Patient Protection and Affordable Care Act / Affordable Care Act / Obamacare – signed on March 23rd

2010

In 2010, President Obama and Congress signed Obamacare into law. Why? They wanted to make sure
all Americans were able to get health insurance. More important, they wanted to lower the cost of health
care.

According to a report in NY times, prior to Obamacare, going to the doctor or the hospital was very
expensive. In fact, health care costs are the No. 1 cause of bankruptcy in America. Just one visit to the
emergency room costs $1,265 on average. A broken foot costs around $16,000, while cancer treatment
can cost $30,000. People with health insurance don't have to worry about these costs since their
insurance pays most of them. Before Obamacare, many just did without it and took their chances. Some
had a chronic illness, called a "pre-existing condition," and the insurance companies wouldn't even offer
them coverage. If something happened and they had to go to the hospital, they often just didn't pay the
bill. The hospital charged it to an emergency Medicaid plan. That raised the cost of health care for
everyone.

The most important part of this Act requires you to have health insurance for at least nine months out of
every twelve or be subject to a tax. (2.5% of income)

US Population –Below data is as per National Center for Health Statistics

(https://www.nytimes.com/2017/05/22/health/obamacare-health-insurance-numbers-nchs.html);

308.7Million, 48 million (~15% of population) were without insurance in 2010. As per 2015 census, 50% of
the US population is middle class

2016 – 28.6 Million enrolled, 2017- 12.2Million and 2018- 11.8Million- Total 52Million covered so far
(327.16 million people in 2018; ~16% of entire US population)

By the spring of 2016, the overall US uninsurance rate had fallen to 8.9%

In 2011 to 2013, only 11 states had uninsured rates below 15%; by 2015, 35 states had uninsured rates
below 15%

The largest absolute gains in coverage were among those with the lowest incomes, especially in states
that had expanded Medicaid (Nonetheless, higher income groups also saw reductions in uninsurance.
About 600 000 people with incomes above $50 000 gained coverage between 2011 to 2013 and 2015.

All in all ACA had become Cynosure of every eye, an object of all adoration among various strata
of society

The pattern of coverage gains points to the importance of the ACA’s subsidies, rather than its insurance
reforms, in contributing to increases in coverage

Benefits:

 The biggest benefit of the ACA is that it slows the rise of health care costs. It does this by
providing insurance for millions and making preventive care free. This means people
receive treatment before they need expensive emergency room services. In 2016, the cost
of health care services increased 1.2 percent for the year. That's much less than the price
increase of 4 percent in 2004.
 It requires all insurance plans to cover 10 essential health benefits. These include
treatment for mental health, addiction, and chronic diseases. Without these services,
many patients wind up in the emergency room. Those costs are passed onto Medicaid and
therefore the taxpayer.
  Insurance companies can no longer deny anyone coverage for pre-existing conditions.
They can't drop them or raise premiums if beneficiaries get sick.
 Children can stay on their parents’ health insurance plans up to age 26. As of 2012, more
than 3 million previously uninsured young people were added
 The middle class (earning up to 400 percent of the poverty level) receive tax credits on
their premiums
 If anyone is chronically ill, a new insurance company can't deny coverage.

Why is Obamacare so crucial?

A day in the hospital costs between $2,000 to $20,000. Most people assume their insurance pays most of
this. Some may be unprepared to pay a high deductible. But before the ACA, they could also get hit with
another bill. Many found out their plans had a low maximum. They were responsible for any costs above
that. That's one reason why health care became the No. 1 cause of bankruptcy.

Once a patient declared bankruptcy, the hospital had to declare a loss on any unpaid treatment.
To make up the profit, they passed this cost onto everyone else.

Obamacare reduced the number of bankruptcy filings. In 2010, 1.5 million (0.5%) people filed. That
dropped to 770,846 by 2016. The ACA forced insurance companies to cover all costs by eliminating
annual and lifetime limits.

That Obamacare's strategy is working to slow the increase of health care costs. Between 1990 and 2008,
health spending rose 7.2 percent a year. After the exchanges opened in 2014, spending on health care
rose more slowly. It grew 5.3 percent in 2014 and 5.8 percent in 2015.

That's one reason why the ACA could reduce the deficit by $143 billion over its first 10 years. In addition
to reducing healthcare costs. It also shifted cost burdens to health care providers and pharmacy
companies. Last but not least, it raised taxes on those earning at least $200,000 a year. Those taxes will
be repealed under Trumpcare. That's why an Obamacare repeal will increase the debt.

How Preventive Care Lowers Health Care Costs

Preventive care helps lower health care costs in America by preventing diseases before they require
emergency room care. Why is this a problem? Hospital care is very expensive, making up one-third of all
health care costs in America. The number of emergency room visits is increasing, from 115 million in
2005 to 136 million in 2011. A surprising one out of every five adults went to the emergency room last
year.

One reason is that a lot of them use the emergency room as their primary care physician.

Almost half of them or 46.3 percent went because they really had no other place to go for health care.
That's especially true for the uninsured. The cost of emergency room care for the uninsured is a
staggering $10 billion a year. This cost gets shifted to your health insurance premiums and to Medicaid.

The other half went because their doctor sent them. Sadly, the four leading causes of death -- heart
disease, cancer, chronic obstructive pulmonary disease, and stroke -- are caused by totally preventable
chronic diseases. Heart disease and strokes are primarily caused by poor nutrition and obesity. Lung
cancer, the most common type, and COPD are primarily caused by smoking. Obesity is also a risk factor
for the other common forms of cancer.

Even before they reach emergency room status, these chronic diseases are expensive to treat. Half of
adult Americans have a chronic illness, but they are responsible for 85 percent of health care costs. They
cost an extra $7,900 each, five times more than a healthy person. Many patients get tired of taking so
many medications or can’t afford it. When they cut back, they wind up in the emergency room with heart
attacks, strokes, and other complications.

Repealing ACA and its impact:

The simplest repeal of the ACA would undo it entirely and return health insurance coverage more or less
to where it was before the ACA’s passage, when 16% of Americans were uninsured.

The ACA generated large, widespread coverage gains. If the entire act were repealed, these coverage
gains would disappear, and the share of the US population lacking insurance coverage, would resume its
upward climb.

Behavioral Risk Factor Surveillance System – Collected data on more than 400K individuals.

Key Note on GDP:

As per investopedia, the largest component contributing towards US GDP is Personal consumption
expenditure (69%). Second largest is Government Spending / expenditure (17%). 16% from Private
domestic investments (Business investments).

GDP = C+I+G+NX

2010 GDP- 14.96 trillion

2011 – 15.52 trillion, 2012 – 16.16trillion, 2013- 16.7

2016 – 18.6trillion

2017 – 19.39 trillion

Growth between 2010-2017: 29.6% in seven years

Between 2010 and 2016, the increase in income level for middle class population has been between 20%
- 30% when compared to 80% to 110% of the high income group levels.