The Affordable Care Act: Is it feasible or not - Essay Example

Affordable Care Act: Is it feasible or not? President Obama’s healthcare law “Patients Protection and Affordable Care Act” or informally known as Obamacare, is believed to be the “signature achievement of Obamas administration” (Gamage 1). However, American public has been witnessing a never-ending debate over this act pertaining to issues like non-workability, and unfeasibility. Since the time of its inception to legislation and now during its implementation, it has been subjected to constant criticism by various social and governmental sectors. The act has turned out to be one of the most comprehensive yet politically schismatic legislative initiatives in decades. This paper is an attempt to understand the salient features of this law along with a critical analysis of its drawbacks and advantages to reach a fair conclusion. Understanding the Affordable Care Act (ACA): President Obama has clearly projected ACA as a “healthcare reform.” Therefore, it is important to first evaluate why America needs reform in this particular department. Americans are largely considered as the receivers of worlds "best" healthcare services. However, facts reveal that they rank 29th in terms of “healthy life expectancy," 30th for “infant mortality rate," and around $2, trillion is used up annually “on unnecessary hospitalizations and tests, unproven treatments, ineffective new drugs and futile care at the end of life” (Meister). Another important problem, according to a year 2008 data analysis report from Kaiser Family Foundation, is that about 20 million out of the 40% or 46 million uninsured Americans are young-adults and working poor; whose median household income is “at least 2.5 times the federal poverty level for a family of four" (Brooks 27). They choose to remain uninsured because they are either too young to qualify for Medicare, or insurance would cause an onerous burden on their domestic life expenditures. America, most probably, is the only developed country around the world that does not offer affordable and feasible healthcare services to the nation as well as spends the most on it than any other country (Levine and Levine 91). Healthcare expenses and quality of services have been hugely undermined by the previous governments as a result of which median annual expenditures increased to up to $2.5 trillion or 16% of GDP in 2010 as compared to 9% in UK, 10% in Canada, and 11% in France and Germany (Brooks 26). Due to the economic recession of 2008-09, the economy did not grow at the same rate whereas spending has increased substantially. Furthermore, high expenditures were utilized for out-patient care, home care, and long-term healthcare plans whereas critical areas like insurance checks and balances, inpatient care, medications, and Medicare administration were ignored (McKinsey). Obama’s government needed to come-up with a plan or strategy that could minimize the expenditures, as well as manage to expand insurance to all Americans. Hence, on March 23, 2010, the American Congress, although by a narrow majority, managed to approve a new healthcare law that was supposed to reform the entire insurance, Medicaid and Medicare system in United States by the year 2014 (Medina 52). It is undoubtedly the most comprehensive legislative step that has been formulated so far by any government in America to improvise the existing healthcare system since 1965, when Medicare and Medicaid were formally created (Gamage 1). ACA has been designed to empower people and promises to make healthcare insurance affordable for over 33 million citizens by 2022 (Klein). There are two fundamental priorities of its statute “to control costs at all levels and expand coverage to uninsured individuals” (Medina 52). This will be done by eliminating the control of insurance companies once and for all through allowing individuals to make up their package for healthcare insurance according to their own terms and conditions. Apart from insurance exchanges, fines for non-participants, federal subsidies for low to middle-income families, and comprehensive planning for removing insurance oversight are some major points of ACA’s Medicare and Medicaid reformation strategy (Medina 53). To reduce the costs of healthcare in America ACA aims to grant additional funding to the departments responsible for providing healthcare services and also to improve the quality and quantity of innovative healthcare practices. Hence, from the outlook, ACA seems like a credible legislative effort on papers; nonetheless, analyzing the practicality, advantages and drawbacks of this act is indeed important. Positive aspects of ACA: ACA lays emphasis on reforming the private health insurance market, refining prescription drugs coverage, approves the accessibility of Medicare for people with pre-existing conditions, methods for guaranteeing long-run deficit reduction, as well as outspreads the tenure of Medicare for citizens (Medina 92). Its provisions will consequently improve healthcare services, lower the annual expenditures and salient deficiencies of the private insurance system altogether. For instance, the national-level implementation of a community and issue rating is guaranteed to ensure that all insurers are providing the similar premium package deal to all citizens irrespective of their gender, age, location, and/or pre-existing condition. It expands Medicaid eligibility to people or family of four having an income level of about 133% of the poverty level. For low-income families or citizens (having a criterion of being above the medical and up to 400% of poverty level) will be receiving subsidies on sliding scale to purchase private insurance through exchanges (Meister). Another significant rule from this act is that families having an income level between “150% and 200% of the poverty line” will only pay 6.3% of their incomes as premiums, whereas between “300% and 400%” of the poverty line will be paying 9.5% (Meister). The law also allows medical coverage for children below 19 irrespective of any pre-existing condition and prohibits insurance companies from dropping anyone on grounds of paperwork mistakes. This implies that ACA does support people’s empowerment by contemplating the factors that have been causing catastrophic healthcare risks and expenditures to people, and both private and public payers will benefit from it. The Medicare payment reforms, establishing of the Centre for Medicare and Medicaid Innovation, and the Independent payment and Advisory Board are some significant steps that can restrict the annual costs and expenditures on healthcare (Olson 115). These boards will formulate policies to minimize Medicare spending instead of limiting access to care, ensure improved healthcare productivity, and will fund as well as recommend new strategies for providing high-quality care. It has been propagated that in the next ten years, the act’s cost-saving reforms will definitely “add about $575 billion to the Medicare Hospital Insurance Trust Fund” (Olson 115). It has been assumed that the claim of saving around $1 trillion on healthcare in the upcoming decades may not be achieved, and the taxation reforms may instead increase the expenditures. Nonetheless, the Congressional Budget Office has clarified that “the law will cut the deficit by around a trillion dollars” (Klein). Provisions such as reducing the number of hospital readmissions, reducing acquired conditions, improving physician quality reporting, and bundling of payments for ESRD will significantly improve the quality of care and will be helpful in decreasing expenditures. To reform the delivery system, promotion of Accountable Care Organizations and creation of Independent Payment Advisory boards are significant steps (Olson 115). ACA provides a substantial strategy to reform the faulty financing system through halting overpayments to Medicare Advantage Plans, modifying payment methods for advanced imaging services, and promoting competitive bidding for Durable Medical. These basic steps only are believed to save at least $417.5 billion in the next ten years which will be a great advantage for the weakened economy of US. Various critics of Obamacare, including state legislators and opinionated right-wing voices have been slamming ACA on grounds that the law will cause huge financial damage to the insurance companies; employer taxation plan is impractical, and exemption of small businesses will largely affect state employers (Ivey). The fact is that the rule for providing 50% tax credit is applicable on small firms that consist of less than 10 employees with median wages below $25,000 (I-e 96% of total US business firms) and provide insurance (Ivey). Since 4% companies are already giving insurances and only about 10,000 companies all over US will be subjected to this provision annul the claims of critics in this context (Ivey). Through implying 30% tax on employer-sponsored insurance packages the government is looking to cut-down the costs of extremely expensive private insurances and give ordinary citizens some leverage. Some very productive provisions that have been implemented so far include that firms that do not provide health insurance will be subjected to penalties; and insurers are requested to utilize at least 80 to 85% of every dollar on medical care instead of advertising (Klein). Thus, Obamacare provides a comprehensive package to promote health insurance in small firms; as well as it ensures that majority of people could avail and afford insurance. Negative aspects of ACA: ACA was plagued by controversies and lawsuits soon after it was officially assigned the status of a law. A careful evaluation of its provisions brings forth certain drawbacks and strategic flaws that cannot be overlooked. The first negative aspect is that it substantially risks individual liberty (Foley 13). The law makes endorsing a health insurance policy mandatory for everyone and whoever does not possess government sponsored Medicare, and Medicaid is required to buy a private policy that must satisfy the minimum federal standards (Foley 13). The individual becomes subjected to a penalty and has to pay a hefty fine (about $700) if this rule is not followed. The contradiction arises on the point that individual mandate is permitted by the constitution and bestows Congress with the power to regulate interstate commerce; however, government cannot apply this rule through forcing citizens to buy private products (Foley 14). Analyzing the provisions of ACA regarding making insurance compulsory, president of Albuquerque TEA Party Board Dr Rick Morlen pointed out another negative impact of ACA that if every citizen gets an insurance policy, then “the time it takes to approach a doctor will increase because of more people wanting appointments” (Duncan). This could be understood through the example of Canada, where it is easier to get a pet treated than a human because every citizen has access to government-sponsored healthcare insurance (Duncan). Another drawback is that the provisions that focus on expanding Medicaid program alternately violate the constitutional requirement of Federalism (Foley 14). According to the tenth amendment of US constitution, fair distribution of power between federal and state institutions is most crucial, and every department is sovereign in this regard (Foley 14). This implies that state, and federation cannot force anything up on each other. However, Obamacare incorporates vast Medicare and Medicaid expansion, promotional and reformation steps that will definitely impose huge financial burdens on governmental departments. From this perspective, it can be assumed that ACA may have been formulated to achieve long-term and productive end-goals, but it can also develop clashes between various departments. The costs and expenditures for thorough implementation of ACA are unclear and hence; it is yet another debatable issue. For instance, it requires the establishing of at least 133 new agencies that will work independently yet under government’s influence. Therefore, total expenditures involved in the implementation of ACA are still unknown (Levine and Levine 91). Paul Howard believes that ACA “will add new cost pressures and problems that will serve as a drag on economic growth and job creation” (1). It is estimated that by 2012, ACA strategic steps will reduce deficit and save at least 143 million; however, the federal government will need to spend about $940 billion within a decade to implement the proposed healthcare reforms and plans (Johnson, Uradnik, and Hower 551). This means that eventually about half a trillion dollars would be budged from private economy and utilized for healthcare improvements. This has been referred to as “a spaghetti approach to cost control" by MIT economist Jonathan Gruber (Howard 3). Moreover, tort reform is ignored in ACA due to which doctors will continue to be vulnerable to the risk of paying malpractice insurance penalty if the tests they perform do not yield desired results. ACA heavily targets the employer-sponsored health insurance policies and has labeled it as extremely unaffordable. Nevertheless, this probably is the only negative aspect affiliated with employer-owned policies. For a common citizen, it is always difficult to understand the complex insurance policies, and gain thorough knowledge about the variety of coverage offered. That is why individual market is highly susceptible to risk classification, adverse selection and absent regulation (Gamage 8). On the other hand, employer-sponsored insurance plan reduces the costs of risk classification and adverse selection since a group of workers get insured, and the company ensures the health and welfare of its workforce to maintain balance at the workplace. Thus, individual market tends to be costlier than employer-sponsored plans from a long-term perspective. Furthermore, Human-Resource department at a workplace is responsible for educating the staff about healthcare issues, complex rules of insurance policies, and assist them in making the right choices. Hence, it should be taken into consideration that employer-sponsored policies involve numerous significant advantages. Conclusion: Considering the pros and cons affiliated with Patients Protection and Affordable Care Act, it can be concluded that it is neither a perfect plan nor is it a completely impractical or defective solution for improving the dysfunctional healthcare system. It must be understood that American economy has been subjected to a great recession in recent times and hence, a comprehensive strategic plan is indeed required to cut-short the unnecessary expenses and also to enhance the quality of care. Obamas administration needs to re-evaluate certain provisions and formulate a fool-proof package for the nation. It is a fact that American economy cannot take the burden of yet another expensive package in the name of reformation. Therefore, the flaws and loop-holes in ACA must be eliminated and the plan should provide immediate and low-cost solutions for edifying the overall healthcare system in America. Works Cited Brooks, Stephen. American Exceptionalism in the Age of Obama. Routledge, 2012. 26-29. Web. Read More