The financial downfall of the Affordable Care Act - Research Paper Example

The financial downfall of the Affordable Care Act This research paper will deal majorly with the financial downfall of the affordable care act that was proposed. The affordable care also known as the Obama care has a wide variety of objectives for its implementation. This act, which is also known as, the Obama act was approved by the congress and there after it was signed by the president for it to be included in the law. These proceedings happened on the 23rd day of March in 2010. Later on June 28th in the year 2012 the court passed its final judgement on the act. Its final decision was to uphold the health care. The act is widely reaching and involving and most importantly it is happening on a serious note. With the affordable care act in place, consumers are subjected to the responsibility of taking care of their health care. There is a new bill of rights set for the patients which provides the American citizens a chance to own the opportunity to be stable and flexible in making right and informed decisions concerning their health. In addition, all the aspects arising from the aspect of financial downfall of the Affordable Care Act is also depicted in a detailed and argumentative manner. Factors leading towards such an incidence that weakens an act that is beneficiary to the economy are discovered and laid down satisfactorily. For this state to diminish certain measures must be employed to help in contributing some amount of money that will help in health, health care and health insurance. Such measures may include additional taxes, which will increase the income of money. This will initiate continuous service provision by the act. The financial downfall of the affordable care is considered as the failure of financial support from the donors. And also it means that the costs involved in developing the act are higher than the original funds available. The cost for the health insurance is still on the rise despite the fact that the act was signed into law in the year 2010 yet some provisions of the health care reform have effected already, but the complete overhaul has not yet begun until the year 2014. Bearing these issues in mind, there is no sign for downfall of the medical costs. Facts say that there is an argumentative debate on the act with maybe the largest storm fermenting over single mandate. This means the face of reform that created a thousand tiffs (Ostrom 4). The biggest question is should Americans continue worrying about the future? For the sake of a clear understanding from both the proponents and opponents side, an expert regarding Affordable Care Act must be consulted. In this case, the associate professor at the Carey Business School and the Bloomberg School of Public Health at Johns Hopkins, Douglas Hough is held responsible for giving a clear understanding. The Americans are worried about the health care since even though it is shaping the scope of the health insurance but it is doing too little to make up for the costs of medical services. This is what is referred as the financial downfall but how? Even though the battle over the Affordable Care Act was difficult and tiresome, the only easy part in the health reform revolved around the effort aspect. It is seen that Affordable Care Act was held responsible for dealing with improve on accessibility to health care, to the 50 million Americans with no health insurance. At this time, the Act did little to dress the inexorable increase in health care costs (Ostrom 3). Necessary methods and measures are to be put in place in order to count for how health care dollars are spent and how they will provide incentives and services for physicians, and other healthcare professionals to address both wellness and sickness. A method such like that of Chinese of paying physicians when they treat their patients well should be implemented and put in place and finally be emphasized. The physicians should not be paid inform of the volume of their sickness services. An encouragement should be done to enable people to be responsible over their health and also health care in both financial concerns and conceptually. These encouragement measures may include recognizing that some sickness may resolve with almost no intervention and additionally there are various consequences resulting from bad lifestyle choices such as overdrinking, overeating and overmedicating. Another aspect that deals with the financial downfall of the affordable care Act is the views on the requirements. This is a controversial part in an individual mandate leading to such downfall. The individual mandate may be controversial or very important at some point. Take, for example, certain provisions that people like such as the prohibition of exclusion on reasons accounting pre-existing conditions, inclusion of young adults on their parents’ health insurance plans are financial feasible, this will mean that everybody will be included in the insurance pool. But if everybody is included in the insurance pool it will create a clear understanding that the cost spent on the health insurance will be high than the costs originally set aside for the process. This makes the Act fall in the sector of finance due to overspending. This means that those who do not need insurance will subsidize over those who need insurance (Strohm 1). It is clear that behavioral economics can give a detailed description on what is going in health care and health care reform. One of the concepts used in such description is the hyperbolic discounting where it disposes out views how people do overvalue consumption in the present in relation to the future, and afterwards they do regret their choices when the future comes. This is what is known as unrealistic plans where the future runs from unidentified foundation or financial background. This concept is shown hand in hand in the health care with conflict with the individual mandate. Every person will be well off if everybody has his/her own insurance than several people depending insurance from one person (Strohm 2). If people depend on one person’s insurance, the expenditure will be high thus leading to the downfall of the Act financially. Financial downfall of the affordable Care act is also shown by the effect of Sequestration on Small Business Health Care Tax Credit. In relation to the requirements of a balanced budget and emergency deficit control Act implemented in 1985; the refund payments that were issued to the employers who are exempted from tax, and they do claim refundable sections of the Small Business Health Care Tax Credit under Internal Revenue Code Section 45R are exposed to sequestration (Strohm 2). This creates an understanding that the payment refunded on or after the 1st of October 2013 and on or after the 30th of September 2014 in relation to section 45R applicant will be minimized by the fiscal year 2014 sequestration rate of a percentage of about 7.2, even if the IRS received the original or amended tax return. The rate of sequestration reduction will then be put in place unless there is a law that will be put in place to cancel or either impact the sequester in that the rate of sequestration reduction is exposed to change (Affordable Care 1). If the rate of sequestration is effected then, the cost of health care will reduce yet the population of people who should enjoy health insurance is increasing. This will lead to a huge downfall in the financial sector of the Act (Strohm 2). Thereafter the taxpayers who are affected will be availed with information that the portion of their requested payment was subjected to the sequester reduction and also the amount. This will create double expenditure. Another aspect creating downfall in financial state of the Affordable Care Act is the Disclosure or Use of Information by Tax Return. This prepares complete and final measures on rules and consent requirements that relate to the affordable Care Act (Obamacare 1). If the information is published then there are huge sums of money being used on this process only. If huge sum of money is used on publishing information only, what of the expenditure set for the people who are insured with health insurance and they need services? The cost for such services will be high than the initial cost thus leading to the financial downfall of the Affordable Care Act. The medical loss ratio is another aspect showing how the Act is financially falling. By the start of 2011, the companies dealing with insurance are set to spend a certain percentage of premium dollars on medical care and improvement activities. This led to the achievement of the medical loss ratio standard while those companies that did not meet the medical loss ratio standard are hence required to provide rebates to their consumers beginning in 2012 (Strohm 2). If these companies make their rebates, there will be no enough cash for the medical care services thus leading to the financial downfall of the Affordable Care Act. The Affordable Care Act has its own requirements such as reporting on the cost of coverage under an employer sponsored group health plan on employees’ form and Wage and Tax Statement with use of the DD code. It is said that many employers have the opportunity which enable them to be eligible for a transitional relief for the tax-year 2012 and beyond. The amount that is reported has no effect on the tax liability since the value of the employer continues to be excluded from the employer’s income and hence it is not taxable if and only if the contribution to the health coverage is excluded. This report gives information on the value of the employer’s health care benefits, and hence it is for informational purposes only (Ostrom 3). When this report is given, and the contribution to the health coverage is excluded, there will be little funds in the health care sector hence the Affordable Care Act will fall definitely. Therefore, contributions to the health care coverage should be included and excluded reporting on general issues to reduce expenditure so that there is enough cash to support the Act. One way that has been put in place to reduce or curb the financial downfall of the Affordable act is the Additional Medicare Tax. This measure was effected on January 1, 2013 where it applies to single wages, also railroad retirement tax act compensation and additionally self-employment income that occurs in surplus as based on the individual’s filing status (Health Reform 2). It is recorded that the amount for the threshold is $250,000 for the married taxpayers who jointly file, $125,000 for those who file separately and all other taxpayers recorded $200,000 (Ostrom 4). This increases cash that will be used in the health care to provide efficient services. Facts deploy that an employer has a responsibility of withholding an additional medical Tax from wages. This will actually help a lot in reducing the financial downfall of the Affordable Care Act. With close evidences, the financial downfall of the Affordable Care Act is highly depicted and without safety measures to control the amount of money to be used, the Affordable Care Act may not be available in the coming years. The measures put in place are the ones contributing some money to support the Act. If some other measures are employed, the Act will strongly live on and provide necessary services to the citizens. Works cited Obama care individual mandate may be next to fall, Yahoo finance, 2013, retrieved from http://finance.yahoo.com/news/obamacare-individual-mandate-may-next-180700957.html Carol Ostrom, a user’s guide: 20 things to know about the Affordable Care Act, the Seattle times, 2013 retrieved from < http://seattletimes.com/html/localpages/2021860490_acaguide.html > About the law/HHS.gov/healthcare, Hhs.gov, 2013 retrieved from < http://www.hhs.gov/healthcare/rights/ > Affordable Care Act tax provisions, Irs.gov, 2013 retrieved from < http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions > Mitch Strohm, Affordable Care Act: changing costly care?/Bankrate.com, Bankrate.com retrieved from < http://www.bankrate.com/finance/insurance/affordable-care-act-changing-costly-care-1.aspx > Health reform in action/the white house, White House.gov, 2013 retrieved from < http://www.whitehouse.gov/healthreform > Read More