Government Intervention Analysis-Affordable Care Act Expansion

Government Intervention Analysis-Affordable Care Act Expansion

Arguments For and Against ACA Expansion

Most states in the US have adopted an Affordable Care Act (ACA) framework as enacted in March 2010. The program proposes three main changes to the US healthcare sector. Firstly, the ACA framework seeks to bolster healthcare access by introducing premium tax credits for low-income earners (Kominski et al., 2017). Another proposal in the ACA is to expand the Medicaid program to cover adults within 100-400% of the federal poverty level (FPL) (Kominski et al., 2017). Finally, the ACA focuses on lowering overall healthcare costs. Proponents of ACA argue that it has enhanced financial security for low-income earners, improved healthcare outcomes, and general healthcare access.

The ACA also has its fair of criticism. One of the reasons the opponents of ACA cite is the mandate that all Americans must have health insurance coverage. Most feel that an individual insurance mandate goes against the basic tenets of the American Constitution. Citizens also oppose the ACA because it grants the government a role in healthcare. Since governments are political institutions, a significant portion of the population does not trust a government to defend their welfare at any given time. Americans who oppose government intervention in healthcare prefer market-based solutions.

Consequences of the Intervention

According to Oberg (2010), children are some of the biggest gainers from the ACA program since its launch. Some policy changes have led to expanding the number of children the program covers. For instance, children can stay under their parent’s employer coverage until they are 26. Even if such children have personal insurance coverage, they can still benefit from their parents’ employers’ baskets. Another positive change affecting children is the prohibition of a requirement inhibiting coverage of children with pre-existing health conditions. A lack of healthcare access for children with pre-existing conditions has been a significant issue for fifty years.

Negative Externalities

Following the implementation of the ACA Act, insurance providers have been on the receiving end of the negative externalities resulting from the implementation. Unlike in the past, insurance companies are now required to cover pre-existing conditions. If the requirement is not equally matched with increased premium remittances, the insurance company risks giving out more than it can pool.

Positive Externalities

The expansion of Medicaid coverage under the ACA has solved inherent social issues. A notable impact has been a reduction in foster home admissions. Foster home admissions are caused mainly by home-based abuse due to a lack of resources. With enhanced healthcare coverage, communities have a lot to spare to spend on other day-to-day needs. Due to the improved socio-economic situation, home-based abuse among children from historically excluded communities, such as Black Americans and Hispanics, has reduced.

Cost of ACA against GDP

The Congressional Budget Office (2015) figures show that the ACA has drawn significantly from the GDP. The impact of ACA expenses on the GDP continues to lead as its implementation takes shape. By 2015, ACA projects had subtracted $250 million from the national GDP. By the end of the first decade, ACA implementation is expected to cost Americans about $1.2 trillion. Immediately after its implementation during the first year (2014/2015), the projects cost Americans $85 billion.

Other economic costs of the ACA program are linked to the disincentives of failing to adopt the program. Large-scale employers who fail to enroll their employees under the program pay $275 in penalties per month for one employee. A business must incur $275 per month to permanently retain a single employee (Congressional Budget Office, 2015). Such a disincentive discourages small businesses from pursuing growth, significantly reducing their contribution to the GDP.

Experts’ Opinion Regarding the ACA Expansion

ACA implementation may have improved healthcare outcomes, but healthcare economists feel that the primary objectives are yet to be achieved. A primary goal of the ACA framework was to enhance eligibility for insurance, yet about three million low-income Americans are still ineligible. For instance, Florida, Texas, and other Southern states hosting economically disadvantaged demographics have yet to enact the law. Therefore, residents in such states are effectively locked out even if they are legible. The COVID-19 pandemic also revealed that a staggering 28 million Americans are yet to acquire health insurance (Goodnough & Abelson, 2020). Therefore, despite the high cost, ACA has yet to attain its primary objective- to enhance healthcare access.

Recommendations

Healthcare stakeholders must focus on patient needs even as the ACA is rolled out. Although the ACA has significantly improved the numbers of insured people, access remains an issue, especially for underprivileged communities. One of the factors preventing more historically excluded communities from enrolling is the high premiums charged by private health insurance companies. To remedy this, a comprehensive public insurance system is needed to introduce much-needed competition and rivalry to private players. The entry of a shared provider will absorb negative externalities associated with expanded coverage, thereby reducing risk-associated premiums imposed by private insurers. Once the government enters the insurance market, private players will have to improve access to move customers from the lower socio-economic segment of the population.

References

Congressional Budget Office. (2015, June 9). Budgetary and Economic Effects of Repealing the Affordable Care Act | Congressional Budget Office. Www.cbo.gov. https://www.cbo.gov/publication/50252

Goodnough, A., & Abelson, R. (2020, June 27). Obamacare Faces Unprecedented Test as Economy Sinks. The New York Times. https://www.nytimes.com/2020/06/27/health/coronavirus-obamacare-unemployment-health-coverage.html

Kominski, G. F., Nonzee, N. J., & Sorensen, A. (2017). The Affordable Care Act impacts access to insurance and healthcare for low-income populations. Annual Review of Public Health, 38(1), 489–505. https://doi.org/10.1146/annurev-publhealth-031816-044555

Oberg, C. (2010). The Affordable Care Act and Children. https://mch.umn.edu/wp-content/uploads/2013/09/ACA-Children.pdf.

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Analyze 1 (only one) of the following government intervention programs
***** Affordable Care Act expansion************

Write a 700- to 1,050-word summary of your analysis. Identify the intervention and the market failure leading up to the intervention. Complete the following in your paper:
Analyze the arguments for government intervention as opposed to arguments for market-based solutions. Hint: See the information about market failures. Examine who has been helped and hurt by the selected government intervention.
Examine externalities and unintended consequences of such intervention. For example, consider whether the SNAP program and health coverage for lower-income families result in higher future tax revenues because children from lower-income families grow healthier and produce higher incomes over their lifetimes. Analyze whether the cost of the intervention you selected as a share of GDP or the number of participants is increasing, decreasing, or varies with the state of the economy based on the cost trend(or number of participants) since its inception or since 2000. Analyze credible economists’ opinions on the success or failure of the intervention you chose to achieve its objectives.
Based on your conclusions, recommend whether the program should be continued as is, discontinued, or modified. Defend your recommendation.

Note: Use of charts and graphs with appropriate citations is highly encouraged. Any charts or graphs retrieved from the Federal Reserve Bank of St. Louis FRED website may only be included when the data sources used by FRED are US government sources such as the Bureau of Economic Analysis or the Bureau of Labor Statistics.

Cite at least four academically credible sources.

Format your assignment according to APA guidelines.