Problems with Ppaca

Topics: Health insurance, Health care, Health economics Pages: 5 (1387 words) Published: October 26, 2012
Problems with PPACA:

Higher Costs

PPACA has touted new benefits without measures to cut cost.1 One should know that in America there are already federal laws and programs to cover the elderly (Medicare), the poor (Medicaid), and uninsured children (CHIPs), In addition there is basically free or low cost care to anyone who needs it and it is available if one looks for it. Examples include: Shriner’s hospitals, free clinics, and providers who do pro bono work. In case that wasn’t enough, there are also laws in place that ban practices of charging more to people with pre-existing conditions in employer-based health insurance. The 60% of Americans who get their healthcare insurance from their employer may actually be hurt by PPACA. All one needs to do is make the connection that minimum standards for health insurance and broader access to subsidized healthcare will drive taxes up.4 But for those who have a hard time making the connection, the literature supports costs 3 times higher than initially stated by President Obama, and an additional $118 billion through 2023.3

In order to drive home the point of higher costs, look at an example used by Supreme Court Justice Samuel Alito. Justice Alito spoke on the hypothetical typical healthy 27 year old worker who on average consumes less than $900 annually on healthcare services. Under the PPACA that same healthy 27 year old worker will be required to spend more than 5 times that amount for a healthcare policy that gives a low deductable and pediatric services. Two services that a healthy 27 year old normally wouldn’t choose.4

Regulations prevent small businesses to grandfather their health insurance plans, further driving up healthcare spending as small businesses search for new plans.1 When those same small businesses purchase new health insurance plans they are going to find a soggy sandwich in their lap. Effective 9/22/10, non-grandfathered insured health plans will be fully or partially subject to Internal Revenue Code 105(h).2 What this means, if it is applied as it is currently written, is that highly compensated employees would be taxed on healthcare benefits provided under fully-insured plans. Previously, these employees were covered under fully-insured plans and they were exempt from the requirements of Internal Revenue Code 105(h). In short, the small businesses and highly paid individuals will pay tax premiums on healthcare plans, another example of discriminatory actions taken against wealthy individuals. The fallout may be an estimated 80% of small businesses that will either drop healthcare plans completely, or be forced to spend on higher priced new plans.2

The liability piece of the healthcare system was not touched.1 Perhaps it is because the trial lawyers association is a large donor to the democratic party. Without liability reform, namely tort reform, providers will continue to practice defensive medicine. Costs are going to continue to rise as providers continue to practice and order tests that may not be needed. Defensive medicine occurs when providers alter clinical decision making because of the threat of medical liability.6 The American Academy of Orthopaedic Surgeons reports that more than 90 percent of physicians reported practicing defensive medicine within the past 12 months. Liability reform is estimated to result in a savings between 5%-34%, by reducing the practice of defensive medicine. This would equate to an annual savings of $54-$650 billion dollars.6

New taxes aimed at small business owners, employees, and consumers will fund PPACA. As previously mentioned funding will come from payroll taxes on high-income earners increasing by 0.9 percent. In addition, there will be a 3.8 percent tax on unearned income for those same individuals.7 Provisions aimed to help small business such as the health insurance tax credit are only temporary.1,2

One final strike to the pocket book of the working...

References: 1. PPACA: Endless Problems for Small Business. National Federation of Independent Business. Retrieved from
2. Harris, S., Keller, E., Lipsig, E. (March 2010). Healthcare “Reform” Provides no relief for Employers. Paul Hastings. Retrieved from
3. Trino, K. (1 March 2012). Obamacare’s Gift to the States: Huge Unfunded Medicaid Mandate. Retrieved from
4. Fisher, D. (28 March 2012). The Big Problem with Obamacare: It Doesn’t Help Many. Forbes. Retrieved from
5. Roff, P. (16 March 2012). Cheap PR Stunts Can’t Hide Obamacare’s Huge Problems.US News. Retrieved from
6. Hettrich, C. (December 2010). The Costs of Defensive Medicine. AAOS Magazine. Retrieved from
7. Federal Funding Under the Affordable Care Act. (2012, April). The Henry J. Kaiser Family Foundation. Retrieved from
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