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Healthcare Act Review

Healthcare Act Review

Healthcare Act Review

The introduction of the healthcare reform, namely the Patient Protection and Affordable Care Act (PPACA) of 2010, has resulted in fierce debates regarding its feasibility. In particular, the idea of the compulsory insurance is often perceived as unconstitutional, since it robs the U.S. citizens of the freedom of choice. Nevertheless, at the end of June 2012, the U.S. Supreme Court recognized the legality and constitutionality of the rules on charging for the absence of health insurance, with the payment being considered tax rather than a fine (Jacobs & Skocpol, 2012). Still, there are numerous attempts to alter the course of the reform and find the solution that will be feasible both for its supporters and for opponents. Among them, there is the bill H.R.3762 that is also known as Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015. As can be judged from its name, the bill is aimed at the restoration of the U.S. citizen’s constitutional right to freedom by leaving the decision regarding the acquisition of a health plan in their hands. At the same time, the consequence of such change may have a wide array of effects on the healthcare industry in particular and the country as a whole. Therefore, the following work focuses on the review of the main provisions mentioned act, namely in the terms of their effect on the healthcare system of the United States.

Analysis

The bill H.R.3762 has been introduced to the House by Tom Price on October 16, 2015. On October 23, the bill has been agreed in the House, with its subsequent introduction to Senate in December 2015 (Price, 2015). In case it will pass it and will be signed by the President, it will obtain the status of law. The bill consists of the three titles, with each of them containing amendments to existing acts. In order for the review to be comprehensive, each title will be analyzed separately.

Title 1: Committee on Education and Workforce

The first title contains the amendment of the Fair Labor Standards Act of 1938. In particular, after becoming law, the act will free the certain categories of employers from obligation to enroll their workers in a health plan (Price, 2015). In other words, the ultimate decision on providing the personnel of a company with healthcare insurance will be made by an employer. On the one hand, such initiative will lower the financial burden on companies, which is particularly critical for the representatives of a small and medium business. Considering the fact that the average annual healthcare costs per employee exceed $10,000, the freedom in the terms of decision regarding the enrollment of a company’s staff in a particular health plan will allow optimizing the expenditures of the majority of companies (Aon Media Center, 2013). In turn, the overall economic climate in the country is likely to improve.

On the other hand, the amount of options regarding the health insurance, which are available to the U.S. citizens, will be lowered. It should be noted that the majority of the insured Americans (about 59%) are enrolled in the health plans offered by their employers that cover the corresponding expenses either partially or fully (Jacobs & Skocpol, 2012). As a result, in case the described bill will become a law, the amount of people covered by the health insurance, and, therefore, the sales of health plans are likely to reduce drastically. In turn, not only the overall coverage but also the funding of the healthcare system as a whole will decrease.

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Title 2: Committee on Energy and Commerce

The second title focuses on the funding of the healthcare system. In particular, it proposes an amendment of the ACA that terminates the Prevention and Public Health Fund, the primary goal of which involves the improvement of health outcomes and reduction of the healthcare costs (Price, 2015). On the one hand, such initiative can be perceived in a positive way. First of all, the elimination will result in the release of funds (about $1 billion) that may be used to sustain the healthcare system after the abovementioned measures are taken (Goldsteen, Goldsteen, & Dwelle, 2015). In particular, it is also proposed to increase the financing of community health centers (Price, 2015). Moreover, it is possible to say that the amount of intermediaries between the government and healthcare facilities will be reduced, thus lowering the financial losses during the flow of funds from a donor to a recipient.

At the same time, the elimination of the fund may halt the work of several health programs, including fighting obesity, reduction of the use of tobacco, and increase of the accessibility of preventive medical services (Goldsteen et al., 2015). In turn, it may have a negative effect on the health level of the nation. Moreover, the bill does not specify the fate of the unobligated funds, meaning there is a risk of their partial loss after the termination process (Price, 2015). Additionally, it is stated in the bill that for one year, the federal funds will not be available for payments (both direct and through an intermediary) to certain groups of entities (tax-exempt organizations, essential community providers, etc.) (Price, 2015). On the one hand, this measure will allow reallocating the money, ensuring that healthcare facilities that require them most will receive them first. At the same time, the altered system of funding may lack flexibility in case of emergency.

Title 3: Committee on Ways and Means

The third title of the bill focuses on the current taxation of the healthcare industry. First of all, it amends the Internal Revenue Code, thus eliminating the idea of compulsory insurance. In other words, the U.S. citizens will not be obliged to purchase the essential health plan (Price, 2015). As mentioned before, according to the PPACA, the failure to maintain it resulted in a fine (tax). Millions of healthy Americans consider it to be a better option than the purchase of a health plan. Indeed, the first penalty was about $95 or 1% of the earnings per person per year. However, it is required to pay a greater sum of the mentioned two. Moreover, fines rise steadily, meaning that people, no matter what their state of health is, have to purchase the insurance to avoid further financial losses (Tate, 2012). The described provision allows citizens to dispose of money at their own discretion, without forcing them to make unnecessary purchases. At the same time, it should be noted that the share of people that purchase their health plan by themselves is rather low (about 9%) (Jacobs & Skocpol, 2012). Nevertheless, even this amount may be enough to undermine the financial basis of the healthcare reform that is built on the idea of on expanding the range of insured people paying to the treasury.

Additionally, the bill repeals the excise tax on medical devices that is meant to be paid by manufacturers (Price, 2015). This 2.3% tax was introduced to serve as an additional source of funding for the reform. Considering the fact, it is assessed on the gross sales of medical device manufacturers, rather than their profits (Tate, 2012). It is possible to say that its termination will allow increasing their revenues by about 25%, potentially leading to an increase in their productivity and the quality of manufactured goods. For example, in case, the gross sales of a company engaged in the health care industry reach $1 million with the profit of $100,000, the tax will account for $23,000, i.e. almost a quarter of the enterprise’s profits. On the other hand, the very same fact means that, in case, the tax is repealed, the shortfall of the funds required to support the healthcare industry is inevitable. As a result, certain programs funded by the government will be impossible to carry out, which will result in the decrease of the overall health level of the nation. The same can be said about another provision of the third title regarding the repeal of the tax on the high-cost health plans that are sponsored by employers (Price, 2015).

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Conclusion

The reviewed bill cannot be viewed unambiguously. On the one hand, it not only ensures the constitutional rights of the U.S. citizens but also lowers the burden on the representatives of small and medium business, as well as manufacturers of medical devices. However, the amendments presented in it are quite radical, with each of them being potentially capable of undermining the financial base of the U.S. healthcare system. This negative impact will be particularly strong in case the bill H.R.3762 becomes a law in its current form, meaning all of the changes will be carried out simultaneously due to the effect of synergy. As a result, it is possible to either block it completely or amend it in a way that provides for the gradual (partial) introduction of the described provisions. In general, the second option can be perceived as the most rational one as it will allow dealing with certain problems and challenges that have emerged because of the introduction of healthcare reform of 2010.