Impact of the Affordable Care Act

Impact of the Affordable Care Act

Introduction

The Patient Protection and Affordable Health Act is-a federal statute in the United States-was signed in by President Obama on March 23rd 2010. It has since been known simply as the Affordable Care act or “Obamacare.” The act, coupled with the Health Care and Education Reconciliation Act make up what would perhaps be the biggest change in the United States healthcare system since 1965 when Medicaid and Medicare were signed in. the act was signed in with the aim of expanding insurance coverage, reducing the cost of healthcare and increasing the affordability and the quality of healthcare to the American people. The bill plans to achieve this through a number of mechanisms that it plans to introduce. Such include; subsidies mandates and insurance exchanges. On 28th June 2012, the Court made a ruling that states could not be forced to participate in the acts’ Medicaid expansion. This meant that states could opt not to expand their Medicaid coverage and therefore fewer people were eligible for Obamacare. This paper aims at discussing the impact of Obamacare on the uninsured population in North Carolina, the financial burden on the state, the federal government and insurance companies, effect of the bill on quality and accessibility of healthcare and finally any ethical implications brought about by the act on both the organization and the patients.

Before any argument is made on the impact of said act on the uninsured population in North Carolina, it is important to first know what portion of this population will be actually infected by Obama care. See, given all the pros that come with the implementation of this act, there obviously has to be a catch. Since the act promises reduced cost of healthcare on both patients and the organizations, how does it suggest the bills get paid? Apart from the obvious increment in taxation, for the act to be implemented in a state, the state would have to increase their Medicaid coverage. As stated above, the United States Supreme Court ruled that states would themselves decide whether or not to incur the cost of Medicaid expansion. The Medicaid expansion would expand Medicaid to the nation’s poorest so that it could cover half of the uninsured Americans. Initially, states had to cover their poorest otherwise they would lose federal funding, but since the Supreme Court’s ruling, some states are opting not to expand their Medicaid therefore leaving many poor families without coverage. The obvious reason as to why a state would opt out: to save money. The ramifications of opting-out are increased insurance costs. North Carolina is one of the states that chose not to expand their Medicaid program.

The biggest impact of the act on the uninsured will have to be that an estimated 50% of the uninsured population was projected to be covered upon expansion of the Medicare program in North Carolina. The achievement of this is by increasing public and private and public and private insurance coverage. Since the state opted-out, the state would not be raising its coverage to cover those earning up to 138% of the federal poverty line. This would mean that anyone earning more than 133% of the federal poverty line, and was single would not be legible for Medicaid. Those who were not eligible for Medicaid would be forced to pay more for healthcare in the long run. Affordable care in North Carolina would therefore mean that more uninsured people would be covered by Medicaid.

The act would also mean that the uninsured would need to spend less on medical care in the state. Due to enforcement of the act, many uninsured people would be covered. Those that would not be eligible for Medicare would be eligible for some kind of relief. This would mean that they would not have to incur the full cost of healthcare. Every dollar that a mother does not spend on medical care is a dollar she can spend on food and housing. It is therefore safe to say that if North Carolina chooses to change its mind by January 2014, Medicaid expansion would lead to financial flexibility among the state’s poor and uninsured.

The uninsured would also be receiving better quality healthcare if the act was in place. Part of the strategy of keeping costs down was that the act would shift the system from quantity to quality through incentives, competition, and regulation to streamline healthcare delivery, better healthcare would mean lower mortality rates and therefore less uninsured people would die every year in the state. As the state, through refusal to expand its Medicare would not be able to improve the quality of its healthcare without increasing its cost on it, uninsured people will continue to die due to lack of quality health care. Studies have shown that Medicaid expansion leads to better state of health and lower mortality rates for the uninsured in America.

Under the act, insurance companies would be forced to offer new minimum standards and to offer the same premiums for those with preexisting conditions and regardless of the applicant’s sex. This means that Americans have the option of waiting till they fall sick so that they can seek out insurance coverage. This means that premiums will have to go up. This fact will encourage those that are currently uninsured to remain as such. This effect would counter the attempts of the bill to increase the number of insured people.

The will call for uninsured women with breast and cervical cancer to be covered by Medicaid. Other groups that will be covered by the expansion include some mental health treatment as well as substance abuse treatment. Such groups were previously left to be covered by the state alone.

The impact on economics of affording better healthcare can be discussed on three levels; the impact on the state, the impact on the federal government and on insurance companies. The federal government is set to cover most of the cost of the Medicare expansion. States are excluded from payment of any amount of the expansion cost until 2017. From then, the government will slowly transition to cover 90 percent of this cost by 2020. This obviously means that the cost of Obamacare will lie squarely on the tax payer, at least for the next few years. Tax increments will face Americans, particularly high earners. The burden is however not as heavy as it would be if the State was to cover the cost of expansion. Strength in numbers, right? The federal government will foot the bill for majority of those that were previously not legible for Medicaid but have since the expansion become legible.

It is estimated that should the state of North Carolina choose to expand its Medicaid, it  will only have to increase its spending on Medicaid by 2.8% to provide coverage for many new low-income individuals between the years of 2014-when the act will take effect-and 2022. This is true for all states leading to 17 million low earners being covered. Instead of incurring unsustainable costs states that expand their Medicaid will enjoy many fiscal gains in the long run. These should be a function of the savings and increased federal funding. The fact that most of the previously not legible will mostly be catered for by the federal government will mean freeing up of state dollars in the hundreds of millions as in the case of Florida that estimates annual savings of up to $100 Million and Ohio that estimates having made $1.9 Billion by 2022. Many states have admitted being able to afford the expansion but chose to opt-out of it as they fear the federal government may abandon its promises midway thus leaving majority of the financial burden on the state. There is however little chance of this happening. The state-like Arizona and Nevada- may choose to adopt the “Circuit-breaker” approach to the expansion. This means that the two states have chosen to opt out of the expansion if the federal government fails to meet its costs up to a certain level.

As the Affordable Care Act allows people to wait till they are sick to seek out insurance, there would be no reason for young, healthy Americans to have insurance. This would have to mean that for insurance companies to make any money, they would have to increase premiums a lot. To tackle this, the act has in it three mechanisms. The first is reinsurance. The temporary program is basically a pot of money from which insurers will be compensated from by the Health and Human services Department should they treat especially sick individuals. Once spending on a patient reaches a certain level, the federal government pays for majority of their costs.    Under the act, the law sets aside $10 billion for insurance payments in 2014. The second mechanism is the risk corridors program. This program is meant to protect insurance companies should more high-cost patients than projected sign up. If this happens, the government pays the amount that is in excess. If less high-cost patients apply, the insurer pays the government. Risk Adjustment is meant to ensure that no single insurance company bears most of the burden of the most expensive patients in the state. Under this program, insurance companies in a state will pay each other. Companies with healthy cash pools make cash payments to those with especially unhealthy ones.

The overall aim of the Affordable Care Act is to afford better quality health care to the people of America and at a lower cost. In states that opted to expand their Medicaid, the low earning families will spend less on healthcare. Since expanding the Medicaid in a state means more people become legible for coverage, the number of uninsured in the U.S that get cushioned as pertains to the cost of medical care is larger.

The quality of healthcare is also projected to increase. This is to be achieved by offering of incentives and by competition. As the government will be offering subsidies, this will attract investment in healthcare. Because of this, competition will increase and so will the quality of healthcare availed to the uninsured. The fact that there will be more healthcare facilities and that more people will be afforded quality healthcare should imply that healthcare will be move available following implementation of the act.

Ethical issues about the act include the fact that the United States spends more money on healthcare than other states of equal development. This act will lead to higher cost of healthcare for the federal government both per person and as a percentage of the Gross National Product.

Conclusion

The Affordable Care Act seems to be the solution to the question of access to quality healthcare by the poor in the U.S. However, politics is denying citizens of many states from experiencing the fruits of this act. This can be seen from the fact that majority of the states that opted out of Medicare expansion have Republican presidents.

 

 

 

 

 

 

 

 

 

 

 

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