smoking status (Jones 11). Additionally, the law sets the minimum standards set for insurance in the small group and non-group markets, and this includes a list of “essential benefits” that should be included in any insurance package. The act also mandates that it is every individual’s requirement to purchase an insurance cover (Economic Report of the President 121). The government has a responsibility to offer subsidies to make insurance more affordable to lower income families. Under the act, the subsidies are in the forms of Medicaid (caters for the poor) and Medicare (offsets the cost of private non-group insurance) (Economic Report of the President 123).
Effects of ACA on The Healthcare System
ACA‘s reform plan has been playing various roles in its quest to strengthen the U.S. health care system:
- The plan projects to offer quality and affordable health coverage for all American citizens anywhere in the United States.
- It also projects to modernize the health care systems leading to improved quality of services while lowering costs. The act intends to increase competition in the insurance industry to enhance cheaper covers to the citizens (Economic Report of the President 115).
- It also promotes public health while also encouraging prevention. The act aims at improving prevention and management of common chronic conditions.
Health care aims at utilizing health information technology that targets at cutting unnecessary expenditure. According to CBO, this will reduce expenditure on health by a typical family by up to $2500 annually.
Who Does the ACA Affect The Most?
As earlier mentioned, the government, according to the act, offers subsidies to two groups of people in the form of Medicare and Medicaid. Besides, there are other special groups that ACA affects in bigger ways and thus the paper will highlight on two of those groups.
According to the ACA, small businesses with 50 or less full-time employees and who make less than $250,000 will get better access to more affordable and quality insurance covers. Businesses with over 50 full-time employees and those who make over $250, 000 may also be considered under “employer mandate” come 2015. Small businesses with less than 25 full-time employees can receive tax-breaks of up to 2014 if they insure their employees. However, according to critics, this will hinder growth of employment since companies will prefer hiring their workers on a part-time basis to avoid insuring them (Economic Report of the President 122).
The Retirees (Seniors)
According to ACA, there are some changes highlighted that will affect the retirees. The act cuts about $700 billion between 2013 and 2022 and this has an effect to retirees with the traditional Medicare parts A and B. For example, the premium fees have slightly been increased and these upsurge will stay constant until 2017. The seniors should, however, benefit from the free screening services such as diabetes, bone mass density and cervical cancer among others. The free services follow the elimination of deductibles as offered by ACA (Jones 11). The Medicare Advantage plan that covers about 14 million retirees also received a boost after Medicare and Medicaid increased their payment rates to 3.3 percent from 2.2 percent in 2014. This will lead to an increase in benefits and lower the cost of premiums. For people between the ages of 50-64 without ESI coverage, ACA guarantees that they can get insurance policy even if they lose their job or have a pre-existing health condition.
Who Pays for Obama Health Care?
One of the major avenues that have been targeted to finance for the Obama health care reform plan include taxing families that make $250,000 and above annually. The increased taxation will target reducing the families’ mortgage interest deductions and charitable offerings deductions. By lowering the mortgage interest deductions, experts say that the effect will be lower the general value of homes. Another major financing avenue involves cutting Medicare subsidies for private insurers, and this will ultimately affect their shareholders and executives (Navarro 130).
General Implications of ACA
Health Care Costs
Probably the biggest impact of ACA will be on its effect to slowing down the increasing cost of health care (Jones 14). The cost of health is already a point of concern in America, accounting for about 17 percent of GDP and growing. At the start, the ACA will lead to an increase in national health care expenditure, with its peak projected in 2016 at 2 percent. The subsequent years will see a drop to up to about 1 percent in 2019.
However, the insurance coverage will grow more than 32 million people by 2019 under the new law (Jones 13). The ACA will, therefore, boost medical expenditure in the country and by the second decade, it is expected that ACA will lower the national spending on health.
Impact on Premiums
According to CBO, exchanges to premiums will be 10-13 percent higher for non-group insurance market. Additionally, premiums will drop by 7-10 percent largely due to an improved health mix in the market. The premiums are also projected to drop a further 7-10 percent due to lower prices caused by enhanced competition in the field of insurance (Jones 14). Finally, the demand for insurance policies will lead to a rise of between 27-30 percent in the premiums in the non-group market (Economic Report of the President 121).
Increased National Saving
By slowing down the growth of the cost of health, it is expected that the federal government would prevent devastating budgetary consequences. The government incurs a large part of the cost of health and thus, lowering the rate of the costs of health care would consequently lower the budget deficit. The effects of this will be a projected growth of GDP by more than 2 % in 2020 and about 8 % in 2030. It also expected that real income of a typical family will grow by more than $2,600 in 2020 and $10,000 higher in 2030. The rate of unemployment is also expected to get lower.
The ACA is a phenomenal piece of legislation that is expected to reform the U.S. health care industry if fully implemented. It is still quite early to notice or predict its exact measure of impacts, but it is certain that the future looks bright for the America Health Care sector. The major uncertainty, however, lies on how far the ACA will go in slowing down the growth of health care costs.
- Jones, Denecia A. Simple Reader’s Guide to Understanding the Affordable Care Act Health. S.l.: Abbott Press, 2013. Print.
- Navarro, Armando. Global Capitalist Crisis and the Second Great Depression: Egalitarian
- Systemic Models for Change. Lanham: Lexington Books, 2012. Print.
- United States. President; Council of Economic Advisers (U.S.). Economic Report of the President: Transmitted to the Congress February 2011, Together with the Annual Report of the Council of Economic Advisers. Washington D.C.: U.S. G.P.O, 2011. Print