I wanted to try something new. I wanted to try and explain the major portions of the Affordable Care Act of 2010 without the hyperboles, scare tactics and disregard for the truth both sides of the political arena have touted. I will attempt to express the many concerns people have about this bill and recent SCOTUS ruling. I will then offer my best interpretation of how this concern can be fixed and/or a clarification for the confusion. To begin, here is the basic gist of what the Affordable Care Act of 2010 does as reported by CBS News.
ACA Concern #1: More coverage for more Americans means that hard-working Americans have to share waiting lists and wait in lines with people who have less-than-ideal insurance coverage.
Potential Fix: One way this is being fixed is by for-profit hospitals charging people as much as $350 up front for emergency care that is not urgent. In an article by Kaiser Health News, they explain that as many as 27 percent of ER cases could be handled more cost-effectively by going to clinics or doctor’s offices, not the emergency room.
Also, part of the reason your care is being rationed is because the U.S. has fewer doctors, physicians and hospitals than other developed countries. Also, we have a growing epidemic of obesity meaning our population is growing sicker by the year.
An argument can be made that because we have so few doctors, nurses and facilities, the ACA is a potential job creator due to the fact that the demand for health care professionals is extensive. We spend more than any other developed country when it comes to health care. Carolyn McClanahan of Forbes wrote this:
“According to the OECD, we spend $7,960 per person per year for health care in the U.S., totaling about $2.5 trillion. In comparison, the average OECD country spends $3,233 per person annually for health care. (In case you don’t know which countries are included in the OECD, they are mostly places you would be happy visiting.) If we could achieve average spending, the U.S. would save $1.5 trillion a year in health care costs.”
So naturally, this leads to our next concern.
ACA Concern #2: It will kill jobs.
Clarification: There are a number of tax credits for businesses like:
- Small business tax credit of up to 35% (up to 25% for non-profits) for companies that employ up to 25 people
- Small businesses with fewer than 100 employees can shop in an affordable insurance exchange
- Businesses with fewer than 50 employees are exempt from employer responsibility
Is this a guarantee to keep companies from firing workers and raising premiums to cover the effort it takes to rewrite their policies? Of course not. The discretion whether or not to fire people is and will always be left up to the individual employer or insurance company. They will do what they want with their product to make the most money. After all, it is their product.
All the ACA supporters can hope is that there will be enough incentives in place for employers and insurance companies to adopt the new requirements without laying off their workers. That is a big hope by the way.
ACA Concern #3: It will cost the states too much.
Clarification: For the first few years of the ACA, the federal government will cover the costs for states (up to 90 percent).
What the bill creators hoped was that for these additional 32 million Americans covered—this includes those that are between 100-400 percent of the federal poverty level (FPL)—the insurance companies will compete for the new customers in new exchanges. Customers hope this will bring costs down, but insurance companies still have the ability to increase premium rates at their discretion.
Though employers and insurance companies are required to cover new customers for the most part (which are considered new regulations, taxes and burdens), covering an additional 32 million people could net insurance companies approximately $1 trillion over the next eight years.
Additionally, individuals and small businesses are expected to get a rebate of approximately $1.3 billion because of a provision that requires 80 percent of premiums go toward medical costs and quality improvement.
But if states decide to take federal money the first few years, they will be required to pay up to 10 percent of the total cost of the ACA’s expansion of Medicaid. Already Republican leaders are sharing their reservations because some say they barely have the funds to support the current version of Medicaid.
ACA Concern #4: By mandating that Americans and companies pay into health care or risk fines, we’re essentially mandated what people have to do with their own lives.
Potential Fix: There really isn’t any way around this part. This is what most Americans dislike about the ACA. It is an infringement on our liberty and this part of the bill will probably continue to be fought. This is something both sides agree on.
The mandate might play a positive role in preventing Americans from dying due to lack of insurance. A report showed that 26,000 Americans die each year due to lack of insurance. Maybe this will help, maybe it won’t. But it’s a start.
ACA Concern #5: It’s government overreach.
Clarification: Not necessarily. In his ruling, Justice Roberts said that forcing states to expand their Medicaid coverage through the ACA or risk losing federal funding for Medicaid is unconstitutional. The decision to expand Medicaid is still up to the discretion of the states.
Current System Concern: Medicare and Social Security are due to be insolvent quicker than expected. Add the growing concern that the Baby Boomer generation is coming of age and taking out more from entitlements than they are putting in with the fact that people are living longer and you have a bubble ready to burst (potentially being worse than the mortgage-backed security bubble).
If we were to continue with our health care system without enacting any major changes, we would see massive taxes or major cuts to programs. Social Security is due to be insolvent by the year 2036 and Medicare by 2024. According to an editorial by The New York Times:
“Fixing the projected long-term shortfall in Social Security would require changes equal to a 17% increase in Social Security taxes or a 14% cut in benefits; fixing Medicare’s hospital insurance program would require the equivalent of a 21% hike in Medicare taxes or a 17% cut in benefits. The magnitude of those changes will only increase if Congress waits to act.”
Similarly, members of Congress don’t want to discuss this concern out of fear of losing their jobs. They don’t want to lose the vote of the people who keep them in office: older, affluent Americans who use entitlements regularly.
Taxes and Revenue:
Nobody wants to see taxes go up or their benefits cut, right?
But we may have to do this regardless because tax levels since World War II, which have been at an average of 18.3% of GDP are actually speculated to have been too little. These tax levels may have played a factor into why the U.S. is in the its current deficit problem. Some argue the only time America had a balanced budget was between 1999 and 2001 when levels were between 19 and 20 percent of GDP. The current budget, Obama’s plan and Paul Ryan’s ideas really don’t do enough to cover this increasing concern either.
The worst part about this problem is that this all comes full circle because there are still millions of young Americans either underemployed or unemployed due to the recession. If they don’t have jobs, they’re not going to pay into the health care system for the simple fact that they can’t afford to.
Potential Fix: Though I’m not a fan of using information from the Heritage Foundation think tank (here is a look at their plan) for the purposes of this post, I believe they have a reasonable solution to beginning to fix our problem within entitlements.
The first solution is to get Congress to acknowledge this is a problem and stop scaring our older population into thinking the government wants to kill them by revamping the status quo. The second solution is to have a review of the health care industry’s 30-year plans (i.e. entitlements) every five or so years to make sure we are not exceeding our expenditure-to-revenue ratio.
A second solution might be to require seniors who can afford to pay for Medicare do so as opposed to allowing them to automatically receive government subsidies once they turn 65. Having something in effect that not only limits what seniors are reimbursed, but requires that they give back to their heirs would be something that could keep this country from facing hard times by 2040 and beyond.
The last possible solution is to get Congress to address student loan debt, unemployment and our educational system. China and Africa are kicking our children’s asses when it comes to educational achievement and success.
If you’re still confused check out Kaiser Health News.
Here’s an inside look at how states are already reacting to the health care ruling. There is a LOT of commotion going on to say the least.
Lastly, here is the text for the 2010 law.
Thanks for taking the time to read my word vomit. I hope this clarifies some stuff and I hope you can go forth and have civilized and intelligent conversations with people about a pivotal area of our lives that will forever be changed. In my next post I will discuss what is at the heart of our health care problem—And it has little to do with money and the system itself.