One of the most influential pieces of legislation in recent memory is the Patient Protection and Affordable Care Act, colloquially known as “Obamacare.” Ever since President Obama signed the PPACA into law in 2010, there has been much debate over the planning and execution of the law as well as controversy about its effectiveness. Proponents of the PPACA argue that it will gradually lower health care costs, expand preventative health care measures, make health care coverage more universal and improve the economy in the long term. On the other hand, opponents of the PPACA contend that the law will instead increase healthcare costs, negatively affect economic growth, eliminate patient choice and also be proven unconstitutional. In addition, some opponents feel the law is not comprehensive enough and will do little to create any lasting reform in a broken healthcare system. Support for the Act is also divided on the political spectrum, with Democrats generally backing the Act and Republicans nearly universal in their skepticism towards it. This controversy between the two sides has provoked both support and backlash, but the effectiveness of the Act is still being measured.
Before the PPACA was enacted, the U.S. healthcare system had numerous flaws. Insurance providers were almost universally privatized. Healthcare premiums were rising exponentially. There existed frequent discrimination and restrictions on people with preexisting conditions, as well as a lack of oversight and regulation in the healthcare industry overall. In response to those issues, President Obama campaigned on a platform of reform of the healthcare system. In a speech before Congress in February 2009, Obama cited the issue of the “crushing costs of healthcare” and the effects of this problem on individual Americans, including bankruptcy and the loss of property. Additionally, Obama stated the issue of rising healthcare costs result in small businesses closing, increased outsourcing of jobs and the stagnation of wages. The Act was initially proposed with a “public option” that would address these issues. Numerous reactions immediately took place with protesters denouncing the Act as “socialized medicine” and supporters likewise embracing its potential. After much debate, the bill was finally passed on December 24, 2009, and signed into law on March 23, 2010.
The scope and size of the Act are wide-reaching and it has several major provisions. One major requirement of the PPACA is the implementation of health insurance exchanges that are meant to allow people without health insurance provided by their employers to purchase plans from a wide array of providers. This also allows for employers with 100 or fewer workers to purchase plans. These health insurance exchanges are either run by the individual states, the federal government, or by state-federal partnerships. In addition, the federal government provides subsidies and tax credits in order to reduce premiums and out-of-pocket expenses for lower and middle-income individuals. The rationale behind the establishment of these health insurance exchanges is to reduce the overall cost of health insurance and increase the number of individuals with coverage.
Another key provision in the PPACA is the banning of discrimination by insurance companies on patients with pre-existing medical conditions. At first, the provisions only covered children with pre-existing conditions, but the requirements came into effect for adults in 2014. Prior to the passage of the Act, insurance providers routinely discriminated against individuals with pre-existing conditions and either denied them insurance coverage or charged them higher premiums. In addition, all existing or new insurance plans have to cover dependent children of policyholders until the age of 26.
Another provision of the PPACA is the loosening of Medicaid eligibility requirements and the reduction and ultimate closing of the Medicare prescription drug coverage gap. Under the current policy, Medicare patients have to pay out of pocket for a portion of the cost of their prescription drugs. The eligibility provisions for the Medicaid program were revised to cover anyone who earns less than 133% of the poverty line. The Act also stipulates that the federal government would pay 100% of the cost of the new enrollees until 2016 and then gradually shift more of the cost onto the states. In addition, the Act reduces the coverage gap in the Medicare part D prescription drug plan (known as the “donut hole”) gradually by 2020.
A major aspect of the PPACA is the individual mandate component of the law. The individual mandate requires all U.S. citizens to purchase basic health care coverage or face fines and additional penalties. The main penalty, if one does not purchase health care insurance, is a tax that can vary from $695 to $2,085 per year, per family. The tax is to be gradually phased in over a 3 year period and is to be increased annually due to the cost-of-living adjustment. In addition, businesses with 50 or more employees will be charged a penalty beginning in 2014 if they do not offer healthcare benefits to their employees.
Federal funding finances the PPACA through several payment systems. The Act mandates that an excise tax will be levied on the most expensive employer-sponsored healthcare plans and the Medicare payroll tax for higher-income workers will be increased. The PPACA has imposed several restrictions as to what is covered as well. Federal funding of all abortions with the exception of rape or incest are prevented through the inclusion of the Stupak–Pitts Amendment. In addition, illegal immigrants are prohibited from purchasing coverage through the health care exchange programs.
Proponents of the PPACA argue that the law will help to reduce healthcare costs overall. In a November 5, 2014, press conference, President Obama indicated that “health care inflation has gone down each year since the Affordable Care Act was passed” and that “we now have the lowest healthcare costs in 50 years.” Some articles have found this claim to be exaggerated, as in reality, healthcare spending growth rates have slowed down but not actually decreased. A recent study by the Centers for Medicare and Medicaid services stated that U.S. healthcare spending will be $500 Billion less in 2019 than was originally projected by the Congressional Budget Authority (CBO) in 2010. In addition, the study also stated that the lowering of total healthcare spending would have a positive effect on the U.S. fiscal situation and would prolong the life of the Medicare trust fund for an additional 4 years. The data gathered by both agencies gives credence to the original claim that the Act would be cost-effective and help to slow down the ever-increasing growth in the overall cost of healthcare.
Another argument used by Proponents of the PPACA is that the law will increase the number of people who have basic health insurance and, in turn, make coverage more universal. One of the major provisions of the Act is to increase the access to healthcare insurance and reduce the number of uninsured citizens. According to the Urban Institute’s Health Reform Monitoring Survey, the number of uninsured Americans declined by 2.7 percent from the time the first enrollment period into the healthcare exchange began in September 2013 through March 2014. In addition, the percentage of people who are uninsured is higher in states that had rejected the Medicaid expansion provisions of the Act as opposed to states that accepted the expansion.
Proponents of the PPACA also argue that the law will increase the number of people with access to preventative healthcare. Prior to the passage of the Act, many insurers did not cover preventative care measures. Due to the fact that insurance companies are now required to cover basic healthcare measures, the number of people taking advantage of preventative healthcare is increasing, especially among people between the ages of 19 and 25. According to a study by the New England Journal of Medicine, the number of 19-25-year-olds receiving routine checkups has increased 5 percent since the main provisions of the Act came into effect. In addition, the number of young adults with private dental coverage increased from 37 to 42 percent during the same time period. A possible reason as to why the number of young adults receiving preventative healthcare has increased is due to the provision in the Act that allows them the option to remain on their parent’s insurance plans until they are 26.
Another argument from supporters of the PPACA is the possibility that the law will benefit economic growth over the long run. In a 2012 article, Jonathan Gruber, one of the main figures behind the development of the Act, stated that he believes this legislation will improve economic growth. Gruber held that the Act will result in greater economic security for uninsured families due to the lower cost and increased accessibility of care. Gruber also expressed that the Act could potentially increase consumer spending, as uninsured people who previously set aside money to cover medical expense would now be able to free up that money for consumer spending. Gruber further cites that, when the federal government expanded the Medicaid program during the 1990s, consumer spending increased amongst the newly-insured. In addition, Gruber feels that as demand for medical care grows, job opportunities for doctors, nurses and technicians will rise, thus improving the job market.
In the debate regarding the PPACA, opponents criticize the provisions of the Act, saying it will result in negative consequences. Critics take the position that the Act will increase healthcare costs, negatively affect the economy and say the law itself is unconstitutional. In addition, some critics believe that the Act will not go far enough to increase coverage and will not result in any lasting changes in the healthcare system.
One of the major points that opponents of the PPACA argue that the Act will harm economic growth and competitiveness. Two major opponents of the Act that believe it will harm job growth are House Speaker John Boehner and Senate Majority Leader Mitch McConnell. In an op-ed published in the Wall Street Journal on November 5, 2014, both Boehner and McConnell spoke of their intentions to repeal the Act which “is hurting the job market along with America’s healthcare.” A survey by the Federal Reserve Bank of Philadelphia stated that roughly 18 percent of U.S. businesses have either stopped hiring or reduced their staff due to concerns about the expenses and provisions of the Act. Business who have 50 or more employees are the most reluctant to expand due to the new regulations and requirements that have been pushed onto them due to the Act.
Opponents of the PPACA say that the law will ultimately reduce quality of care and patient choice. According to report by the National Center for Public Policy, the quality of health insurance declined prior to the Act’s implementation. The study found that the health insurance plans offered by the healthcare exchanges provided a less comprehensive quality of care than comparable plans on the private market. The study also found that the average deductibles for the bronze-tiered plan (the least costly plan) in 2014 were about 42 percent higher than those in plans from the individual market in 2013. In addition, patient choice may be limited under some of the healthcare plans on the exchange. In order to reduce costs and lower premiums, many of the insurance providers have opted to only cover certain doctors under some plans, restricting patient choice.
Opponents of the PPACA also question of the constitutionality of such a law, specifically the individual mandate provisions in the law. Despite that fact that the Supreme Court had ruled that the individual mandate was constitutional in a 5-4 decision in 2012, there are still some arguments against its constitutionality. Opponents argue the Act itself will result in an unchecked expansion of Congressional and executive power beyond the limits of the Constitution and that the individual mandate is a violation of an individual’s right to choose. In addition, George Washington University law professor Jonathan Turley wrote that the individual mandate is “the greatest challenge to states’ rights in U.S. history” and that “it is an assertion of federal power that is inherently at odds with the original vision of the Framers.”
Challengers of the PPACA further argue that the law itself does not go far enough in providing universal healthcare coverage. An example of someone who feels that the Act is not comprehensive enough is Senator Bernie Sanders of Vermont. While arguing that the Act has resulted in some improvements to the healthcare system overall, Sanders stated that the law will do little to foster long-term change to the healthcare system. In addition, Sanders feels that the U.S. healthcare system should be modeled after a single-payer system similar to the ones that are present in Europe. He believes that a single-payer healthcare system would reduce the feelings of insecurity that individuals and small businesses have regarding the availability of health insurance and result in more cost-effectiveness in healthcare In addition, a single-payer healthcare system would have a positive benefit on the economy, as small business owners and entrepreneurs would have more freedom to develop their business plans without the worry and cost of providing healthcare to their employers. Sanders cited the Medicare and Medicaid programs as models of an effective single-payer healthcare system.
Though the PPACA has received a good deal of negative press from opponents who question the constitutionality of the law, the potential for effectiveness, and the general far-reaching implications of the Act, I myself remain cautiously optimistic about the long-term ability of the law to meet the objectives of those who initiated it. As stated, the Act is dependent on many factors such as enrollment and its acceptance by those who are still opposed. Some downsides include the slow rollout of the program, difficulties in accessing the Internet framework of the exchanges, legal challenges presented against the program, and questions about its overall effects on a still-weak economy. Of course, the measurable success of the program will be directly correlated to enrollment of those previously uninsured, good revenue growth within the program, the attraction of qualified physicians and practices who will embrace the program and confidence in the quality of care in the selections available for coverage.
In conclusion, reform of the healthcare system is long overdue and has been proposed often throughout the past century. The last real healthcare reform was the Social Security Act of 1965. The most recent attempt to reform the healthcare system occurred during the Clinton Administration in 1993, but this did not pass. Restructuring is imperative in order to remedy the unbridled spending, bureaucracy, waste and inequities in the current healthcare system. The divide between critics and supporters is indicative of a lack of clarity and transparency in the current healthcare system. In addition, the divide in opinions on the Act is segregated on ideological and political-party lines, with Republicans mostly opposed to it and Democrats in favor. The Act attempts to reform the healthcare system by setting up an exchange network and regulating the accessibility of healthcare for Americans. While opponents are skeptical of the effectiveness of the Act, we do not know for certain how successful the PPACA will be.