Question

Describe the types of government intervention present in the healthcare industry. How did the Affordable Care Act change this? Describe the potential economic benefits and disadvantages of each type of intervention.

Answer 1

Healthcare is one of the leading industries in the US economy and accounted for the 16.6% of country's GDP in 2016. The chief concern of the USA is the rising cost of healthcare services such as hospitalisation costs that are becoming out of reach of the common people in the country. A good healthcare system is always essential for maintaining healthy life of the people in any country. There is no unified healthcare system in the US and individual seeking medical coverage scheme must have to enroll himself/herself for such scheme with a private healthcare company and pay price for it.

There are two types of medical and healthcare schemes of the Federal government in USA which are medicare and medicaid.

Medicaid: Medicaid is open for US citizens belonging to low income group and disabled persons and is jointly run by Federal and provincial governments. Under this scheme, federal government offers financial assistance to registered people through state governments for various healthcare services such as inpatient and outpatient care, vaccination, nursing services for adults over 21 years and diagnostic and treatment of children. People with physical disabilities are eligible to receive home or community based care under this program.

Medicare: Medicare is a healthcare reimbursement program of the Federal Government for old aged persons and persons with physical disabilities. It is a typical healthcare insurance program of the government. The medicare program consists of two parts i.e., Medicare part A and Medicare part B. Medicare part A is the hospital insurance that funds hospitalization expenses including admission costs, meal expenses, nursing and testing service costs. Medicare part A is offered free of costs to the patients.

Medicare part B is the medical insurance and funds the hospital costs such as medical and laboratory test expenses, inpatient and outpatient treatment costs, ambulance transportation costs, nursing service expenses etc.  Medicare part B is chargeable healthcare program and patients must have to pay $96.40 per month as a premium for receiving medicare services under both parts A and B of the Medicare program, In 2006, an additional part was added in the Medicare program known as Medicare part D. The part D is managed by the private insurance companies and patients have to pay premium to the insurance companies for the benefits under the scheme, Under part D, certain proportion of drug expenses of the patients are financed by the insurance company.

Affordable healthcare or obamacare was one of the biggest healthcare reforms in the US history and it was introduced by the former presdient Barack obama in 2010. It was introduced for the purpose of curtailing rising healthcare expenses in the country and providing US citizens affordable and quality health care services. The key features of obamacare were:

i) offering people the basic rights and benefits of healthcare services

ii) Extension of medicaid services to all registered adults in US provinces.

iii) Enhancement of medicare services for old aged persons and persons with physical disabilities

iv) Employer coverage to the employees in all industries

There were several benefits of government healthcare plans such as rise in employment opportunities in the health sector, regulation of pricing and quality of medical services in the US healthcare. However, government healthcare scheme such as Affordable healthcare ran with severe criticisms. There was provision of fine for people who do not register with Affordable healthcare of the government, Federal Government had also increase tax rates to generate funds for Affordable healthcare plan. The increased taxation created additional burden on the people. Many private insurance companies already started offering diverse range of healtcare plans at affordable plans and this was one of the prominent reason of failure of obamacare in United States and it was replaced with Better Care Reconciliation Act (BCRA) by the US president Donald trump in July 2017.