Why Did Obama Create the Affordable Care Act?

Why Did Obama Create the Affordable Care Act?

Prior to the Affordable Care Act (ACA) being signed into law in 2010, no major reform had taken place in healthcare in America since Medicare’s inception in 1965.

The Affordable Care Act, also referred to as Obamacare, mandated most Americans obtain health insurance and established state or federal exchanges to assist individuals and small businesses buy coverage. Furthermore, preexisting conditions were prohibited from being denied coverage under this act.

1. Affordability

The Affordable Care Act prohibits insurers from dropping individuals while they are sick, denying coverage or charging higher premiums due to pre-existing conditions. In addition, this law enables people to deduct medical expenses from taxes while providing subsidies that help people afford health insurance on the market.

The authors cite research suggesting that Obamacare had some impact in helping to decrease health care costs in the US, though their numbers show the rate of cost growth prior to passage was far greater than any potential benefits from its passage. Furthermore, they argue that its implementation did little more than increase fee-for-service billing systems where doctors are paid per service they provide rather than for managing patients overall health needs.

President Barack Obama signed comprehensive health reform into law 10 years ago today – known as the Affordable Care Act or ACA – with an aim of expanding coverage, decreasing healthcare spending and improving system quality.

2. Medical care that is innovative

Health care is an incredibly diverse industry: nearly half of doctors work in practices with three or fewer providers; most hospitals are independently run; and medical device and biotechnology firms tend to be small businesses. Innovation in business models could significantly boost efficiency while decreasing costs.

Horizontal integration refers to merging several independent players into one organization. Or it could involve creating economies of scale while increasing customer service. Or vertical integration refers to providing physicians with one place for tracking patient data in one location–reducing errors of omission and commission.

Innovation must also involve patients. Consumers want products that not only offer convenience and reduced prices, but are user-friendly too – something consumer-focused innovations may get more support for than technology that cuts costs but is hard to use – like HealthAllies did, which failed to attract enough customers with promises of discounts on services such as orthodontics and in vitro fertilization.

3. Expansion of Medicaid

The Medicaid program offers health coverage to millions of low-income Americans. It includes a wide array of health services and limits enrollee out-of-pocket costs; additionally it serves as an important source of funding for hospitals, community health centers, physicians, nursing homes and many other providers of care – and studies have found that Medicaid saves lives!

Prior to the Affordable Care Act (ACA), Medicaid was only accessible to individuals with very low incomes. Now, states are permitted to expand coverage up to 138% of FPL for non-elderly adults while still guaranteeing federal matching funds.

At present, two-thirds of Medicaid beneficiaries are enrolled in private managed care organizations that contract with their state to deliver comprehensive health services and assume financial risk. Other innovative programs include global capitated payments for safety net hospitals; bundled payment initiatives covering hospitalizations and outpatient episodes of care; as well as demonstration projects that allow pediatric medical providers to organize as accountable care organizations to share in cost savings with government.

4. Tax credits

The Affordable Care Act (ACA) includes premium tax credits to offset lower-income Americans’ costs of health insurance coverage, prevent insurers from denying coverage due to preexisting conditions, and requires all plans cover an essential health benefits list.

The Affordable Care Act also prohibits lifetime monetary caps and limits annual premium increases to no more than 2%. Furthermore, state or multistate-based exchanges were established to help individuals and small businesses buy insurance, as well as expanding Medicaid coverage in many states.

RAND research indicates that the Affordable Care Act’s individual mandate required most Americans to purchase health insurance or face a fine, which RAND research indicates has substantially reduced the likelihood that nonelderly adults skip necessary medical care due to costs, while increasing access to more affordable care and decreasing share of spending for those with lower incomes. It is expected to further improve accessibility as more states adopt Medicaid expansion; however, legal challenges to this law could threaten any gains that have been achieved thus far.

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About the Author: Raymond Donovan