Final Project Due

ACA 13

Changes resulting from the Affordable Health Care for America Act (ACA)

Weltee Wolo

Rasmussen College

Author Note

This paper is being submitted on May 28, 2017, Kristi Downs’s

Healthcare Planning and Policy Management H360/HSA4150 course

The Affordable health care act was a series of changes and reforms that were directed towards the health sector. The bill got signed into law in March 2010. The reforms aimed at improving the quality of health care for the American population (Protection & Act, 2010). They are a set of rules for health care facilities, insurance companies and other businesses on matters to do with the provision of health care to people. Much as there are changes the overall perception is that there has had a tremendously positive effect on the people of America as they can now comfortably rely on the act to have their medical issues taken care of without worrying too much about paying. According to Huntington et al. (2011), the bill has substantially made health care affordable and attainable by most of the people in the US. Ever since it’s passing the bill has had tremendous changes in some primary health care providers such as insurance companies, health care providers, and the facilities. The changes range from those that are negative and those that are positive, from the long term to the short term goals. One of the providers that have been affected the most by the law is the insurance companies and the way that they operate.

Possible causes of change to the insurance unit

The changes have had to take place so as to accommodate the titles of the ACA of 2010. The biggest and most recognizable cause of the changes is the fact that the law calls for the increase in the number of people who get health care in the country. More people of all classes and social standing automatically request the adjustment of operation and systems within insurance companies (Cantor et al., 2012). There is the need to reduce the amount of money being spent by individuals in health care without having to compromise the quality of care. What this implies is that companies and businesses that take care of issues of insurance substantially need to check their systems so as to be viable and up to the task of meeting the needs of the people and fulfilling the law of ACA.

According to Blumenthal & Collins (2014), most of these changes are not temporary as they are static unless there is a reversal of the law they are for the long term. Naturally, the insurance companies are the ones that are most affected by the act. This is because most of the components of the law deal with issues of money as well as health care quality. As a result of this, it is critical that the effects of the changes be evaluated by what takes on a temporary standing and those that are for the long term. The short term effects are those that are quickly forgotten based on the minimal impact that they have. On the other hand, the long-term effects are more permanent and affect the company the greatest.

Effects of the Affordable Care Act on insurance companies

Education of consumers – more power to consumers

The ACA is one document that has brought about enlightenment to the consumer when it comes to matters of health care. People can conveniently take control of their lives and what facilities that they would want to have the care in (Huntington et al., 2011). With more private insurance firms coming up to fill the gap which is used to fulfill the needs of the people, there is the emergence of the need to conduct consumer education. Berwick & Hackbarth (2012), state that consumer education ensures that people make choices that are informed and with adequate knowledge on the issue. There is a possibility that people could under buy or over buy the policies and harm them financially in the long run. The ACA has mandated the insurance companies to offer very valid and more information on their policies and has even made it simpler for more understanding. In the beginning, these companies would quickly hide facts and figures in very complicated insurance terminology that was not understandable upfront. This could easily mislead people into buying things that they did not understand or be deceived into buying policies that did not meet their needs entirely (Blumenthal & Collins, 2014). Deception and poor understanding are a thing of the past according to the new act. People now have a choice among many options, and they do so after accessing the relevant information.

Accommodation of more people

Some of the ways through which insurance companies accommodate more people is by increasing the coverage limits, mandating private business owners with fifty additional employees to offer medical insurance to its employees, not using medical conditions to provide medical cover and stopping the idea of people losing protection based on the seriousness of their diseases (Rosenbaum, 2011). All these are strategies employed by the ACA to increase the number of people being covered by the medical health plans under the act. For the insurance companies, this translates once again to fiscal adjustments.

As of 2009, there were fewer businesses that could not facilitate accommodation for every individual that needed to be covered. For instance, with this act, there has been accommodation of younger people as compared to previous years where older people were included (Cantor et al., 2012). Insurance companies have had to establish safeguards so as to ensure that the premiums offered were enough to cover the extra costs that would accommodate all the additional people that have had to be covered. Safeguards are meant to reduce consumer spending, increase insurance companies spending and eventually ensure that costs of all the medical care for individuals that deserve and have covered are catered to properly.

Financial

The ACA has significant financial implication for the insurance companies all around the state. The cat called for the coverage of people and therefore more planning and the need to establish more sources of funds emerged. The private firms also saw a chance to get a place in the market. The act also increases the amount of money that the government allocates for the companies. Much as the government assists the companies in their funding, the amount used to cover the cost official care is far more than they can get from the government. Retaining a for-profit healthcare system has economic benefits this mostly applies to the private insurance companies who are set to cater to the needs of the people as well as make profits to remain in the market and relevant (Sommers et al., 2015). This also means that the system’s aspects also need to gain benefit so as to stay relevant. While the ACA aims at reducing the cost of health care Americans are still among the people paying the most for basic health care. These are some of the adjustments that companies have to take care of.

The other financial implication of the Affordable Care Act is that of reduction of annual revenue of insurance companies. According to Blumenthal & Collins (2014), while the insurers had to make adjustments to suit the demands of the ACA, the clients to these insurers were not affected as they were not expected to make adjusted contributions to also adjust to the ACA marketplace. This had them making assumed projection, and these assumptions did not work as projected since this was a first time experience. The result of this was that insurers did worse in their performance unlike in previous years. Many of the insurers underestimated the claims by over thirty-five percent for the high claimants. On the other hand, the lower providers underestimated their own by over four percent. Both of these were equivalent to a six percent deviation from the global market share of claims. In the preceding years, there have been evidence of more accurate projections, but the losses have been permanent as most of the newer and smaller insurers have had difficulty in gaining their financial round with many of them closing shop due to bankruptcy.

Competition in business – insurance market place

The ACA makes room for the establishment of an insurance marketplace. This is where people get to make informed choices based on the type of insurance that they want and the amount of money available (Berwick & Hackbarth, 2012). Unlike in the past, the insurance companies have been mandated with the duty of making known and transparent all the information about it as much as possible so as to facilitate in decision making. As a result of this companies may have to make adjustments to their services and premiums so as to attract more clients to its companies. The competition for customers increases and this calls for the need for changes.

According to Protection & Act (2010), many insurance companies have had to take on extreme measures so as to attract more customers. Those with difficulty in adjusting may have had to take adverse measures such that they have run out of business. Lack of clients or their reduction in number equally results into the making of losses for the company. This means that these companies have had to run out of business and close shop. Business is threatened by the need to adjust premiums and rates. People have the power to choose the policies and companies that they feel serve their needs without feeling oppressed by them. The failure to comply with the policies of the Act will bring about the tight competition that makes the other companies better their offers so as to attract more clients. Competition in this business has had extreme effects that work to the advantage of the patients by regulation of costs and quality (Rosenbaum, 2011).

Medical conditions covered – preexisting conditions

With the signing in of the ACA, insurance companies have had to change the type of conditions that they cover. Before the law was implemented, people were limited to insurance cover based on their present health conditions. There was an increased chance that people with chronic illnesses before their application would be left out of coverage based on these circumstances. With the inception of the Affordable health care act into law, insurance companies have had formulated policies that accommodate children and adults even if they had preexisting conditions that initially barred them from getting covered (Rosenbaum, 2011). This was a measure that the insurers made the most of their revenue by reducing associated risks which were to be borne by the individual as opposed to the company. For this reason, the insurer has had to deal with extra costs incurred by the people who are suffering from chronic diseases other conditions that may have had to be addressed at a cheaper cost. Due to the fact that a person only pays a limited amount of money for their cover, the insurance company is the one that cushions the extra fees.

In addition to the medical conditions covered insurance companies have had to deal with the limitation of the conditions that could lead to one losing their cover. These have been reduced to accommodate those people who may have made an honest mistake while making their application or may have developed a complication that was beyond their control or previous awareness (Sommers et al., 2015). Initially, insurance companies had the power to dismiss a cover for mistakes made and complications developed even after providing the person with medical cover. This implies that once again the insurer has to part with more money to provide essential services without charging the client more to get the same services.

Increase in coverage limit

The act has changed the age limit for coverage. It is flexible enough, and the insurance policies have been mandated with the task of covering children under their parents for up to twenty-six years of age. These have deep fiscal implications that have the long-term impact on the companies. These have further long-term financial consequences to these enterprises. There is a need for flexibility, and without proper planning, most of these businesses may quickly run out of business based on the fact that they are not financially prepared for these changes. As of 2016 many of the newly established insurers have had to go into financial distress to the extent of failing and going out of business. The effect has also been seen in the larger companies such as United Healthcare which have so far withdrawn from the ACA’s exchange market due to the important financial losses that it had been facing. The insurers as of 2016 only managed to make only two percent of profits higher than the projected profits in 2010 even after the account reinsurance payment done. This is evidence of the deep financial plunges that insurance companies have had to deal with as a result of actions such as increasing the insurance cover limit.

In conclusion, the new health care act has had a very great impact on the insurance companies. This range from fiscal implications to having to accommodate more people at a smaller cost than it was before. Many adjustments have therefore been made to accommodate these changes. The greatest impact of all time is that these companies have shifted focus from making more money from claims to ensuring that everybody gets an insurance policy or treated at a lower cost. These companies have often focused on making money for themselves at times compromising the health of the patients. These include situations such as dropping of patients due to complications developed so as to cut the costs of money discharged by the insurance companies. Much as there seem to be more negative impacts as opposed to the positive ones, the insurance companies may have ultimately been favored as they have more people to cover thereby accumulating more money while offering better services to the people. Finally, the ACA has enabled more companies to crop into the market thus creating equilibrium as more money has been allocated by the federal government to support the provision of better health care for people.

References

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