Affordable Care Act Capstone Project

The Affordable Care Act means that health coverage will be required for almost every American and will be partially subsidized. However, it will not change the employer-centric, private-insurer-based system of financing and coverage. Demand for care will increase significantly and rapidly, but the underlying issues that created the need for a safety net in the first place will not be solved in the near future.

Feldstein (2005) argues that if national health insurance is enacted and designed as an efficient in-king subsidy, then it is questionable as to whether in-kind subsidies should be continued. The major in-kind subsidies on the demand side are Medicare, Medicaid, and the tax deductibility of medial expenses in excess of 7.5% of adjusted gross income. According to the new Act, there will not be any abolition of any of these, but there will be reductions to all of them.

Taking a closer look at all the different aspects of the effects of national health care reform, it is important to contemplate the impact that the economy has already had on health care -- particularly for hospitals for the purposes of this study. The American Hospital Association (2009) survey found the following statistics, which represent the impact of the economy on hospitals in the United States:

1. Emergency room visits by uninsured patients -- 45% of hospitals reported a moderate increase in the number of emergency room visits by uninsured patients; 13% reported a significant increase.

2. Uncompensated care -- 43% of hospitals reported a moderate increase in uncompensated care as a proportion of total gross revenue; 27% reported a significant increase.

3. Elective procedures -- 41% of hospitals reported a moderate decrease in elective procedures; 18% reported a significant decrease.

4. Inpatient admissions -- 38% of hospitals reported a moderate decrease in inpatient admissions; 17% reported a significant decrease.

5. Community need -- 42% of hospitals reported a moderate increase in community need for subsidized services; 11% reported a significant increase.

6. Charitable contributions -- 31% of hospitals reported a moderate decrease in charitable contributions; 9% reported a significant decrease.

7. Total operating margin -- 26% of hospitals reported a moderate decrease in total operating margin; 39% reported a significant decrease.

8. Days cash on hand -- 32% of hospitals reported a moderate decrease in days cash on hand; 27% significant decrease.

9. Days accounts receivable -- 29% of hospitals reported a moderate increase in days A/R; 7% reported a significant increase.

10. As a result of these economic conditions, hospitals responded in the following ways: Administrative expenses -- 80% of hospitals reported cutting administrative expenses as a result of economic concerns. Staff reductions -- 48% of hospitals reduced staff. Service cuts -- 22% of hospitals reduced services. Mergers -- 9% of hospitals reported considering a merger.

While modern health care has become more effective than ever in saving and improving the lives of individuals in America, it has become more expensive than ever for individuals, businesses, and governments. What is more, insurance companies have long abandoned its clients without medical insurance at times in their lives when the have needed it the most, resulting in patients putting off the care they need, compromising the state of their health and driving up the cost of care when they do finally get it. Insurance companies tend to put the insurance company bureaucrats between a patient and his or her doctor. Private health insurance companies in this country have grown into mega industry hegemonies coordinating coverage in negotiations with big employers on one side, and hospitals and doctors on the other side (Jacobs & Skocpol 2010). Insurance companies have very strong incentives to protect their profit margins by "dumping people who get costly illnesses, such as cancer" (2010).

…public and private health insurers engage in a complex and continuous process of negotiations with multiple health care providers to establish reimbursement rates for services. This increases administrative expenses among payers and providers and leads to wide variation in prices (Volsky 2010).

Health care reformers, often called "advocates of universal coverage" (Jacobs & Skocpol 2010) have run into major political opposition and have failed every time at trying to guarantee coverage for all U.S. citizens. "The best reformers could do, in major steps toward this goal, came decades ago, in the mid-1960s, when Medicare was enacted to help cover physician and hospital costs for the elderly and Medicaid was enacted to pay for care for some of the very poor" (2010).The Affordable Care Act puts the insurance company back in its place, pointing out their scandalous practices while also giving individuals the stability that they need to make choices about their health that makes the best sense to them as individuals. As Joe Biden noted on that day in March 2010 after introducing Barack Obama, "this is a big f…ing deal." The Affordable Care Act of 2010 has taken place as a landmark in U.S. social legislation, comparable to Social Security legislation enacted in 1935, Civil Rights legislation enacted in 1964, and Medicare (Jacobs & Skocpol 2010). New York Times columnist David Leonhardt called the Affordable Care Act "the federal government's biggest attack on economic equality" since the late 1970s (2010). The Congressional Budget Office projects that cost-control provisions will gradually reduce the nation's overall healthcare bill and shrink the federal budget deficit (2010).

The health care "system" in America has been continually under attack. While millions of Americans are uninsured, there is also the problem of hospitals being run more like "profit centers" (Berenson & Zuckerman 2010) than places of care. Rather, there is "a strong business case for keeping beds full and employing service-line strategies for generating volume, contributing to what some have called a 'medical arms race'" (2010).

The United States has some of the world's best doctors and healthcare facilities, yet American medicine, in general, has failed to provide high-quality care to Americans, There are too many unplanned readmissions, medication mistakes, and hospital-acquired infections (U.S. Dept. Of Health & Human Services 2009). There are several barriers that come into play as well when doctors and other healthcare workers are trying to give quality care to patients. The combination of the American Recovery and Reinvestment Act and the Affordable Care Act will help address any information gaps that get in the way of physicians caring sufficiently for patients. For example, the American Recovery and Reinvestment Act provides about $25 billion in incentives for physicians and hospitals to use electronic health records (2009).

Administrative overhead and lack of primary care providers are also perceived to be barriers to the delivery of high-quality care. The Affordable Care Act is a major step forward in each of these areas. One of the nightmares of the health care system is paperwork. This results in the need for millions of workers just filling out forms for insurance companies. Under the administrative simplification provisions of the Affordable Care Act, physicians will be able to reliably find out electronically whether a particular test is covered, how much the insurance company is paying, and how much patients have to pay. These simple changes are expected to save the government $20 billion over the next decade and save hospitals, physicians, and insurers far more in both in cost and frustration (U.S. Dept of Health & Human Services 2009).

The Affordable Care Act will require that essentially all Americans, beginning in 2014, buy basic health insurance coverage (just like all drivers on the road need car insurance). This "individual mandate" (Jacobs & Skocpol 2010) is designed to ensure that individuals do not wait until they or a family member becomes ill to seek care, getting the healthy people into the system from the get-go. The law also includes eventual taxes on very expensive private insurance plans (the intention is to make them less prevalent), along with incentives for more efficient payments to physicians and hospitals, intended to move the country toward paying for results in health care, rather than for sheer numbers of tests and procedures (2010).

The hospital industry is made up of numerous and varied sectors including such as non-profit and for-profit hospitals. With such wide variation in hospital industry sectors, it is only plausible that the Affordable Care Act will have unique results the varying sectors and individual hospitals, in general. Certain hospitals have, historically, offered more care to patients who are uninsured. "These hospitals are likely to gain the most in terms of revenue increases for the mostly uncompensated care they have been providing these patients" (Berenson & Zuckerman 2010). There are substantial provisions within the Affordable Care Act that will have a beneficial effect on recovering unsustainable losses incurred through uncompensated care by a hospital that already provides ample charitable services.

President Obama as well as some.....