PPD 513: Health Law
December 10, 2012
Final Research Paper
Negative Economic Impact of the Patient Protection and Accountable Care Act The Patient Protection and Affordable Care Act (PPACA) also referred to as ObamaCare, federal healthcare law, Affordable Care Act, or ACA, is a United States federal Statute signed into law on March 23, 2010, by President Barack Obama. In combination with the Healthcare and Education Reconciliation Act, it represents the most significant regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965 (Patient Protection and Affordable Care Act). The PPACA is intended to increase the number of health insured Americans and reduce the overall costs of healthcare. The PPACA will revamp the current health insurance system by extending health insurance coverage to nearly 32 million currently uninsured Americans; 18 million through Medicaid expansion to individuals with incomes under the 133 percent federal poverty line (FPL), and 18 million through government exchange subsidies to individuals with incomes up to 400 percent of the FPL. Citizens and legal residents in families with income between 100 and 400 percent of poverty who purchase coverage through a health insurance exchange are eligible for a tax credit to reduce the cost of coverage. To subsidize the additional 32 million individuals covered, the new law introduces 18 new taxes and penalties on individuals, employers, and businesses (Campbell). Though the PPACAs intent is to lower healthcare costs, it will increase the federal deficit, increase state deficits, hinder employment, job creation and innovation, increase health insurance costs, and delay economic growth. These negative economic issues are far-reaching and long lasting. Increase the Federal Deficit
One of the goals for the PPACA was to reduce the federal deficit by a small amount in the first ten years and by trillions of dollars thereafter. Contrary to this key objective, the combination of mandates and taxes will not reduce the federal deficit, but will likely increase it. The PPACA is estimated to increase the federal deficit by $75 billion, per year, resulting in the nation’s publicly held debt to grow to $753 billion higher at the end of 2020 (Campbell). Once the government begins to pay health insurance for individuals through subsidies and bring people into the government insurance program in the later half of the decade, this growing debt will balloon. The CBO’s updated 2011 estimates found that the PPACA will increase federal outlays by roughly $604 billion between 2012 and 2021 (Blahous). The excessive debt will drive out productive investments and lead to an estimated 670,000 lost job opportunities annually. The imposed tax hikes are anticipated to cost taxpayers $503 billion over 10 years and more in the future to subsidize government spending on new entitlements (Dubay). The standing budget analysis is very limited, as it does not account for how the policy’s combination of spending and increased taxes alters the macroeconomic performance of the economy. The heavy initial costs of the policy hinder economic growth with higher inflation and interest rates, overwhelming the benefits the law hoped to gain in later years. Within the PPACA, legislation double counts $53 billion in Social Security payments, counts $70 billion in premium payments for long-term care insurance programs as revenues, and ignores up to $115 billion in discretionary costs associated with the PPACA (Howard). After discounting the double counting of Social Security payments, long-tern care premium payments as revenue, and takes discretionary costs into account, the true financial deficit of the PPACA during its first ten years is over $562 billion, and $1.15 trillion thereafter (Howard). Increases the State’s Deficit
Not only does the PPACA have a serious negative impact on the federal deficit, but also on state’s budgets, several of...
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