Impact of the Obama Care on the Insurance Industry

Introduction

The Obama care is also referred to as the Patient Protection and Affordable Care Act or simply the Affordable Care Act. President Barrack Obama assented to this statute of the United States of America on 23rd March 2010. The bill became part of the Unites States’ laws. The Affordable Care Act is the most prolific health care act that has been witnessed in the history of the United States since 1965 when the federation passed the Medicaid and the Medicare schemes. According to Tumulty and Yan (2009, p. 26), the Obama care aims at raising the degree of insurance cover to the Americans besides making the cost of health care low.

The Patient Protection and Affordable Care Act has various methods of achieving high rates of health insurance coverage and low costs of health insurance. The Obama care health pact aims at using subsidies, tax credits, and mandates to all employers who employ more than 50 people and to individual Americans. Such a mechanism will enable the country to increase the number of people under insurance cover hence easing the health care burden on individuals and families. Obama care also extends to its mandate to ensuring that the outcome of medical care is better and that health care delivery systems are refined in every corner of the United States.

The Obama care will influence the insurance care in various ways. The impacts will be realised on the payment of insurance premiums. For example, the insurance premiums tha the non-group insurance market pays will be raised though a huge percentage of individuals will receive subsidies for medical insurance. The group insurance market will also be affected through a 0-3 effect on their premiums. With this hint, it is clear that the Act has a significance influence in the insurance sector. Therefore, this paper discusses the impact of Obama care on this industry.

Literature Review

There is a significant link between the Obama care and the insurance sector. In fact, it was earlier projected that the Obama Care would reduce insurance cost. According to Peterson (2011, p. 429), patients’ protection and Affordable Care Act would ensure that by the year 2016 the older persons will be able to save about 31% of the insurance premiums that they were paying before the bill was passed. In addition, the young people were to save about 13% of the insurance premiums that they are currently paying. However, these projections have since changed. In fact, Tumulty and Yan (2009, 27) affirms that it is now projected that the Obama care will increase the insurance premiums by 19 to 30 percent.

A research that was conducted by an American economist Gruber in 2011 indicated that insurance premiums would increase once the Obama Care health pact begins to operate. According to Peterson (2011, p. 430), the average increase in insurance premiums for the United States of America by the year 2016 would be 30%. This achievement would be a 30 percent increase on the premiums rate that would not have been payable in the absence of the Obama Care.

The Obama Care would also influence the insurance packages for low-income earners. President Obama (2010, p. 183) affirms that the Obama Care will not negatively influence low-income earners in terms of premiums. The only impact that such earners are likely to experience can only find its way if the cost of insurance premiums goes up (Marmor, Oberlander, and White 2009, p. 485). Moreover, the rate of such an increase must be higher than what it projects. According to Peterson (2011, p. 429), a rise in the cost of premium will influence all taxpayers since they have to contribute higher taxes to subsidise the premiums. Insurance subsidies are likely to be in billion dollars.

The rise in insurance premiums also depends on the laws that have been set by the Obama Care pact. It is a requirement by this law that every insurance plan will actually cater for specific important benefits. Gitterman and Scott (2011, p. 555) posit that the health insurance will meet the actual value set at 60 percent of the pact. Under this requirement, the insurance beneficiary is also required to cater for up to 40 percent of the cost from his or her pocket.

It is also required of the health insurance provider to use up to 80% of the market cost of each premium in the market only on the coverage of medical health. This outcome is regarded as the medical loss ratio that contributes towards making the price of the premiums go up. The law also predisposes the insurance industry into the high risk of exchanges. Very competitive efficiencies result from exchanges.

In addition, Bailey (2008, 55) asserts that it is a requirement of the Obama Care for insurance authorities to offer medical health insurance on community rating where the young and the old are charged a similar amount. The Obama Care will thus raise each market premium by an average of 19% because of the new insurance rules. The insurance subsidies are paid for in a mandatory way via tax in order to offer incentives to the rich insurance. Gitterman and Scott (2011, p. 555) affirm that every increase in the cost of insurance either on the poor or rich will finally trickle down the cost to the consumer.

Through the Obama Care, the insurance firms are forced by law to provide customers with more benefits for their insurance package. According to Marmor, Oberlander, and White (2009, p. 487), it is almost inevitable for health insurance providers to pay more on health expenses than they would have ordinarily paid. The pact also makes insurance providers to financially support towards the acceptance of the richer packages of insurance. All these subsidies by the insurance firms and government are then passed on to consumers to pay the cost. Bailey (2008, p. 55) asserts that it is a requirement of the Obama Care that all people have health insurance.

The insurance companies are also supposed to begin insuring people regardless of their conditions. According to Gitterman and Scott (2011, p. 555), the law provides for a fine of 95 dollars for each individual who does not pay for health insurance beginning the year 2014. By 2015, the fine should rise to 323 dollars.

The Obama care will also increase the insurance cost for the young. Increase in the cost of obtaining insurance cover for the infantile will result from the application of the community rating in the provision of health insurance. It is worth noting that young people are new entrants into the job markets. They earn low income and are healthier. With such conditions, they have no much use of the expensive health insurance packages that the Obama Care proposes.

In the community rating policy, the young are charged less than the old at a ratio of 1:3. In the actual sense, older people account for six times of the health expenditure that the insurance companies spend on young persons. However, Coiley (2012, p. 18) affirms that in a complete disregard of such spending, the community rating distributes the insurance cost to all the clients from those who are young to the old.

Analysis of the Obama Care

The Patient Protection and Affordable Care Act of 2010 is a medical health care Act that aims at reducing the cost of health care while increasing health insurance coverage to all the Americans. Currently, the Obama Care is already in the application since President Barrack Obama signed it into law. However, the most controversial part of this health insurance pact will begin to be implemented in 2014. This section dictates that every American has to buy the health insurance cover. If one fails to do so, he or she becomes liable for a fine. However, Obama (2010, p. 183) argues that a large percentage of the Americans are not aware of what the Patient Protection and Affordable Care Act of 2010 entails.

Analysis of the Obama Care insurance pact indicates that it has more benefits to those who already have insurance covers. For example, according to Tumulty and Yan (2009, p. 29), those who already have insurance covers will have increased benefits such as being allowed to include their children that are not above the age of 26 to their individual health insurance cover.

Sullivan (2012, p. 30) asserts that some instances the Obama Care limit ones insurance cover to last for their lifetime. The aim of the Patient Protection and Affordable Care Act 2010 is thus to ensure that the Americans’ health is secured at all cost. Americans who already have an existing health insurance package can enjoy a rebate from the amount they have paid to the insurance companies.

According to Peterson (2011, p. 429), it is a legal requirement through the Obama Care that all health insurance providers pay the premium money back to the contributors to the health insurance if they do not manage to spend 80% of it on medical care service. Such money has been spent on paying huge salaries to the insurance executives and advertising of the insurance providers. The aim of doing so is to make healthcare less of a trade to a life-centred undertaking. It is an indication of the way Obama government attaches special value to the lives of the Americans. Those who had health insurance before the inception of the Obama Care are therefore going to receive a rebate this year unless their insurance providers work hard to spend the money in the provision of health services.

Sullivan (2012, p. 30) asserts the Obama Care has also made special plans for the government to monitor the implementation of this insurance scheme. Any health insurance provider that raises its insurance rates must provide a justification in the form of written submission to the Obama Care implementers. The state has allocated enough resources to ensure constant monitoring of such activities. Such close monitoring ensures that the quality of health insurance that employees receive is compliant with the law. It also ensures that insurance companies do not exploit citizens in their bid to make huge profits.

Beneficiaries of the Obama Care are also not entitled to co-pay a certain amount that was initially paid for such as pregnancy test and wellness examinations. The overall cost of health care in America will indeed drop. The drop will result from the fact that all people will be obliged to secure a health insurance for themselves. Coiley (2012, p. 18) affirms that having a health insurance is more preventative. It works better than being reactive and looking for finances when one is in the hospital bed.

Americans who have been living without health insurance covers will be required by law to obtain health insurance covers beginning from 2014. Whoever will not purchase the cover will be required to buy it or pay 2.5% penalty on his or her income. It is also unique that the congressional representatives will be part of the Obama health insurance scheme and not the current government-offered health insurance.

Under the Obama Care, employees will be required to evaluate various exchanges and to choose the exchange that best fits them. The exchanges will also enable individuals to check whether they can qualify for certain exchange rates, government benefits, and tax credits. The federal government of the United States has provided funds to facilitate registration and enrolment to various health insurance schemes. The centralised regime will cater for those who are unable to pay for wellbeing indemnity.

From the year 2014, those with an income that is “below 133% of the poverty level will be provided with health insurance by the government, for example, those earning below $14,000 as individuals, and $29,000 if in a family of four people” (Gitterman & Scott, 2011, p. 555). Low-income earners can also access tax credit if their income level is below 400% of the federal poverty level such as those earning below $43,000 individually or 88,000 as for a family of four.

Such persons are eligible for monthly rebates from their insurance providers. The Obama Care also recommends such people to receive deductibles and copayments. Small business owners with 50 employees and above are also required by the Obama Care to offer health insurance for their employees. Failure to provide health insurance will attract a fine of $2,000 for every employee. However, there will be no deductions on the first 20 employees. For companies that offer health insurance for the early retirees between the ages of 55-64, the federal government will offer financial aid to them.

Impact of Obama Care on Health care Quality

The Obama Care will result in the improvement on health care quality. The health care scheme endeavours to encompass every American in health insurance care. When everyone is under insurance cover, there is a guarantee of quick and effective medical care for him or her in case of an illness or an accident. A country that has a high healthcare quality is able to provide effective and timely medical care to its citizenry. The Obama Care makes it mandatory for all citizens to be issued with health care insurance cover regardless of the pre-existing conditions.

Many Americans would fear enrolling in health insurance schemes due to the high charges that were to be paid by patients with pre-existing conditions. Eliminating extra charges on these patients will end up improving the quality of health care in America. Thomas (2010, p. 29) affirms that the Obama Care requires that all applicants for health insurance be treated the same way regardless of pre-existing conditions. The barriers that existed before, for example the use of sex barriers when issuing health care insurance, have also been eliminated under the Obama Care. Today, male, female, healthy, and the sick persons in the United States of America are eligible for health insurance.

The Obama Care has also raised the quality of health care through ensuring that all people are covered and that those who do not pay have to be penalised on their monthly salary. When a health insurance company covers every citizen, the burden of lack of funds for medical care to individuals, family, and the community is eliminated. This argument means a more healthy society where people are confident with an assurance of good medical care in case they fall sick.

Thomas (2010, p. 29) affirms that only some few people who belong to the registered sects that are against the medical care are exempted from this scheme. A more healthy society will also emerge out of the Obama Care. The scheme will enable the sick and the healthy citizens to keep on visiting their healthcare providers for medical checkups to ensure that they get the value for their money. As many people visit the health care providers for such medical checkups, medical professionals discover the presence of diseases. For instance, people who are likely to be cancer patients can be realised through early checkups.

The same case applies to many diseases that are treatable when they are diagnosed at their early stages. The federal government will also ensure that the poor people can also afford the health insurance cover. According to Gottschalk (2009, p. 28), those who earn very low incomes will receive subsidies from the government. Those earning above 100% and 400% of the current federal poverty level are to receive subsidies from the federal government. In addition, those that purchase health insurance via exchange programs also receive subsidies besides paying premiums costing 3% o 4% of the total income.

There is an established independent non-profit research institute to investigate the quality and effectiveness of the program. The Patient-Centred Outcome Research Institute carries out research on the effectiveness of the Obama Care scheme. The institution checks the effectiveness of various health undertakings. It also counterchecks the effectiveness of clinical health services offered in the federation and the appropriateness of various medical care services. The institute is balanced. Its findings are reliable since it comprises “patients, hospitals, device manufacturers, doctors, insurers, drug makers, payers, health professionals, and government officials” (Gitterman & Scott, 2011, p. 555). Such a team ensures that the programs are of high quality and reliable.

The scheme will also ensure that the quality of health services offered under it is high through health care exchange. For example, on June 21, 2010, it established a high-risk pool where all adults with pre-existing conditions are enlisted for special care. These adults are covered under special considerations. One has to have been covered for the past six months to become eligible. In fact, the pool of high-risk patients has no age limit. All these are steps taken under the Obama care to ensure that there is quality of health care provision under the scheme.

The eminence of medical care will also improve since the Obama Care recommends that the health insurance should cover medical screening. According to Gottschalk (2009, p. 28), with medical screening, many individuals can visit hospitals for screening as many times as possible hence preventing the treatable and communicable diseases at their early stages. Most of the people will avoid visiting hospitals for screening due to the high cost of such services. The insurance is also supposed to cover preventative care for all registered persons. Such preventative care should be of level A or B only to ensure superior health services to the United States citizenry.

Conclusion

The Obama Care is a health insurance care regulation Act that is aimed at changing the healthcare system in the U.S. The health care pact ensures affordable and an all-inclusive health insurance to all the citizens of America. The health care pact will be beneficial to citizens with healthcare pacts and those who have not enrolled for health care. All people must pay for their health care insurance. Those who disregard the requirement must pay a fine. There will be various impacts of Obama Care on health care quality.

Such impacts include comprehensive coverage for those with pre-existing conditions. The quality of service will also be made better through oversight institutions such as the task force on preventative services and community preventative services. The Patient-Centred Outcome Research Institute also ensures quality of healthcare service under the pact. The Obama Care also provides for preventative and screening health services. Such services enable citizens to visit health care providers regularly for medical checkups hence standing a better chance of detecting diseases at their early stages.

Reference List

Bailey, L. (2008). Obama and McCain On Health Care Reform. Business & Economic Review, 55(1), 24-29.

Coiley, M. (2012). Healthcare Lending Post Obama-Care. Secured Lender, 68(10), 18-21.

Gitterman, D., & Scott, J. (2011). Obama Lies, Grandma Dies: The Uncertain Politics of Medicare and the Patient Protection and Affordable Care Act. Journal of Health Politics Policy & Law, 36(3), 555-563.

Gottschalk, M. (2009). Sick on arrival Health Care Reform in the Age of Obama. New Labour Forum, 18(3), 28-36.

Marmor, T., Oberlander, J., & White, J. (2009). The Obama Administration’s Options for Health Care Cost Control: Hope versus Reality. Annals of Internal Medicine, 150(7), 485-489.

Obama, B. (2010). Remarks by the President on Health Care Reform. Vital Speeches of the Day, 76(4), 183-186.

Peterson, M. (2011). It Was a Different Time: Obama and the Unique Opportunity for Health Care Reform. Journal of Health Politics, Policy & Law, 36(3), 429-436.

Thomas, E. (2010). Obama’s Other Deficit. Newsweek, 155(7), 26-29.

Tumulty, K., & Yan, S. (2009). Can Obama Find a Cure? Time, 174(5), 26-29.

Sullivan, A. (2012). The Long Game. (Cover Story). Newsweek, 159(4), 30-35.

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