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The Escalating Cost of Healthcare

The Escalating Cost of Healthcare

Health care cost is escalating alarmingly in the United States, more than the income of those who are paying for it due to their daily practices like unhealthy lifestyles. In addition to unhealthy lifestyle, this rise in health care spending has also been contributed by medical technology that has caused a great revolution in the field of Medicare. Moreover, machinery used for patient diagnosis and treatment has also increased the cost of health care spending since there is an additional cost of purchasing and maintaining these machines. On the other hand, the mean of out-of-pocket health payment grew annually by sixty-four percent that is from $1,670 to $2,740, as mentioned by Neuman, Cubanski, Desmond, & Rice (2007). Subsequently, the employees’ income rose by twenty-five percent from $12,000 to $15,000. In other words, when health care spending is escalating more quickly than economic growth, then there will be a relatively higher premium, higher taxes, and higher out-of-pocket payment to finance government insurance program, as asserted by Pipes (2010). Therefore, this essay discusses cost, quality, and access – three issues or problems addressed by Patient Protection and Affordable Care Act (PPACA), commonly known as Obamacare legislation. In addition, this paper sheds light on the history of Obamacare legislation, and evaluation whether Obamacare has or will adequately address these three issues in the future. Finally, this essay illustrates the possibility of future revision or obsolescence of Obamacare legislation.

In the year 2010, President Obama signed Patient Protection and Affordable Care Act into a law in order to reinvent the health care industry, as stated by Loker (2012). The primary goal of PPACA is to improve access to affordable and quality health coverage, and to curb the escalation of health care spending in the United States. In short, the vision of ObamaCare is to improve affordability of health coverage by enacting several reforms, such as consumer protection, subsidies, and regulation and insurance exchanges (Patel, & Rushefsky, 2014).

There are three issues that prompted to signing of PPACA into a law. The first issue addressed by ObamaCare is cost. For instance, the total national health care expenditure was $2.4 trillion in 2007, which was an equivalent to $7,900 per person, or 17 percent of Gross Domestic Product (GPD), as stated by Stanley (2010). This indicates an astounded increase from 5.2 percent in 1960 (Stanley, 2010). Next issue addressed is quality. However, there are several quality problems that have been evident. The first quality problem is unjustified high health coverage cost of avoidable Medicare errors, which has resulted in premature death or disability. For instance, 100,000 people die annually in hospitals due to medical errors in the United States, as pointed out by Stanley (2010). The third issue addressed by ObamaCare is access that may be defined as an individual ability to access the service. Lack of health coverage compromises health of uninsured people since they are entitled to less preventive care and may only be diagnosed by some advanced level of a disease. Therefore, without health coverage Americans are more likely to receive less preventive care and at an advanced stage of a disease. In short, cost, quality, and access are the three issues that prompted signing of PPACA into a law, and the most affected people by these issues are taxpayers (Stanley, 2010).

On December 24, 2009, the Senate passed Patient Protection and Affordable Care Act (PPACA), which was subsequently passed in the House on March 21, 2010, as asserted by Loker (2012). On March 23, 2010, President Barack Obama signed PPACA into law, thus establishing a remarkable change in America’s health care system (Pipes, 2010). PPACA was upheld by the Supreme Court on June 28, 2012. There are several provisions of ObamaCare, as stated by Pipes (2010). The first ObamaCare provision ensures that insurers cannot neglect sick people by taking away health coverage from them. The second provision calls insurers to be accountable for any rise in health coverage cost. In addtion, there is a provision advocating for zero discrimination based on gender. Another provision banned insurance companies from denying children coverage based on the pre-existing conditions. Moreover, ObamaCare advocates for reception of credit taxes and subsidies to small businesses in order to avail insurance covers to their employees. Another mandate of ObamaCare is to restrict insurers from placing annual limits or lifetime limits amount of coverage a patient need.

This ObamaCare legislation embodies a philosophical and political agenda rather than curbing of escalating cost and fundamentally transforming of American health care system. The legislation is commonly referred as ObamaCare, a label that was endorsed by President Barack Obama, (Loker, 2012). ObamaCare is the second notable American health care reform that has been realized after the approval of Affordable Care Act in Massachusetts in 1965. Therefore, ObamaCare has altered American health care system by imposing new federal government regulations, mandates, bureaucracies, and taxes on citizens.

Consequently, individuals will be forced to purchase health coverage that they may not be willing to buy. In addition, businesses will be fined unless they adhere to what the government dictates about structure, composition, and breadth of coverage benefits. This coverage must be certified after meeting criteria set by the government rather by the insured or their families who were to be covered. Private insurers will be forced to set the price of their services based on the government’s fiat rather than market forces. Additionally, medical professionals will have to treat patients and accept lower pay as the reward for their efforts, according to the values set by the government appointee. Another significant factor that accompanied ObamaCare reform apart from a striking shift in power from an individual to the federal government increase in taxes (penalties), as mentioned by Pipes (2010).

The federal government began executing the 2,700-page law, Patient Protection and Affordable Care Act (PPACA), immediately after President Barack Obama signed it. According to Pipes (2010), the Department of Health and Human Services (HHS) issued the benefaction amounting to $46 million to the federal government for financing administration insurance rate reviews. On September 2011, another $199 million benefaction was also donated to the federal government to help with the same. These insurance rate reviews require an insurance company to justify publicly for about ten percent increase in premium (Pipes, 2010). Federal officials managed to control premium hikes by rejecting premium hikes in most states. Family policies were required to provide coverage for children up to the age 26 as from September 2010.  Therefore, there was an increase of health expenditure from $151 to $452 per year as a result of extending insurance to the youths (Pipes 2010). However, this was done at their parents’ expense.

There are three more cost-inflating mandates addressed by ObamaCare in 2010. The first mandate bans insurers from placing annual limits or lifetime limits amount of health coverage a patient needs. The next mandate restricts insurers from denying children coverage based on the pre-existing conditions. As highlighted by Pipes (2013), the third mandate is to restrict insurers from deviating from a preventive service, as recognized by the Health and Human Services (HHS). ObamaCare has not been and will not be fully effective in addressing cost, quality, and access, the three issues. However, there are several benefits of ObamaCare.  The first benefit of ObamaCare is that about 30 millions of Americans are able to gain coverage access through ObamaCare, Medicaid, or Medicare. The next benefit is that there is coverage for children up to the age of 26 based on pre-existence conditions. Small businesses with a maximum of 25 employees are allotted taxes credits and subsidies in order to offer health coverage to their employees. Another achievement of ObamaCare is that most senior citizens can save millions of money owing to Medicare since there is no ouut-of-pocket payment for health coverage. Additionally, about 47 millions of women will have access to women’s health services without out-of-pocket payment. Lastly, employees can save money on insurance premium through tax credits and subsidies allocated by the federal or state governments. Therefore, some issues have been addressed while others have not.

There are some points that can be pointed out in ObamaCare. To begin with, ObamaCare does not address all the facets of the healthcare spectrum. The next point to note is that ObamaCare’s massive Medicaid expansion will have adverse effects on cost since there is a need to provide more health coverage that will result in poor quality as more dollars are allotted for providing more care. This is as in the equivalent triangle, the three issues have equal priority; therefore, expansion of any one of the angles compromises one or both the other two issues. For example, increasing access will result in rising of the cost and falling in the quality (Stanley, 2010). In short, in order to address these issues fully, there should be a balance between cost, quality, and access, which can be realized through utmost efficiencies in administration, claim payment, care delivery, and all other facets of healthcare spectrum.

Indeed, there are the numerous reasons of a future revision of ObamaCare lest it becomes obsolete. For instance, according to the 2012 survey, about thirty percent of doctors are planning to withdraw their services from private sector. In addition, these doctors and hospitals must also collect data on the quality of health care, which they have to support financially since HHS only allocate $960 billion to be used for this data collection for three years. However, this amount is 0.2 percent less than Medicare’s spending in a year (Pipes, 2010). In addition, more than half of medical professionals are pessimistic of their future jobs due to ObamaCare, as pointed by Pipes (2010). According to Deloitte Consulting survey, ObamaCare’s most disastrous has not yet been implemented. The second reason that may prompt revision of ObamaCare is high tax increase in the United States (Roy, 2014). ObamaCare is likely to increase taxes (penalties) by more than $1.2 trillion, as highlighted by Roy (2014). This increase in taxes is significantly affected by increases in insurance premiums since insurers have been forced to increase their savings lest the federal government fine them.

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The next reason for revising ObamaCare is that it increases the cost of employee recruitment. ObamaCare requires employers with more than 50-full-time-equivalent workers to provide federally certified health coverage, or be fined for failure to do so. Therefore, employers will opt to maintain the number of their employees to be less than 50 in order to evade this federal fiat thereby locking out many people from being employed. In addition, ObamaCare should also be revised since it offers subsidies that encourage many employees to drop out since paying unemployed people more money will make them economically reluctant to seek work. Moreover, ObamaCare contains a provision that would eradicate jobs, limit creation of jobs, and reduce working hours and wages, when fully implemented, as mention by Boehner (2011). Lastly, ObamaCare legislation will cost the government $2.6 trillion when fully implemented, plus the deficit of $701 billion in first decade, according to the House Budget Committee Republication’s analysis (Boehner, 2011).

In conclusion, there are three issues addressed by ObamaCare including cost, quality, and access to health coverage in order to curb escalating health cost. However, ObamaCare has not been or will not be effective in addressing these issues without utmost efficiencies in administration, claim payment, care delivery, and all other facets of the healthcare spectrum. Therefore, there is a need for revision of ObamaCare legislature in order to curb drawbacks presented in this essay, such as high tax (penalties) increase, withdrawal of 30 percent of doctors in the private sector, and increasing the cost of employees’ recruitment.

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