The Economic Effects of the Patient Protection and Affordable Care Act[1][1][1]

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The Economic Effects of the Patient Protection and Affordable Care Act in the Health Care
Industry
Student ID: 1196!"
Introduction
On March 23
rd
, 2010, President Barack Obama signed into law the single largest piece of health
care legislation since the creation of Medicare and Medicaid in 196! "he Patient Protection and
#ffordable $are #ct %#$#& was created to increase the percentage of #mericans with health ins'rance
co(erage and red'ce the o(erall costs of health care! "here was not broad s'pport for this legislation!
Man) *ep'blicans felt that it greatl) e+pands the role of the federal go(ernment in the health care
ind'str) and will increase federal spending and the deficit o(er the long,r'n! -owe(er, it remains to be
seen what economic effects this legislation will ha(e on the .!/! econom) since m'ch of it has not taken
effect )et! -istor) will determine the s'ccess or fail're of this legislation o(er the long,r'n!
The Economics of the Health Care Industry
-ealth care is a 'ni0'e ind'str) compared to man) other ind'stries! 1t has been referred to as a
0'asi,market beca'se it does not follow the free market model like man) other ind'stries! 1n free
markets, )o' ha(e b')ers and sellers who act independent of each other! 1f the health care ind'str) was
tr'l) a free market, patients wo'ld be able to choose ser(ices from an) pro(ider! -ealth care pro(iders
wo'ld not be able to fi+ prices beca'se the) wo'ld be dictated b) the interaction between the a(ailabilit)
of pro(iders (ers's the 0'antit) of ser(ices demanded b) patients! -owe(er, in the health care ind'str)
)o' ha(e an intermediar) which is health ins'rance which dictates the a(ailabilit) of pro(iders to
patients! 1n addition, prices are negotiated between pa)ers %t)picall) ins'rance companies& and pro(iders!
"he health care ind'str) does not allow the 2in(isible hand3 described b) #dam /mith to mo(e s'ppl)
and demand toward its nat'ral e0'ilibri'm!
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 1
-ealth ins'rance which is t)picall) ac0'ired thro'gh emplo)er benefits also ins'lates patients
from the tr'e costs of health care which creates a moral ha5ard! Patients 'tili5e health care ser(ices to a
greater e+tent beca'se the) do no ha(e to end're the f'll cost of ser(ices pro(ided to them! 6hen
patients compare the opport'nit) costs of whether to seek health care ser(ices or not, the) do not
appreciate the tr'e costs that the) are sacrificing in order to recei(e the care that the) need! #s a res'lt,
patients with health ins'rance are ma+imi5ing the 'tili5ation of their benefits which is leading to health
care costs rising faster than total economic o'tp't as seen in 7ig're %++& %$ite&!
"he .!/! health care s)stem is also a m'ltiple pa)er s)stem which has created inefficiencies in
the s)stem along with e+cessi(e administrati(e costs! 7'rther, ad(ancements in technolog) and ser(ices
ha(e led to rising health care costs! 8egal risks also dri(e 'p costs which has led pro(iders to practice
defensi(e medicine creates a pro(ider ind'ced demand for health care ser(ices! "he .!/! health care
s)stem is also dominated b) costlier specialt) care rather than primar) care!
#ccess to basic health care has been another iss'e beca'se of the high cost and the absence of
health ins'rance! 1n 2010, when the #$# was enacted, it was estimated that 0!9 million #mericans were
witho't health ins'rance %$ite&! -owe(er, these indi(id'als still create a cost to the s)stem beca'se the)
'tili5e emergenc) care ser(ices more than indi(id'als with ins'rance! :6 billion in 'ncompensated care
was pro(ided to 'nins'red indi(id'als in 200; %$ite&! Man) of these indi(id'als do not ha(e health
ins'rance beca'se the) are not offered health ins'rance thro'gh their emplo)er and cannot afford it in the
pri(ate market!
#s a res'lt of these iss'es and man) others not described here, the .!/! has the largest
e+pendit'res on health care in the world as seen 7ig'res 2 %$ite&! Back in 2000, the 6orld -ealth
Organi5ation ranked the health care s)stems of all of its members, and the .!/! ranked 39
th
despite ha(ing
the spent the most mone) per capita %$ite&! "his indicates that the health care s)stem is operating at a
s'b,optimal efficienc)! 1n 1993, President Bill $linton tried to p'sh health care reform thro'gh $ongress!
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 2
-owe(er, the legislation ne(er recei(ed the s'pport it needed for passage and was 'ltimatel) declared
dead in /eptember of 199<!
#o$ Is the Time for Healthcare %eform
1n =o(ember of 200;, Barack Obama was elected the <<
th
President of the .nited /tates!
-e had campaigned hea(il) for health care reform! 6ith a democraticall) controlled $ongress, he was
able p'sh thro'gh the most comprehensi(e health care legislation since the 1960s! 1t was not witho't
challenges and compromises! 1n the end, the #$# was passed, and with it came some of the following
pro(isions %$ite&>
• O'tlawing the denial of health ins'rance co(erage as a res'lt of a patient ha(ing pre,
e+isting conditions!
• # sliding scale ta+ credit for small firms %fewer than 2 emplo)ees& in order to enco'rage
them to offer emplo)er sponsored health ins'rance!
• /tates ha(e to de(elop health ins'rance e+changes thro'gh which non,gro'p indi(id'als
can p'rchase health ins'rance on the open market!
• 4+pansion of Medicaid to co(erage to indi(id'als who earn incomes 'p to 133? of the
7ederal Po(ert) 8e(el %78P& and premi'm s'bsidies for indi(id'als with incomes 'p to
<00? of the 7P8!
• 4mplo)er mandate to offer health ins'rance co(erage to emplo)ees in firms with more
than 0 emplo)ees or pa) a free rider ta+!
• 1ndi(id'al mandate which re0'ires indi(id'als to carr) health ins'rance co(erage or face
a penalt) of :62 or 2!? of income!
Man) of these pro(isions will be phased in o(er a ten )ear period! #ccording to the $ongressional
B'dget Office %$BO&, the #$# is e+pected to red'ce the n'mber of 'nins'red b) 32 million b) 2019
%$ite&! -owe(er, there will still be 23 million indi(id'als 'nins'red despite this legislation!
One of the most contro(ersial pro(isions of the #$# is the minim'm co(erage re0'irement@also
known as the indi(id'al mandate! .nder "itle 1, /'btitle 7, /ection 000#, 2/hared *esponsibilit) for
-ealth $are3, the 1ndi(id'al *esponsibilit) *e0'irement states that, beginning in Aan'ar) 1, 201<,
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 3
indi(id'als will be re0'ired to 2maintain minimal essential health care co(erage!3%6ashington Post 2010&
#n) indi(id'al who does not ac0'ire a 0'alif)ing minim'm ins'rance co(erage will inc'r a ta+ penalt)!
"his pro(ision is meant to compliment two other pro(isions of the legislation which also help increase
medical access> P're $omm'nit) *ating and B'aranteed 1ss'e! %6ashington Post 2010& Both pro(isions
are 'nderwriting methods which prohibit ins'rers from 'sing demographic and medical histor), also
called claims histor), to set premi'm prices! "his pre(ents 2cherr) picking3 b) ins'rers! Of co'rse,
witho't the co'nterbalance of a mandate re0'iring e(er)bod) to obtain minim'm co(erage, ins'rers
wo'ld become insol(ent as the cost of reimb'rsing care wo'ld be greater than the amo'nt of premi'ms
the) recei(e!
The ACA and the &ederal Deficit
One compromise that was essential to the passage of the #$# was that it co'ld not res'lt in an
increase in the federal deficit! 1t had been reported in 2011 b) the $BO that the #$# wo'ld red'ce the
deficit b) more then :200 billion o(er the first 10 )ears of the legislation! "his wo'ld be the res'lt of an
increase in :;13 billion in net ta+ receipts, and an increase in :60< billion in federal spending %$ite&!
1n 2012, the $BO re(ised the cost estimates of the legislation! 1t estimated that the #$# wo'ld
ha(e a net cost of :1!2 trillion o(er a 10 )ear period %$ite&! "he) did not pro(ide an 'pdate on the
impact on the deficit! "he large increase in cost is d'e to the added )ear which takes into acco'nt the cost
of e+pansion of eligibilit) of Medicaid which was not in the 2011 cost estimate! 1n addition, as a res'lt
of the 2fiscal cliff3 negotiations, the $!8!#!/!/! #ct was remo(ed which wo'ld ha(e pro(ided 8ong "erm
$are 1ns'rance to certain indi(id'als! 1t was e+pected to red'ce the deficit b) :1<3 billion o(er the first
decade!
1n A'l), 2012, the $BO reported to Aohn Boehner that the #$# wo'ld red'ce the federal deficit
b) :109 billion o(er ten )ears %$ite&! Part of this red'ction will be achie(ed thro'gh :916 billion in
Medicare c'ts seen in 7ig ++! #s the legislation is still in the process of being enacted, it remains to be
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 4
seen if deficit red'ction can be achie(ed! Man) *ep'blicans ha(e indicated that the) wo'ld like to
repeal the #$#! #ccording to the $BO, a repeal of the #$# wo'ld res'lt in a deficit increase of :210
billion %$ite&! -owe(er, it has also been reported b) a former director of the $BO that the #$# will
act'all) increase the deficit b) :00 billion o(er the first ten )ears and :1! trillion in the second ten
)ears %$ite&! "herefore, it is not entirel) clear if the #$# will achie(e deficit red'ction o(er the ne+t
decade and be)ond!
'ill the ACA (end the Cost Cur)e*
One of the primar) goals of the #$# is to achie(e cost control! -ealth care costs were 19!6? of
BCP in 2010 %$ite D PB/&! 1n addition, .!/! health care costs are c'rrentl) rising faster than the increase
in o(erall BCP! 6itho't health care reform, it was estimated that health care costs wo'ld rise to 3<? of
BCP b) 20<0! One third of all economic o'tp't wo'ld be from health care! "his wo'ld res'lt in
economic stagnation for man) other ind'stries!
"he #$# hopes to red'ce this proEection b) pro(iding access to lower cost ser(ices thro'gh
e+pansion of ins'rance to millions of indi(id'als! 1t is also enco'raging the 'se of pre(entati(e care
ser(ices b) eliminating patientsF costs at the time of (isits! 1t is belie(ed that this will increase the
demand for more primar) care ser(ices which are a lower cost! 1t was reported in March 2013, that 10
million #mericans with pri(ate health ins'rance and Medicare were able to recei(e pre(entati(e care
ser(ices at 2no cost3 according the Cepartment of -ealth and -'man /er(ices %$ite&! 7'rther,
pre(entati(e care has shown better o'tcomes s'ch as lower infant mortalit), longer life e+pectanc), and
better 0'alit) of life! "his wo'ld pre(ent patients from 'tili5ing more costl) specialt) and emergenc)
care ser(ices! One problem with this approach is that the s'ppl) of primar) care pro(iders in the .!/! is
not rising fast eno'gh to meet the demand of the millions of new patients that will be ins'red as a res'lt of
the #$#! 1n 2011, appro+imatel) <2? of ph)sicians were working in primar) care while ;? were
specialists %$ite&! Other ind'striali5ed nations tend to ha(e abo't 0 to 9? of ph)sicians working in
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 5
primar) care which is wh) the primar) care pre(ention and disease management tends to be better in
other co'ntries! 1t has been estimated that that will be a shortage of 63,000 ph)sicians b) 201 and
130,600 b) 202 %$ite&! -owe(er, there has been growth in the s'ppl) of non,ph)sician pro(iders s'ch
as n'rse practitioners and ph)sician assistants which ma) help offset the shortage of ph)sicians! #n
increase in the s'ppl) of primar) care pro(iders will be necessar) to meet to demand from newl) ins'red
cons'mers if the #$# hopes to achie(e cost red'ction in the health care ind'str)!
The ACA and the Costs to Insure Indi)iduals
B) 2016, the $BO has estimated that the a(erage ann'al cost of an indi(id'al ins'rance
plan will cost between :<00 to :000 and :12,000 to :12,00 for families %$ite&! Aohn Boodman from
the =ational $enter for Polic) #nal)sis reports that this will cost f'll,time working indi(id'als
appro+imatel) :2!2; per ho'r and :!;9 per ho'r for famil) co(erage %$ite&! "he legislation re0'ires that
an emplo)eeFs share cannot e+ceed 9!? of famil) income for low to moderate income workers!
4mplo)er s'bsidi5ation of health ins'rance can also infl'ence whether indi(id'als choose to enroll in a
benefits plan! Most emplo)ers who pro(ide health ins'rance will s'bsidi5e at least 0? of the health
ins'rance premi'm!
4conomists are also debating what effect minim'm wage laws ha(e on the #$# re0'irements and
emplo)ees working at fast food resta'rants or retail chains! "he #$# re0'irements ma) res'lt in lower
wages for emplo)ees to offset the cost of pro(iding health care benefits! 1t ma) also lead to Eob losses
partic'larl) to )o'nger workers!
E+,licit and Im,licit Ta+es in the ACA
1n order to achie(e all of the pro(isions in the #$# witho't raising the federal deficit, ta+
increases were re0'ired! "he s'mmar) of ta+ increases associated with the #$# can be seen in 4+hibit
++! On criticism of these ta+es are that the) are not adE'sted for inflation! 1nflation adE'sted dollars will
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 6
lead to more people ha(ing to pa) the increased Medicare ta+ o(ertime which will increase the n'mber of
middle income indi(id'als who get penali5ed!
"he ta+ on medical de(ices co'ld ha(e some negati(e economic effects! Prod'cts like
toothbr'shes and bandages wo'ld be e+empt! -owe(er, prod'cts s'ch as tong'e depressors wo'ld be
s'bEect to this ta+! One iss'e that ma) occ'r as a res'lt of this ta+ is that man'fact'rers of certain medical
prod'cts ma) end 'p owing more in ta+es than the) generate in re(en'e from operations! "his co'ld
st)mie inno(ation and res'lt in red'ced Eob creation! 1t has also been estimated that <,661 Eobs will be
lost across the medical de(ice ind'str) as a res'lt of this ta+ %$ite&!
"he Medicare pa)roll ta+ will also ha(e a negati(e impact on high income indi(id'als,
partic'larl) small in(estors and small b'sinesses! 1n addition, these indi(id'als will ha(e an additional
ta+ against capital gains, interest, and di(idend income! "his co'ld 'ltimatel) impact the labor market b)
red'cing Eob creation or wages! "his co'ld red'ce the prod'cti(it) of workers and 'ltimatel) economic
o'tp't!
1n addition Aohn Boodman, an economist, arg'es that the s'bsidies that will be pro(ided to
indi(id'als and families who earn between 133? and <00? of the 7P8 co'ld be faced with an implicit
marginal ta+ rate %$ite&! #s indi(id'als and families approach (ario's c't points in adE'sted gross income
%#B1&, the amo'nt of the s'bsid) co'ld be red'ced rather significantl) res'lting in a marginal ta+ rate!
#n indi(id'al or famil) abo(e <00? of the 7P8 will earn no s'bsid)! -owe(er, if a famil) is earning an
#B1 at <00? of #B1 and the) earn :1 more, this wo'ld res'lt in an implicit ta+ rate of 1!<9 million? as a
res'lt of the elimination of the s'bsid)! "herefore, lower income indi(id'als and families will be faced
with to'gh decisions whether to seek wage increases at the cost of red'ced s'bsidies!
4mplo)ers will also be faced with high marginal ta+ rates! 7irms that emplo) fewer than 1 f'll
time emplo)ees %7"4& will not be penali5ed for not offering health ins'rance benefits! "herefore, if a
firm is going to hire a 1
st
emplo)ee, it will cost more than E'st the wage for that position! "he penalt) for
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 7
not pro(iding health ins'rance in firms of more than 0 emplo)ees is :2000 for each emplo)ee be)ond
the first 30 emplo)ees! "his co'ld s'bEect an emplo)er to a potential fine of :2000 + %1,30& G :<2,000
fine! "he fine will be significantl) less for firms that hire part,time emplo)ees! "his co'ld res'lt in a
significant red'ction in f'll,time Eobs a(ailable for firms that emplo)ee aro'nd the 0 7"4s! -owe(er,
as firms increase in si5e be)ond the 0 7"4 c't point, the cost of the penalt) will o'tweigh the cost of
offering health ins'rance benefits!
"o s'mmari5e, the e+plicit ta+ re(en'e from 4+hibit ++ will be 'sed to s'bsidi5e the cost of
e+panding health ins'rance co(erage! Penalties which ser(e as implicit ta+es are designed to enco'rage
emplo)ers and indi(id'als to obtain health ins'rance benefits so that the n'mber of 'nins'red indi(id'als
can be red'ced! #ltho'gh growth in health care costs ma) be red'ced as a res'lt of more indi(id'als
being ins'red, these ta+es co'ld res'lt in red'ced economic growth and e(en recessions!
Health Insurance and -edical .oss %atio
# pro(ision that aims to promote efficienc) and help contain rising costs in the health ins'rance
ind'str) is the Medical 8oss *atio %M8*&! "he M8* is the ratio of benefits paid b) ins'rance to re(en'e
from premi'ms %7eldstein 2011&! /ince Aan'ar) 1, 2011, pri(ate ins'rers are mandated to spend at least
;0 percent of indi(id'al polic) premi'ms towards medical care! 7or emplo)er,based or gro'p polic)
premi'ms, ; percent of premi'ms m'st go towards these e+penses! 1f it is determined that an ins'rerFs
M8* is below the re0'ired minim'm, then the ins'rer m'st rebate the polic)holder the difference! "his
pro(ision co'ld ens're that health premi'ms are not prohibiti(el) e+pensi(eH thereb) pricing o't certain
segments of the pop'lation! Of co'rse, if that barrier to entr) is lifted, then some proacti(e people are
more likel) to take ad(antage of pre(entati(e care! "his co'ld impro(e o'r global standing in life
e+pectanc)!
"he M8* co'ld foster inno(ation and efficienc), b't it co'ld also create problems for higher
ded'ctible ins'rance plansH the same t)pes of plans that polic)makers foresee people enrolling into once
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 8
the minim'm co(erage re0'irement comes into fr'ition! "his is beca'se high,ded'ctible plans pa) a
smaller percentage of claims beca'se the enrollee has a greater share of the cost! $laims that are
generated below the ded'ctible arenFt co'nted in the M8* form'la as medical e+penses! "his co'ld
increase the chance that an ins'rer will not satisf) the M8* re0'irement! $onse0'entl), this co'ld create
a per(erse incenti(e for ins'rers to a(oid offering high,ded'ctible plans and catastrophic co(erage!
Pro)iders/ Hos,itals/ and Health Care %eform
"he #$# hopes to achie(e cost red'ction b) transforming the wa) healthcare ser(ices are
pro(ided in both the inpatient and o'tpatient settings! Man) different programs are being initiated
thro'gh the $enters for Medicare and Medicaid %$M/&! "he traditional model of reimb'rsement for
pro(iders has been a fee for ser(ice model! Pro(iders and hospitals will t)picall) charge as man) fees as
applicable to ma+imi5e the amo'nt of reimb'rsement from pa)ers! # new pilot program that is being
implemented as part of the #$# to red'ce this practice is the 'se of b'ndled pa)ments whereb) a single
b'ndled reimb'rsement is pro(ided for an episode of care %$ite&! "his wo'ld enco'rage pro(iders and
hospitals to minimi5e costs beca'se increasing the amo'nt of ser(ices wo'ld not generate additional
reimb'rsements! -ospitals and pro(iders wo'ld be forced to share in single pa)ments!
#nother program that is being implemented thro'gh $M/ is the 'se of Ial'e Based P'rchasing
%IBP& which is a model whereb) incenti(e pa)ments will be paid to hospitals that meet or e+ceed certain
performance meas'res %$ite&! "hese metrics incl'de patient satisfaction and efficienc)! .nder the #$#,
reporting of the metrics will be mandator)! One metric that is the foc's of cost red'ction with hospitals is
readmissions! "hro'gh the #$#, $M/ has de(eloped a program to enco'rage cost red'ction at hospitals!
"he -ospital *eadmissions *ed'ction Program gi(es $M/ the stat'tor) a'thorit) to fine
hospitals that readmit patients within 30 da)s of prior hospital discharge %$ite&! "he fine will be ded'cted
from reimb'rsement! "he p'rpose of this program is to incenti(i5e pro(iders to p't more emphasis on
a(oiding readmission! "he -ospital *eadmissions *ed'ction Program, if s'ccessf'l, co'ld lower the
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 9
n'mber of pre(entable deaths b) fostering best medical practices and better clinical o'tcomes! 1n t'rn
this pro(ision co'ld impro(e the .!/! global health rankings with regards to pre(entable deaths!
One negati(e conse0'ence of the -ospital *eadmissions *ed'ction Program might be the impact
on non,profit pro(iders since non,profits, b) (irt'e of their ta+ stat's, commit more reso'rces towards
charit) care! Of co'rse, this means the) are located in 'nderser(ed, 'ndered'cated, and medicall)
('lnerable comm'nities! 6here there are a greater n'mber of indigent and sick people, there is also a
greater likelihood of readmission! 6hether or not reg'lators 'se discretion with non,profit hospitals will
determine how the) withstand these new financial press'res.
Accountable Care 0r1ani2ations
#nother wa) that the #$# hopes to red'ce health care costs is thro'gh the de(elopment
of #cco'ntable $are Organi5ations %#$Os& %$ite&! #/Os are designed to comprehensi(e health ser(ices
thro'gh a coordination of primar) and specialt) care! /ome e+amples of #$Os are Jaiser Permanente
and -ealth$are Partners Medical Bro'p! "he #$# enco'rages pro(iders and health care organi5ations to
enter into #$O agreements with $M/! $M/ will make pro(iders acco'ntable for 0'alit) of care and cost
efficienc) with Medicare beneficiaries!
1t has been estimated that implementation of #$Os will lead to a median sa(ings of :<90 million
from 2012,201 %$ite&! #$Os will enter into a three )ear agreement with the /ecretar) of the
Cepartment of -ealth and -'man /er(ice as part of the Medicare fee,for,ser(ice model! "he #$O model
incenti(i5es pro(iders b) rewarding those #$Os who red'ce costs! # formal str'ct're will allow #$Os
to recei(e and distrib'te the shared sa(ings pa)ments! #s of 2012, there will be a one,sided and two,
sided model! .nder the one,sided model, pro(iders will ass'me no risk o(er a three )ear, and will ha(e
the opport'nit) to share in cost sa(ings abo(e 2?! .nder the two,sided model, pro(ider will ass'me
some financial risk b't will be able to share in an) sa(ings! $M/ will establish benchmarks for sa(ings!
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 10
#$Os will also be re0'ired to pro(ide 0'alit) metrics on care coordination, pre(entati(e health, patient
safet), patientKcaregi(er e+perience, and at,risk pop'lationKfrail elderl) health %$ite&!
"he Medical Bro'p Management #ssociation %MBM#& indicates that implementation of #$Os
will be one of the to'ghest challenges as part of the #$#! One concern that has been e+pressed is the
lack of specificit) regarding how #$Os sho'ld be implemented %$ite&! 1n addition, #$Os will be faced
with high start'p costs and significant maintenance e+penses! 7'rther, it has been indicated that #$Os
are at risk of being acc'sed of anti,tr'st laws! Pro(iders will also be faced with implementation of an
4lectronic -ealth *ecord %4-*&! 1n theor), #$Os ha(e the potential to organi5e pro(iders in a wa) to
will impro(e efficienc) and 0'alit) of care! Based on these challenges, it is still to be determined
whether widespread de(elopment of #$Os can be achie(ed!
Conclusion
"he primar) goals of the #$# are to pro(ide affordable health ins'rance to 32 million
indi(id'als and red'ce health care costs! "his will be achie(ed thro'gh (ario's pro(isions! Onl) a small
fraction of the potential impacts of this legislation ha(e been presented here! 1t is a comple+ piece of
legislation that will significantl) transform the healthcare ind'str)! 1t is 'nclear if the #$# will
'ltimatel) bend the cost c'r(e or achie(e deficit red'ction! -owe(er, the #$# will ha(e a significant
effect on how ins'rers, pro(iders and hospitals operate! 1n addition, some indi(id'als and b'sinesses will
ha(e to weigh the marginal impact of health ins'rance benefits! 1n the end, a tr'e anal)sis of the #$#
will 'ltimatel) be written decades from now when economists can e(al'ate the act'al impact of this
legislation!
E+hibit 13
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 11
A3 Per Ca,ita S,endin1 on Health Care by #ation



E+hibit 43 Estimated Effects of the Affordable Care Act and the Health Care Pro)isions of
the %econciliation Act on the &ederal (ud1et 5(illions of dollars/ by fiscal year6
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 12
(3 %atio of Health Care S,endin1 to 7DP by #ation

/o'rce> %Jlein, 2012&
E+hibit 83 Com,arison of C(09s Estimates of the Effects of Insurance Co)era1e
Pro)isions in the Affordable Care Act
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 13
E+hibit !3 Com,arison of C(09s 4:1: and 4:11 Estimates of the #et (ud1etary Im,act of
All Pro)isions of the Affordable Care Act 5(illions of dollars/ by fiscal year6
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 14
E+hibit "3 Ten year ,ro;ections of -edicare Cuts 5billions of dollars63
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 15
E+hibit 63 -a+imum 0ut<of<Poc=et Premium Payments >nder the ACA/ If Currently
Im,lmented3
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 16
E+hibit 3 Summary of Affordable Care Act Ta+ Increases3
Sources of Ta+ Increase Antici,ated %e)enues from Ta+
1. 0!9? increase in the Medicare ta+ and 3!;? ta+ on
'nearned income on high,income ta+pa)ersL :210!2 billion
2! <0? e+cise ta+ on health ins'rance premi'ms in
e+cess of :10,200 for an indi(id'al and :29,00 for
a famil) :32 billion
3! 2!3? e+cise ta+ on certain medical de(ices :20 billion
<! #nn'al fee for band name pharmace'ticals :29 billion
! 10? #dE'sted Bross 1ncome floor on the medical
e+pense ded'ction %Pre(io'sl) 9!?& :1!2 billion
6! :2,00 limit to health care fle+ spending :13 billion
9! #nn'al fee for health care pro(iders :60 billion
;! Other so'rces of re(en'e :1<!9 billion
"otal :392 billion
?Hi1h<income ta+,ayers are incomes of @4::/::: and @4":/::: for indi)iduals and ;oint filers/ res,ecti)ely3
%eferences
"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 17
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#ccessed 0<K1<K2013N!
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7eldstein, P! %2011&! How Much Health nsurance !hould E"er#one Ha"e$ -ealth Polic) 1ss'es> #n
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Boodman, A! %2012&! The mpact of the %atient %rotection and &fforda'le Care &ct on (o' Creators and
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reform! M8ast #ccessed 0<K13K2013N!
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the +ninsured! ; %e!g! 2&, pp!1,12
--/ Press Office %2013&! &fforda'le Care &ct e,tended free pre"enti"e care to -1 million &mericans with
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-olt5,4akin, C! Q *amlet, M! %2010&! Health Care Reform s .i/el# to Widen the 0ederal Bud1et
Deficits2 3ot Reduce Them! MO=81=4N #(ailable at>
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-!* 390 %2010&! The %atient %rotection and &fforda'le Care &ct! MO=81=4N #(ailable at>
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Jane, A! %2012&! Health Costs) How the +4!4 Compares With 5ther Countries ! MO=81=4N #(ailable at>
http>KKwww!pbs!orgKnewsho'rKr'ndownK2012K10Khealth,costs,how,the,'s,compares,with,other,
co'ntries!html! M8ast #ccessed 0<K13K2013N!
Jlein, 4! %2012&! 11 facts a'out the &fforda'le Care &ct! MO=81=4N #(ailable at>
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"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 18
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#(ailable at> http>KKschwart5!ho'se!go(Kpress,releaseKcbo,affordable,care,act,will,red'ce,deficit,109,
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"he 4conomic 4ffects of the Patient Protection and #ffordable $are #ct Page 19



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