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Class 18 – Health Care – Mohd Sakib
March 30, 2015 | Leave a Comment
The Affordable Care Act has been one of the most significant healthcare legislations passed in recent decades, and has created numerous debates on its effectiveness, costs, needs and political agendas. After various technological mishaps, and countless advertisements both on behalf of the Obama administration as well as third-parties, 10 million more people have insurance in 2014 due to the healthcare legislation. Now that these people have finally been insured, the underlying statistics and trends are interesting to analyze as it may say something about income inequality. According to “Obama’s Health Law: Who Was Helped Most” by Kevin Quealy and Margot Sanger-Katz, the majority of people who signed up for the Affordable Care Act were “people between the ages of 18 and 34; blacks; Hispanics; and people who live in rural areas.” Not surprisingly, more people signed up for the healthcare Act in Democratic states than Republican states, as the legislation gave states the choice to opt-out of the Medicaid expansion. It really is a shame that certain states haven’t encouraged this healthcare Act due to political agendas from certain parties within the States, as it does really benefit the lower-income families living there. I don’t necessarily see the direct correlation between new healthcare legislation and decrease in income inequality as stated by the article; “[its] essentially redistributing income — in the form of health insurance or insurance subsidies”. The Affordable Care Act definitely does helps those low-income families that usually don’t have insurances due to the unaffordable premiums or the fact that their jobs rarely provide it.
The New York Times article “Is the Affordable Care Act Working?” presents more statistics showing the healthcare Act’s effectiveness in its implementation, and how it also benefits the health care industry as a whole. The number of uninsured Americans has decreased by 25%, even with the 23 states that have declined to expand Medicare. It is projected that the number of uninsured Americans however, will hover around 30 million for the next several years if the 23 states still don’t expand the health insurance plans. These states are making it difficult to reach about 4 million low-income Americans who are living in these regions and have not obtained affordable health-care insurance. The next point to focus on regarding the Act is if it truly is affordable. This fortunately was true as well, as the subsidies that come with the plan decreased the cost of premiums for the 85% of insured individuals that were qualified for the subsidies.
In addition to benefiting the general public, the Affordable Care Act has enabled the health care industry, specifically various hospital companies throughout the US to profit immensely. I found this aspect to be very interesting because I previously interned at a middle-market investment bank that focused on healthcare companies. During my investment banking summer internship, I focused heavily on emergency services, and hospital companies. Some of my responsibilities were to analyze the companies’ business models, and understand the various external factors that affected their revenue streams and profitability. I researched large companies such as Healthcare Corporation of America and found out that this healthcare Act significantly decreased bad debt expense on behalf of the hospital chains since more patients were insured, and ensured more payments to the hospitals and physicians. There were much more inpatient flows than before, and since there were more insured patients, physicians received more compensation, creating a domino effect of positives for the hospital chains’ top and bottom line. As shown in the article, most hospital, health insurance and pharmaceutical companies posted healthy profits within 2014.
As much as the law benefits healthcare companies, the main value proposition it offers is still primarily for the millions of uninsured Americans. The NY Times article “A Perfect Fit for Some, but Not Others” does an excellent job of portraying how the law can benefit some while possibly harming others. Lyla Turner, a hairdresser in St. Louis, serves as a great example of how the Act can alleviate financial problems in regards to healthcare plans. She received a generous subsidy that decreased the cost of her marketplace plan, making it very affordable for her. There are more benefits in her plan with an attached cost that is less and a higher deductible. It seems quite picture perfect when put in Turner’s context, and surprising when politicians argue that it might actually be more expensive than normal. I found out the reality however, when reading Mark Segina’s story. Their new health insurance cost was shockingly more than their mortgage payment. It made sense to get all the medical treatment that they could get while covered, but having the plan in a long-term period did not seem realistic. In his case, it does seem that the “insurers are going to charge what the market can bear and keep pushing the envelope until it collapses.”
The debate over the Affordable Care Act has been very contentious, and I believe there needs to be more transparency regarding how insurance premiums are configured, and how much medical costs truly are. Personally, when I go to the doctor and have a check-up or a treatment without coverage, I am shocked to see the high costs that do not really have a full explanation. The various insurance cost and premiums that go along with it, need to have a better explanation as well, as the public needs to be educated on why premiums may be higher for certain individuals while it may be lower for others. Overall, the Affordable Care Act does seem to benefit millions however, as millions of low-income families that previously did not have access to quality healthcare plans, are now able to afford them. We have to see how the plans can reach millions of others in states that have not complied with the Act, and how the law can truly affect health outcomes of many Americans.