The Patient Protection and Affordable Care Act

Introduction

The three main objectives of the Patient Protection and Affordable Care Act, signed on October 2010 included the following. One was the reforming of the private insurance market mainly for the individuals and purchasers belonging to a small group, second was the Medicaid expansion to the poor who are working whose maximum income is around 33 percent of the federal poverty level and the third was the alteration of the way of making medical decisions in the country (Silvers, 2013).

The private choices mainly determine these three objectives rather than regulation by the government expecting the making of decisions as rational based on incentives while constrained by other factors (Hall and Lord, 2014). Hence, it is assumed that for the production of a good with high value, namely medical care access the users work jointly within the reforms at a price that is appropriate for which the financing is done through sharing of risk(Hall and Lord, 2014 ).

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Given this, the two aspects of the Patient Protection and Affordable Care Act, namely the private insurance market reforms and the Medicaid expansion are critically evaluated in this paper. It is examined whether these two will be successful or not.

Private Insurance Market reforms

The first objective is based on the variations in the rules and the mandates for the individuals (Silvers, 2013). The Affordable Care Act facilitates the different insurance companies for more risk taking through the provision of policies that are comparable to everybody with only slight changes( Jacobs et al, 2012 ).The Act does not allow the exclusion of conditions already existing or for policy cancellation and constrains the rise in the rates.For enabling this, it is mandatory for the insurance companies for the enrollment of some section of the population that is representative, so that the average risk assumed under the affordable act is realized. This necessitates the mandatory purchase of insurance by everybody. At the same time, it is not realistic to assume a mandatory purchase when there are affordability issues and this problem is solved through the requirement of the subsidies in the Act( Hall and Lord, 2014 ).

The act provides for subsidy of more than 50 percent for the purchase of own insurance for a middle income family and thus facilitates very high purchasing power. This in turn ensures robust competition among the insurers through the rise in the purchasing power of the individuals who are uninsured earlier. The implicit assumption under the Act is the translation of this competition into lower premiums and provider pressures so that a high quality value service is obtained (Reisman, 2015).

If there is a failure in the private markets for the achievement of these outcomes, then these assumptions will not be valid. Studies have shown many significant problems in the organization and the payment of the US health system, in the availability of information and choices and about how capable the participants are in responding to the provision of incentives and pressures under the Act (Silvers, 2013). There can be a lot of problems associated with the market failures arising from the information asymetry.

There are chances that the brokers in the health insurance field might get premiums from the clients mainly the small businesses , as well as payments from the insurance providers without considering the quality of the contract for the engaging firms by the providers. Consequently, the premiums obtained by the health insurance brokers will be higher than the physicians in the primary care , while the small businesses that are insured will not know this( Hall and Lord, 2014 ). Hence, it is not guaranteed that competition among the insurers might tranlate into lower premiums and pressurize the providers for conducting a high quality service.

Another constraint is the existing distortions that restrict competition including the lack of supply of physicians and the limits to competition created by the pharmaceutical patents etc( Hall and Lord, 2014 ).. All these potential distortions to competition can result in the process reorganization, alternatiev compensation negotiation, chances of using technology that is more efficient and various other practice cahnages that can create significant market barriers to obtain the desired outcomes of the private insurance market reforms under the Affordable health care Act.

Medicaid expansion

The main component of the Medicaid reforms is its expansion to the working poor people who were earlier unsinsured ( Medicare Payment Advisory Commission., 2013). There were concerns regarding the expansion of Medicaid in some states leading to the expansion blocking which resulted in the doubts regarding the effectivness of the working of Medicaid and its effects on the working force mobility(DeVoe, 2013 ).

At the same time, the big businesses strogly supported expanding the Meidcaid due to the fact that the payment for health care that is not compensated would be reduced ( Chang and Davis, 2013). Through the expansion of Medicaid, the perceived benefits for the employers included acquiring lower premiums, cost reduction and the expansion of jobs(DeVoe, 2013 ).

Despite these, the main concern about the Medicaid expansion is the chance of trapping the workers who get low wages into a low quality program since there are no advantages associated with the existing jobs that are low income ( DeVoe, 2013 ). Hence, without specific mandates and coverage for the small businesses and low income jobs, how far the Medicaid expansion will be beneficial to those with low income jobs is an area of concern.Another major issue associated with obtaining the benefits of the Medicaid expansion is the surplus incentives for perverse payment (Reisman, 2015 ).

The incentives can vary from the fee payment for different services to individuals to the Medicaid schedule of fees for the speciality services with updates that are biased(Reisman, 2015 ).All these create information asymmetries in the market restricting the competition in the market to get the desired outcomes through the expansion of the Medicaid program. There can be lot of implementation challenges associated with the expansion of the Medicaid program that include the difficulties to access the uninsured, the chances of many with English as not their primary language and the chances of many unsured having less mental capacity( Rosenbaum, 2011 ).

All these creates significant challenges for the implementation of the expansion of the Medicaid program to the working poor . Hence, there are many challenges that the State agencies which implement the Medicaid and the Insurance Exchanges of the state , have to face for implementing the expansion and getting the desired outcomes. Before overcoming these barriers, it will be difficult to achieve the desired target of providing access to insurance to the the poor who are working whose maximum income is around 33 percent of the federal poverty level.

Conclusion

In this essay, the two main components of the Affordable Health Care Act signed on October 2010 were discussed. The discussion shows that though there can be many benefits for the reforms, the market failures might prevent the competition arising form the reforms to achieve its desired targets. Though there are many reforms that can benefit the poor, the fundamental structural defects of the US health care system remain unchaged that can constrain the achievement of the desired outcomes. Hence, there needs to have institutional reforms in such a way that the market failures will be reduced and then go for other reforms in the market. Without the implementation of the institutional reforms, the reforms mentioned under the Affordable Health Care Act will not be successful.

References

Chang T and M Davis(2013) . Adult Medicaid beneficiaries under the Patient Protection and Affordable Care Act compared with current adult Medicaid beneficiaries. Ann Fam Med. 11(5):406-411.

DeVoe JE(2013). Being uninsured is bad for your health: can medical homes play a role in treating the uninsurance ailment? Ann Fam Med. 2013 11(5):473-476

Hall MA and R Lord(2014): Obamacare: what the Affordable Care Act means for patients and physicians, BMJ,1-10

Medicare Payment Advisory Commission(2013). Data Book: Health Care Spending and the Medicare Program. Washington, DC: :97.

Reisman M(2015): The Affordable Care Act, Five Years Later: Policies, Progress, and Politics, Perspective, 4(9),575-600.

RosenbaumS( 2011): The patient protection and affordable care act:implications for public health policy and practice, Law and the Public’s Health, 126, 130-135.

Silvers J B(2013): The Affordable Care Act: Objectives and Likely Resultsin an Imperfect World, Ann Fam Med 2013 402-405.

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