Research Blog #2 PPACA and the Uninsured

In my last post, I updated on my steady progress in the field research.  As I near the finish line of my surveying, I would like to spare some blog space for covering some of the Affordable Care Act’s (ACA) most important features, especially relevant in light of the Supreme Court’s landmark decision to uphold and strike down several of its features.

The ACA was written to address the prominent problems in America’s health care system.  Without delving into overly encumbering detail, the U.S. spends over $7000 per capita in health care spending.  More than any other developed nation, the U.S. struggles to contain the growth of its health care costs and spending.  The benefits of this extravagant spending are scarce to be seen.  The U.S. is still middle of the pack in several major measures of health care quality, including hospital stay duration, mortality due to short-term stays, and mortality due to long-term stays.  This signifies a huge inefficiency buried deep in the health care system.  And the trend is not promising.  Health care costs continue to rise, although at a slower rate than the 1990s.  A number of reasons have been offered for this rise, from innovations in medical technology to worsening obesity-related illnesses in the U.S.  Whatever the cause, the ACA tries to limit the costs of health care and expand coverage.  Ideally, the ACA will save over a trillion dollars in the budget deficit over ten years by reducing government health spending.

Towards that end, the ACA creates a patchwork pattern of regulations and subsidies to reduce spending.  The expansion of Medicaid to 133% of the federal poverty line redistributes the cost of health care from the wealthy to the poor and near poor.  States must expand Medicaid spending or risk losing all their Medicaid funding.  At the same time, the health benefits exchanges “pool the power” of individual consumers and small businesses to limit the ability of private insurance companies to impose high experience rating costs on those who need health insurance the most.  Grouping together large numbers of consumers reduces health care costs to the more affordable “community rating.”  But this change creates a new set of issues.  Consumers have an incentive to purchase the cheaper health insurance only when they need it.  To counteract this incentive, the ACA enforces an individual mandate upon citizens.  With a few exemptions reserved to Native Americans, religious groups, or those falling into narrow income ranges, the individual mandate compels all citizens to purchase a health benefits package through their employer or through the health benefits exchange.  These provisions are the most aggressive and the most controversial sections of the ACA.  More numerous administrative reforms simplify the system by cutting the paperwork.  Medical procedures are re-evaluated to remove exorbitant or inflationary costs.  Doctors are further insulated from malpractice suits, which encourage defensive spending.  The Medicare Advantage program will be eliminated to prevent Medicare fraud.  Government regulation will force insurance companies to follow a medical-ratio overhead.  Medical-ratio overheads prevent insurance companies from abusing the insurance payments they receive for profits and advertising.  Mixing public and private, the ACA extends even more provisions than listed here to control the cost of health care.

On the other side of the legislation, other reforms try to fix some of the weaknesses of the current health care system.  Guaranteed coverage from preexisting conditions and health plans persist even after divorce of job under the individual mandate.  Health insurance coverage is “grandfathered” from parent or guardian to those under the age of 26 in the household.  Health care for the elderly changes as well.  The ACA will try to close Medicare D’s “doughnut hole” in prescription drug costs.  The ACA stipulates health benefits exchanges must create a minimum or standard health benefits package that gives consumers more choice in health care plans as well as ensure private insurance companies do not simply sell shoddy or partial health plans.  These provisions act in coordination with the ACA’s goals in reducing health care costs.  As more individual pay for health insurance and join the pool, private health insurance companies must charge based on community rather than experience.  In summation, the ACA tries to lower health care costs by pushing more individuals to pay for cheaper health insurance.  Thus, the Affordable Care Act could also be called the Affordable Insurance Act.

The last set of provisions in the ACA attempt to find a way to fund the aforementioned parts of the law.  New taxes on the wealthy drive most of the changes.  These taxes even include new revenue made from large-scale health care plans, the so-called “Cadillac plans,” used by many unions.  In 2015, an Independent Advisory Board aims to analyze and determine where spending can be cut.  In other words, this board will try to find money where it can.  A few billion dollars will come from those who choose to pay the penalty for choosing to forego health insurance.

The ACA possesses countless other regulations but these form the brunt of the ACA’s efforts to curb the cost of health care.  With last Thursday’s Supreme Court ruling, the expansion of Medicaid to the states has been altered.  The federal government cannot cut all Medicaid funds to the states if the states decide not to expand their Medicaid programs.

On the subject of my surveying, I see strong support (58% strongly feel government should provide health care) for government control of health care.  Also, 42% of surveys strongly agree that health insurance coverage ought to be mandatory.  45% of surveys show strong support for the United States to convert its health care system to mirror those of Britain or Canada.  The uninsured population appears to be more receptive of big government than the insured.  Indeed, their responses may indicate acceptance of a single-payer system.  On the other hand, the uninsured population seems fairly split on the question of whether an income tax should finance the ACA (23% strongly disagree, 28% neither agree/disagree, and 26% strongly agree).  Likewise, the surveys responses are divided on whether private insurance companies are to blame for America’s current health care problems (23% strongly disagree, 24% neither agree/disagree, and 29% strongly agree).  Most interestingly, the uninsured are very opposed to doctor protection from malpractice (39% strongly oppose and 8% somewhat oppose).

I am interested to find out how the uninsured feel about Medicare and Medicaid.  I suspect they agree with the changes the ACA has made to the programs.  Medicaid will cover more of the uninsured population.  And from the types of services these free clinics provide, drug costs are the lion’s share of health expenses in their budgets.  The Medicare D doughnut hole provision of the ACA will seek to remedy that.