Introduction
The Patient Protection and Affordable Care Act is a common federal law of the United States. It affects many stakeholders in the United States of America including business people, employees and consumers. The law was passed on December 24, 2009 in the senate of USA. The House of Representatives’ version of the Act was the Affordable Health Care for America Act. The primary sponsor of the bill was John Dingell of Michigan.
The Patient Protection and Affordable Act passed through several stages before being passed into law. It did not go into law in its original draft as first crafted by the United States House of Representatives but during the 111th congress of Barack Obama’s administration the healthcare system was reformed and part of the reforms was to enact the bill as a federal law. The bill’s code was HR 3962. The bill was introduced to the Senate in 2009 and was amended to come up with the final draft that was enacted into law.
This policy paper analyzes the Patient Protection and Affordable Care Act from the perspective of business and society. This analysis will start with a brief history of the Act whereby the origin of the Act and the various phases that it has undergone will be discussed. The policy paper also traces its implementation from the Act, the code and agency. It will also address the impact of the Patient Protection and Affordable Act on business and society based on theories and models on ethics and law in business and society. The policy paper will also include policy analysis which analyzes the Act to determine whether it has worked or not. This section includes weaknesses and strengths of the law as well as recommendations for future policy makers in United States. Therefore, this policy paper generally examines the Patient Protection and Affordable Care Act to determine its relevance in business and society.
History of the Act
The Patient Protection and Affordable Care Act was passed into law by President Barrack Obama on March 23, 2010 after a long period of evolution through various versions and bills. Together with the Health Care and Education Reconciliation Act, this law enhanced a significant transformation of the US healthcare system. There had never been such a significant policy changes in the health care system since the Medicare and Medicaid of 1965. The main goals of enacting the law were to: increase the quality of health insurance, reduce government and individual costs of healthcare, and increase the number of the insured through expansion of both private and public insurance coverage. Reforms in the healthcare system through the law have significant impacts on business and society.
The passage of the Patient Protection and Affordable Care Act was boosted by the concept of individual mandate and subsidies for the private sector which ensured that universal healthcare was provided in United States. This concept won the support of the senate. Individual mandate was first proposed in 1989 when it was considered as the best alternative to single-payer health care. The concept of individual mandate was also considered as an important market-based approach of reforming healthcare system.
The senate also considered the concept as an appropriate mechanism of avoiding free rider problems, which are specifically caused by market failures. Market failures are caused by the inefficient allocation of resources in the economy (Booth & Snower, 1996). They result in negative impacts on business and the society. When a market failure sets in, costs of production are not minimized. The law was enacted to solve market failures which always occur because those who are not able to pay for health care insurance are left vulnerable.
In the 1986 Emergency Medical Treatment and Active Labour Act, hospitals which participated in Medicare were required to provide emergency services to everyone. In this case, the government paid for those who are not able to pay. This action was intended to rectify the market failure caused by the costs of insurance. In 1993, President Bill Clinton’s administration proposed a healthcare reform bill which required employers to give health insurance covers to their employees through health maintenance organisations that were regulated in the marketplace. Senators of the Republican Party proposed an alternative plan that would call upon individuals to insure themselves. This bill failed and Clinton negotiated with the 105th congress to enact the State Children’s Health Insurance Program.
Healthy Americans Act was introduced in the senate in 2007 by senators Bob Bennett and Roy Wyden. This Act included individual mandate and State Health Help Agencies regulated by the state. The bill did not go through the committee stage but it gave way to healthcare debate in 2008. Democrats used the healthcare debate as a basis of championing healthcare reforms. The debate became a campaigning tool for the 2008 general elections. This resulted in the Patient Protection and Affordable Care Act, famously referred to as Obamacare. Each of the presidential candidates in the elections promised to provide insurance to those who do not have an insurance cover as a way of resolving market failures caused by insurance costs.
Following the election of Obama in 2008, a series of bills were introduced in the House of Representatives to address the issue of health reforms. The principles that were agreed upon by the members of the House of Representatives formed the basis for the healthcare reforms of the senate. The senate’s Finance Committee held a31 meetings to discuss about the healthcare reforms. Obama’s administration focused on universal healthcare Health policy experts advised that community rating and individual mandate would prevent free-rider problems and adverse selection from causing insurance death spiral. Free-rider problems and adverse selection are both market failures while community rating and individual mandate are government interventions intended to resolve the market failures. Therefore, the rationale for the Obamacare was to resolve market failure in terms of free rider and adverse selection.
The Patient Protection and Affordable Care Act resulted from the amendment of Internal Revenue Code to include recommendations and proposals suggested by the Finance and Health Committees. The Democrats in the Senate supported the bill while the Republicans supported it. The bill, as amended, was voted for by 60 democrats and against by 39 republicans. This allowed it to pass the senate and was signed onto law by President Obama on March 23, 2010.
Trace Patient Protection and Affordable Care Act Implementation
The long title of the act is “The Patient Protection and Affordable Care Act (PPACA) also known as Affordable Care Act (ACA). The law represents the great efforts of the state government to implement healthcare system reforms. The law is intended to increase coverage and affordability through subsidies, individual mandates and insurance exchanges. The law also enhances improved competition, incentives and regulations in order to promote quality over quantity as well as reduction of healthcare insurance costs. The US Supreme Court has upheld the validity of the individual mandate of the Patient Protection and Affordable Care Act as an exercise of taxing power by the congress.
Obamacare has various provisions which are expected to be effective between 2010 and 2020. There are various reforms that have been accomplished since the enactment of the law. They include:
Guaranteed issue
This reform prevents insurers from using pre-existing conditions to deny some people insurance covers. Insurers are also required to charge insurance premium at the same price for all applicants within the same age brackets regardless of sex or geographical and cultural background.
Minimum standards for health insurance policies
Some of the new standards such as the bans on dropping policyholders and price discrimination who fall sick are set by the state to regulate insurance agents and companies. The insurance standards also allow children and dependents to be covered by the insurance covers of their parents until they attain 26 years. Insurers are also required to indicate the benefits of all insurance covers and implement processes of appeal for determination of coverage and claims on new insurance plans.
Individual Mandate
The individual mandate is concerned with individuals who are not covered by any insurance covers from their employer, Medicaid or Medicare (Gold, 2012). It requires such individuals to take an approved private insurance plans or pay a penalty. Low income earners are subsidized by the state in order to comply with the policy.
Medicaid
The Patient Protection and Affordable Care Act expanded the Medicaid provisions to include individuals whose income reach 133% of the poverty level established by the federal. Income disregard is also provided at 5%. This means that the eligibility limit for Medicaid is 138%.
An overview of the Act’s titles
Title I – Quality, Affordable Health Care for all Americans: This title has seven subtitles with the purpose of improving America’s healthcare system (Gold, 2012). It also involves both individual and market reforms on the public health.
Title II: Role of Public Programs – This includes public programs such as Medicaid and children’s health programs. This title has 11 subtitles, most of which contain clauses on the improvement of Medicaid and children insurance programs.
Title III: Improving the Quality and Efficiency of Health Care – this title includes transformation of delivery systems in Heath Care and improvement of Medicare and for patients and providers. This title has seven subtitles.
Title IV: Prevention of Chronic Disease and Improving Public Health – This title has five subtitles. It is concerned with the modernization of disease prevention and enhanced access to clinical preventive services.
Title V: Healthcare workforce – This includes issues that aim at improving innovativeness of the Healthcare workforce and increased size of healthcare workforce. This title has eight subtitles addressing healthcare issues of healthcare workforce.
Title VI: Transparency and Program Integrity – This title has nine subtitles which focus on the integrity and transparency of various institutions in the healthcare system. It provides regulations and provisions guiding the integrity of healthcare providers.
Title VII: Improving Access to Innovative Medical Therapies: this includes issues of price competition, innovativeness, and affordability of medicines for children, and increased participation. This has 2 subtitles.
Title VIII: Class Act: it deals with the program of national voluntary insurance.
Title IX: Revenue Provisions: it deals with issues of revenue in the health care sector including offsetting of revenue, tax, etc.
Title X: Strengthening Quality, Affordable Health Care for all Americans: This title reviews subtitles of title I and provides guidelines for the support of pregnant women and teens as well as parenting women.
Impact on Business and Society
The Patient Protection and Affordable Care Act has various impacts on business and society. The Act affects both consumers and producers in the market. It also affects individuals, business organisations and the government. Through the individual mandate, the law also leads to an impact on the purchasing power of consumers. The law increases insurance cover by expanding the eligibility of Medicaid to cover individuals with income of up to 138% of the poverty level (United States, 2010). Individuals and small businesses can also buy insurance covers through the state-based insurance exchange.
The impact of the Patient Protection and Affordable Care Act can be examined in the perspective of Thomas Hobbes’ modern political philosophy. Hobbes suggests that humans are the same as matter which obey physical laws. Therefore, laws are essential in enhancing social life. Political communities operate within social contracts in which everyone should comply. Therefore, the Patient Protection and Affordable Care Act is valid because it requires individuals to be insured and employers to insure their employees. This law acts as a social contract between the government, the insured individuals, hospitals, and insurance companies. The Act provides regulations which allow an effective interaction between these parties in order to reduce costs and risks in the society. Without such insurance, hospitals and insurance companies will incur a lot of costs and face a lot of risks. The increase in insurance cover caused by the regulations may result in positive impact in terms of improved quality of life and reduction of medical bankruptcies (CCH Incorporated & Wolters Kluwer, 2010). Businesses covered by insurance policies are able to pay for medical fees in case its key managers or employees fall sick. On the other hand, if the business employees are not covered by insurance policies, the medical bills may rise to the level that the company is not able to pay. This leads to bankruptcies.
John Locke the father of classical liberalism argues that the civil society should be established by the people for the people to resolve conflicts in a civil manner with the help of the government (Booth & Snower, 1996). The government of the US helps businesses and society by enacting the Patient Protection and Affordable Care Act to ensure that as many people as possible are covered by insurance. The Patient Protection and Affordable Care Act is appropriate for business community because it is used as a mechanism of cost control in hospitals and insurance companies (King & United States, 2011). Hospitals and insurance companies are part of business and society, and they depend on cost control mechanisms to minimize costs and make profits. Through insurance requirements of the law, hospitals reduce their charity care activities while insurers develop large and stable insurance pools to share risks. The insurers and hospitals alone cannot achieve these risk and control objectives without the help of the government. As suggested by Locke, the civil society requires government help to operate in a civil way.
The insurance exchanges for individuals as provided by the Act addresses various issues related to market failures including medical bankruptcies, coverage limits, high number of uninsured, inflation and unaffordable insurance (Miller, 2013). Regulations are used to resolve such market failures. The regulation of healthcare insurance can also be considered as a way of providing a social good. The Patient Protection and Affordable Care Act allows the government to subsidize individuals who are not able to pay insurance covers. In this case, the individuals use healthcare insurance covers as a public good because the use of a health care insurance cover by one person does not restrict any other individual from acquiring the cover. This indicates that the Act has an impact of allowing the government to provide public goods and solve market failures where the private sector fails.
The Act also leads to negative impacts on business and society. Implementation of the Act leads to the reduction of the uninsured and increases costs of production to employers. As employers attempt to meet the requirements of the law, they incur a lot of insurance costs which will add up to the expenses of their organisations. Individual mandate also causes individuals to use part of their income to pay for healthcare insurance. This reduces their purchasing power; hence causing low consumption and expenditure in the economy among consumers.
The Patient Protection and Affordable Care Act also leads to government failure. The government’s intervention to resolve market failures through ACA results in failure to allocate resources in a socially efficient manner (Miller, 2013). One of the inefficiencies is increased government spending to subsidize individuals who are not able to pay for the healthcare insurance cover. In this case, government subsidies are the main causes of the government failure.
Policy Analysis
The “Obamacare” works well. It is of great importance to businesses and the society. The law allows the government, hospitals, insurance companies and businesses to interact in a way that promotes socio-economic benefits. The law has various requirements that allow insurance companies and hospitals to work with the government in order to ensure that the number of the uninsured reduces significantly. Health Care insurance also ensures that modern innovations are used to improve the health care system (Davidson, 2013). The Affordable Care Act is an effective way of ensuring that everyone gets insured so that the costs and risks incurred in business and society are minimized while maximum benefits are attained from various socio-economic activities of the entire economy.
Despite the criticisms that it attracted, the Act has worked well to solve market failures including bankruptcies, unaffordability, free rider, inflation and deficits. The regulations of the Act lead to efficient allocation of resources in the economy. For instance, the requirement for insurance companies to increase insurance covers, the requirement for employers to provide insurance covers to their employees, and the individual mandate ensure that the number of uninsured reduce significantly; hence the market failure of uninsured is resolved. Unaffordability problem is solved through the subsidies provided by the government for those people cannot afford to pay for health insurance covers (Davidson, 2013). This is why the name “affordable” healthcare is used to refer to the Act. Bankruptcies are avoided by ensuring that all businesses and individuals are insured against health issues so that they can reduce the risks and costs that may be caused by health problems.
One of the main strengths of the Patient Protection and Affordable Care Act is that it is supported by the government and business community. The subsidies offered by the government offered for low income earners indicate that the government is willing to support the Act (United States, 2010). This makes it easy to resolve market failures. Government regulations and provisions of the law are key intervention measures that the government uses to resolve the market failures caused by unregulated market system.
The second strength of the law is that it is backed by the desire of America to reform the healthcare system. The American government and the entire political system of the country had been attempting to reform the health care system for a very long time (Faguet, 2013). The. Even the former President of America Bill Clinton attempted to reform the health care system in 1993. Debate concerning the reform of the health care system has been ongoing since then, and many stakeholders are still supporting the law until now.
The main strength of the Patient Protection and Affordable Care Act is that it enhances affordability in the health care system. The law requires everyone to be insured under the individual mandate, insurance exchange or employer insurance plan. The government also subsidizes those who are not able to pay for insurance covers. This leads to affordability of health care services and reduction of costs in business and society.
The Obamacare Act has its own weakness in terms of its legal impact in businesses and society is that it adds on some costs to businesses which are required to provide insurance covers for their employees. The law also has a lot of provisions which are difficult and costly to implement through the country. For instance, it may not be easy for the government to determine who is eligible for the subsidization of the insurance.
There are various recommendations for future policy makers based on the lessons from the Patient Protection and Affordable Care Act. One of the recommendations is that the subsidies provided by the government should cover even small businesses. This is because the costs of providing health insurance to employees by the employers of small businesses go against the principle of affordable health care because small businesses earn low income. If they are required to pay for healthcare insurance for their employees then they will incur costs that may result in low profits or even go out of business. To avoid the collapse of small businesses, future policy makers should provide subsidies to even small businesses.
Another recommendation for future policy makers is that they should provide measures that allow for cooperation between the government and businesses so that the government does not just impose health insurance costs on them without considering their costs of operation and profit levels. The society should also be engaged in policy making so that they can provide their view on the level of health insurance that will help them to overcome health problems and costs in future. Furthermore, insurance companies should be engaged in the policy making process so that they can also provide their opinions on the provisions of the law that touches on them.
References list
Booth, A. L., & Snower, D. J. (1996). Acquiring skills: Market failures, their symptoms and policy responses. New York: Cambridge University Press.
CCH Incorporated, & Wolters Kluwer (Firm). (2010). Law, explanation and analysis of the Patient Protection and Affordable Care Act: Including Reconciliation Act impact. Chicago, IL: Wolters Kluwer Law & Business.
Davidson, S. M. (2013). A new era in U.S. health care: Critical next steps under the Affordable Care Act.
Faguet, G. B. (2013). The Affordable Care Act: A missed opportunity, a better way forward. New York: Algora Pub.
Gold, S. D. (2012). Health Care Reform Act. New York: Marshall Cavendish Benchmark.
King, K. M., & United States. (2011). Patient Protection and Affordable Care Act: Contracts awarded and consultants retained by federal departments and agencies to assist in implementing the Act. Washington, DC: U.S. Govt. Accountability Office.
Miller, E. A. (2013). The Affordable Care Act: Advancing long-term care policy in the United States.
Thompson, T. (2014). The Affordable Care Act.
United States. (2010). The Affordable Care Act: Protecting consumers and putting patients back in charge of their care. Washington, DC: U.S. Dept. of Labor, Employee Benefits Security Administration.
United States. (2009). An analysis of health insurance premiums under the Patient Protection and Affordable Care Act. Washington, D.C.: Congressional Budget Office.
Appendix
111th Congress: Patient Protection and Affordable Care Act
1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
2 (a) SHORT TITLE.—This Act may be cited as the ‘‘Pa3
tient Protection and Affordable Care Act’’.
4 (b) TABLE OF CONTENTS.—The table of contents of this
5 Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—QUALITY, AFFORDABLE HEALTH CARE FOR ALL
AMERICANS
Subtitle A—Immediate Improvements in Health Care Coverage for All
Americans
Sec. 1001. Amendments to the Public Health Service Act.
‘‘PART A—INDIVIDUAL AND GROUP MARKET REFORMS
‘‘SUBPART II—IMPROVING COVERAGE
‘‘Sec. 2711. No lifetime or annual limits.
‘‘Sec. 2712. Prohibition on rescissions.
‘‘Sec. 2713. Coverage of preventive health services.
‘‘Sec. 2714. Extension of dependent coverage.
‘‘Sec. 2715. Development and utilization of uniform explanation of coverage
Titles
Title I – Quality, Affordable Health Care for all Americans
Title II: Role of Public Programs
Title III: Improving the Quality and Efficiency of Health Care
Title IV: Prevention of Chronic Disease and Improving Public Health
Title V: Healthcare workforce
Title VI: Transparency and Program Integrity
Title VII: Improving Access to Innovative Medical Therapies
Title VIII: Class Act:
Title IX: Revenue Provisions
Title X: Strengthening Quality, Affordable Health Care for all Americans
