Healthcare Headaches

The Affordable Care act, also popularly known as Obamacare, was first signed by President Barack Obama in March of 2010; however the idea of socialized health insurance is not a new one, and has been sought after unsuccessfully by numerous Democratic presidents for the last 75 years. The core principle of the Affordable Care Act, as established by its signee President Obama, was that “everybody should have some basic security when it comes to their health care” (Affordable Care History).

The Act has not come without its struggles, twenty-six states and the National Federation of Independent Business brought suits in federal court challenging the Affordable Care Act in 2012. This action was fueled by the previous heated controversy of the Act which at the time was a 1,000 page bill, created by the House Democrats that outlined the overhaul of the health care system. The unfamiliarity and general confusion about what exactly the bill outlined made the bill very unpopular with many Americans. The consensus on the bill in politics was generally a split divide between the Democrats and the Republicans. Many Republicans at the time held the view of House leader John Boehner, “This so-called public option is going to force millions of Americans out of their private health insurance into a government-run plan” (Affordable Care History). On the other hand, many Democrats matched their opinion with that of Senator Ted Kennedy who had written in a letter, addressed to President Obama, that spoke of the necessity, that nationwide healthcare for America would have. In this letter, Kennedy said that healthcare was a “moral issue” that addressed the “fundamental principles of social justice” (Affordable Care History).  In the end, the Supreme Court decided to uphold most of the original provisions of the Affordable Care Act after multiple disagreements in the House of Representatives and the Senate. Finally, in June of 2012, the law was set in motion to be put into action effective immediately on January 1, 2014.

The Affordable Care Act is an idea similar to socialized health insurances systems already instated in other countries such as France, Germany and Canada . As in every controversial situation, there are many pros and cons. In regards to the Affordable Care Act there are positive effects for the American people but also quite a few negative effects on the health care industry. In addition, although negative effects on the health care industry may not initially appear horrible, the economic backlash from the health care industry negatively impacts the American people .

To fully understand the Affordable Care Act’s implications on the health care industry, and in turn the American people, one must first understand what Obamacare entails. In contrast to its tumultuous past, the Affordable Care Act is predicted to provide health insurance to more than 30 million uninsured people nationwide by increasing Medicare’s coverage. Moreover, the Affordable Care Act does this by supplying government subsidies to allow middle-and lower class Americans to afford private healthcare coverage; this is accomplished in several different ways. On a side note, Medicaid is a federal medical service program designed to help families with low incomes and resources (Medicaid). Most American’s are split into four groups: many Americans who already have health insurance with their employers can keep their current insurance. A third of Americans will be covered by the government through programs such as Medicaid and Medicare. Medicare is a federal health insurance program for people 65 years of age or older as well as some younger people with certain disabilities (Medicare). Approximately one in ten will buy insurance themselves from private insurers and finally another couple million who for certain extenuating circumstances still cannot acquire health insurance, will continue to go uninsured. For those Americans ensured by their employer there will be caps for the employees on how much they have to pay out of pocket, how much they must pay hospitals/physicians for medical services, and they will receive free preventative cares i.e. screening tests and immunization shots. In addition, larger companies with 50 or more employees will be required by the government to insure full time workers or pay a fine. Smaller employers, however, will not face the same rule but will be supported by the US government to give their employees’ health care by giving employers temporary tax breaks. Those getting health insurance from the government through either Medicare or Medicaid are also seeing benefits. Senior citizens and those with certain disabilities under Medicare will be assisted more in regards to prescription drugs and preventative care. In addition, Medicaid’s assistance is growing as many more people whose income is low, $15,856 for a single person or up to 138% of the poverty level, will have health insurance with Medicaid’s help in a private insurance plan. For many others who can’t acquire healthcare from an employer or do not qualify for Medicaid, they will have to buy private insurance from health insurance marketplaces. These health insurance marketplaces will allow consumers to select from an assortment of private health insurers as well as decide the extent to which they want to be covered, with premium plans also being available. In addition, if individuals decide to buy health insurance from these marketplaces, the government will give them tax credits so that they may purchase affordable insurance if their income is below a certain level, $78,120( 400% of the poverty level). The insurance companies within the marketplaces will have to abide by certain rules such as offering insurance to the sick, having to stop charging more for pre-existing conditions, allowing both men and women pay the same price for health insurance, and finally the price of insurance for the elderly will decrease, while young people may pay more.  However, to offset this, the Affordable Care Act has instated a bylaw that young adults, up until the age of 26, may continue to be covered under their parents health insurance plan. Finally, the Affordable Care Act states that signing up for any of these health insurance procedures is only possible during special enrollment periods. In addition, because of the individual mandate within the Affordable Care Act, if a person does not have health insurance they must pay a fine, however this can also be waived if one cannot afford health insurance or is ineligible for Medicaid (ObamaCareFacts).

Although the Affordable Care Act brings many benefits to those with fewer resources, there are also numerous negative ramifications to the healthcare industry that result from these new changes. The primary ambition of the Affordable Care Act is to ensure that millions of uninsured American citizens receive health care; however this does not come for free.  The Affordable Care Act is paid for by taxing the health care industry itself, paying hospitals and insurance companies under Medicare less, and of course taxing Americans. Those in the higher tax brackets, now pay more of their income into Medicare. As was stated previously, Medicaid’s net is growing to cover millions of more people, up to 138% of the poverty level. As Medicaid grows larger, it does so using federal and state funding. Additionally, because of this, each individual state legislature can decide if they wish to partake in this action and for those that do not, people in those states may remain uninsured. On the subject of health insurance companies themselves, the Affordable Care Act also brings some negative repercussions as well. Since sick people as well as those with pre-existing conditions must now be covered by health insurance companies, those same health insurance companies must now raise the prices of health insurance for everyone in order to continue making a profit. Furthermore, since preventive care is now low cost or free because of the Affordable Care Act, insurance premiums have increased because health care insurers must now offer the covered services. On the business side of the Affordable Care Act, the employer mandate stated that small businesses with 50 or more employees must provide said employees with health care coverage. Some businesses cannot afford to do so; in order to escape this rule, some employers have cut employee hours and as a result cut their employees pay. Doctors also suffer under the Affordable Care Act. As Medicare provides more for senior citizens, conversely Medicare payments to doctors are decreasing as a result. Since Medicare pays physicians more than any other health insurance program plan, this decrease in pay has led to doctors getting paid less and hospitals increasing the cost of health care for American citizens (Obamacarefacts). Ultimately, the Affordable Care Act was created in order to ensure that millions more in the US were insured; however, while it accomplishes this task its emphasis on having people covered has left the actual cost of care raised, a shortfall for many poor and middle class people who had problems with health care in the first place.

One country whose health care system American health care reformers could learn from, and which the Affordable Care Act has some similarities to, is the German health care system. German’s benefit from a two tier health insurance system comprised of a private system for individuals making more than a certain monetary threshold, $70,000 for 3 consecutive years, and a public plan for German citizens whose income falls below this line. This system works so well primarily because its public insurance actually helps the majority of its recipients with costs. German public insurance is financed by payroll taxes with 14.9% coming out of a person’s salary. This percentage is then split with the employees paying 7.9% and employers paying the residual 7%. Premiums are also dealt with differently in the German public insurance system. Premiums in the public system are determined by income instead of a person’s risk, age and current health. General practitioners (physicians) in Germany are also paid a lot less than their American counterparts ($161,490), the median salary being $80,000 or more a year. Germany’s method of creating such an efficient health care system is in part what America’s comparative Medicare is trying to do. The German health care system, similar to Medicare, fixes the reimbursement rates for hospitals; however the contrasting factor is that the German system extracts price concessions from drug companies.  This means that the government ensures that drug prices are low enough for consumers to buy and therefore use, at times, lifesaving drugs(Raghavan). Statistically, the German health care system is doing much better than its American counterpart. In 2013, Germany’s percentage of GDP spent on health care was 11.3% whilst the US’s was 17.7%, Germany’s out-of-pocket health care spending per capita was $593 while the U.S.’s was $987 per capita, finally spending on pharmaceuticals per Capita in Germany was $633 while spending on pharmaceuticals per capita in the USA  was $995( Jun).

Although created with a charitable and noble intent, the Affordable Care Act has numerous pitfalls when one considers its effect on the health care industry. The overall increase in pricing of health costs, a lack of price concessions on drug companies, and a definite need for more stringent Medicaid enforcement among state legislatures still leaves the Affordable Care Act with plenty of problems and room for improvement. Although the US health care system is fragmented and now operates at greater costs, the Affordable Care Act has resulted in the insurance of a number of Americans who under past circumstances, would be uninsured.

 

 

Work Cited:

“Affordable Care Act history.” Affordable Health California. n.p.n.d. Web.  14 Aug, 2014.

Jun, Miraya and Osborn, Robin and Squires, David and Thomson, Sarah. “International Profiles of Health Care Systems, 2013.” The Common Wealth Fund.  The Common Wealth Fund

ObamaCare Facts: Affordable Care Act, Health Insurance Marketplace. ObamaCare Facts. n.p. n.d. Web. 14 Aug, 2014

Raghavan, Anita. “Beyond Hysterics: The Health Care Model That Works.” Forbes. Forbes Magazine.  21 Sept, 2009. Web. 14 Aug, 2014

“What is Medicaid?” NC DMA: Medicaid Home. n.p. n.d. Web. 14 Aug, 2014.

“What is Medicare?” Medicare.gov: the official U.S. government site for Medicare.n.p. n.d. Web. 14 Aug, 2014