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What are Some of the Effects of PPACA?

In March of 2010, the Patient Protection and Affordability Care Act (PPACA) [3] was passed by Congress and signed into law by President Obama. Since then, challenges to the PPACA have been wending their way through the justice system.

In December 2011, the Supreme Court announced that it will listen to arguments [4] about the law, which affects the way health insurance is purchased in the United States, in March of 2012. A ruling on the constitutionality of the law is expected in June 2012. The PPACA is expected to have an effect on consumers, since it requires everyone to purchase health insurance by 2014 — or be fined.

What If You Can’t Afford Health Insurance?

One of the issues that many have with PPACA is that it forces the purchase of health insurance. The question that naturally arises from this state of affairs is: What if you can’t afford health insurance [5]?

The law actually has some measures built in to address that issue. First of all, there is a limit on the premium dollars that can be used for items other than health care. That means that at least 80% of the dollars collected in insurance premiums must be used for health care purposes. This measure is meant to help rein in health care costs.

Another way that health insurance is supposed to be made affordable by the new law is through subsidies. Low income families will receive help paying their premiums, on a sliding scale based on needs. That way, those who can’t afford premiums will now be able to make premiums, and many of the nearly¬†50 million Americans without health insurance [6] now will be covered.

Costs of the Health Care Law

The Congressional Budget Office said that PPACA would not cost anything in the long run, with the costs being offset, over 10 years, by certain increases in taxes and budget cuts in other areas. However, some point believe that the health care law will add other costs as states set up insurance exchanges and as enforcement is required. Additionally, some believe that, no matter what the CBO said of the health care law when it was passed, the reality is that the costs of insisting those with pre-existing be covered, along with subsidies to those with low income, will lead to a greater budget deficit.

Costs of Being Uninsured

If the PPACA is struck down by the Supreme Court, and if the law does not take effect, there will be some different costs. Caring for the uninsured, whether it’s through emergency care when things get bad enough, or through the societal costs of a system that discourages prevention, actually costs everyone. Some estimates are that families that do pay for insurance have premiums that are, on average, $1,100 higher each year [7] due to the costs of the uninsured. Those costs are still paid by someone, regardless.

For those who are actually uninsured, even the simplest health care treatments can be quite costly. Investopedia points out that two out of five adults were struggling with medical debt in 2007 — and it’s hard to believe that statistic has improved during the recession. Without insurance to help offset some costs, the uninsured continue to struggle with debt.

Bottom Line

Whether or not PPACA is upheld by the Supreme Court, health insurance costs are going to rise. Our entire system is inefficient, whether or not PPACA is in effect. PPACA might slow cost increases (as some claim), but it doesn’t make fundamental changes to a system that is already terribly inefficient.

What would you do to improve health insurance system in the country and rein in costs?

(Photo: Truthout.org [8])