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In: Economics

Summarize five effects Patient Protection and Affordable Care Act (PPACA) have on insurance companies.

Summarize five effects Patient Protection and Affordable Care Act (PPACA) have on insurance companies.

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Expert Solution

The Patient Protection and Affordable Care Act (ACA) has revolutionized the health insurance industry in a number of ways. Its impacts have been vast and wide.

1. The upward trajectory of premiums, deductibles, and out - of-pocket costs is one of the most important effects of landmark legislation, particularly with plans sold on health insurance exchanges.

2. Many of the ACA regulations have resulted health payers to spend more on covering medical facilities among the sickest communities while hospitals and emergency care providers are no longer required to handle almost as much uncompensated care owing to the development of Medicaid and the individual mandate.

3. The health plan population risk pools are now much different than before, and health care payers are required to cover the costs of some of the more expensive patients in the health care delivery system.

4. Since the Affordable Care Act came into effect, the risk pool has altered considerably as health payers are no longer permitted to use pre-existing condition provisions and young adults can stay on insurance plans for their parents until they are 26 years old. In addition, most Americans have been needed by the individual mandate to enroll in health plans or risk a tax penalty.

5. A big influx of fresh life to be covered is the greatest change. It also shifts the game for health insurers when there are fewer coverage gaps and when there is payment for care given, insurers can increasingly concentrate on how to enhance quality and value and move to fresh types of distribution schemes and payment agreements, all of which rely on individuals paying for services to a big extent.

6. The Affordable Care Act has also led to the design of accountable care organizations (ACOs) and the Medicare Shared Savings Program. In general, federal legislation such as the prior meaningful use requirements have brought a greater focus on reforming the healthcare industry into a system that incentivizes quality over quantity.


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