Thus far the Patient Protection and Affordable Care Act, also known as ACA or Obamacare, has had a mixed impact on the nation. On the one hand, the implementation of a system of affordable health insurance has allowed millions of uninsured Americans access to affordable care, some for the first time in their lives.
The law aims to support traditionally underserved and at-risk groups, including low-income individuals and families, pregnant women, women in general, children, the elderly, the disabled, and so on. The ACA also made discrimination against certain groups in terms of pricing and approval of coverage illegal, so that now those with pre-existing conditions no longer need to worry about being over-charged for health insurance, or worse, being dropped or denied coverage outright.
On the other hand, there has been a lot of contention concerning the mandates involved, including the individual mandate requiring all citizens to carry minimum qualifying health insurance coverage and the mandate for most employers (with some exemptions) to provide health benefits that meet minimum essential coverage standards for their employees. Also contentious are costs associated with the law, as well as the requirement for all states to operate health insurance exchanges.
Opposition to Obamacare has led to lawsuits going all the way to the Supreme Court, but thus far, the core components of the law have remained in effect and proven effective for states that have gotten on board with reform. What people are beginning to wonder is what the economic impact of healthcare reform will be over time. Here are some of the costs and savings to consider.
There was initial speculation that the implementation of Obamacare, and especially the employer mandate, would lead to many businesses enacting layoffs, reduction in work hours (ostensibly reducing the number of full-time employees), and overall reduction of income for many workers. So far these suppositions have not been substantiated, at least not as a direct result of the passage of the ACA.
At the time healthcare reformed was enacted in 2010, the country was in the midst of recession, so layoffs and reduction of hours for workers were already underway. In addition, the implementation of the employer mandate was delayed.
Since then, the country has seen growth in both part-time and full-time jobs. Likely these changes have more to do with the general state of the economy than the implementation of Obamacare, but it’s hard to know for sure.
Other potential ongoing costs include support for federally-run exchanges and Medicaid expansion. The good news is that limits were put in place regarding how long the federal government would continue to offer incentives for states to create self-run exchanges.
Additionally, it is estimated that returns from savings on various healthcare costs will make the system more sustainable over time, eventually recouping initial costs and funneling funding back into programs that need it, such as Medicare and Medicaid. It remains to be seen whether this forecasting will come to fruition.
The current buzzword centering on projected savings associated with Obamacare is “healthcare inflation”, which refers to the increasing costs of healthcare services year upon year. Although some pundits have estimated that the ACA will go well beyond its proposed budget, reports from the Congressional Budget Office (CBO) in 2015 declared that the program is slated to come in at 20% less than anticipated thanks to greater returns.
According to the CBO, anticipated costs for administering Obamacare have dropped due to dipping healthcare costs that have slowed inflation in the industry. The number of uninsured Americans that signed up for health insurance as of 2015 came in at over 12 million, and it is estimated that another 12 million will obtain coverage by the end of 2016.
Although the number of Americans gaining coverage through programs like Medicare and Medicaid has increased, boosting federal costs in one area, these expenses are more than offset by the decline in healthcare inflation, and the CBO estimates that costs for reform will reach $571 billion by the end of 2019, which amounts to $139 million less than originally projected.
Affordable Health Insurance
One area in which the ACA has largely excelled is in providing affordable care options to more Americans than ever before. The rate of uninsured citizens has dropped significantly since the implementation of Obamacare.
This is probably due at least in part to the mandate requiring all citizens to obtain minimum qualifying coverage (or face increasing penalties for failure to comply). However, it can likely also be attributed to the fact that many Americans who were previously unable to obtain affordable health insurance (or any health insurance) due to low-income situations or pre-existing medical conditions are now eligible for assistance.
Of course, not every state has jumped aboard the healthcare reform bandwagon. Many persist in dragging their feet, particularly in regards to Medicaid expansion. Some states accepted federal funding and elected to contribute state funds to the expansion, as well, providing needed services for eligible residents.
Other states only took federal funding. Still others exercised their option to deny Medicaid expansion altogether, leaving many residents without realistic access to affordable care options.
In most cases, Obamacare has delivered on the promise to provide affordable health insurance options to the majority of U.S. citizens, many of whom now receive benefits through their employer or assistance through state health exchanges and federal and state programs. If the ACA remains in effect, more and more states are likely to get on board with healthcare reform and, over time, more Americans will gain access to the preventive, emergency, and other essential healthcare services.
Improved Quality of Care
One of the many ways in which the ACA was projected to save money was through improved quality of care. By mandating health insurance coverage for every citizen, those who were previously uninsured gained access to essential preventive care services, potentially lowering the long-term (and extensive) costs associated with a failure to treat conditions until they were so advanced as to be cost-prohibitive.
Not only is this ethically responsible, but it also makes sense from a financial standpoint. Further, the ACA comes with built-in provisions for oversight that set limits on costs for certain procedures and demand that standards for care (including after care) be met in order to continue receiving payments through federally-funded programs.
The effects of Obamacare on the economy have likely been overestimated by some and underestimated by others, but so far the ACA seems to be exceeding expectations in terms of cost savings for both citizens and the proposed program budget.
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