Affordable Care Act: Looming Decisions, Part II
The initial rollout of the Patient Protection and Affordable Care Act (ACA) included a personal mandate by the federal government; obtain healthcare, either through your employer or the marketplace, or incur a fine.
From my perspective, the mandate was a public relations nightmare, and overshadowed the spirit of the effort; providing access to care through the marketplace, extending subsidies to those in need, and protecting citizens from being punished for getting sick.
Was the mandate a way to tax those not interested in obtaining care and use it for the greater good? In theory, however it exasperated a public divide and enabled some to weaponize the topic of “free” healthcare.
As always, its a balance, or at least should be.
Subsidies
According to the Tax Policy Briefing Book, federal spending on healthcare topped $1.5 trillion in fiscal year 2022. The government also lost nearly $300 billion in potential tax related income, based on tax provisions and other healthcare related exclusions.
A key to offering care to those in need are subsidies or tax credits. Without subsidies, countless citizens would continue to rely on local emergency departments (ED) for common ailments, or simply not seek care at all.
Of course, the challenge with subsidies is someone needs to pay for them.
The Congressional Budget Office (CBO) estimates:
If subsidies expiring in 2025 are not extended, 4 million people will be unable to afford health insurance in 2026
The subsides originate from the American Rescue Plan of 2021, making plans within the ACA even more affordable for lower earning Americans
Since 2021, enrollment in the ACA has more than doubled
It could cost $335 billion over the next decade for a permanent extension
$335 billion to cover an extension is no small sum, however 4 million uninsured Americans is just the start. Each year, the number will grow as healthcare costs grow out of reach for additional citizens, especially those already enrolled in the expansion program.
Does it work?
As I outlined in part one, the ACA permitted expansion of Medicaid to Americans in financial need, and according to the Center on Budget and Policy Priorities, as of 2023, roughly 24.5 million adults were enrolled in the program.
Research published in 2021 by Teresa A. Coughlin, Haley Samuel-Jakubos, and Rachel Garfield stated uncompensated costs for the uninsured averaged $42.4 billion per year from 2015 - 2017.
Guess who pays for that?
A recent study completed by the Texas A&M University School of Public Health attributed the ACA to reducing total ED visits by uninsured patients. The study, conducted in select states found a 14 percent reduction in the rate of uninsured ED visits per 100,000 population. It also highlighted a reduction in time between visits for uninsured white and black patients.
The study credits medicaid expansion for affording more access to preventative care, thus reducing the need for patients to utilize the ED as a primary care provider.
How is it funded?
On paper, the ACA seems like a good way to reduce costs to taxpayers for the uninsured, incentivize improvements in management of our system, and reduce the operational strain on healthcare workers. I realize the ACA does not fix every problem in our system. There are misconceptions of how the ACA is funded, and here are a few tax examples that help pay for the program:
Employer tax: impacts companies of 50 or more that offer inadequate health insurance
Pharmaceuticals tax: charged to manufacturers or importers with sales of over $5 million
Additional 0.9 Medicare tax on earnings and a 3.8 percent tax on net investment income for individuals with incomes exceeding $200,000 and couples with incomes exceeding $250,000
We Have a Choice
While I have oversimplified the issue of subsidies versus taxes and the impacts to our economy, my hope is it may cause some to pause and contemplate the impact expiring subsidies could have on our society.
Are subsidies expensive? Yes. Are they necessary? I guess it comes down to how we want to pay.
Do we pay unrelenting and inconsistent fees related to the uninsured seeking help at hospitals? Do we allow drug manufactures to charge whatever they deem appropriate for a potentially life enabling or saving drug?
Or do we make difficult concessions and reduce or eliminate other government efforts to then fund ACA subsidies, ensuring health care for those in need so they can receive preventative and managed care, reducing ED visits, and hospitalizations.
Either way we pay.
Maybe it’s because I’m sick, or maybe I’m too idealistic. However to me, access to affordable and reasonable care for every American seems nothing more than meeting a basic human need. Or dare I say it, human right.
