THE EFFECT OF THE AFFORDABLE CARE ACT OF 2010 ON AMERICAN HEALTH CARE. Irina E. Beyderman. Copyright 2012 Nationwide Healthcare Solutions, Inc.

Transcription

1 THE EFFECT OF THE AFFORDABLE CARE ACT OF 2010 ON AMERICAN HEALTH CARE Irina E. Beyderman Copyright 2012 Nationwide Healthcare Solutions, Inc.

2 Table of Contents Table of Contents. i Abstract.. ii Introduction 1 Goal One: Provide Coverage for the Sick, Funded by the Healthy; Provide Coverage for the Less fortunate, Funded by the Well-to-do.. 1 Goal Two: Reign in Abuses by Insurance Companies and Medical Equipment Manufacturers.2 Goal Three: Save Medicare from Defaulting.3 The Pros and Cons of ACA a Health Policy. 3 The Impact on the American Consumer.4 Opposing Viewpoints... 4 Specific Factors that Contributed to the Ability of the House of Representatives and the Senate to Approve the Legislation.. 5 Conclusion 5 References.6 i

3 ABSTRACT: This article examines the background and the practical effect of the 2010 Affordable Care Act. The Purposes of the ACA are (1) extend coverage to the sick and the less fortunate, (2) reign in abuses by insurance companies and medical equipment manufacturers (3) save Medicare from defaulting. Coverage to the sick and the less fortunate is funded by mandating the healthy to obtain health insurance and taxing the well-to-do. Medical manufacturers are taxed. Medicare costs are cut. This results in a fairer and more sustainable healthcare system in the United States. ii

4 THE EFFECT OF THE AFFORDABLE CARE ACT OF 2010 ON AMERICAN HEALTH CARE Irina Beyderman The Purposes of the ACA are (1) provide health insurance coverage to the sick and the less fortunate, (2) reign in abuses by insurance companies and medical equipment manufacturers (3) save Medicare from defaulting. This paper explored the background of the ACA, how those goals are being implemented, and the effect of the policy on the stakeholders in the American healthcare system. Goal One: Provide Coverage for the Sick, Funded by the Healthy; Provide Coverage for the Less fortunate, Funded by the Well-to-do Coverage for the sick is increased by requiring health insurance companies to provide low-cost health insurance to individuals with pre-existing conditions (guaranteed issue). This is funded by requiring healthy people to get health insurance. Coverage for the less fortunate is increased by expanding Medicaid. This is funded by raising taxes on the well-to-do and on medical companies. Healthy people not otherwise covered by insurance are mandated to buy health insurance. They will pay a penalty if they do not obtain insurance. So now, insurance companies will get an increase in revenue. But the insurance companies will not be able to keep all of it - insurance companies are now required to insure sick people regardless of how sick they are, and they will not be allowed to charge them more then healthy people of the same age. Poor people with income of up to 133% of the poverty level are now eligible for Medicaid. For us New Yorkers, this is no big news since this was our Medicaid eligibility level anyway. But for poor people in other states, this decrease in eligibility income can 1

5 mean the difference between getting and not getting Medicaid. Low-income individuals and families who do not qualify for Medicaid but who are still below 400% of the federal poverty level will have their health insurance subsidized, so their premium will not be higher then 3-4% of their income. This increase in coverage is funded by increasing the overall Medicare tax rate by.9% and imposing an additional tax of 3.8% on unearned income (capital gains) on the well-to-do. The.9% is ostensibly a Medicare tax, but Medicaid can, and does, borrow from Medicare extensively. The increase in coverage is also funded by increased taxes and requirements on the insurance companies and medical manufacturers, which brings us to the next section. Goal Two: Reign in Abuses by Insurance Companies and Medical Equipment Manufacturers States are required to set up websites ( health insurance exchanges ) that provide information on health insurance policies, such as coverage and cost. This requirement will require states to analyze insurance coverage and prices and summarize the information for consumers in a digestible form. Previously, this information was scarcely available, if at all. This will have the effect of reducing insurance prices and improving coverage, and will enable consumers to pick an insurance policy that better suits their needs. The government is of the opinion that medical equipment and drug industries have room in their margins to subsidize the cost of medical care in this country. The government also views the industry as unduly benefiting from the market. To remedy what the government perceives as price-gorging by the industry, and to make them 2

6 contribute to the market from which they are benefitting, the ACA imposes an annual fee on manufacturers and importers of branded drugs and a 2.3% excise tax on the manufacturers and importers of certain medical devices. Goal Three: Save Medicare from Defaulting Data from the Congressional Budget Office, pointed out by the congressional budget committee, has long pointed to the fact that Medicare s current rate of spending is not sustainable. ACA makes Medicare more sustainable by offsetting Medicare spending reducing funding for Medicare Advantage Policies, reducing Medicare home health care payments, and reducing certain Medicare hospital payments (not physician payments). The Pros and Cons of ACA a Health Policy The biggest advantage of the ACA as a health policy is that it is feasible it made enough sense to be passed by Congress. Some of the goals it sets to accomplish are noble and just providing healthcare for the sick and the less fortunate. Other goals are inevitable cutting Medicare. Providing healthcare to the less fortunate and the sick at the expense of the wellto-do and the healthy is, ultimately, the right thing to do. This is what most other civilized countries are doing for decades. Nevertheless, the healthcare overhaul is continuing to be a source of public debate and political controversy. Republicans have challenged the scheme as redistribution of wealth, which, even if it is, is not necessarily bad it may be the right thing to do. 3

7 The disadvantage of the healthcare overhaul is that it diverts to healthcare funds that may have otherwise been directed to economic growth. For example, drug and equipment manufacturers have claimed that the extra taxes diminish their ability to fund research and development of new products. The Impact on the American Consumer American public as the consumer is likely to benefit from the overhaul, which probably cannot be said for the American public as a taxpayer. Significant parts of the healthcare overhaul benefits the sick and the less fortunate at the expense of the healthy and the well-to-do. Taxes on the medical equipment and drug industries will benefit the less fortunate consumers, as the money is likely to be allocated to Medicaid. The Medicare-cutting provisions were created out of necessity, to preserve Medicare for future generations of Americans. Will having less money in the healthcare system be outpaced by improvements in its efficiency? The impact of the ACA on the American consumer remains to be seen. Opposing Viewpoints Before the 2008 election, many republicans were in favor of healthcare overhaul. Prominent republicans have proposed healthcare overhaul bills in the past. Republican governor Mitt Romney has enacted a healthcare overhaul in Massachusetts. But when the election rolled around, republicans including Mitt Romney were negative about healthcare reform, largely due to ideological reasons. Some republican politicians characterized healthcare reform as socialism, and warned of death panels 4

8 Republicans have gone so far as to try to repeal the ACA before the Supreme Court of the United States. They were especially adamant about the mandate for healthy individuals to purchase health insurance. However, the court has ruled that the government s taxing power enabled the government to require individuals to purchase health insurance, and so the ACA was approved by the Supreme Court. Most Democrats were pro healthcare reform, with many having a view that a single payer system should be in effect, with the insurance companies being eliminated, replaced by the government, a system that was ultimately not adopted. Specific Factors that Contributed to the Ability of the House of Representatives and the Senate to Approve the Legislation One of president Obama s 2008 campaign promises was reforming healthcare. The preceding democratic president, Bill Clinton, tried to push through a health reform but it died in Congress. But this time was different. Due of the public s outrage with the republicans who were controlling the White House during the 2008 economic crisis, democrats won control of both chambers of Congress the House and the Senate. With both the legislative and executive branches being democratic, democrats had little difficulty pushing through any legislation they wished, and so the ACA was born. The ACA accomplishes noble social goals and stabilizes the market. Providing healthcare for the sick and the less fortunate is something that has been done in other civilized countries for decades, and brings the United States closer to an efficient and sustainable healthcare system of which we can all be proud.

9 References Patient Protection and Affordable Care Act, Pub.L , 124 Stat. 119, to be codified as amended at scattered sections of the Internal Revenue Code and in 42 U.S.C Insurance Reforms under the Patient Protection and Affordable Care Act (PPACA)" (Press release). Blue Cross Blue Shield of Michigan. Wikipedia, Perkins Accounting Firm Newsroom Bulletin Health Insurance Legislation Mandates (Press release). Perkinsaccounting.com. Holan, Angie D. (March 20, 2012). RomneyCare & ObamaCare: Can you tell the difference? PolitiFact.com. Tampa Bay Times. Selected Patient Protection and Affordable Care Act (PPACA) implementation dates of interest to RNs as caregivers, RNs as patients, and RNs as employees. Nursingworld.org. The Affordable Care Act in Brief: A Look Into January 2014 Changes, Benefits Quarterly, Second Quarter of 2013 Berman, Micah L., A Public Health Perspective on Health Care Reform, Case Western Reserve University School of Law, Journal of Law and Medicine Emanuel, Ezekiel J. MD; Kocher, Robert MD; and DeParle, Nancy-Ann M. JD, The Affordable Care Act and the Future of Clinical Medicine: The Opportunities and Challenges, Annals of Internal Medicine Gorin, Stephen H., The Affordable Care Act: Background and Analysis, Health and Social Work, May 2011 Gorin, Stephen H., The Patient Protection and Affordable Care Act, Cost Control, and the Battle for Health Care Reform, Health and Social Work, August 2010 Grier, Peter (March 20, 2010). Health care reform bill 101: Who gets subsidized insurance? The Christian Science Monitor. Hearst, Steven R. (June 28, 2012). Supreme Court Upholds Heart of Obama Health Care Law Seeking to Cover 30 Million Uninsured. The Gazette. Krugman, Paul (January 31, 2010). Krugman calls Senate health care bill similar to law in Massachusetts", PolitiFact.com. Tampa Bay Times. Pear, Robert (July 7, 2012). Health Law Critics Prepare to Battle Over Insurance Exchange Subsidies. New York Times. 6