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Lindsey Bishop

Health Care Law - PLA 4522

Professor Bell

Summer 2017

Analysis of the Effects of the Affordable Care Act

and the American Health Care Act


Analysis of the Effects of the Affordable Care Act and and the

American Health Care Act

It is quite evident that healthcare reform has been at the forefront of the minds of

American citizens. The 2014 implementation of the Patient Protection and Affordable Care Act

fueled the healthcare reform debate at the 2016 presidential election. With the noble intention to

expand coverage to millions of uninsured Americans, lower the overall cost of healthcare, and

ultimately better the quality of healthcare delivery, the Affordable Care Act proposed strict

regulations and the growth of bureaucratic control (Shi & Singh, 2015). Although the legislation

did expand coverage to millions, the Affordable Care Act has it’s fair share of shortcomings.

The recent shift in the political leadership of America has left republican congressmen

scrounging for a healthcare alternative before the faults of the Affordable Care Act financially

suffocate the public. The plan proposed by republican congressmen, the American Health Care

Act, or AHCA, was written with the intention to cut the Affordable Care Act’s regulatory control

by transferring the power from the federal government back to the states to provide Americans

with genuinely affordable health care (Kodjak, 2017). Nonetheless, this analysis will provide a

clear understanding of both reform efforts and their underlying issues.

In the first term of his presidency, President Barack Obama signed the Patient Protection

and Affordable Care Act into law, delivering a comprehensive change to the healthcare delivery
system of the United States. The Affordable Care Act, or ACA, undoubtedly represents the most

extensive reform effort since the creation of America’s social welfare programs, Medicare and

Medicaid (Shi & Singh, 2015). The ACA focused on controlling the cost of health care and

decreasing the number of uninsured citizens by expanding medicaid coverage, opening state-

based marketplaces, providing subsidies for low-income families when purchasing insurance,

and imposing numerous regulations on insurance companies, small businesses, and individuals

(25, 2. A., 2017). Though much good was accomplished through the passage and start of the

ACA, like lowering the number of uninsured, the ACA has indisputably lead to just the opposite

of affordable health care for many of those participating in the marketplaces. Since the

legislation was fully adopted by the states in 2014, more and more insurance companies have

been pulling out of the state-based individual marketplaces, placing a great strain on competition

within the market while also driving up the cost of premiums (Khazan, 2017).

There are many underlying problems with the implementation of the Affordable Care

Act. The legislation created state-based American Health Benefit Exchanges, otherwise known

as individual marketplaces. The individual marketplaces were designed to provide health

insurance packages from multiple insurance companies to those who do not have health

insurance through government programs, their job, or any other source, and who fall below

138% of the Federal Poverty Level. The Affordable Care Act also prohibited the ability of

insurance companies to refuse coverage to those with pre-existing conditions (25, 2. A., 2017).

Recently, insurance companies within the exchanges have been fleeing, or solely returning to the

private market, citing financial losses as their reason for pulling out. For example, Blue Cross

Blue Shield is currently the only insurance company participating in the Alabama state

marketplace. Because all other insurance companies have withdrawn from the exchanges in
Alabama, Blue Cross Blue Shield is spending approximately $1.20 for every $1.00 it collects in

premiums (Khazan, 2017). The financial losses faced by insurance companies are most likely a

result of having to insure so many sick, poor people in the individual marketplace.

With the abundance of insurers pulling out of the state-based individual marketplace,

health care premiums for American citizens have skyrocketed. When insurers leave the state-

based individual marketplaces, competition within the marketplace stiffens, forcing more

insurees onto the remaining insurers, consequently driving up the cost of healthcare premiums.

For instance, the cost of premiums in Arizona are estimated to more than double from last year.

If a 27 year old non-smoker were to purchase the second-lowest silver plan, the most popular

plan, from the Arizona exchange, they can expect a gigantic increase in premiums. A 2016

projection showed that this individual living in Arizona would pay $422 in premiums for an

unsubsidized second-lowest silver plan in 2017, a giant leap from the $196 the previous year, a

116% increase (Herron, 2016). Fortunately, 74% of those participating in the Arizona exchange

can expect a subsidy to help pay for their premiums. However, the remaining 26% of Americans

purchasing health insurance from the Arizona exchange will not qualify for such subsides and be

forced to take on the rising cost of premiums with no help from the government (Goodnough,

2016).

The American Health Care Act, or the Better Care Reconciliation Act of 2017, is the

latest effort to reform the healthcare system and has recently passed in the House of

Representatives. There are many fundamental differences between the American Health Care

Act and the Affordable Care Act. Foremost, The AHCA repeals the Affordable Care Act’s

individual mandate. Under the Affordable Care Act, individuals are forced to buy insurance, or

pay a penalty (25, 2. A.). The AHCA does not require individuals to purchase insurance,
although if a previous uninsured individual decides to purchase insurance from the exchanges

later on, they will then face a monetary penalty (2017, May). Also the American Health Care Act

keeps the provision that insurance companies cannot refuse coverage to those individuals with

pre-existing conditions. However, unlike the Affordable Care Act, the AHCA does not mandate

that the cost of insurance for those with pre-existing conditions be the same as healthy

individuals. Within the AHCA, the Establish Patient and State Stability Fund allows for 115

billion dollars of federal funding to be available to all state over the period of nine years. The

fund also includes 8 billion dollars in additional funds to be shared amongst the state to provide

high-risk individuals with financial help, since there is no limit on the cost of their insurance.

The states may choose to spend this money on promoting access to preventative care, subsidies,

etc (2017, May).

The Affordable Care rolled out a massive medicaid expansion to those states that would

choose to expand their programs. Of thirty-two states that choose to expand their Medicaid

program, newly eligible adults under the those below 138% of the federal poverty line, are fully

funded by the government until 2020, then funding will decrease to 90% (H.R. 1628). However,

under the American Health Care Act, there will be a complete reversal of the Medicaid

expansion, although those who are enrolled by 2020 will be grandfathered in. The AHCA also

will reduce federal funds made available to the states for Medicaid and place caps on coverage

per enrollee for all categories of individuals, including children and the disabled (2017, May).

The Affordable Care Act required that states that choose to expand Medicaid cover basic mental

health and addiction services, partly due to the rising opioid epidemic hitting America (Zezima

& Ingraham, 2017). The AHCA would scrap this requirement beginning in 2020 but it would
disperse a fund of 15 billion dollars to the states in order to fund these services, as well as

maternal and newborn care (2017, May).

In summation, the heated political climate of the today is greatly due to the problems

associated with the current United States healthcare system and the proposals to amend it. While

The Affordable Care Act has benefitted millions of previously uninsured individuals, some with

pre-existing conditions, it has done little to bring the cost of healthcare premiums down to those

in the marketplace that do not qualify for it’s subsides. Premiums have steadily increased in the

majority of the 50 states and one by one health insurance companies are dropping out of the

exchanges. In addition, the ACA has imposed far-reaching regulations of the state's, small

businesses, and individuals, contributing to the Republican plan to partially repeal and replace

segments of the ACA that they feel drive up the cost of care for American families. The

American Health Care Act was designed to hand the newfound power of the bureaucracy under

the ACA, back to the states. The new Act repeals the individual mandate, cuts Medicaid

enrollment eligibility in 2020, and also rids the state's of numerous regulations on coverage for

Medicaid beneficiaries while at the same time, throwing money at the states to deal with the

chance of rising costs. Only until the American Health Care Act passes in the Senate will we, the

American people, know exactly how its proposals will affect the healthcare system of the United

States.
References

25, 2. A. (2017, February 02). Summary of the affordable care act. Retrieved from

http://www.kff.org/health-reform/fact-sheet/summary-of-the-affordable-care-act/

Affordable Care Act. (n.d.). Retrieved from

https://www.medicaid.gov/affordable-care-act/index.html

Goodnough, A. (2016, October 29). Increase in health act premiums may affect arizona vote. The

New York Times. Retrieved from

https://www.nytimes.com/2016/10/30/us/politics/affordable-health-care-premiums-

arizona.html?mcubz=0

Herron, J. (2016, November 1). Here’s how much obamacare premiums are rising in all 50

states. The Fiscal Times. Retrieved from

http://www.thefiscaltimes.com/2016/11/01/Here-s-How-Much-Obamacare-Premiums-

Are-Rising-All-50-States

H.R. 1628: American Health Care Act of 2017. (n.d.). Retrieved from

https://www.govtrack.us/congress/bills/115/hr1628/summary

Khazan, O. (2017, May 11). Why so many insurers are leaving obamacare. The Atlantic.

Retrieved

from
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obamacare/526137/

Kodjak, A. (2017, May 05). Obamacare vs. american health care act: here's where they differ.

Retrieved from http://www.npr.org/2017/05/05/527092478/obamacare-vs-american-

health-care-act-heres-where-they-differ

Shi, L., & Singh, D. A., (2015). Essentials of the U.S. health care system. Retrieved from

https://books.google.com/books?id=xd0wCwAAQBAJ&printsec=frontcover&dq=essenti

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Tuttle, B. (2016, October 18). 8 states where obamacare is rising at least 30%. Time Magazine.

Retrieved from http://time.com/money/4535394/obamacare-plan-premium-price-

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Zezima, K., & Ingraham, C. (2017, March 09). GOP health-care bill would drop addiction

treatment mandate covering 1.3 million americans. The Washington Post. Retrieved from

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