Affordable Care Act
The Affordable Care Act (ACA), or the Patient Protection and Affordable Care Act (PPACA) is a healthcare reform law enforced in 2010. Primary goals for the ACA are to increase the accessibility of medical insurance covers, protect patients, improve the quality of healthcare services, and increase the number of qualified medical personnel. Also, the act was designed to manage the cost of health services that was on an upward trajectory.
The drafters of the act enshrined numerous clauses within the act, framed to ensure that each primary goal was attainable. Accessibility to insurance coverage was designed to be achieved by enforcing employers to cover workers unconditionally and providing tax credits to small entities that cover employees. Premium costs were also designed to favor lower-income earners, and covers on persons earning less than 133 percent of poverty guidelines made mandatory (U.S. Centers for Medicare & Medicaid Services, 2010). ACA also increased levels of consumer insurance protection through several enforcements such as the prohibition of lifetime monetary caps and exclusion of children with terminal conditions. To emphasize the prevention of diseases, the act introduced a Prevention and Public Health Fund that provides states with grants for activities related to the prevention of illness. Quality of healthcare services was designed to be improved through an increased number of comparative researches and the introduction of projects that reduce medical errors (U.S. Centers for Medicare & Medicaid Services, 2010). However, as discussed in this paper, the enforcement of these sections has had positive and negative impacts on different stakeholders in the healthcare system. Consumers, hospital entrepreneurs, and insurance providers are the most affected stakeholders of the ACA.
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Stakeholders Impacted by the ACA
As expected, consumers are the first stakeholders directly affected by such enactments. Drafters of the act had patient protection as their core concept, thus making patients the main impacted stakeholder. Healthcare service providers are also at the center of the ACA program. As implementers of the act, private and public hospitals feel both negative and positive impacts of the new laws. The last stakeholders are insurance providers who have received both positive and negative effects.
Financial Impact of the ACA on Stakeholders
Caswell and Waidmann (2017) examine the effects of ACA on personal finance through an analysis of personal bankruptcy, medical collection balances, and credit scores. States that embraced ACA had persons in the age bracket of 18 to 64 years, having a higher credit score than persons from nonexpanding states (Caswell & Waidmann, 2017). The figures imply that ACA had a favorable impact on the personal finances of the covered persons. However, states under ACA had higher credit balances than their counterparts. The higher credit balances is a factor of increased financial freedom among consumers. Consequently, the financial freedom that lures such consumers into higher credit figures is responsible for the higher bankruptcy levels in the expanding states.
After the enactment of ACA, Dobson, DaVanzo, Haught, and Luu (2017) carried out a data collection and analysis process to determine the financial effects of ACA in safety-net hospitals within states that expanded. The analysis was paralleled along with states that did not expand to ensure integrity and quality in the investigation. Between 2012 and 2015, the hospital operating margins in regions that expanded increased from -3.2 percent to -2.1 percent, while the operating margins in states that never expanded dropped from 2.3 percent to 2.0 percent. An increase in the operating margins was due to a rise in revenue and a 47.4 percent drop in uncompensated services. Also, the same period saw hospitals that expanded recording a 13.5 percent increase in inpatient days, a factor that contributed to a rise in revenue. Hospitals that did not expand saw their inpatient days fall by 0.9 percent.
Since the inception of the act, major insurance companies providing cover under Obamacare have recorded a stable increase in their financial performances. The five notable insurance players in the act, Humana, Cigna, Anthem, and Aetna, have had soaring shares on the stock market. These are indicators that ACA has offered favorable financial impacts on the insurance stakeholders. The effect is due to premiums collected from millions of new contributors on the broader program.
Benefits of the ACA on Stakeholders
The ACA has had a positive financial impact on hospitals within states that enforced the laws. Hospitals experienced an influx in inpatient consumers that was directly proportional to the revenue generated. Elaborate insurance clauses resulted in a decline in uncompensated care costs, a scenario that led to increased profit margins. The net effect within hospitals was an improvement in their operating margins.
Consumers are the biggest beneficiaries of the ACA program. Apart from a personal financial analysis, that shows their improved credit score, ACA has ensured quality healthcare service delivery. Under the program, the federal government continues to offer grants that promote medical researches to ensure quality and clinical efficiency. Consumers also enjoy reduced costs and broader coverage for medical conditions that were previously uninsurable. Increased coverage has resulted in a decrease in socioeconomic disparities in the accessibility of health care (Griffith, Evans, & Bor, 2017). The reduced inequalities are more favorable to the minority underserved populations. Consequently, the general health of consumers has improved. Similar to consumers, insurance companies have benefits that out rightly outweigh drawbacks. Courtesy of ACA, insurance stakeholders enjoys increased registrations and premium contributions.
Drawbacks of the ACA on Stakeholders
Despite the increase in hospital revenues, profit margins on patients under Medicaid dropped to 0.7 percent from 6.8 percent. The drop in profit margins indicates that the rate of growth in revenue did not match the rate of growth in the cost of operation. Notably, the ACA laws demand improved quality of healthcare services at a lower patient cost. Besides, hospitals offering Level-1 Orthopedic Trauma Services reported fewer patients and a decline in revenue post ACA (Beck, Shelton, Wisner, & Wolinsky, 2019). The decrease was due to consumers favoring higher levels of service.
Consumers under ACA covers were more likely to file for bankruptcy, at 0.5% than those in non-expansion states at 0.4%. The higher rate of bankruptcy is a factor of increased credit balances among consumers in expansion states (Caswell & Waidmann, 2017). Drawbacks for insurance companies arise from the strictness with which ACA dictates on the insurable persons. Currently, children with predetermined medical conditions are insurable under ACA. Their inclusion substantially increases compensations.
References
Beck, C. J., Shelton, T. J., Wisner, D. H., & Wolinsky, P. R. (2019). The financial impact of the Affordable Care Act on a Level-1 Orthopedic Trauma Service. Journal of Orthopaedic Trauma , 33 (3), e84-e88. http://doi.10.1097/bot.0000000000001374
Caswell, K. J., & Waidmann, T. A. (2017). The Affordable Care Act Medicaid expansions and personal finance. Medical Care Research and Review , 76 (5), 538-571. http://doi.10.1177/1077558717725164
Dobson, A., DaVanzo, J., Haught, R., & Luu, P. (2017, November 21). Comparing the Affordable Care Act’s financial impact on safety-net hospitals in states that expanded Medicaid and those that did not. https://www.commonwealthfund.org/publications/issue-briefs/2017/nov/comparing-affordable-care-acts-financial-impact-safety-net
Griffith, K., Evans, L., & Bor, J. (2017). The Affordable Care Act reduced socioeconomic disparities in health care access. Health Affairs , 36 (8), 1503-1510. http://doi.10.1377/hlthaff.2017.0083
U.S. Centers for Medicare & Medicaid Services. (2010, May 1). Affordable Care Act (ACA). https://www.healthcare.gov/glossary/affordable-care-act/
