Policy Analysis of the Patient Protection and Affordable Care Act

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Policy Analysis of the Patient Protection and Affordable Care Act

Dr. Joseph Costa, D.H.Sc., PA-C

Health Policy and Management

MPH 525

Allison Erickson

March 2013

Abstract

In times of economic uncertainty, foreign conflict, and unemployment, it is a fact that the United States has faced hardship, conflict, and opportunity. Throughout the course of the century, our nation’s leaders have strived for national excellence, many times in the political party and policy-making arenas. However, few leaders of our country have strived for changes in the healthcare system of our country. Beginning in the early 1900s all the way to the late 2000s, leaders have attempted to pave the way of change. President Barack Obama has been one leader in our nation’s history to enact and sign a change to the healthcare system in the United States. On March 23, 2010 President Obama signed the Affordable Care Act (ACA). The development of the ACA showed to be difficult in the Legislative and Judicial branches of the United States government. However, through intense debate and numerous changes, the ACA was signed. The ACAis fundamentally changing the way healthcare is carried out in the United States through mandating health coverage for individuals, changing Medicaid and Medicare eligibility and benefits, creating opportunities for small businesses, and giving each state the responsibility of developing healthcare plans that will serve their population.

Table of Contents

Chapter Page

1. Introduction

United States Government

Nature of the Problem

2.Discussion

Political Opposition and Support

Impact on Existing Public Programs

Health Exchanges

Mandates

Implementation Costs

Future Projections

3. Summary

4. Recommendations……………………………………………………………………………..23

5. References……………………………………………………………………………………..25

Chapter 1

Introduction

United States Government

Federalism

The forefathers of the United States set out to create a system of government that centered on individual freedom and balanced governmental control. Differing from parliamentary government systems, such as those found in Canada, Germany, and the United Kingdom, the United States has been a Federalist government. Federalism has been widely regarded as one of America’s, “most valuable contributions to political science” (National Center for Constitutional Studies, 2013). In developing the United States Constitution, Thomas Jefferson placed great emphasis that states should not become subordinate to the national government; instead, the two are coordinate departments of an integral whole. Throughout the course of 300 years, the nature of Federalism in the United States has become a complex set of policies, laws, and balance. Economic and class inequality, as well as changes in political leadership, have contributed to the multifaceted Federalist society of America.

In the past century, the United States has faced foreign conflict and steep economic downfall. Through this time, the nation’s leaders have focused on continuing to uphold Federalism through policy, law, and foreign affairs. In addition, the many leaders of the United States work to improve the well-being of the citizens. This improvement has come in different forms and through different policy development over the past century. However, an area in which only a few political leaders have focused on is the healthcare system in the United States.

Nature of the Problem

The Uninsured

With the advancement of medical knowledge in the early 1900s, healthcare access and insurance became a desired commodity (Teitelbaum & Wilensky, 2013). As the United States went to war throughout the 1900s, the healthcare industry saw an influx in citizens needing appropriate and affordable coverage. However, there was dense dispute between political parties, interest groups, and medical professionals in how to effectively create a universal healthcare system. Since the 1900s only a handful of United States Presidents have made attempts at creating universal healthcare coverage through national reform. These leaders have included President Theodore Roosevelt, President Harry Truman, President Richard Nixon, and President Bill Clinton. Although an attempt was made, these leaders never fully implemented a universal healthcare system in the United States, but they made changes and presented policy that would greatly impact President Barack Obama’s priority in a more improved healthcare system.

Compared to other developed countries, the United States spends over twice as much on healthcare per person and rank at or near the bottom in health outcomes like infant mortality, obesity rates, and life expectancy (Teitelbaum & Wilensky, 2013). To be more specific, in 2009, the United States spent $2.5 trillion on healthcare spending, which is $8,086 per person and 17.6 percent of the nation’s Gross Domestic Product (GDP) (Teitelbaum & Wilensky, 2013). In addition to the steep costs of healthcare, Miller, Vigdor, and Manning (2004) indicate that the rate of uninsurance for the United States population under age 65 has fluctuated between 15 and 18 percent over the past quarter century. There are many factors that contribute to uninsurance in the United States. Factors such as income level, employment status, age, race or immigration status, and geography all are characteristics that influence an individual’s access to health insurance. “The primary reason people do not have health insurance is financial – available coverage is simply too expensive” (Teitelbaum & Wilensky, 2013, p. 50). Additionally, even though 70 percent of the uninsured work, or are in families with at least one full-time worker, many work for companies that do not offer health insurance. Many employers ceased offering health insurance for similar reasons, cost. Adults who are not pregnant and do not meet requirement for government programs like Medicaid and Medicare are also more likely to be uninsured. Teitelbaum and Wilensky (2013) say, “Approximately 30% of young adults (18-24) are uninsured, which is nearly twice the rate of the general population” (p. 51). Finally, there is a greater proportion of the uninsured population that is a minority. This also includes a higher number of immigrants who are uninsured. “Of the foreign-born uninsured, 19% are naturalized and 46% are noncitizens” (Teitelbaum & Wilensky, 2013, p. 52).

Having health insurance offers tangible ways for individuals to receive the healthcare services needed to stay healthy. Thus, an increase in the insured across the country is said to have a positive impact on desired health outcomes. As aforementioned, President Obama has been the only United States president to sign into law a healthcare reform that would change the way healthcare has been traditionally carried out. On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA). The focus of the discussion to follow will include a look into how the ACA has had political opposition and support, the impact the ACA will have on existing public programs, health insurance exchanges, the individual mandate, the cost of implementation, and future projections.

Chapter 2

Discussion

Political Opposition and Support

RepublicanOpposition

The ACA passed through legislation under a, “unified Democratic control without a single Republican vote” (Cummins, 2011, p. 247). Many would argue that Republicans have seen a need for closing the gap between the insured and uninsured. However, it is in how the gap is closed is the point of contention between political parties. During the strenuous process that the Senate and House of Representatives went through to pass the ACA, Republicans pursued more of a market-based reform. With a support for a market-based reform, Republicans wanted to focus on having individuals control their own healthcare dollars, which, in turn would help with waste reduction (Cannon, 2009).

When consumers own and control their health care dollars—in particular, the money thatpurchasestheirhealthinsurance—theself-interest of hundreds of millions of Americans will lead them to choose health plans that eliminatewastefulspending,whether through cost-sharingor caremanagement, in exchange for lower premiums. (Cannon, 2009, p. 3)

Within the free-market approach, Republicans proposed a Medicare reform that would allow Congress to give enrollees a voucher to choose any healthcare plan available on the market. In order to provide healthcare coverage across all health and financial statues, Congress would provide larger or smaller vouchers; larger for those of poorer and sicker conditions, smaller for those with more financial flexibility with better health. Republicans favored this form of Medicare reform to allow seniors to make their own rationing decisions to protect from government rationing.
The second proposition made by Republicans was to eliminate the tax preference for employer-sponsored health insurance. Within the ACA, employer-based health insurance, typically from a private insurance company would see a tax hike that would result in appearing more like a government program. Republicans do not support this tax hike on employers; rather, they see how avoiding the tax hike would result in creating less spending. “Eliminating the tax preference for employer-sponsored insurance would therefore shift controlovermore than$532billioneach year, and $9.7 trillion over the next 10 years, from employerstoworkers” (Cannon, 2009, p. 5).

In addition, upper-income whites are more likely to support the Republican Party than lower-income whites and minorities. With that said, many supporters of the Republican Party are more likely to also have insurance. Therefore, because of this support, Republicans were more reluctant to mandate, “further employer-sponsored initiatives because this would impose higher costs on businesses, which is also a Republican constituent group” (Cummins, 2011, p. 249).

Democratic Support

Throughout the healthcare system, the Democratic Party is more likely to pursue state-based programs and reforms (Cummins, 2011). With the support for state-based programs, Democrats are more likely to support social reform, which as mentioned before, is generally handled on a state level. Teitelbaum and Wilensky (2013) also indicate, “Democrats have ranked health care as a higher priority than Republican and Independent voters did in every presidential election from 1988 to 2008” (p. 166). Additionally, the Democratic Party largely supported healthcare reform to help close the gap between those insured and not insured, through the creation of individual, state, and employer mandates.

It is important to note that as the ACA was being passed throughout the House of Representatives and Senate, House Democrats were leading the committees. However, even though the House passed the bill 220-215, passing the bill in the Senate was to be more rigorous (Teitelbaum & Wilensky, 2013). Some of the provisions of the health reform bill that passed in the House were unlikely to pass in the Senate. These provisions included public health insurance competing with private plans, national health insurance exchange instead of state-based exchanges, and more subsidies for low-income individuals (Teitelbaum & Wilensky, 2013). As aforementioned, Democrats topped as head of the committees regarding health reform throughout the House and Senate. In the Senate, Max Baucus, a Democrat from Montana and Chairman of the Finance Committee, lead the effort in passing health reform in the Senate. After a lengthy process of bipartisan negotiation, the Baucus bill was passed on Christmas Eve in 2009 (Teitelbaum & Wilensky, 2013). With similar results as the House, no Republican voted for the bill.

Even though the bill passed in both the House and Senate, Democrats sought compromise to pass along to the Executive branch. Many of the choices the Democrats had were not appealing in the viewpoint of Republicans. These choices included passing the Senate version of the bill, trying to use a reconciliation process to pass a new bill, promise a smaller and more incremental form of health reform, or choose to abandon the efforts of passing a health reform bill at all (Teitelbaum & Wilensky, 2013). In the end, however, a compromise was reached. Even after compromise, all Republican and a few Democrats voted against the final bill.

Impact on Existing Public Programs

Medicaid

Medicaid is the nation’s federal and states public health insurance program for the needy. Because Medicaid is run by the states with federal funding, it is designed to ensure that funds are available in order to provide healthcare services to the poorer and less-healthy population of beneficiaries (Teitelbaum & Wilensky, 2013). “Traditionally, Medicaid has covered low-income pregnant women, children, adults in families with dependent children, individuals with disabilities, and the elderly” (Teitelbaum & Wilensky, 2013, p. 185). About one-half of Medicaid beneficiaries are children with adults accounting for 25 percent of the enrolled. Disabled and elderly individuals make up the remaining quarter. Most of the non-elderly Medicaid beneficiaries, 80 percent to be precise, are poor or near-poor. Even though the majority of the Medicaid population is poor, there are still over 28 million individuals who are uninsured. Essentially, those not covered under Medicaid do not meet the eligibility requirements Medicaid has traditionally required. However, the ACA has significantly expanded the eligibility leading to an expected 16 million individuals obtaining Medicaid by 2019 (Teitelbaum & Wilensky, 2013). This eligibility, beginning in 2014, includes all non-Medicare eligible individuals under 65 years of age, with incomes up to 133 percent Federal Poverty Level (FPL). The current rules require that all children ages six to 19 must be covered up to 100 percent FPL. However, the ACA changed that to 133 percent FPL. In addition, “Undocumented immigrants, as well as legal immigrants who have resided in the United States for fewer than five years, will not be eligible for Medicaid under the expansion…” (Teitelbaum & Wilensky, 2013, p. 189). However, states do have the option of covering legal immigrant pregnant women and children even if they have been in the country less than five years.

Because Medicaid has traditionally been run by the state with some federal funding, the federal government will provide 100 percent of the funding from 2014 to 2016 due to the changes in eligibility. After 2016, federal funding will decrease to 90 percent by 2020 (Kaiser Family Foundation, 2013). In the same fashion, because Medicaid is different from state to state, different state governments will determine what benefit plan will be suit the needs of the population, while needing to consider mandatory and optional benefits set in place by the ACA. Some mandatory benefits include physician services, inpatient and outpatient services, family planning services and supplies, nursing facility services, and, new with the ACA, tobacco cessation programs for pregnant women. Optional benefits include prescription drugs, clinical services, dental services, primary care case management, inpatient or nursing homes for individuals over 65 years of age, respiratory care services, hospice services, and, new with the ACA, options for community-based care, home health care, and family planning services (Teitelbaum & Wilensky, 2013).

Other Medicaid changes that will take place after January 1, 2014 includes Medicaid coverage for children who are under 26 years of age who were raised in a foster home after age 18 (Kaiser Family Foundation, 2010). Also, states will be required to report back to the federal government any changes, “in Medicaid enrollment by population, outreach and enrollment processes and other data to monitor enrollment and retention of Medicaid eligible individuals” (Kaiser Family Foundation, 2010, p. 5). This reporting will be to the Department of Health and Human Services (HHS), who will report to Congress beginning in 2015.

CHIP

Congress enacted the State Children’s Health Insurance Program (CHIP) in 1997 as a $40 billion, 10-year block program. “CHIP is designed to provide health insurance to low-income children whose family income is above the eligibility level for Medicaid in their state” (Teitelbaum & Wilensky, 2013, p. 198). After CHIP expired in 2007, President George W. Bush signed a temporary extension of the program after Congress tried passing two versions of the Children’s Health Insurance Program Reauthorization Act (CHIPRA)unsuccessfully. President Obama signed CHIPRA into law after passing in Congress in 2009. Although CHIPRA included $33 billion in federal funding through 2013 and with the ACA extending it to 2019, funding will only go through the fiscal year 2015 (Teitelbaum & Wilensky, 2013). Importantly, unlike Medicaid, which is an entitlement program with federal matching with no limits, CHIP is a block grant that has matching levels capped. Teitelbaum and Wilensky (2013) indicate that the future of CHIP is cloudy because of the ACA. As mentioned prior, due to CHIP being a block grant and with the expansion of Medicaid eligibility, as well as federal matching ceasing in 2015, states may decide to place their state dollars in other areas. “Given the ACA’s individual insurance mandate, most children who are dropped from CHIP would be required to obtain coverage through another source” (Teitelbaum & Wilensky, 2013, p. 201). However, the ACA does require that children who are dropped from CHIP due to federal allotment caps must be screened for Medicaid eligibility. If the child is not eligible for Medicaid, then the child would be eligible for tax credits as designed by the state to be comparable to the CHIP (Kaiser Family Foundation, 2010).