Blalock 1

Will Blalock
Ms. Caruso
UWRT 1103
19 November 2015
The Economic Effects of the Affordable Care Act
In recent years, the partisan divide has become great between the two American political
parties, resulting in disagreement over governmental priorities pertaining to the future of the
country. The Democratic Party, who controlled the majority of the federal government while the
Affordable Care Act (ACA) was being debated among congress, believes that healthcare is one
of the more pressing issues facing America. The Republican Party prioritizes the general welfare
of the economy and the amount of national debt, and healthcare falls very low on their list of
priorities (Blendon and Benson, Table 1). On March 23rd, 2010, President Barak Obama signed
the Affordable Care Act into law, in attempt to fix a variety of issues with the previous health
insurance system, and in hope of stimulating the American economy. There were three main
problems that the ACA is designed to solve from the previous system: millions of uninsured
Americans, soaring costs of healthcare, and patient protection provisions. Economically, the
ACA, in theory, is supposed to make the cost of health insurance cheaper and more accessible for
all Americans, but has yet to demonstrate economic stimulation. Ronald Reagan said,
Government does not solve problems; it subsidizes them, and the ACA is an attempt to solve
many problems. The most effective way to demonstrate the contrast between both political
parties beliefs is seen through a debate. This discussion will examine the ACAs effect on the
economic stability of America by breaking down the financial components incorporated within
the ACA, and its effects on individuals and families.

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With forty-four million Americans previously uninsured, the ACA formulated a plan that
would allow a percentage of those individuals to obtain health insurance (The Uninsured). To
accomplish this, the ACA essentially attempts to utilize the redistribution of wealth to decrease
the individual price of health insurance. Politically speaking, this appears to be an amazing
victory, but a financial transition of great magnitude is an extremely difficult task that usually
proves to be costly. Prior to the ACA being implemented, healthcare systems, like hospitals and
clinics, used cost sharing, meaning insured patients were charged more than uninsured patients
for the same treatment, in attempt to mitigate financial losses (Kaufman par. 2). Cost sharing is
effective on a microeconomic scale. The ACA works similarly but on a macroeconomic scale,
meaning more patients will be covered by deficit-generating government-sponsored plans
rather than private insurance companies that are extremely profitable. As a result, the expansion
of insurance coverage will cause an increase in cost for small businesses and low income
workers (Myers par. 1). To compensate for losses, the cost of insurance and taxes increase for
everyone, and healthcare systems need to cut operating costs by ten to fifteen percent to achieve
financial equilibrium (Nathan par. 2 & 3). As a result, an increase in national debt is probable,
healthcare systems are being monetarily conscious, meaning they are investing less in suppliers
and vendors, and patients are paying more money, which tightens their budgets.
Healthcare costs have become astronomical in recent years. Healthcare spending as a
percentage of GDP has risen from 13.1% in 1996 to 17.1% in 2013 (Health Expenditure).
Increased cost comes from wasteful administrative costs and advances in medicine and
technology. Much of this waste began in the previous system, and has remained within the ACA
(Mercola). Public healthcare results in major economic repercussions. David Walker, previously
the U.S. Comptroller General, suggests that America may become bankrupt by 2040 from public

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healthcare spending (Herzlinger par. 1). Since the cost of healthcare is daunting in the privatesector, it remains just as, if not more, daunting in the public-sector, because there is little to no
competition forcing competitive pricing. Families and individuals are hurt by high costs if they
are not covered by their employer. Most Americans can avoid this because, unlike other
countries, many employers provide health insurance for their employees, but if not, they have to
pay an income tax, that is supposed to make insurance cheaper, and purchase insurance as well
(Herzlinger par. 7). Economic stimulation comes from monetary flow throughout the free
market. Since those who do not receive health insurance through their employer have to pay
more to obtain coverage, the economy is not stimulated due to less money flow throughout the
system. This effect is also amplified by employers response to the employer mandate.
On a microeconomic scale, the ACA has a negative economic impact by decreasing
economic growth, and increasing unemployment and insurance premiums. The employer
mandate demands employers of a certain size to provide health insurance to its employees, or
else they have to pay a fine (Employer Mandate). Companies are less than thrilled by the
mandate, which is causing them to cut employee hours in order to avoid paying a fine (US
employers slashing worker hours to avoid Obamacare insurance mandate). Lower income
workers are suffering because they are working less, and therefore, making less money to
reinvest into their state and local economies. As a result, the economy does not grow, and
affected workers chances of obtaining health insurance decreases as well. Some employers have
even began to lay off employees in order to negate the mandate, because the ACA forces upon
them one of two options; either decrease their employees wages and offer insurance or increase
wages and not offer insurance. The wage difference of the options is usually not enough to offset
employee loses (Tanner par. 56). Essentially, workers are suffering from a law that is supposed

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to help them, resulting in economic difficulty. Insurance premiums are also becoming more
expensive for families, and this can be attributed to the increased amount of low income earners
obtaining insurance at a lower rate than if they were covered by their employer (Tanner par. 28).
It may be considered a good thing that the less fortunate are able to obtain insurance, but while
looking at the big picture, it is not economically productive because overall less money is
flowing through state and local economies, which are the pillars for the national economy.
The ACA has been promoted by the government and media to be beneficial for
minorities, particularly African Americans in less affluent parts of the country, but has resulted in
those neighborhoods being worse off. Since the law does not contain cost control measures and
the government has historically struggled to curb the cost of healthcare programs, increasing
insurance coverage does not benefit the African American community, because cost remains high
and healthcare access is more difficult (Myers par. 3). If the government cannot contain its
programs costs, then it does not benefit the economies that are in poverty and in desperate need
of growth. The ACAs provisions demonstrate that the interest of the African American
community did not take precedent during the development of the law. Considering that a
majority of treatment in monetarily destitute African American communities is preventable
illnesses, the ACA fails to acknowledge prodigious racial inequalities in preventative care, which
leads to a lack of productivity and desolating financial loses (Myers par. 6 & 7). Suffering local
economies desperately need stimulation to create a better America, and that is hard to achieve
when civilians and healthcare systems are resulting to counterproductive healthcare measures.
The amount of money that could be saved by healthcare systems and taxpayers would be
colossal if the ACA focused on preventative care equally among all communities.

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The discussion of the ACA has been active since 2008. Republicans today still call for its
repeal, while Democrats defend it with everything they have. I believe that the Republican Party
tends to focus more issues that pertain to general welfare of America, while the Democratic Party
mainly focuses on social issues that dont necessarily have immediate ramification. Healthcare
reform, to me, feels more like a campaigning strategy rather than pressing issue. However, to
demonstrate the discussion healthcare reform, I decided that creating a transcript of a debate on
the topic was the best way to convey the ideas of both parties. The debates main intention is to
allow undecided individuals, whom are interested in economics and politics, to examine both
sides.
In conclusion, the Affordable Care Act, which was designed to solve a variety of
problems, has allowed Americans to obtain health insurance who did not previously have it. On
the other hand, it has resulted in Americans paying more for coverage, tightening the noose on
healthcare systems spending, decreased economic growth, and increased unemployment and
insurance premiums, and negatively impacted the community that was promised improvement.
Economically, less money is flowing throughout the free market system, which results in the
national economy reaming relatively static.

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Old:
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<https://www.uschamber.com/health-reform/employer-mandate>.

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Mercola, Joseph, Dr. "Top 10 Ways the American Health Care System Fails." Mercola.com. N.p.,
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