Free markets are among the economic tools that foster positive competition because they allow entities that provide the best goods or services to elevate themselves based on their competitive advantages. America’s privatized health insurance model is one example of a free market that ensured that individuals could choose the insurance coverage that met their needs. The Patient Protection and Affordable Care Act of 2010 sought to change this insurance landscape and make health insurance more available to uninsured Americans. The Act also sought to ensure that all employed individuals got health insurance coverage from their employers and penalized employers who did not offer this as a benefit. The reality, however, is that the Affordable Care Act places undue pressure on employers and taxpayers and creates an untenable insurance landscape. As a result, the government should direct more attention to improving provider capacity to increase access to quality care in America.
In its current state, the American economy has a deficit of over $1 trillion, and this could increase even further due to the government subsidies offered by the ACA (The Heritage Foundation, 2010). This makes the legislation a burden to the economy at a time when government spending should be on the decline to compensate for the national debt. The ACA’s proposal to tax high-income earners to fund the health insurance scheme also places undue stress on the upwardly mobile sections of our workforce (The Heritage Foundation, 2010). According to a report by The Heritage Foundation (2010), the ACA reduces individuals’ motivation to engage in activities that earn them over $200,000 since this will expose them to additional taxation. The ACA, therefore, threatens to reduce upward mobility and the desire to earn higher incomes due to its selective tax principles, which slows economic recovery even further.
According to the ACA, businesses are eligible for tax credits if they offer in-house insurance, but in 2010, only 4% of eligible businesses claimed their returns (Lowry & Gravelle, 2015). Many found the incentives to be little when compared to the potential costs, and others found the rules around the issue to be somewhat complicated (Lowry & Gravelle, 2015). Businesses will eventually have to comply and offer insurance to their employees to avoid being penalized by the ACA. The high costs of insurance premiums mean that they will either increase product prices or reduce employee wages to compensate for the additional coverage costs (Lowry & Gravelle, 2015: The Heritage Foundation, 2010). Employees will, therefore, have less to spend and still have to pay their part of the premiums, while consumers will bear the burden of higher market prices as businesses transfer their expenses to the market.
Under the ACA, businesses with over 30 employees are subject to penalties if they do not offer health insurance to their employees. The fact that employees could opt out or even get better insurance elsewhere also exposes businesses to undue penalties in situations where they are not at fault (Lowry & Gravelle, 2015). This could impede business growth as companies choose to remain under the 30-employee threshold to avoid the compulsory insurance and penalties imposed on firms above the threshold (Lowry & Gravelle, 2015). The ACA imposes rules that are detrimental to business growth at a time when this growth can prove vital for the overall growth of the economy. The government should, therefore, implement conscience protections to ensure that companies do not face penalties for choosing not to insure their employees regardless of the reason (The Heritage Foundation, 2010).
Instead of heavy-handedly implementing the ACA that 53% of voters want to repeal, the government should pay attention to improvements in the previous private insurance system. The Medicare Payment Advisory Commission made over ten years’ worth of recommendations that were swept aside in favor of the ACA (Jost, 2011). As it currently stands, the ACA encourages freeloading due to its provision of free services in emergency departments, which worsens an already burdened situation. Instead, we should focus on issues such as reducing the barriers to cross-state insurance provision (The Heritage Foundation, 2010). We should also encourage the formation of insurance pools for high-risk patients as well as short-term security for individuals in need of quick access to health services (The Heritage Foundation, 2010). We should also encourage the adoption of private insurance for families by allowing private insurance companies to present them with individual competitive packages (The Heritage Foundation, 2010).
The ACA already faces heavy opposition and, by a simple majority alone, is not deemed as acceptable by many Americans. The rules it imposes on businesses will only lead to reduced wages, slower business growth, and higher product prices as companies attempt to avoid the penalties of not insuring their employees. The ACA was put together in a confusing manner, and the best example of its inadequacies is the penalties imposed on businesses regardless of whether their employees found a better insurance cover elsewhere. The Act also imposes taxation rules on the higher-income portion of the population to cover its costs, which is unethical and slows economic growth. Instead, the focus should be on looking at the recommendations that would have improved the private insurance landscape. We should, therefore, repeal the Act and re-focus our attention towards improving overall coverage for families, high-risk conditions, and individuals who need quick access to health care services.
References
Jost, T. S. (2011). The real Constitutional Problem with the Affordable Care Act. Journal of Health Politics, Policy and Law, 501-506.
Lowry, S., & Gravelle, J. G. (2015). The Affordable Care Act and Small Business: Economic Issues. Congressional Research Service.
The Heritage Foundation. (2010). The Case Against Obamacare. The Heritage Foundation.