What Was the Theory Behind the Affordable Care Act?

We are being saturated with information and propaganda these days about the Affordable Care Act, i.e., ObamaCare. But I, for one was not clear on exactly what was the thinking and the theoretical provisions of this recent piece of legislation that is planned to take over one sixth of our economy. For this reason, I am electing to review its essential features for my readers.

We are aware of the fact that about 47 million Americans are without health insurance. Many of those are young and healthy adults who do not want insurance. They do not seem to realize a need in that area. Nevertheless, this group does need health care from time to time; and the cost of treating them falls on hospitals and on those of us who buy insurance. Additionally, health care costs have been increasing more rapidly than the rate of inflation for many years. Everyone, both conservatives and liberals, understand this problem and seek a remedy.

The Affordable Care Act, (ACA) was designed to bring these 47 million Americans under insurance protection and to distribute health care costs throughout the population. But…how to pay for their protection—that is the question. Democrats devised a system they thought would pay the bill for health care coverage. It ran as follows:

1)      Money would be taken from Medicare and put into the funding for the ACA. $716 billion is to be taken from Medicare spending over the coming 10 years and used to fund the ACA. Concurrently with spending Medicare money on the ACA, spending reductions in Medicare reimbursement schedule for procedures will be legislatively decreased. This will mean that doctors and hospitals will receive less money for their work and for procedures that they do, which were formerly covered by Medicare.

2)      Increased money is to be raised from higher taxes charged to medical devise manufacture and to pharmaceutical and health insurance companies.

3)      Penalty money will be collected from young persons who refuse to buy insurance through ObamaCare exchanges.

4)      Increased income taxes will be levied on the wealthy, i.e., those with annual income >$200,000.

5)      Monthly premium payments from young and healthy persons will more than pay for their own care; and the overage will be used to pay for more expensive, older, and sicker people.

Democrats believe that this increasing money stream will more than pay the cost of insuring the 47 million people.  They even believe that there will be a surplus of money which can be used to decrease federal budget deficits. They believe that our country will be better off financially with ObamaCare in full operation.

Republicans do not believe that there will be nearly enough money in the kitty to pay for this program. I, personally, think that one major defect in the program will be decreasing participation in Medicare by physicians and hospitals caused by the government’s reduction of payment. I have seen doctors for decades declining Medicare payment schedules because of low payment levels. These lower ObamaCare fee schedules will aggravate that tendency.