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What’s wrong with the Affordable Healthcare Act?

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Keep in mind...
  • The highly touted health insurance exchange marketplace has been disappointing, with far fewer insurers participating than originally envisioned
  • Many of the plans offered under the Affordable Care Act are simply too expensive for the majority of the middle class
  • Contrary to what was envisioned, the Affordable Care Care has not adequately solved the problem of the number of uninsured people in America
  • The flat cost pricing scheme for the majority of medical services offered today has failed to deliver on its promises of reducing overall costs
  • The public option is discouraging new health insurance companies from entering the marketplace, while others are leaving
  • The states are soon to have their own say in whether to stay in the system or opt to run their own

As with nearly any major reform movement, there was bound to be a fair share of critics to the Affordable Healthcare Act. Beyond that, now that the legislation has been in place for nearly a decade, we are beginning to see a few areas that are wrong with the ACA. Here are some of the basics, before we dive into each in much more detail later on.

While you read up on the problem with Marketplace plans, consider your own health insurance. If you want better (or cheaper!) coverage, you can compare private plans for free by entering your zip code above!

The Healthcare Exchange Just Has Not Delivered

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One thing that the Affordable Care Act has been effective at doing can be seen in the expansion of Medicare. Because of this, there has been a noticeable reduction in the number of uninsured people across the country. This has not happened, however, as Obama intended when drafting the law.

Government based insurance such as Medicaid is designed for low-income families, and it is to be administered by the states. Because of the explosive numbers of people now being insured by this program, the insurers participating on the exchanges simps have not seen the number of new individuals coming to purchase their policies.

When the Affordable Care Act was first put into place, the estimates were that two million people would enroll in the program under Medicaid. That number is actually known now to be more than four million, or a 100 percent increase over estimates. This amounts to roughly 18 percent of the total number of enrollees under Affordable Care Act to date, and that number is expected to swell to 22 percent by 2026.

– The Problem

This is a problem because budgets are quickly being eaten up by the steadily rising expenses associated with Medicaid. Essentially, the federal government is now paying much more than it bargained for interns of patient costs. States are paying less than they were prior to the Affordable Care Act.

With most states now opting into the new federal Medicaid program, the exchanges have suffered. Private insurers under the Affordable Care Act were meant to compete for customers by offering a great deal of choice with prices that were much lower than previous health care systems offered.

This just magnifies the reality that the Affordable Care Act has not made the medical system in America more competitive, In fact, with more and more insurers leaving the exchanges, the average consumer today has less choice than before.

The Middle Class is Paying More for Health Insurance

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The architects of the Affordable Care Act envisioned a new landscape by which private health insurance policies would be offered to the middle class as far more affordable rates than was previously possible. This would also enable middle-income wage earners the opportunity to obtain a much broader coverage than was typically offered by employers prior to the Affordable Care Act.

If this had come to fruition, it would have been a great deal for families who were earning just slightly more money than the poverty line the would have qualified them for Medicaid under the Affordable Care Act. The reality is from what was envisioned. Consider the following points:

  • Middle-income families are having to pay quite a bit more for the premiums on their health insurance by themselves. Subsidies simply are not available to them in the numbers that the Affordable Care Act had touted when it was first enacted.
  • Policies for the middle class are overpriced for the benefits received, leaving many to opt for the lower cost bronze policies that mostly cover only catastrophic illnesses or accidents. Other expenses are born by the patient themselves in the form of higher deductibles.
  • Because of these factors, far fewer middle-income individuals and families have signed up for policies offered under the Affordable Care Act.
  • Only 12 million families are currently enrolled in a policy offered on the health insurance exchange, with that number only expected to peak at roughly 19 million in 2020.
  • By contrast, Medicaid will soon have 15 million people enrolled if current trends continue.

With middle-income individuals being the ones that were targeted for help under the Affordable Care Act, the plan appears to have fallen flat and far short of expectations. Premiums continue to rise, as do deductibles, leaving many to just pay the fine and avoid keep insurance active in the first place.

The Number of Uninsured Individuals is Still Way Too High

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It is undeniable that many more Americans have insurance today than before the Affordable Care Act was enacted. In fact, the number of uninsured individuals in the country went from an estimated 49 million in 2010 to a low of 26 million in 2010. On the surface, this seems to be a great indicator of things to come. As fate would have it, however, these numbers are rather troubling once the surface is peeled back.

The latest estimates from the Congressional Budgeting Office are that the number of uninsured will actually begin to go up again, numbering 28 million in the year 2026.

After that point, it will remain steady, with 10 percent of the United States population under the age of 65 going without health insurance.

The reason seems to be that the high cost of the exchanges means to policies will be shunned by the very people that were meant to purchase them. The only way around this will change is if future Presidential administrations feel fit to raise the the subsidies substantially, but this does not appear to be likely given prevailing federal budget constraints.

Flat Costs Have Not Paid Off

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Much was made of the way in which the Affordable Care Act was designed to lower medical costs across the board by implement a flat pricing scheme wherever possible. This, again, has simply not panned out. It is projected that there is now to be a rapid rise in the health care costs that are subsidized by the federal government in the next decade alone. While this increase has been in the low single digits to this point, a gradual escalation is expected to take place soon.

The Congressional Budget Office estimates that the amount of money that the federal government spends on healthcare-related coverage for Americans under the age of 65 will actually increase from $660 billion today to more than $1.1 trillion in the next ten years. This is an increase of roughly 5.4 percent. Consider these numbers as well:

  • More than $8.9 trillion is being spent on subsidies via the various exchanges.
  • The cost of the new Medicaid plan under the Affordable Healthcare Act will be roughly $1.9 trillion a year, or 21 percent of the total health care related expenditure in the United States.
  • These numbers cannot continue unabated for long or the system may very well collapse as insurers leave the exchanges altogether.

It should be noted that it is true that the Affordable Care Act has done a great job protecting American who were previously uninsured. With an estimated national deficit approach $1 trillion, however, the costs being pumped into the new insurance-related regulations is staggering and many believe that it cannot be maintained.

The Presence of a Public Option

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The Affordable Care Act is meant to eventually permit states to offer their one version of Medicare, commonly considered to be a public option. This option is to only be considered when a particular area of the country or state has two or fewer health insurance companies offering coverage on the exchange. In such a case, President Obama felt that the competition in the marketplace was not sufficient enough to bring down premium costs for most Americans, making the public option a more appealing prospect.

In the end, this is a proposal that did not make its way into the final version of the Affordable Care Act. Many consider this to be a positive development, as it is the government that runs the exchanges, so they would essentially be competing against the very private health insurance companies that they are supposed to promoting. At the end of the day, many insurers are exiting the state exchanges and the law itself is still not even 10 years old.

If a public option were to come into existence, and it is still being floated as an option, many more insurers would almost certainly leave the exchanges and new ones would simply never enter the market in the first place.

At the end of the day, many insurers are exiting the state exchanges and the law itself is still not even ten years old. If a public option were to come into existence, and it is still being floated as an option, many more insurers would almost certainly leave the exchanges and new ones would simply never enter the market in the first place.

States Have Too Little Control Over the System

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There is a surprising proposal contained within the Affordable Care Act, and it is one that is often overlooked. Known as provision 1332, it is set to be invoked in 2017 at some point. Is allows states to request a waiver from the federal government if they chose to exit the Affordable Care Act and its ensuing health care system if they so choose. In order to do so, the state requesting the waiver will need to meet certain requirements for coverage and provide certain out of pocket expenses to consumers in their states. Most states liked this provision. Here are a few examples as to why:

  • Vermont has long wanted to have a public option built into the health care system, and this provision purports to give them just that.
  • The state of Oregon sees this a way to get the federal government to pay them for the programs that they feel they are better suited to run at the state level.
  • Texas sees provision 1332 as a way to grant states a free market solution that can provide residents of the state with vouchers that are meant to pay for their own healthcare-related expenses.

In actuality, President Obama’s administration was not very happy about the inclusion of Provision 1332 within the Affordable Care Act. As such, they provide few guidelines in regards for how states would meet the requirements necessary to actually the program altogether. This has resulted in the federal government shielding itself to make sure that the Affordable Care Act remains intact, even given the many things that are apparently wrong it.

Other Factors Leading to Problems With the Affordable Care Act

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While the six concepts just discussed are major issues with the Affordable Care Act that have become apparent within the first decade, there are other factors that are quite worrying as well.

– The Affordable Care Act is Rather Complicated

The health care system in America was already rather complicated and difficult for the average American to understand, but the Affordable Care Act is even more so. To illustrate this point, just consider that there are four different types of health insurance policy levels offered under the ACA. Names Bronze, Silver, Gold, and Platinum individuals must decide which one they want based upon the c-pays and deductibles offered under each This is on top of the co-insurance that is included with many plans offered under the Affordable Care Act.

– The Tax Penalty is Difficult to Understand

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There is a provision in the Affordable Care Act that stipulates a tax penalty for failing to maintain adequate levels of health insurance throughout the year. The problem is that this tax is not easy to digest and understand. In 2016, for example, the penalty is meant to be equal to 2.5 percent of a person’s adjusted gross income.

– Few Can Agree on Whether or Not ACA Actually Reduces the Deficit

When the Affordable Care Act was first created, it was said that it would deliver some $143 billion in savings. There are some experts, however, who argue that it will actually add more than $1.75 trillion to the national debt. This would actually be a bad development, and it would be brought on by the expanding Medicaid program that is insuring many more than was originally projected.

– Many Could Not Keep Their Existing Plans as Promised

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One of the major selling points of the Affordable Care Act was that people could keep their existing health insurance plans if they like it and chose to do so. The reality is, however, is that more than one million people had their policies cancelled because they failed to meet the requirements of the Affordable Care Act that ten essential health benefits be included.

– Health Care Costs Increase in the Short Term

While the Affordable Care Act is designed to bring down health care related costs across all sectors of the country, the reality is expenses actually increased expenses in many ways.

Most people were receiving preventative care services as a benefit for the first time in their life. As such, people receive screenings and tests for cancer, diabetes, and cholesterol in record numbers. This increased costs for health insurance companies.

In Conclusion…

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The Affordable Care Act is a good effort the has seemingly gone wrong in several key areas. While the number of uninsured has declined, and many living below the poverty are receiving health benefits they would not otherwise have, the cost savings are simply not there.

There is some work that still needs to be done to truly bring health care reform to the United States in the way that the ACA has envisioned.

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