Thispaper is a discussion of the Affordable Care Act of 2010. To begin,this paper will make a problem statement, emphasizing the reasonsbehind why more than 80% of American citizens canvassed for an entireoverhaul of the US healthcare system. The second segment of thispaper, the literature review, is an elaboration of the underlyingcauses of the skyrocketing prices of health insurance coverage. Thethird segment sheds light on the ACA, its implementation, and itspros and cons. The fourth and last segment is the conclusion, whichsummarizes all the items of this essay’s discussion.
InAugust 2008, approximately six months prior to the commencement ofthe debate on what would become the Affordable Care Act, 85% ofAmericans were gravely dissatisfied with the healthcare system of theUS (McCarthy, 2015). The author notes that a study conducted by TheCommonwealth Fundin the same year found that most, if not all Americans, were nothappy with the way the government of the United States was handlingissues concerning the healthcare system and therefore wanted itcompletely overhauled. According to the report, many Americans wereworried with how they were being personally affected by theinefficiencies of the healthcare system that saw costs increasingyear after another. The cost of healthcare was rising at an alarmingrate that an ever increasing number of Americans were winding up inthe cluster of the uninsured members of the society (McCarthy, 2015).
Chokshi(2014) observes that by the time the ACA was signed into law, one outof every four Americans were either uninsured or underinsured.Hundreds of thousands of Americans found themselves in job-locksbecause most were afraid to quit their corporate jobs to start theirown business ventures because it would simply imply walking away fromaffordable health insurance covers provided at work. In addition tothis, Diaz (2015) observes that many insurance companies did notcover persons with pre-existing conditions because such illnessesrequired much more money to treat in the long-run. While all thesenegative effects were trickling down to the consumers, insurancecompanies and healthcare corporations were boasting of ever growingprofits. A combination of all these issues vexed Americans, whichultimately drove them into demanding for an absolute overhaul of thehealthcare industry in the US which was brought about in 2010 by theAffordable Care Act (Diaz, 2015).
Sowhat was the actual cause of the skyrocketing costs of healthcareprior to the inception of Obamacare? According to Lalli (2013), oneof the main reasons why healthcare costs rose between 2000 and 2010was because of the costs of new technology and medicines. The authorobserves that a study conducted in 2008 by the Congressional BudgetOffice (CBO) found that new technology accounted for morehealthcare-spending increases than any other factors. Chokshi (2014)notes that cutting-edge technologies were liable to be over-pricedwhen they were first introduced to markets, after which they becameless expensive as they became more available. Similarly, newpharmaceutical products were expensive because before reaching theintended markets, they had to go through rigorous processes ofresearch and development for periods customarily spanning intodecades (Draz, 2015). Therefore, the increase in healthcare costs inthe US between 2000 and 2010 could be attributed to the rapiddevelopment in drug research and development processes.
Itis the opinion of Chokshi (2014) that politics also played a hugerole in the soaring costs of healthcare in the United States between2000 and 2010. The author notes that to win public favor, politicianswere canvassing for insurance companies to provide aone-size-fits-allhealthcare plan that included an ever increasing variety of benefits.As the numbers of insurable benefits were increasing with themandates of each legislator seeking public preference, the costs ofinsurance were driven further up because the insurance companies hadto increase the insurance premiums to provide sufficient coverage formore healthcare benefits (Chokshi, 2014). With increasing costs ofhealth insurance premiums, more American citizens sidesteppedpurchasing any form of insurance cover, and in so doing, amplifyingthe number of Americans that were uninsured. By the time the ACA waspassed into law, more than 50 million Americans were uninsured, withan estimated 27 million Americans under-insured (Lalli, 2013).
Chokshi(2014) points out that another political factor that caused theskyrocketing in healthcare costs in the US between 2000 and 2010 wasthe state’s regulation of guaranteed-issue.Prior to the ACA, guaranteed-issuewas a decree given by the government of the US that requiredinsurance companies selling to the small-group market (businesseswith between 2 and 50 employees) to cover anyone and everyone whoneeded coverage even if they had pre-existing conditions (McCarthy,2015). To this effect, the insurance companies increased theinsurance premiums to cover for the pre-existing conditions, some ofwhich were long term illnesses that were very expensive to treat. Tocushion themselves from heavy losses, Chokshi (2014) argues thatinsurance companies had to increase their premiums.
Inaddition to the guaranteed-issuedecree, Chokshi (2014) observes that the legislators of some statesautonomously changed their areas of jurisdiction from a normalfree-marketstate to a practice known as communityrating.Under the free-marketconditions, people were insured according to their healthcare needswhich meant that younger people were covered for fewer healthcareservices compared to older people. Under the free-marketplace,it was cheaper to insure a college student than a retired teacherbecause the youngster was considered much healthier and therefore,posed no financial risks to insurance providers (Diaz, 2015). Olderpeople were charged higher premiums because of their advanced ages.This meant that the aged had to pay more to be covered for theirdeteriorating health conditions, which would possibly cost aninsurance company millions of dollars in reimbursement fees in caseany adverse thing transpired like death. However, some legislatorschanged from free-marketto community rating protocols, through which insurance companies wereobligated to set corresponding premiums for everyone in the samegeographical region without prior consideration of their medicalstate of affairs (Chokshi, 2014).
Itis the opinion of Lalli (2013) that these market unconventionalitiesoccasioned a huge insurance premium pricing variation among states.For instance, in 2006, Massachusetts, which was the pioneer of theconcepts of universal healthcare, had the lowest rates (14%) ofinadequate coverage (Chokshi, 2014). The same year, Texas had 32% ofits population experiencing insufficient insurance coverage.Additionally, Lalli (2013) observes that the government’s actionsof barring the purchase of insurance plans across states also causedan increase in insurance premiums. Since consumers were long deniedthis opportunity, there was a dramatic decrease in healthycompetition among insurance providers which constantly kept premiumsmuch higher than what they would have been in a free-marketplace(Chokshi, 2014). The author notes that this also caused a hugevariation in the premiums charged by individual states because thestandardized insurance policy in one state would be more than fivetimes expensive as a standardized insurance policy in a differentstate.
Aboveand beyond political influences, McCarthy (2015) argues that thegrowth of the economy of the US contributed to an increase inhealthcare since an increase in income denoted an increase in thepurchasing power of Americans. To this level, it is evident thatpolitics certainly played a huge part in increasing the costs ofprivate healthcare coverage in the US between 2000 and 2010. As anoutcome, the US was used to spending an average of more than 18% ofits GDP to foot healthcare expenses, compared to Japan’s 10.1%,Canada’s 10.9%, and Germany’s 11.3% (Chokshi, 2014). Evidently,there may have been other causes of the increase in healthcare costs,but it is apparent that politics was the main cause of these marketinconsistencies that had Americans vouching for a complete overhaulof the healthcare system in the US.
Tosuitably manage this “healthcare crisis” that was being passed onfrom one president to another, Kim (2015) observes that PresidentObama canvassed for the implementation of the ACA. In his 2008presidential campaign, in the backdrop of the 2009 to 2010 debate ondecreasing healthcare costs, President Obama promised that hisenvisioned health reform plans would decrease the insurance premiumfor the typical middle class American family by $2,500 (Lalli, 2013).And on the 23rdof March, 2010, President Obama signed the ACA into law. Nonetheless,the most important feature of the ACA is known as the “individualmandate,” which was effected in 2014 (Diaz, 2015). For the veryfirst time in the history of the US, the federal government obligedmost Americans to obtain a specific product- health insurance.
Toput consumers back in control of their healthcare concerns, the ACArequired all Americans to purchase a one-size-fits-allgovernment qualified coverage plan (McCarthy, 2015). The ACA, alsoreferred to as Obamacare,was put into place to ensure that all Americans were treated fairlyby healthcare providers, by making insurance less inexpensive tomiddle and lower income earning Americans as well as small businessemployers (companies with 2 to 50 employees) (Lalli, 2013). Eversince its application, Americans have been questioning whether theACA has been a successful tool in driving the much needed healthcarereforms in the US. There are some Americans contending that not muchhas transformed, whereas there are those that appreciate theexistence of the ACA because of the new and positive effects it haselicited on the healthcare sector. The subsequent section of thispaper will shed light on the positive effects of Obamacare in privatehealthcare.
Tens of millions of previously uninsured Americans have been able to gain access to high-quality but affordable health insurance covers through the expansion of Medicaid and the general health insurance market. According to Kim (2015), the main reason why the ACA was enacted in the first place was to increase coverage in the low and middle class American families which was certainly realized because more than 90% of Americans are presently covered.
More than 50% of the previously uninsured Americans can now access free or low cost health insurance covers, while some get assistance in out-of-pocket costs when they use their state’s health insurance market (Kim, 2015).
On account of the ACA, Kim (2015) observes that the health insurance market place is now offering more private coverage options, where each and every American is qualified for a certain government-determined minimum essential coverage.
The ACA has many protections which ensure that no American is dropped from coverage even if they make a mistake on their application forms or fall ill (Kim, 2015). What’s more, the ACA has protections that bar health insurers from making sudden hikes in premium rates that are not permissible without adequate explanation (Lalli, 2013). Additionally, the ACA has protections which ensure that insurance companies spend most of the premium dollars to foot healthcare costs and not pay company executives.
With nearly 50% of Americans using prescription drugs, the ACA provides for the coverage of at least one drug in each and every class and category in the US Pharmacopeia (Kim, 2015).
The ACA lifts the community rating policy, allowing young people to purchase insurance covers at a relatively low price than what it costs for a 70 year old geriatric (Chokshi, 2014).
The ACA provides for a minimal essential coverage. This means that under Obamacare, any insurance cover should offer a minimum set of predetermined essential health benefits to consumers (Lalli, 2013).
In order to raise the funds to cover all Americans, the ACA introduced new taxes to be levied mostly on the high-earners. As a result, these new taxes affect the employer and individual mandates of this group of individuals in the US (Kim, 2015).
The ACA raises issues when it comes to filing for taxes because the individual mandate says that anyone who is capable of affording a health insurance cover can obtain exemption. Therefore, this creates a loop hole through which the individuals that do not want to pay their taxes can sidestep their responsibilities citing lack of money. This can be detrimental to the economic health of the United States in case many Americans abscond from paying their taxes because of the exclusion clause of the ACA (Lalli, 2013).
The fact that the ACA provides more options means a more complicated process for consumers to select from. The risk of this happening is that consumers can be confused at what covers to take which might lead to over-buying or under-buying (Kim, 2015).
Beforethe application of the ACA on the healthcare industry of the US, thissensitive industry was marred by market inconsistencies that saw morethan 80% of Americans demand for its entire overhaul. The greatestconcern was the increasing number of uninsured or underinsuredAmericans, occasioned by an increase in insurance premiums. As thispaper has discussed, the escalation of insurance premium prices wascaused by many issues with political influences exerting morepressure than all the other factors. To restore sanity in theindustry, President Obama introduced the ACA, better still,Obamacare. The ACA was implemented to curb the increasing rates ofhealth insurance premiums in the US. Just like two sides of a coin,this paper has discussed the positive and negative attributes of theACA. The effectiveness of the ACA is a hot topic because there aretwo groups split along the line of whether it has achieved theintensions for which it was initially envisioned. However, the ACAcan be said to be fruitful because it has elicited positive changesin the healthcare industry in the US. Even though many people areskeptical about the ACA, it is benign to argue that it hascontributed to an improvement in the general healthcare industry.
Chokshi,N. (2014, March 26). Historians take note: What America looked likebefore Obamacare. Retrieved November 06, 2016, fromhttps://www.washingtonpost.com/blogs/govbeat/wp/2014/03/26/historians-take-note-what-america-looked-like-before-obamacare/
Diaz,F. G. (2015, May 10). How Obamacare Will Affect You. Neurosurgery,62,81-91. doi:10.1227/neu.0000000000000807
Kim,S. (2015, June 15). The Pros and Cons of Obamacare. RetrievedNovember 06, 2016, fromhttp://www.healthline.com/health/consumer-healthcare-guide/pros-and-cons-obamacare
Lalli,F. (2013, September). Affordable Care Act`s 10 Essential HealthBenefits – AARP. Retrieved November 06, 2016, fromhttp://www.aarp.org/health/health-insurance/info-08-2013/affordable-care-act-health-benefits.html
McCarthy,M. (2015). US health secretary calls on Republicans to move on fromObamacare debate. Bmj,350(Jan193). doi:10.1136/bmj.h320