The Affordable Care Act has led to recent advancements in healthcare provisions. This has affected the computation of the break-even analysis due to several changes experienced. This paper will discuss how the recent development in healthcare, the Affordable Care Act, requires additional considerations in computing break even analysis.
Break-even analysis allows one to determine what needs to be sold either monthly or annually to cover the cost of doing the business. It mainly entails the examination and calculation of the safety margin for entities basing on collected revenues and associated operating costs (Auerbach et al., 2014). Break-even analysis is broadly used in several economic aspects from corporate budgeting to recent developments like the Affordable Care Act. The Affordable Care Act, which aims to control healthcare provision in the U.S, has recently reduced their fixed costs relating to several companies (Laskaris & Regan, 2013). This should the considerations in computing the break even analysis since their involvement margin is still constant.
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Computing the break-even analysis of the Affordable Care Act should also consider the technologies used in several institutions since they heavily rely on it. Technology mainly drives the institutions to improved outcomes either at relatively reduced costs. Technology should be considered when computing break even analysis since it affects related costs in acquiring, using, and maintaining it (Auerbach et al., 2014). Moreover, technology affects the fixed costs of Affordable Care Act institutions since more advanced technologies often result to higher costs compared to other relatively advanced technologies.
Subsidies on different premiums should also be considered while calculating break-even analysis since the Affordable Care Act increases subsidies to older patients and median income households (Auerbach et al., 2014). This enhances the ability of related institutions to achieve breakeven point since most of the expenses are directly paid by the insurers thus leading to reduced operating costs and increased outcomes.
Conclusion
In sum, computing the break even analysis of Affordable Care Act is vital in determining their progress regarding the cost of doing the business. Technology used and subsidies given should be considered while computing the break-even analysis for effective results.
References
Auerbach, D. I., Brantley, I., Heaton, P., & Institute for Civil Justice (U.S.). (2014). How Will the Patient Protection and Affordable Care Act Affect Liability Insurance Costs? Santa Monica, CA: RAND Corporation.
LASKARIS, J., & REGAN, K. (2013). The New Break-Even Analysis. Hfm (Healthcare Financial Management) , 67 (12), 1–6.
