The Affordable Care Act Analysis - Essay Example

? Health Care Reform      The Affordable Care Act (Obamacare) Introduction The Affordable Care Act, also popularly known as Obamacare, is a health care bill that is bound to significantly transform the health sector by 2014. The bill was officially signed by the president on March 23rd, 2010, but it will be fully implemented by 2014 (Andrews, 2012). The law faced considerable opposition from the Republicans and its repeal failed after it was upheld by the Supreme Court on June 28th, 2012. The reforms spurred by the bill will extend health cover to over 30 million Americans. This will be achieved through the provision of Federal subsidies for the less able and the expansion of Medicaid. The subsidies will enable the low earners to purchase private health cover. The legal provision also creates room for the development of exchanges for individuals that will be willing to buy cover. The bill also expands accessibility to health insurance by prohibiting insurance firms from denying cover to anyone based on pre-existent conditions (Andrews, 2012). The bill also makes provisions for the creation of an experts’ panel to limit reimbursements to only effective treatments and offer incentives to providers as a way to persuade them to “bundle” their services instead of charging by singled out procedures (Andrews, 2012). The reform redefines the way Americans purchase health cover by requiring all Americans without employee cover to buy privately provided health insurance cover or pay a tax percentage of 1%-2.5% (Andrews, 2012). Americans that cannot afford cover and do not have one from employers will either go into Medicaid/Medicare or receive tax credits to make the private purchases. Financing of the Affordable Care Act The Affordable Care act will be funded through government funding, taxes and budget cuts. The taxes will include 9% from Medicare and unearned income tax on earnings above $250 000. The taxes will be levied on a sliding scale. Therefore, the more one earns, the higher the taxation. Insurance companies and employers with over 50 fulltime employees will be taxed to fund the plan. Taxes will also be implemented for medical supply companies and pharmaceuticals. Modest estimates by the non-partisan congressional budget office from 2010 showed that health insurance companies would pay $2 billion, medical suppliers would pay $2.3 billion, and pharmaceuticals would pay $2 billion by 2011, and this amount was expected to go up to $10 billion by 2017. Reduction on wasteful spending is also expected to contribute to the budget. The taxes designated. The efficiency that the bill introduces is also expected to cut costs and increase efficiency, and therefore; contribute to the offset of the costs incurred. Influence in Legislation and Policy Making The policies relating to Federal changes on pre-existent conditions’ coverage in insurance made a significant part of the overarching initiative, which led to the legislation of the act. Generally, Democrats, liberals and physicians were supportive and still persist in supporting health reforms related to this major reform (Harrison & Gerard, 2010). On the other hand, insurance companies, Republicans and conservatives were opposed to the reform proposal, and they have been actively seeking to repeal on the act that contains the reform details. The opposing forces are still actively attempting to change the main elements of the act. In the initial stages of the proposed reforms, the public was overwhelmingly supportive based on statistics from public opinion polls. However, currently the public is fairly split on the issues surrounding the reform process (Harrison & Gerard, 2010). Notably, there were also various advocacy organizations that supported the legislation of the act. These included the “American Association of Retired Persons” (AARP) (Roy, 2012). The Potential Effects of the Affordable Care Act on the Economy The act presents a number of welcome economic effects as well as some unwelcome economic effects for some sectors that will be hit by increases in taxes to fund the reform. Perhaps the first positive economic effect from the reform shall be an increase in job opportunities. The job market is expected to get a modest, but immediate boost. This will result from the fact that legislation will grant tax credits to smaller businesses, which offer health covers, and thus reducing incremental labor costs. According to a Goldman Sachs analyst, the incremental costs on labor will reduce by approximately 4%. Taxes rises will also hit the well-to-do and businesses. Homes with income exceeding $250000 will experience an increase in their Medicare tax. The capital-gains tax on investment will also increase in homes within this range of earnings. Business organizations will also incur new taxation if they provide high-end health cover; whereas big employers will pay hefty penalties if they do not provide health benefits to their employees. The health industry players will also incur greater taxation that may negatively impact new product development as well as hamper their capability to raise expansion and operating capital. The most affected in this case will involve pharmaceuticals and medical devices manufacturers (NYS Health Foundation, 2009). The act presents a brighter economic future for small businesses and their employees. The shared responsibility reforms are expected to cut down health insurance expenses incurred by small businesses by an estimated $50.2 billion dollars within a decade when compared to the current trend. The resultant low insurance premiums will also allow the small businesses to pass on higher wage payments to their employees. The shared responsibility within the reform proposals decreases the wage amount that would be lost to premiums in insurance payments by an estimated 76% in a decade (NYS Health Foundation, 2009). In spite of the potentially beneficial aspects highlighted, opponents of the legislation also present a number of possible negative effects that may result from the reforms. For example, opponents state that reforms may negatively affect the hiring practices of smaller companies because the high cost that results from increasing employee becomes prohibitive. The set $2000 taxation for every worker levied in the new law upon employers who fail to offer health cover discourages hiring (Salazar, 2012). The penalties levied on companies with 50 or more employees for failing to offer cover makes hiring costs significantly prohibitive because of the marginal cost increase in insuring employees above the set limit of 50. This implies that businesses within this range will be discouraged from seeking expansion (Committee on Oversight and Government Reform, 2012). In conclusion, the Affordable Care Act seems promising because of various positive factors. Firstly, it will enable people with pre-existing conditions to get cover. Secondly, it will enable students to stay under their parents cover for longer period before acquiring permanent employment. Thirdly, policy holders will not be dropped from cover once they get sick. Equity is perhaps the biggest benefit that this reform brings to the American health sector. The act also promises to improve efficiency and bring about cost reduction. However, this has been heavily disputed, and it is only a matter of time before this is proven because the act seems to be moving smoothly towards its full implementation. References Andrews, S. P. (2012). Health Care Reform. The New York Times. Retrieved from http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/health_insurance_and_managed_care/health_care_reform/index.htm Committee on Oversight and Government Reform (2012). Examining the Impact of Obamacare on Job Creators and the Economy. Retrieved from http://oversight.house.gov/hearing/examining-the-impact-of-obamacare-on-job-creators-and-the-economy/ Harrison, K. & Gerard, A. (2010). Pre-existing condition coverage post-health reform. Johns Hopkins Bloomberg School of Public Health, Department of Health Policy and Management. Retrieved from http://www.hpm.org/en/Surveys/Johns_Hopkins_Bloomberg_School_of__Publ._H_-_USA/16/Pre-existing_condition_coverage_post-health_reform.html NYS Health Foundation (2009). The Economic Impact of Healthcare Reform on New York’s Small Businesses. Retrieved from http://www.smallbusinessmajority.org/_pdf/SBM-Report-110409fin.pdf Roy, A. (2012). How the AARP Made $2.8 Billion By Supporting Obamacare's Cuts to Medicare. Retrieved from http://www.forbes.com/sites/aroy/2012/09/22/the-aarps-2-8-billion-reasons-for-supporting-obamacares-cuts-to-medicare/ Salazar, M. T (2012). Devastating Realities of Obamacare: A call to repeal. Retrieved from http://tucsoncitizen.com/arizona-lincoln-republican/2012/10/15/devastating-realities-of-obamacare-a-call-to-repeal/ Read More