Question

1. Without providing great detail for all provisions contained in in the Affordable Care Act (ACA),
please discuss the primary reasons for the current financial problems.
2. Do you feel as though tweaking the provisions outlined in the ACA will
remedy the situation or are there more fundamental, structural and
economic issues to be addressed?

Answer 1

Question-1 Without providing great detail for all provisions contained in the Affordable Care Act (ACA), please discuss the primary reasons for the current financial problems

The health care environment of United States is one of the largest and most complex in the entire globe. US health care spending has tripled between 1971 and 1981, increasing from $83 billion to $287 billion. The primary factors influencing that contributed to rising health care spending and current financial problems includes technological innovation, increasing competition, aging of the population, restrained public funding, increase in real income, growth in health manpower, and a deceleration in economy-wide inflation.

1) Technological innovation: The innovation in medical technology is arguably the most significant supply factor that targets to affect the entire process of production, development, delivery and financing of health care. Continued growth in new and expensive diagnostic and therapeutic technologies, and an increased development and use of process-innovative technologies have been associated with productivity improvement and the rapid growth in costs

2) Increased prevalence of third-party payment:

Increased prevalence of third-party payment that lead to rivalry and competition within and among various segments of the health industry, thus resulting in many forms of price and non-price competition such as better quality of services and products, expansion of the markets, increased advertising and more substitution of services and goods. This increases the requirement to plan and adapting to changes in the health care sector and resulting in an increase in the medical cost

3) Aging of the population has contributed to rising health care spending

An ageing population in United States has been one of the leading factors behind increasing health care expenditure over the recent decades. The constant increase in the life expectancy together with permanently low fertility rates have lead to the gradual evolution of the demographic structure of populations that began with the last baby-boom period in the 1950's and 1960's. As a result of these changes there has been a gradual rise in the share of older people in the population and more recently a relative shrinkage of the population of young cohorts. It leads to an evolution that has had an obvious impact on the demand for health care. Such use of health care depends ultimately on the health status and not the age of a person itself, wherein the elderly individual use health care more often and more intensively in comparison to young cohorts. Therefore, the relative increase in the proportion of the elderly population contributes more to the   demand for and expenditure on health care

Question-2 Do you feel as though tweaking the provisions outlined in the ACA will remedy the situation or are there more fundamental, structural and economic issues to be addressed?

Answer: Yes, I feel tweaking the provisions outlined in the ACA will remedy the situation. The proposal introduced by Republicans would allow insurance companies to charge higher premium from older adults five times what they charge the young. It is helpful the young and penalizing the elderly. Young people are a subset of voluntarily uninsured people are the group of young and healthy people, who owns a belief that health coverage is a bad deal as there is a low probability that they’ll use it. When the young and healthy drop out of insurance pools, it further drove up the costs for others, driving still more out, in a financial death spiral for private insurers, thus tweaking the provisions outlined in the ACA will provide the remedy for the situation