The Patient Protection and Affordable Care Act

The Patient Protection and Affordable Care Act (PPACA), was enacted by President Obama on March 23, 2010. This act is the most significant attempt at revamping the healthcare system since 1965, with the passage of Medicare and Medicaid. The impact of this act effects a majority of health care outlets, insurance companies, businesses, and most individuals in the United States.  The practices of physicians and hospitals where they practice would feel the impact financially and clinically as the drive to offer better health care at lower costs, while making themselves more accessible.  

The intention of the Affordable Care Act, (ACA), was to increase the quality of health insurance, making it more affordable, lowering the uninsured rate and expanding insurance coverage.  Mandates, insurance exchanges, and subsidies were introduced, along with a law that would require insurers to accept all applicants with a coverage of a specific lists of conditions and a guarantee to charge the same rates regardless of sex or pre-existing conditions. As the end result, the Congressional Budget Office in 2011 projected that future deficits and Medicare spending would be reduced as a result of the ACA (Secretary, HHS Office of the). 

With the establishment of ACA, there is intent to achieve a near-universal guarantee of affordable health insurance coverage.  When the law is fully implemented, the desired result is for 94% of the American population to have health insurance coverage.  The act also aspires the following:

• Improvement of fairness, affordability, and quality of health insurance coverage
• Improve the value, quality, and efficiency of the health-care system
• Accountability of the health-care system to a diverse patient population
• Strengthen primary health-care access, along with availability of primary and preventative health care (Rosenbaum, S. 2011).

The employer mandate requires all employers, with 50 or more full time employees, to offer health insurance benefits.  This will increase the financial demands on employers, along with a greater demand for alternate models of health insurance.  Plans that were purchased by employers may have been cancelled because they did not meet the ten health benefits, which resulted in a higher cost of replacement insurance.  

Employees may lose their employer sponsored health care plans if a business’s finds it less costly to pay the penalty and to let their employees purchase a health plan on the exchanges.  Small businesses may find better plans run through state-run exchanges (Amadeo, K. 2016)

Penalties can be imposed on companies that don’t qualify as providing affordable healthcare coverage. To determine this, the ACA will determine if an employer pays a significant portion of their employee’s coverage.  An employee cannot pay more that 9.5 percent of their income towards health care coverage.  If the employees pay more, the plan is not considered affordable, and the company would pay a penalty.  The health care plan must pay at least 60 percent of the covered healthcare expenses.  If the employer’s plan fails to do this, it is not considered affordable.  The employer must comply on both instances, or it can be penalized (Lorenzen, R. 2013).

The ACA can reduce freedoms, especially with the employers' flexibility and benefit designs   Many feel that the mandate that requires individuals to buy insurance is unconstitutional, and many citizens would rather pay a penalty rather than buy insurance or they will find new loopholes in the law.  The regulation in health care will lead to higher costs, which are passed on to both the individuals and companies that are trying to follow the regulations. Increased hiring costs, along with additional staffing by companies to keep in compliance with the regulations, may lead to lower job creation, which in turn could hurt the economy (The Affordable Care Act).

The Affordable Care Act will have different impacts for employers, depending on their size and if health insurance if offered to their employees, at what cost it is offered, and the type of coverage that is available to the employees.  ACA does not impose new requirements on small employers, (fewer than 50 employees), but health insurance alternatives are offered to these employers through state based exchanges, called SHOP, (Small Business Health Option Program).  The act does provide some financial assistance in the form of tax credits for small employers as these businesses either maintain coverage or begin to offer it to their workers. Small business have an opportunity to gain tax credits.  If an employer has fewer than 25 employees, with an annual average wage of less than $50,000, a tax credit is available if health insurance is purchased.

There is a financial obligation to those mid-size employers, if they do not provide health coverage to their employees, and the workers obtain subsidized health insurance through the insurance exchanges. Employers with more than 100 will face new requirements as a result of ACA, they will not have access to SHOP until after 2017.   Any new coverage that is sold to small and mid-size groups will be subject to regulations that will make insurance more affordable to groups with higher than average health care needs. Currently, there is a very small percentage, only 0.2 percent, of the businesses that employ more than 50 workers and do not already provide healthcare insurance to their full-time employees.

The larger organizations, those over 1000 employees may not have significant changes in the types of coverage that is provided to their employees, but these employers will face higher costs with the increase of the policies that are offered, due to the new set of requirements. The large organizations may experience greater employee participation in the current insurance plans, but these organizations can face penalties if the full-time workers opt to obtain subsidized coverage through the exchanges.        

There are penalties that can be charged in connection with ACA and healthcare coverage.  The more prominent are penalties for not providing healthcare coverage and penalties for not providing affordable healthcare coverage. Companies with more than 50 employees can be penalized $2000 per year for each full time employee, (minus 30), that is not provided with health care coverage.  An example, a company with 60 full time employees, that does not offer coverage, will be penalized $60,000 per year. (60 employees, less 30 equals 30 full time employees, multiplied by $2000/year). The penalty can increase each year with the growth in insurance premiums (Lorenzen, R. 2013).