Abstract
Quality, accessible and affordable healthcare, commonly referred to as universal coverage, is the desire of every American. The Patient Protection and Affordable Care Act aims at ensuring that universal coverage is achieved. This paper highlights basic provisions of the Patient Protection and Affordable Care Act with regards to the attainment of universal coverage.
Patient Protection and Affordable Care Act is not a mere Act of Parliament; it is already in its implementation phase. Controversies and shortcomings have emerged on its long-term sustainability, especially with implications of unexpected cost of healthcare. This implies that statutory amendments aimed at addressing these challenges are necessary.
Introduction
Healthcare reforms have been the concern of the current and previous American governments. The Patient Protection and Affordable Care Act is one of the numerous congressional efforts to institute far-reaching reforms aimed at not only improving the quality of healthcare but also easing access to healthcare services for a majority of Americans.
The Patient Protection and Affordable Care Act targets at least 45 million previously uninsured Americans while improving accessibility and benefits to already insured sections of the American population. ACA is a complex law that aims at attaining universal healthcare coverage through various provisions. The Act can be traced back to President Obama’s presidential campaign healthcare proposals. It also borrows from previous Acts on healthcare reforms especially those passed in the 1990s.
There are far-reaching effects on the American healthcare services which can be attributed to the Patient Protection and Affordable Care Act. For instance, ACA’s overall cost is expected to increase to almost US $ 1 trillion by the year 2020. This is likely to increase the overall cost of healthcare services.
This is besides the increases in the cost of insurance premiums accrued by state-funded healthcare programs. Additionally, the Act increases the demand for healthcare services which increases pressure on healthcare providers. These are some of the unexpected occurrences associated with the Acts, which implies that amendments are required in the near future if universal coverage is to be sustained.
Background: Patient Protection and Affordable Care Act
Healthcare analysts assert that the Patient Protection and Affordable Care Act can be traced back to the 2008 United States presidential contest, especially during the democratic presidential nomination race. The Democratic presidential contenders, Hillary Clinton, the then-senator for New York, and the current President Barrack Obama promised extensive healthcare reforms which would ensure that more than 40 million Americans, especially those not covered by any healthcare scheme accessed quality and affordable healthcare.
Obama’s healthcare campaign policy promised government subsidies to consumers of healthcare products across America. Upon inauguration, president Obama prevailed upon congress to formulate a workable healthcare program that would cover all Americans. It is imperative to state that the final healthcare plan worked under Obama bears resemblance not only to his campaign healthcare reform proposals but also previous Acts introduced in the 1990s.
Of particular importance are the ‘Health Equity and Access Reform Today Act’ and the ‘Consumer Choice Health Security Act’ introduced by republican senators in 1993 and 1994 respectively. The two Acts proposed coverage for all and the individual mandate, concepts that are at the heart of ACA. Despite major oppositions and divisions even within President Obama’s inner circle, the bill was eventually passed after numerous congressional concessions.
ACA summary
The Patient Protection and Affordable Care Act, ACA, is one of the recent laws enacted by the American government, aimed to improve healthcare for all. Obamacare, as ACA is popularly known, was passed by the House of Representatives in 2009 and effectively become law in March 2010.
ACA has various provisions, whose effectiveness takes place over ten years beginning in 2010, and is expanded to incorporate Americans living below the standard poverty line; families with yearly income totaling up to 400% of the poverty level are covered. ACA also requires medical insurers to charge equal premiums to all members of the existing medical care scheme regardless of a pre-existing medical condition.
Under ACA, individual Americans not covered by any medical scheme attract a penalty unless they maintain a minimum healthcare plan. Individuals can only be exempted on the basis of membership of a religious organization that is exempt from taxation by IRA, or in case if a dire financial strain.
To expand its coverage, ACA establishes the healthcare insurance exchange, a system under which individuals and employers compares different prices and healthcare options, before the choice of a healthcare plan is made (DPC, n.d.). ACA also offers medical insurance subsidies to low income individuals as well as the elderly including Americans aged over 65 years, thus making universal coverage attainable (Berenson and Holahan, 2010; Taylor, 2010).
Universal coverage utilizes the sliding scale rule, under which those whose incomes equals 100 % federal poverty line receive a 2% tax credit , and gradually slides to a maximum of 9.8% for Americans whose incomes equals 300 to 400 % of the federal poverty line.
To make healthcare attractive Obamacare eliminates annual and lifetime medical cover upper limits while establishing minimum Medicare insurance standards. ACA also introduces the concept of shared responsibility, under which employers, employees and the government can opt to share the responsibility of Medicare. To ensure that the standards of quality are adhered to, ACA provides additional support for medical research (Keehan, et al., 2011).
ACA is a broad based medical insurance scheme, which requires adequate funding for sustainability. As a result, the US government has outlined several funding strategies. ACA’s biggest funding comes from a number of taxes. These include additional taxes for high incomes earners especially those within the $200,000 to $250,000 annual income bracket. This is besides taxes levied on expensive medical equipment, pharmaceutical companies and a 10% tax levied on sales from tanning beds used for skin surgery (Davis, Hahn, Morgan, Stone and Tilson, 2010).
There are important statistical figures which ACA is built on. For instance, the Act aims at providing access to affordable healthcare to about 94% of Americans for a reduced cost of approximately US $ 0.78 trillion (Davis, Hahn, Morgan, Stone and Tilson, 2010). This is aimed at reducing healthcare budget deficits over a ten year period commencing 2010.
Implications and ramifications of ACA
The primary goal of Patient Protection and Affordable Care Act is the attainment of universal coverage with regards to provision of quality and affordable healthcare services. This implies that ACA automatically increases the demand for healthcare services across the American populace. This is likely to negatively affect state funded healthcare, such that the demand for healthcare services increases at the same rate as state healthcare insurance premiums (Taylor, 2010).
Additionally, increase in demand for healthcare services is likely to increase the cost of basic healthcare. Arguments abound as to the causes of cost increases, with the aging baby boomers being cited as one of the major causes. Nevertheless, Davis, Hahn, Morgan, Stone and Tilson (2010) cite growth in pa capita healthcare expenses as a major cause.
In addition to this, critics argue that ACA is primarily designed for the non elderly population and that it largely ignores the healthcare demands for those aged 65 years and above. Nonetheless, ACA affects the elderly population in a number of ways, especially in reducing the burden of sharing the cost of prescription drugs and diagnostic services (Berenson and Holahan, 2010).
ACAs implementation requires proper coordination and management. As such various government agencies and departments are directly involved. For instance, ACA requires that the Human Health Services not only harmonize preexisting government healthcare schemes such as Medicare and Medicaid, but also coordinate dual eligibility; enrolment by individuals eligible for both state and federal governments’ funded healthcare schemes (DPC, n.d.).
Additionally, ACA aims at ensuring quality standards are adhered to by providing extra financial support to medical research. While the Comptroller General is required to ensure that no research funds are misconstrued, extra funding in medical research is ACA means of attaining patient centered approach to healthcare (Keehan, et al., 2011; DPC, n.d). The department of labor is to collaborate with the Comptroller General in ensuring that quality standards are ensured.
As indicated earlier, ACA is funded through highly complex tax measures and its cost amounts to US $ 0.78 trillion. ACA complicated financial transaction are based on two major trust funds, controlled by treasury. These are the ‘Hospital insurance Fund’ and the ‘Supplementary Medical Insurance’.
For instance, the hospital insurance fund is financed by funds derived from payroll taxes. It is worth noting that the hospital insurance trust fund does not involve transfer of money from the treasury into the healthcare system. Instead, the hospital insurance fund is financed through interest-accruing government securities. The role of the treasury is to ensure that balance is attained before any payments are made.
However, controversies abound to the effect that the hospital insurance fund can only be sustained for the first seven years and then after become insolvent. Such assertions come at a time when industry analysts argue that due to interest rates and inflationary effects, the cost of ACA is projected at US $ 0.98 trillion by 2020, as indicated in the graph below (Keehan, et al., 2011). Such increases are also as a result of, among other unexpected costs, the maturity of unfunded mandates from 2012 to 2021, which are likely to increase the cost of state funded healthcare by US $ 40 billion.
Recommendations
There are genuine claims of ACA’s future sustainability based on the current statutory provisions. For instance, the current design of ACA’s ‘Hospital Insurance Trust Fund’ faces imminent insolvency five years from now. There is no statutory mechanism to ensure direct transfer of funds from the treasury to the fund. As such, the congress ought to make immediate statutory adjustments in anticipation to this. These statutory adjustments ought to also address the current funding strategies in anticipation to any future eventuality.
In addition to this, ACA increases the burden on state funded healthcare and as such, the statutory adjustments should also factor in increasing funding for state healthcare programs. Most importantly the increase in the cost healthcare is attributed to the increase in pa capita cost of health. This precipitates the need to minimize race and class based healthcare disparities. Eliminating such disparities will spread the cost of healthcare evenly and effectively lower pa capita cost of healthcare.
Conclusions
The aim for universal coverage has numerous ramifications and implications. ACA increases the burden on state funded healthcare programs, implying that state government have to rethink funding strategies for state healthcare programs. Additionally, while it is commonly thought that the aging baby boomer generation is likely to increase the cost of healthcare, studies by Davis, Hahn, Morgan, Stone and Tilson (2010) indicate that the increases in pa capital healthcare rates portends spiraling healthcare costs by 2020.
As such, the aging baby boomer generation has no effect on the cost of healthcare. Instead, the baby boomers and the aged stand to gain from ACA’s reduced cost sharing especially in reducing the cost of diagnostic and prescriptive treatment. Additionally, ACA seems to be one of the major avenues through which the government attains its goal of providing patient-centric healthcare. This is attained through additional funds earmarked for improving patient centered medical research activities, which effectively improves the quality of healthcare services available.
ACA’s overall cost is estimated to be about US$ 0.78 trillion, which is to be funded through taxes and government subsidies. However, numerous factors, such as the inflationary effects as well as the maturity of unfunded individual mandates, are likely to increase ACA’s budget to almost US$ 1 trillion.
The unexpected increase in the cost of healthcare under ACA can also be attributed to claims that some of ACA’s major provisions, such as the hospital insurance fund, are likely to be bankrupt by the year 2017. The unexpected increase in ACA’s budget cost has various implications. To begin with, ACA’s designers failed to factor in contingency plans. This implies that there are legal amendments needed not only cater for the sustainability of these provisions but also to ensure the constitutionality of any action taken to avoid bankruptcy.
Reference List
Berenson, R. and J Holahan, J. (2010). How Will the Patient Protection and Affordable Care Act affect seniors? Web.
Davis, P., Hahn, P., Morgan, P., Stone, J. and Tilson, S. (2010). Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA). Web.
DPC (n.d.). The Patient Protection and Affordable Care Act. Web.
Keehan, P., et al. (2011). National health spending projections through 2020: economic recovery and reform drive faster spending growth. Health Affairs 30 (8). Web.
Taylor, M. (2010). The Patient Protection and Affordable Care Act: an overview of its potential impact on state health programs. Web.