FUNDING THE RISING COST OF U.S. HEALTH CARE 7
Fundingthe Rising Cost of U.S. Health Care
Fundingthe Rising Cost of U.S. Health Care
Healthcarehas been one of the most fundamental sectors in the contemporaryhuman society. This may especially be as a result of the bearing thatit has on the wellbeing of the economy of any country. Indeed,scholars have underlined the relationship between the health ofpeople and that of the economy by stating that only healthyindividuals have the mental, physical, as well as psychologicalcapabilities to create wealth. It is, therefore, not surprising thatthis sector occupies an immense proportion of most countries’budget. Unfortunately, recent times have seen an increase in the costof healthcare in a large number of countries, with the United Statesbeing no exception.
Needlessto say, the rising cost of healthcare has a negative impact on theeconomy of the United States. As stated, healthcare determines theindividuals’ capability to engage in economic activities both inthe long-term and the short-term. It goes without saying that theincreased cost of healthcare would mean that fewer people have accessto the healthcare services. Further, more funds would be dedicated tothe acquisition of healthcare services instead of profit-building oreconomic-enhancing activities (Saenz,2010).Research has shown that about 77 million Americans above 19-yearsold, or 40% of American adults, find it difficult to pay theirmedical bills, are currently having accrued medical debt or even haveboth. Further, about 33% of patients in the United States spent over$1000 out of pocket annually, which was not only too high but also alevel rare in other countries (Saenz,2010).Since about a third of all Americans do not have health insurance asa result of the high premiums for the same, it means that thefamilies would have higher financial risk burdens, as well asuncertainty. This results in a reduction in the quality of life thatthese people lead.
Impactof ACA on Insurance and Hotel Industry
Thefull implementation of Affordable Care Act is bound to havefar-reaching impacts on varied sectors in the economy. One of thesectors that have been impacted the most is the insurance industry.In the case of the insurance industry, the policy is bound to havenegative impacts (Saenz,2010).This is especially with regard to the proposed changes that involveputting pressure on insurance to heighten the medical providernetworks that they offer their customers. Further, there is therequirement that individuals who are under plans that are notcompliant with the standards set out by ACA to be allowed to retainsuch coverage until 2016. Scholars have noted that such proposals area threat to the insurers’ bottom line, as well as the consumers’pocketbooks as the insurers are likely to shift the increased costsof such policies to the consumers through higher premiums (Saenz,2010).Indeed, there are reports that the insurance companies have a highlikelihood of earning negative margins with regard to their exchangebusiness. It goes without saying that the increased premiums andreduced coverage would result in diminished attractiveness of thesecompanies, which means that fewer number of people would be willingto take up their policies.
Similarfates are bound to befall the hotel and hospitality sector. ThePatient Protection and Affordable Care Act requires businesses thathave 200 employees or more employees to offer full-time workershealth insurance coverage (Tate,2012).As researchers note, a hotel that has around 170 employees, 53 ofwhom already have voluntary healthcare overage may be forced to payabout $250,000 annually for every 50 extra employees in thegovernment healthcare program. This means that hotel companies willbe incurring more in providing healthcare insurance to theiremployees (Pipes,2010).Needless to say, this has a negative effect on the hotels’ bottomline or profitability, both in the long-term and short-term. It isworth noting that hotel companies have been forced to come up withtechniques that would allow them to cut the cost, sometimes to thedetriment of the employees themselves. It is well noted thatcompanies that have more than 49 permanent employees are required toprovide healthcare insurance. In essence, companies are cutting downon their employee portfolios so as to be eliminated from this list.This means that they keep their employee portfolios to below 50employees, with any other employee after that being employed ontemporary or contractual basis (Pipes,2010).
Prosand Cons of Private Insurance over Obamacare
Theintroduction of Obamacare was undoubtedly groundbreaking. It aimed atensuring that every American has an insurance coverage at subsidizedrates so as to ensure that every person accesses healthcare. However,there are varied pros and cons of private healthcare insurance overthe newly introduced Obamacare.
First,private insurance means that an individual would have the capacity tocustomize or tailor his or her insurance policy so as to suit his orher needs and wants. This means that a lady may chose to concentrateon a policy that primarily caters for maternity (Murdock,2012).This, however, is not possible in the case of the new affordablehealth insurance system.
However,the new affordable health insurance system seems advantageous as faras catering for pre-existing medical conditions is concerned. Indeed,private health insurance used to be denied to individuals who werealready suffering from pre-existing medical conditions. Further,health insurance companies used to drop their policy holders ininstances where they developed chronic ailments or became too old asthe risk was higher for such individuals. Research shows that priorto the entry of Obamacare, health insurance companies used to chargemore, exclude condition-specific benefits and deny coverage toindividuals that had chronic or life threatening health conditions(Murdock,2012).Indeed, while around 220,000 Americans who had the financialcapabilities obtained alternate coverage via expensive “high-risk”pools offered in 35 states, about 25 million individuals withpre-existing conditions were uninsured. However, the new affordablehealth insurance system eliminates such possibilities as health planswill not have such capabilities any more.
Costof Affordable Care Act Implementation
Asmuch as the Affordable Care Act is a considerably beneficial policy,there is need to analyze the costs that taxpayers will pay so as toimplement it in full. As much as it is difficult to tell how muchwill be incurred, there are concerns that the overall cost will behighly prohibitive and unnecessary. Previously, it was projected thatthe full implementation of the policy will incur close to or evenmore than one trillion dollars for the period between 2014 and 2024.However, the actual costs are bound to be lower than the projectedones (Emanuel,2014).Indeed, it is worth noting that the coverage provisions for 2014havegone lower by $5 billion than earlier projections. On the same note,it is projected that the Act will cost around $104 billion less thanearlier projections for the period between 2015 and 2014 despite theincrease in the number of uninsured individuals (Emanuel,2014). Further, it is estimated that the ACA coverage provisions’ netcosts will amount to $1,383 billion for the period between 2015 and2024. The estimate is composed of $1,839 billion set aside forcost-sharing reduction payments, premium tax credits, CHIP, Medicaid,as well as small employer tax credits that are offset by the $456billion receipts from penalty payments, effects on tax revenuespertaining to projected modifications in the employer coverage, aswell as the excise tax imposed on insurance plans with high premiums(Emanuel,2014).
Needlessto say, the incorporation of subsidies in the act means that therewill be a reduction in the cost of insurance that is shouldered byindividuals. This means that Americans will have to pay much less soas to access healthcare or even to have insurance policies. Inessence, there will be a reduction in the number of uninsured people.It goes without saying that there are variations in the statisticspertaining to this category with individuals from minority groupsmaking up the larger proportion (Tate,2012).This means that the subsidies incorporated in the ACA will result ina reduction in the number of minorities (mostly blacks and Hispanics)who are uninsured.
Emanuel,E.J (2014). ReinventingAmerican health care : how the Affordable Care Act will improve ourterribly complex, blatantly unjust, outrageously expensive, grosslyinefficient, error prone system.NewYork : PublicAffairs
Murdock,K (2012). AffordableCare Act: Obama Care.New York: GRIN Verlag
Pipes,S (2010). Thetruth about Obamacare.Washington,DC : Regnery Pub
Saenz,M (2010). Healthdisparities and the Affordable Care Act.Denver,Colo. : National Conference of State Legislatures
Tate,N. J (2012). ObamaCaresurvival guide.WestPalm Beach, FL : Humanix Books