Affordable Health Care Act

Affordable Health Care Act

Impact of the affordable health care act

The affordable health care act, commonly referred to as Obamacare, brought a set of health care reforms aimed at making health consumers to be responsible for their health care. The act brought into law the patient's bill of rights, which gives Americans stability and flexibility in making informed health choices and decisions. Enacted by President Obama in 2010 as the Affordable Care Act, it aims in ensuring the insurance reforms in the country are comprehensive. This is achieved through providing discounts for seniors, protecting consumers against health care fraud, providing free preventive care, ensuring small businesses get tax credits, providing cover for pre-existing conditions, providing consumer assistance, and health insurance in the marketplace

The affordable care act also has other benefits for special groups such as women and youth. Women benefit from enjoying insurance options that provide them with preventive services thus lowering their cost of health care. Young adults benefit from being covered by the insurance scheme until they reach the age of 26 years. Overall, Obamacare or the affordable care act is aimed at holding insurance providers accountable because they are required to justify any increase in their premium that exceed

The third aspect is media coverage. The author states that media coverage is important in affecting the ability of states to learn and adapt towards Medicaid expansion. The author states that if journalists adopt a broader view and look at both what is working and what is not working, they can help the public make informed decisions about the ACA as well as implementation of improvement efforts in the future. The importance of this is because it will portray the real picture of Obamacare implementation to the public

Research questions and hypotheses

The Affordable Care Act has been in the spotlight with experts from different backgrounds, economics, insurance, business, and hospitals, discussing its impact. Different views have been presented regarding the effect of the ACA to the economy, African-American communities and African-American students. These are the focus of this paper. The research questions formed for this study are based on these three aspects:

1. What is the impact of the ACA on the U.S. economy?

2. What is the impact of the ACA to the African-American Community?

3. What is the impact of the ACA to African-American Students of the AHCA?

Several hypotheses have been formed that fit these three questions. First is that the Affordable Care Act will stimulate economic growth by reducing health inequalities that exist in the American population. The number of persons who are unable to access health care will reduce significantly since the act is aimed at reducing inefficiencies in insurance schemes and make them inclusive for all. This will increase the number of people present for the workforce and improve their contribution to the country's economic well-being. Additionally, out of pocket health care spending will reduce leading to increase in disposable income for families.

The second hypothesis is that the Affordable Care Act improves the lives of African-Americans because it allows them to access similar health services as the majority white population. Often, the African-American communities have been left out of health sector reforms, which focused majorly on the majority white group. The Affordable Care Act allows them to enjoy the same benefits as the majority group thus improving their quality of life considerably.

The last hypothesis is that the Affordable Care Act will bring positive changes to African-American students. As stated by Debra et al. (2011)

Literature review

The affordable care act which was later amended by the Health and Education Reconciliation Act of 2010 is expected to be fully implemented by January 2014. At this point, individuals and employers are expected to fulfill their responsibilities as provided in the act with state health insurance exchanges going into operation, expansions to Medicaid taking effect and subsidies to individuals and small employers beginning to flow. Though the process seems easy, there are a series of events that must take place in succession to lead to the successful implementation of the act

As described by Rosenbaum S (2011)

The guide the analysis of the effects of the affordable care act, it is best to outline the background of the U.S. health care system and the key features and aims of the act in order to provide a basis for the analysis.

Background of the U.S. health care system

Health care expenditure in the United States constitutes roughly 17% of the country's gross domestic product (GDP)

. Expenditure on health care in the U.S. is higher than most countries in the world and with continued population growth, it is expected that by the 22nd century, spending on health care will be about 50% of the GDP. The high expenditure on health care does not reflect the fairness in the health care affordability and coverage in the country. A good example is seen in the infant mortality rate which stands at about half a percent for the majority white population and over 1.3 per cent for the African-American population

. Other disparities exist in the U.S. health care system and can be attributed to the lack of universal access in the country despite it being ranked as a developed country with one of the largest economies in the world

The elderly population also faces challenges in accessing health care since apart from the few covered by Medicare, majority do not have health insurance since employers are the primary providers of insurance in the U.S. Employer-sponsored insurance or ESI as they are commonly referred to only cover the majority of Americans who have not retired. They do not cover former employees after they retire. This is because the American system provides employers with tax breaks and subsidies for providing health insurance and they also receive lower costs of insurance by pooling risk in the workplace environment.

Christine et al. (2011) present this in detail and provides that the federal government foregoes about 250 billion U.S. dollars each year when they exclude compensation in the form of health insurance from taxation of payroll and gross income

. Employers are not encouraged to provide retired employees with health coverage because insurance for employees is purchased with pre-tax dollars because they are in the employment environment while that of retired or former employees is provided with post-tax dollars. Therefore, employers are greatly incentivized to provide insurance in the employment setting than for older employees

Further to this, the country only has two major sources of insurance coverage that is publicly provided and funded. These are Medicare and Medicaid. Medicare is a universal insurance provider for the elderly in the United States while Medicaid focuses on the poor and low income families. Therefore the majority of the uninsured in the country are the working poor which as Rosenbaum (2011) describes are those whose age and income makes them ineligible for public health insurance coverage and at the same time do not receive health insurance coverage from their employers

This presents the case for the non-group insurance market, which is a major focus for the Affordable Care Act. Majority of state insurance providers often discriminate individuals with pre-existing conditions. This is majorly because they are often a sure event in terms of having to spend on illnesses that the individuals already had at the time when they were insured

. Therefore, though they provide non-group insurance, they have clauses that limit inclusion of persons with pre-existing conditions thus reducing the number of persons covered by their schemes considerably. In market sense, they do not provide real health insurance protection because they have specific clauses that limit inclusion into the schemes

. Therefore, those persons unable to get access to employer insurance coverage schemes and public health insurance schemes face challenges in joining public or state health insurance schemes due to these limitations.

Outline of the Affordable Care Act

The Affordable Care Act provides a series of premium and cost-sharing subsidies for the health care system and establishes new rules for health insurance providers and create a new market for purchasing of health insurance

In the act, Medicaid will be expanded to include all citizens and legal residents in the U.S. whose family income is less than 133 per cent of the federal poverty level. As described by Rosenbaum (2011)

, the federal poverty level is described as a measure of modified adjusted gross income. This is expected to streamline Medicare enrolment even though the five-year waiting period for United States legal residents will continue to apply to those who have recently arrived into the country.

According to provisions in the act, the almost universal coverage will be the duty of individuals, employers, and insurers. Individuals have a duty to safeguard their right to universal coverage. All taxpayers in the U.S. have this duty and only those who are not legally present in the country are exempted from both the guarantee of universal coverage and their obligation to secure insurance coverage

. By law, persons who for religious or other reasons are unable to join these schemes are exempted. According to Scott (2013)

, it is this duty of individuals that makes universal coverage possible. Without this legal mandate, a large number of persons who are healthy would not see value in risk pooling and thus would not enroll for insurance coverage. Similarly, private health insurance would not eliminate discriminatory pricing that favor the healthy individuals. Private insurance providers cannot protect themselves from adverse selections since they have a duty to provide insurance to all individuals.

As suggested by Genevieve et al. (2012)

, the ACA is basically a three-legged stool that connects the broken ties between employers, private health insurers and individuals. The first stool leg includes proposed reforms to the non-group insurance market. The act outlaws exclusions for persons with pre-existing conditions and other insurance discriminatory practices of the past. This guarantees access to non-group insurance for all individuals despite their health condition. It also imposes limits on differential pricing by insurers based on the health status of individuals. Previously, health insurance providers charged differently for smokers and non-smokers, and different age groups. This differential pricing has been outlawed. Further to this, minimum standards to be met by insurance providers have been set in both non-group insurance and small group insurance markets. These standards provide a list of minimum essential benefits that individuals should receive that meet the minimum actuarial value of the insurance package

These reforms are viewed by most health care experts as being long overdue. However, some argue that the reforms create a vacuum in which individuals cannot survive. In as much as the Affordable Care Act guarantees insurance access for individuals at fair prices despite health status, it creates some issues since many individuals may decide not to purchase insurance until the point when they are sick and really need it

. This would make better financial sense for these individuals since they would purchase insurance at average prices. On the other hand, insurers will have to charge higher prices because the pool purchasing health insurance will be sicker than the average

. This will adversely affect price of health insurance by making them higher on average in the end and lead to failure in the insurance market. This foresight is supported by precedence where five states that attempted to reform their non-group insurance market in the 1990s faced challenges by the mid 2000s when they became the five most expensive states to purchase non-group insurance

According to the author, the second leg of the stool is the duty of individuals to purchase insurance, referred to as an individual mandate. Citizens and legal residents of the United States are required to have health insurance coverage or face a steep penalty of two and a half percent of their income. As suggested by Rosenbaum (2011), this individual mandate creates issues for the health care system because it would make it impossible to make insurance affordable since for individuals to fulfill the requirements of their legal mandate, they need insurance to be affordable in the first place

. This is an unhealthy reliance on affordability of health insurance, which is also the desired objective of the Affordable Care Act.

The third leg of the stool is the government providing subsidies to make insurance affordable for low income or poor families. Under the Affordable Care Act, two forms of subsidies are provided. The first is by expanding Medicaid to all individuals whose income falls below 133% of the poverty line. Second is through tax credits provided to individuals to offset the cost of non-group insurance that they purchase privately. These tax credits are capped at three percent of their income at 133% of the poverty level to nine and a half percent for individuals at 400% of the poverty line

. This cap is meant to limit the share of income that the individual spends on their insurance and indirectly to reduce the price of insurance since providers will have to stick to amounts provided under these caps. The only individuals that are exempted from this individual mandate are those whose incomes fall below 400% of the poverty level or where the cheapest insurance option that is available to them costs them more than eight percent of their gross income.

The Affordable Care Act proposes financing of these tax subsidies from several sources. First is by reducing the reimbursements provided to private insurers under the Medicare Advantage program that provides alternatives to the government's Medicare program for the elderly. Fourteen (14) per cent of subsidies will be funded through this source. Thirty-three (33) per cent of subsidies will be funded through reductions in reimbursements for Medicare provided to hospitals each year. Since the Affordable Care Act proposes elimination of inflation adjustment provided to hospitals, funds will be freed up for tax subsidies. Twenty-one (21) per cent of these tax subsidies will be financed through increasing Medicare payroll tax by roughly one (1) per cent and extending this tax to capital income for those individuals earning more than 200,000 annually and families earning more than 250,000 per year. Eleven (11) per cent of tax subsidies will be funded through new excise taxes that will be levied to several sectors of the U.S. economy that will benefit from increased health insurance coverage of medical spending in the United States such as pharmaceuticals and medical device companies. The non-deductible fourth (40) per cent tax levied on insurance products that cost more than roughly $10,000 for individuals or more than $27,500 for families in the year 2018, also known as the Cadillac tax, will provide three (3) per cent of funding for tax subsidies. These limits will be revised annually based on the consumer price index. The last source of income for these tax subsidies is penalties paid by employers and individuals and taxes charged on individuals with higher wages resulting from reduced spending by employers on insurance. This will fund twenty-one (21) per cent of the tax subsidies

Aims of the Affordable Care Act

Rosenbaum (2011) states that the Affordable Care Act consists of 10 separate legislative titles with several aims. The main aim, as earlier described, is to drive the health system as close as possible to universal coverage

. To do so, the act proposes the importance of shared responsibility between the government, employers, and individuals. As suggested by Rosenbaum (2011), this central aim of the Affordable Care Act is the subject of majority of debate by scholars, congress, and other health care experts

. Economists in particular have argued that universal coverage, though justified, is difficult to achieve because of the change of unforeseen illnesses or injury that will increase costs considerably. On the other hand, economists have praised the law placing individual responsibility in achieving universal coverage since it encourages citizens to opt in to medical insurance schemes thus increasing coverage considerably

The second aim of the Affordable Care Act is to make efforts towards improved quality, affordability, and fairness of health insurance coverage. Further to this aim, as suggested by Bradley and Lentz (2011), the Affordable Care Act strives to ensure costs of treating the uninsured are not covered by the society rather this is covered by hospitals and insurance providers

. By converting the non-group insurance market of the U.S., the act aims to ensuring majority of the population have health insurance and significantly they expand their public insurance and subsidies to private insurance to increase affordability of health insurance thus increase coverage. By increasing revenues for insurance providers through subsidies and tax breaks, the act aims at reducing and reorganizing spending under the country's largest insurance plan, Medicare. As posited by the authors, this will lead to increased fairness and affordability of health insurance in the country

The third aim of the affordable care act is to improve the value, quality, and efficiency of health care by reducing overspending or wasteful spending in the country and increasing accountability. Scholars have argued that the Affordable Care Act may lead to increased efficiency of health care services by ensuring accountability of individuals, insurance providers, hospitals, and employers

. At the same time, the increased coverage of the American population may make it harder for this because the number of people accessing this services will increase considerably compared to the number of providers which projections state will remain the same as some are skeptical about the provisions of the law.

The fourth aim of the Affordable Care Act is to strengthen access to primary care by ensuring long-term changes in the availability of primary preventive care are implemented and sustained. Preventive and primary care is a core part of the Affordable Care Act. According to projections provided in the act, increased spending on preventive care is expected to reduce expenditure on other services in the health care sector considerably.

The final aim of the reforms proposed in the act is to ensure that strategic and informed investments in the public are conducted to ensure that clinical and preventive services are expanded through state, private, and community involvement. McDonough (2011)

Methodology

The study uses a qualitative approach to answer the research questions mentioned earlier. This method allows for collection, analysis, and interpretation of comprehensive narrations and this is triangulated with the reflection of the researcher to gain in depth insight into the aspects to be answered by the study

. Only secondary data will be used for this study to illustrate the variety of views on the impact of the Affordable Care Act and any conflicts arising between findings.

Data collection and analysis

Two main sampling techniques are used for this study, convenience and purposive sampling. Convenience sampling was used to identify sources from EBSCOHOST and Google, which are the available literature search engines while purposive sampling is used to choose a mix of articles written by individuals and experts on economic, ethnical, and technical (hospital and insurers) aspects of the Affordable Care Act. A search will be conducted on EBSCOHOST to find articles published since 2010 when the Affordable Care Act was first signed into law and analyzed to title, abstract and full text screening conducted to identify those that mention the impact of the Affordable Care Act to the economy, African-American communities, and African-American students. A thematic analysis framework was used to identify themes arising from these sources and reflection notes kept by the researcher. The reflection notes will be kept in a journal that contains personal reflections and these are then triangulated with the secondary data from published material and grey literature. Triangulation is important to improve the validity and reliability of this study

Quotations will be used to illustrate the aspects identified from the secondary sources

. Quotes will be important to show the pattern of the analyzed data and these will be purposively chosen to represent the variety of thoughts and opinions from the sources identified.

Analysis

Effect of the Affordable Care Act on the economy

Carter et al. (2013)

state that the Affordable Care Act has been signed into law at a time when the growth of the economy is currently recovering from the financial recession and the employment figures are mixed. Therefore, the importance in identifying the effect of the act on the economy. Strauss (2013) states that the law has provisions that hinder employment and economic growth from several aspects required by the law

. One is the law requires employers to pay for minimum standards health insurance coverage for their employees. Though this has currently been delayed through efforts by employers who have argued the negative impact of the law, this may slow down growth as employers will be skeptical about hiring new employees who they have to pay insurance for. Instead, as suggested by Linda et al. (2012), these companies will prefer to work with part time employees or legal immigrants for who they do not have to pay health insurance

. This will mean that less jobs will be created by the economy. Furthermore, the law requires those earning higher incomes to pay more to the Medicare thus reducing the disposable income for these individuals. This will have a negative impact on economic growth. The third aspect is that the law stipulates higher taxes for health insurance providers, pharmaceutical and medical device companies, which will reduce their income and hurt economic growth as well

Many economists have presented the case for this negative impact of the provisions of the Affordable Care Act but some argue that the law actually has positive aspects as well. Jacobs (2010) points at data from the President's Council of Economic advisers that shows that work hours in the restaurant industry have actually increased since March 2010 when the bill was signed into law. Retail businesses show the same trend where more working hours are being recorded

. Price et al. (2013) suggest that these figures may be as a result of the employer mandate having not kicked in . However, Blumberg et al. (2012) suggests that fears of the adverse effects of the act were overblown and employers are not worried about the impact of the law

. Studies conducted by different authors also support the same line of thinking by showing that there is little adverse effect of the employer mandate. The study reports that employers value health insurance greatly so they feel the mandate is actually beneficial to them.

The most important economic aspect of the act is the reduction it brings to the cost of medical care. As Price et al. (2013) suggest, small businesses will benefit from this cost reduction since they face issues with rising health insurance costs

. Often these small companies have to struggle with increasing total compensation of their employees as the cost of medical care increases. As the study suggests, there is a link between health care costs and employment

. The study shows that as industries provide workers with health care coverage experience lower growth in their employment. The same was experienced in Canada where businesses confirm the role of health insurance in employment. Therefore, businesses in Canada do not pay for insurance. The act, therefore, will bring slow employment growth to the economy.

The Affordable Care Act is aimed at reducing waste within the system. This as stated by Harrington (2010) is met by the act's careful handling of the demand and supply side of the health care system

. By ensuring employers pay for health insurance and expensive insurance plans are charged the Cadillac tax, wastage within the system will be reduced leading to overall benefits to the economy

The findings of this analysis support rejection of the hypothesis that the Affordable Care Act will bring more negatives to the economy. The negative impact of the act on the American economy clearly outweighs the positive impact.

Impact on the African-American Communities

Ethnic and racial disparities in the American health system are persistent. Minority groups like the African-Americans find themselves lagging behind the majority white group across all health indicators including access to affordable and quality care, life expectancy, and prevalence of chronic diseases. Population statistics show that thirty-three per cent of the American population consists of these minority groups including African-Americans and half of these minority groups have no health insurance coverage. It is estimated that slightly over twenty (20) per cent of African-Americans are uninsured compared to sixteen (16) percent of the total American population

The act is aimed at improving insurance coverage for African-Americans by allowing them to access affordable health insurance and better quality care. Estimates provided by Hofer et al. (2011) suggest that about four (4) million African-Americans who would have otherwise remained uninsured will benefit from the act by the year 2016 through the expansion of eligibility for Medicaid and creating affordable health insurance exchanges

Furthermore, African-Americans will benefit from increased availability of preventive or primary care. As suggested by the authors, African-Americans compared with other majority groups have less chances of receiving and seeking preventive services

. Dinan (2011) adds to this by stating that African-Americans often have the largest disparities in the life expectancy related to stroke and heart disease

. Similarly, more African-American women are likely to receive a diagnosis of breast cancer or die from it than the majority white population. This is because of high rates of the uninsured in the African-American population fueled by inequitable access to preventive care that create barriers to early detection and screening of these diseases. African-Americans will thus benefit from increased access to these preventive services as stipulated in the act.

The American population will also gain from the Affordable Care Act in the aspect of receiving better opportunities to train as doctors, nurses, or other cadres of health workers. The Affordable Care Act proposes the National Health Service Corps to triple the number of scholarships and loans provided to medical students of African-American origin as well as primary care physicians in order to diversify the workforce and ensure cultural competency of those working in the industry.

African-American communities also stand to benefit from improved access to community health centers. According to provisions in the act, more community health centers will be built in medically underserved areas, often found where African-American communities live. The aim of this expansion of health centers is to provide primary and preventive care to African-American communities

. The Affordable Care Act will in this sense support increased access to health care for the African-American communities.

African-American communities also stand to benefit from improved management of chronic diseases. African-American communities are often the worst hit by chronic diseases because of their lack of access to primary or preventive services. Racial and ethnic minorities often receive poorer quality of care and have other barriers that prevent them from seeking and receiving preventive care services

As stated by Anand et al. (2011), the Affordable Care Act is expected to invest in data collection and research on the disparity of health care services in the United States. The act will help the elderly to live longer by promoting health lifestyles such as tobacco-free living, and investing in other programs to improve health and reduce these disparities in the health care system by lowering the cost of health care

. Through the Department of Health and Human Services Disparities Action Plan that is part of the act, health disparities should be eliminated in the country. The department is also tasked with upgrading the standards for collecting data on health disparities, better understanding of causes of these disparities and enabling access to increased health care funding.

The findings from this analysis support confirmation of the hypothesis that African-American communities stand the benefit greatly from the Affordable Care Act. Their benefits come from multiple channels and overall, they stand to gain more than they lose.

Impact of the Affordable Care Act on African-American students

Statistics described by Leininger and Burns (2011) suggest that there are over 5 million African-American students and youth living below 200% of the poverty line