Positive and Negative Effects of Obama Care - Essay Example

Positive and Negative Effects of Obama Care America’s healthcare plan, officially known as the Patient Protection and Affordable Care Act, or as commonly referred to as Obama Care, has come a long way, amid much skepticism over the years (Woodward, 2010). President Barack Obama signed the act into law on March 23, 2010, to stimulate reforms in America’s healthcare industry; the Supreme Court later upheld the law on June 28, 2012 (“Obama Care Facts” 2014). Obama Care seeks to make it possible for more Americans to get inexpensive quality health insurance and to curb the rise in America’s healthcare spending (Gibson & Singh, 2012). In order to achieve this end, the Obama Care seeks to expand not only affordability, but also quality, and availability of both private and public health insurance by reforming consumer protections, regulations, taxes, as well as insurance exchanges, among other reforms (Iglehart, 2009). The Obama care has numerous benefits because it expands cover to many Americans who were initially uninsured (Oberlander, 2009); for instance, since the act allows young Americans to stay on their parent’s insurance plans until they are 26 years of age, nearly 3.4 million young Americans have been covered. Furthermore, the Act prohibits insurance firms from denying coverage to patients due to pre-existing conditions, thereby putting an end to horror stories emanating from patients that have been denied coverage (“Obama Care Facts” 2014). Small businesses have also been offered credit by the Obama care to enable them to provide cover for their employees; similarly, the act provides subsidies for many individuals who did not have health care insurance to afford coverage. Nearly 45 million Americans did not have health insurance due to the rising cost of healthcare in the country before the act was signed into law. Obama care has driven down the cost of premiums for healthcare insurance while providing subsidies for low and middle income Americans to access health care insurance. The Obama Care provides state-based health insurance exchanges, thereby creating choice and competition for the American insurance holders; nearly 80% of Americans support the health insurance exchange program provision in Obama Care. Positive effects Obama Care has resulted to many positive effects since it was signed into law; evidently, the act is already boosting household incomes and spending. According to the Commerce Department, consumer spending raised more than expected by nearly 0.4% while personal incomes also climbed by 0.3% in January 2014, and the new act accounted for the greatest chunk of these increases. The Commerce’s Bureau of Economic Analysis indicates that Obama care is responsible for nearly three-quarters of the overall increase in American’s incomes in January since its expanded coverage enhanced Medicaid benefits by nearly $19.2 billion (Culp-Ressler, 2014). Furthermore, the analysis Obama Care contributed to the increased American January incomes by offering numerous refundable tax credits such as health insurance premium subsidies totaling to $14.7 billion. Obama Care has been attributed to nearly $29 billion increase in health care service, as well as the increased spending on utilities, as exemplified by the rise in demand for heat during the cold season. The financial impacts of the act are most obvious in poor households that are still struggling to stay afloat due the tough economic times in the country. The Brookings Institute conducted a study earlier in which they established that Obama Care has the capacity to enhance incomes of poor households by nearly 5-7% since the previously high cost of health Care had been squeezing Americans for so long, depriving them financial stability. Furthermore, it is anticipated that the Obama Care would eventually protect all Americans from financial distress irrespective of their income levels while diminishing the rate of bankruptcy following catastrophic medical events. A 2013 Congressional Budget Office Report Obama care has also been attributed to a significant decline in the growth rate of America’s healthcare costs (Curtler, 2013); this report indicated that federal spending for Medicare and Medicaid was nearly 15% less than the initial projections in 2012. According to Douglas Elmendorf, the Director of CBO, a vast proportion of the savings in healthcare spending are directly attributable to the structural reforms in how healthcare is delivered in the U.S. The slowdown in the healthcare cost is affecting not only the overall rate of spending in the health but also the overall government spending, thereby increasing economic output of the country. The White House Economists project that slowing the annual growth rate of the healthcare cost by 1.5% would most probably lead to a 2% increase in economic output by 2020 and about 8% increase in 2030 (Ungar, 2013). This trend might eventually create more opportunities for productive investments in the budget as well as higher wages for workers. Obama Care has led to positive gains in the U.S. economy at the start of 2014, as highlighted by the Commerce Department, which indicates that the GDP advanced at a 0.1% annual rate in the first quarter. The 3% increase in consumer spending rose to nearly 10% in the first three months of the year, thereby signaling great demand for physician and health services from the previously uninsured consumers now protected by the Act. Nearly 8 million uninsured Americans registered for health care plans through Obama Care exchanges; furthermore, the Act expanded eligibility for Medicaid and the Children’s Health Insurance Program, thereby enabling more consumers to access affordable health care services. Insurance companies have to pay for specific preventive services such as mammograms and colonoscopies since the government is prioritizing preventive biotechnology and vaccines as a strategy to reduce the cost of healthcare. There is much incentive for insurers to want to pay for even the most expensive biotechnology and pharmaceuticals since they are only allowed to devote 20% of collected premiums to administrative expenditures while the remaining 80% goes to genuine medical products and care. Logically, insurers are motivated to hit the 80% target since if they fail to do that, they are required to give rebates to the insured individuals; raising the amount spent on products is the only way to safeguard the 20% for salaries. Obama Care has also resulted to positive effects on the Stock market, with the stock of insurance companies such as the United Health and Aetna appreciating gradually, due to the increasing insurance customers and high rates paid by insurance carriers for necessary medical care. In the last two years alone, Aetna has realized more than 30% growth while United Health has gained more than 60% in the same period. Biotechnology companies such as Behemoth Amgen have benefited greatly from the expanded coverage as well as the increase in customers for their innovative drugs; for instance, Amgen’s new osteoporosis drug (Denosumab) has found utility in treatment of hormone receptive breast cancer. In addition, Novabay has a wide range of anti-ineffective, urinary tract infection as well as dermatological and wound care products that have quickly gained momentum over the last two years. Apart from that, Pharmaceutical companies such as Johnson and Johnson have also gained greatly due to the increased utilization of their wide range of products nearly across every segment of healthcare. For instance, these companies have anti-infective, gastrointestinal, contraceptive, dermatology, oncology, hematology, thrombosis as well as immunology pharmaceuticals, all of which have gained greater utilization due to the expanded coverage as well as expanded government programs following ratification of Obama Care. Negative Effects The Obama Care plan has also resulted to numerous negative effects, mostly unintended, across a wide range of segments in the U.S.; from major corporations to local shops, Obama Care’s negative effects have been felt, particularly on workers, budgets as well as production. Employers around the country have expressed concerns over the requirement for employers to offer health insurance to their employees; as mandated by the act, employers with over 50 workers that work for more than 30 hours a week must provide an approved health insurance policy for their employees. According to the NBC News site, employers are resorting to cutting workers’ hours to below 30 a week to avoid the liability of providing health insurance to their workers as mandated by the health act. Loren, Goodridge, the owner of 21 Subway franchises and a restaurant in Kennebunk says, “To tell somebody that you’ve got to decrease their hours because of a law passed in Washington is very frustrating to me (Guy, 2013),” thereby highlighting the great impact the law is having on workers. Joseph Hansen, president of the United Food and Commercial Workers union, has also observed that Obama Care is prompting employers to reduce the hours and incomes of their workers. The NBS News interviews with nearly 20 small businesses and other entities from Maine to California confirms that they have cut hours for some employees because they cannot afford to pay health insurance mandated by the Obama Care. The Delta Air Lines announced an increase in its healthcare costs by nearly $100 million while abandoning its special insurance plans for pilots, due to what it terms the high “cardillac tax” on luxurious health plans that has made the scheme extremely expensive (Johnson, 2013). Stryker Corp, the Michigan medical-device manufacturer, reportedly laid off nearly 1,000 of its workers earlier in the year due to the Act’s 2.3% exercise tax on medical devices; the company continues to worry over continued negative impact of the medical device excise tax on jobs and innovation. The Welch Allyn manufacturer laid of nearly 10% of its 750 employees; similarly, the Smith and Nephew Company laid off some of its employees because of the high tax on medical devices. Evidently, the Obama care imposes great impacts on the U.S. economy since it will levy nearly $1 trillion in taxes over the next ten years, which will inevitably drag economic growth (Patton, 2014). According to the University of Chicago’s Casey Mulligan, the act imposes taxes on capital as well as medical services while raising employment costs and increasing the implicit, marginal income tax on labor by nearly 5% points. The Obama Care increases the Medicare hospital insurance element of the payroll tax on wages as well as self-employment income by nearly 9% points; the impact of this taxes affects not just the rich, but also small businesses and salary earners. Evidently, the Obama Care mandate adds rigidities to the economy thereby reducing its capacity to make the appropriate changes in line with the shifting economic conditions (Campbell, Nell & Winfree, 2010); for instance, the act imposes new taxes on high-income individuals, medical devices and pharmaceuticals as well as Medicare spending cuts. Furthermore, the Obama Care builds delays in the payment of subsidies to enable lower income households to access affordable insurance while expanding Medicaid cover to the uninsured. Such inflexibilities in the economy inevitably slow down economic growth thereby leading to longer unemployment periods as well as reduced saving and investment opportunities. The Obama Care due to the rising costs has unnecessarily burdened America small businesses, which are essential to America’s economy,; nearly 65% of small businesses have experienced an increase in their health costs (Phillips, 2014). Overall, the Obama Care has resulted to both negative and positive effects since it was signed into law; generally, there have been numerous fears surrounding the introduction of the act, key among them being the concern that the bill would eventually lead to job losses, unemployment, reduced incomes as well as working hours. Presently, the bill has definitely resulted to numerous unintended negative effects such as reduced working hours and reduced incomes as well as layoffs in some industries, due to the increased taxes and high health costs imposed on small businesses in the country. Anecdotal evidences from workers and small-scale business people reveal that the Obama care mandate has indeed burdened the small-scale business people while slowing economic growth across many industries. The Obama Care has introduced several rigidities to the economy, including the new taxes on high-income individuals, medical devices and pharmaceuticals as well as the Medicare spending cuts. These rigidities eventually reduce the capacity of the economy to make the appropriate changes in line with the shifting economic conditions, thereby leading to longer unemployment periods as well as reduced saving and investment opportunities. The negative effects notwithstanding, the Obama Care has resulted to numerous positive effects across a vast field of sectors; evidently, the act has enhanced household incomes and spending as the Commerce Department observes that consumer spending and personal incomes rose more than expected by nearly 0.4% and 0.3% respectively in January 2014. Furthermore, investment opportunities have increased following enactment of the Obama care, especially in the emerging fields of preventive biotechnology and vaccines. Biotechnology companies such as Behemoth Amgen and Novabay have benefited greatly from the expanded coverage as well as the increase in customers for their innovative drugs. A wide range of anti-ineffective, urinary tract infection as well as dermatological and wound care products has quickly gained momentum over the last two years after the act was implemented. Overall, the positive outcomes of the Obama Care outweigh its negative effects, which imply that the mandate has potential to reform the entire U.S. healthcare system, despite the alleged fears and concerns. If the Congressional Budget Office Report that attributes the significant decline in the growth rate of America’s healthcare costs to Obama Care is anything to go by, then America is on its way to a great future of effective healthcare system. References Woodward, C. (2010). Obamas health law at six months: Survival is not assured. Canadian Medical Association.Journal, 182(14), 1498-500. Gibson, R. & Singh J.P. (2012). The battle over health care: What Obamas reform means for Americas future. (2012). Health Affairs, 31(11), 2590. Iglehart, J. K. (2009). Obamas vision and the prospects for health care reform. The New England Journal of Medicine, 361(14). Oberlander, J. (2009). Great expectations -- the obama administration and health care reform. The New England Journal of Medicine, 360(4), 321-3.  ObamaCare Facts. (2014). Obama Care Facts: Facts on the Affordable Care Act. Retrieved from: http://obamacarefacts.com/obamacare-facts.php Patton, M. (2014). Is Obamacare An Economic Disaster? forbes. Retrieved from: http://www.forbes.com/sites/mikepatton/2014/02/25/is-obamacare-an-economic-disaster/ Campbell, K. Nell, G., & Winfree, P.L. (2010). Obamacare: Impact on the Economy. Heritage. Retrieved from: http://www.heritage.org/research/reports/2010/09/obamacare-impact-on-the-economy Johnson, A. (2013). 100 Unintended Consequences of Obamacare. National review. Retrieved from: http://www.nationalreview.com/article/359861/100-unintended-consequences-obamacare-andrew-johnson Guy, B. (2013). NBC News: Negative Obamacare Effects From Maine to California. Town hall. Retrieved from: http://townhall.com/tipsheet/guybenson/2013/08/14/nbc-news-negative-obamacare-effects-from-maine-to-california-n1664454 Ungar, R. (2013). New Data Suggests Obamacare Is Actually Bending The Healthcare Cost Curve. Forbes. Retrieved from: http://www.forbes.com/sites/rickungar/2013/02/12/new-data-suggests-obamacare-is-actually-bending-the-healthcare-cost-curve/ Curtler, D.M. (2013). The Economics of the Affordable Care Act. economix Retrieved from: http://economix.blogs.nytimes.com/2013/08/07/the-economics-of-the-affordable-care-act/?_php=true&_type=blogs&_r=0 Phillips, T. (2014). Obamacare squeezes small businesses: Column. USA Today. Retrieved from: http://www.usatoday.com/story/opinion/2014/03/01/obama-obamacare-health-business-column/5841331/ Culp-Ressler, T. (2014). Obamacare Is Already Helping Boost Americans’ Personal Incomes. Think progress, 2014. Retrieved from: http://thinkprogress.org/health/2014/03/05/3363141/obamacare-americans-household-incomes/ Read More