Economic Editorial
mobxrodBENEFITS OF THE AFFORDABLE CARE ACT
Abhay Oberoi
Bryant University
Public Finance
04/07/2017
INTRODUCTION.
The Affordable Care Act, which the Republican-controlled Congress and Donald Trump wants to repeal;
Was created to solve two basic problems in United States health care system:
Skewed costs of health care and asymmetric information by patients (Kocher, Emanuel, & DeParle, 2015).
Patients have more information about their health status than insurers.
Skewed health care costs have made spending in healthcare expensive, and ACA was crafted to cure this (Kocher, Emanuel, & DeParle, 2015).
The Patient Protection and Affordable Care Act has completely revolutionized the health care system in the United States (Kocher, Emanuel, & DeParle, 2015). The ACA, which the Republican-Controlled Congress and President Donald Trump have vowed to repeal has significantly reduced the costs of health care and increased the number of Americans under health insurance.
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BENEFITS OF THE ACT
Puts more money in families' pockets; boosting demand, and brings down unemployment today.
By January 2014, over two million people had chosen a plan in health insurance market.
80 percent of these people benefits from tax credits to pay premiums thanks to ACA (Kocher, Emanuel, & DeParle, 2015).
In 2014, over 5 million people benefited from premium tax credits.
This helped with cost sharing at an average of 4, 700 dollars per person (Kocher, Emanuel, & DeParle, 2015).
11 million people are estimated to have benefited from ACA, with the figure projected at 19 million last year.
These financial provisions of the act have made it easier for families, especially in low-income brackets to access health care services and to meet their pressing needs concerning healthcare (Kocher, Emanuel, & DeParle, 2015). Through the expansion of Medicaid, many Americans from low-income backgrounds are expected to gain affordable health insurance coverage. Because of the increased demand for health care services, goods and services, unemployment rates have been decreasing.
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FIGURES INDICATING PEOPLE BENEFITING FROM COST-SHARING REDUCTIONS AND TAX CREDITS
These figures indicate the subsidiary both for cost-sharing reductions and tax credits. Tax credits have been accounting for an estimated figure of 85 percent of the total amounts depicted in the two graphs. The source of these figures and graphs is Congressional Budget Office.
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BENEFITS CONT…
Helps slow down growth of health care costs; boosts hiring in the near term; and bolsters employees’ paychecks (Kocher, Emanuel, & DeParle, 2010).
Health care costs growth in American is currently is experiencing a historic slowdown.
Between 2010 and 2012, real per-capital spending in health grew averagely at 11 percent (Kocher, Emanuel, & DeParle, 2015).
Projections implied that the slow growth was witnessed in 2013.
The slow spending growth rates have not been seen in decades, stretching back to 1960.
Reduced and slower growth in costs of health care reduces health insurance premiums.
According to the Council of Economic Advisers, the health care act is contributing to the slow spending growth rates because of reforms taking place in Medicare (Kocher, Emanuel, & DeParle, 2010). Medicare has reduced excessive payments to private insurers and medical providers. By deploying new innovative payment systems or models that incentivize more higher-quality and efficient health care, ACA has kept its promise.
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REAL PER CAPITA GROWTH IN NATIONAL HEALTH EXPENDITURES.
Economic research work has established that with time, an increasingly bigger percentage of premium savings are going to be passed to different employees in form of higher salaries and wages. The real per capital growth in health expenditure is showing how spending is becoming slower and reduced with time.
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BENEFITS CONT…
ACA has reduced the country’s long term deficit and;
Laid the foundation for its future growth and development.
Between 2013 and 2020, the act is likely to reduce the deficit by 109 billion dollars (Schoen, Doty, Robertson, & Collins, 2011).
This is according to Congressional Budget Office (CBO).
The deficit reducing effects of ACA will increase and grow over time.
The volume of national saving will expand owing to the lower long term deficits.
According to the Congressional Budget Office, it estimated that the Affordable Care will have real impacts on the country’s long term deficit by reducing it by over 109 billion US dollars over time (Schoen, Doty, Robertson, & Collins, 2011). Over the next decade from 2023 through to 2032, if ACA remains active and not repealed as the current administration is considering doing, the deficit will be reduced by an average of 0.5 percent of the Gross Domestic Product each year. On a ten year period, this deficit is likely to translate to about 1.6 trillion US dollars.
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HOW ACA WILL REDUCE DEFICITS
The United States Congress and president Donald Trump should consider leaving the ACA operational to achieve this important financial and economic milestone (Schoen, Doty, Robertson, & Collins, 2011). In the next decade, the figure is expected to jump significantly to lay the foundation for America’s national saving.
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BENEFITS CONT…
ACA is improving health and making workers more available and productive.
Through expansion of coverage, ACA is expanding access to needed medical care (Sommers, Buchmueller, Decker, Carey, & Kronick, 2013).
Greater access to care is improving self-reported health status, improving mental health, and reducing mortality.
ACA has increased access to preventive care without care as recommended by United States Preventive Services Task Force.
Since 2010, over 71 million American people have received more than one preventive service without going through cost sharing (Sommers, Buchmueller, Decker, Carey, & Kronick, 2013).
ACA has improved and is improving the efficiency and quality of health care for all Americans, which contribute to better health outcomes while ensuring that costs are reduced. For instance, ACA gives hospitals incentives to be used in reducing the number of patients who return to hospitals after they have been discharged. Therefore, quality care is promoted during the initial days of hospital stay. Medicare is continuing to fund community-based health care organizations that are helping people move more smoothly from hospital stays to home care.
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BETTER HEALTH, MORE EMPLOYMENT.
In an economy, efficient and quality health translates to better employment and improved productivity. People who are healthier because of better health care systems miss few working days, and hence spend a lot of their time in the workplace. Dedication translates into productive workers.
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BENEFITS CONT…
ACA is encouraging entrepreneurship, job mobility and reduces “job lock.”
Before the act, the only source of secure health insurance cover for many Americans was through their jobs.
People with pre-existing medical conditions got no coverage.
Most people could not afford the high premium costs.
ACA banned discrimination against people who have pre-existing medical conditions (Beronio, Po, Skopec, & Glied, 2014).
Because of this ban, many Americans with these conditions have access to health care.
Since ACA banned discrimination against patients who have pre-existing medical conditions, most Americans now have secure access to health insurance coverage. This is independent of their workplaces. There are several economic benefits attached with guaranteed access to health insurance especially outside the workplace. Because of the independence from workplace insurance covers, people can structure their careers and lives in ways that make important sense to them. For instance, they can take vacation days without being victimized, or retire early.
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EXPANSION OF ACCESS TO SECURE HEALTH INSURANCE COVERAGE.
Since the mobility of workers across jobs has been increased, the secure access to insurance assists them in securing jobs best suited for them (Sommers, Buchmueller, Decker, Carey, & Kronick, 2013). Therefore the overall productivity and wages is increased. Additionally, reduction of job lock encourages entrepreneurship which is important for job creation and growth.
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BENEFITS CONT…
ACA improves financial security in the face of sickness or illness (Beronio, Po, Skopec, & Glied, 2014).
Today, getting ill does not spell financial ruin because of extended access to affordable health coverage.
Having health insurance is today considered a financial security.
Medicaid expansion has improved financial security because of access to coverage (Beronio, Po, Skopec, & Glied, 2014).
ACA improves financial security for senior people through phasing out the part D of Medicaid.
ACA has moved beyond just expanding health insurance coverage , but it has improved financial security for families and even senior people (Beronio, Po, Skopec, & Glied, 2014). Since the act was enacted, these provisions saved 7.3 million people who are beneficiaries of Medicare.
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MEDICAID AND MEDICAL COSTS.
ECONOMIC QUESTIONS ABOUT THE ACT
Is ACA too expensive for the government?
And, how sustainable is the Act going forward?
Medicaid expansion, which is a pillar of ACA, requires a lot of federal funding which may too expensive for the government.
Secondly, what is the sustainability and future of individual mandate?
Since many Americans are paying penalties because of the individual mandate as a component of ACA, the economic consequence could be detrimental.
Lastly, are the cost of premiums which continue to increase economically sustainable for Americans?
The fact that ACA is heavily funded by the federal government for universal coverage means spending is likely to increase with Medicaid expansion as the volume of those covered increased is an economic concern. The spending may hit the GDP and hence affecting the country’s ability to invest in other areas.
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REFERENCES.
Beronio, K., Po, R., Skopec, L., & Glied, S. (2014). Affordable Care Act will expand mental health and substance use disorder benefits and parity protections for 62 million Americans. Mental Health, 2.
Kocher, R., Emanuel, E. J., & DeParle, N. A. M. (2010). The Affordable Care Act and the future of clinical medicine: the opportunities and challenges. Annals of internal medicine, 153(8), 536-539.
Schoen, C., Doty, M. M., Robertson, R. H., & Collins, S. R. (2015). Affordable Care Act reforms could reduce the number of underinsured US adults by 70 percent. Health Affairs, 30(9), 1762-1771.
Sommers, B. D., Buchmueller, T., Decker, S. L., Carey, C., & Kronick, R. (2013). The Affordable Care Act has led to significant gains in health insurance and access to care for young adults. Health affairs, 32(1), 165-174.