The ins and outs of the Affordable Care Act (Obamacare) and understanding why it exists and what it does.

1. Explaining the Affordable Care Act
The Affordable Care Act is designed to shift the industry to consumer driven health plans.
Currently, health plans are based upon small pools,
based on individual users, small business groups, or
large businesses, as well as government-run groups.
Some of these groups include military veterans,
Medicare, Medicaid, and many others.
In the current system the health care benefits found
within the private plans have been limited. The
affordable care act mandates health insurance
benefits to include abortion, colonoscopy,
preventative care, in-patient stays, emergency room
benefits, some prescription benefits, and many more.
The design of the Affordable Care Act is to provide affordable health insurance for all individuals in the
United States of America. This is done by providing consumer driven health plans through online
exchanges for those who do not have access to any credible health insurance.
Credible Health Benefits
Health Insurance benefits are considered
credible by the federal government
when the coverage covers all of the
procedures above and more, as well as
having a maximum out-of-pocket
amount spent each year as determined
by the federal government each year.
Those offered insurance through their
employers, as long as it is affordable, are
not able to use the exchanges. Those
that use the exchanges are also allowed
to access federal subsidies in the form of
tax credits.
These tax credits can amount to over $10,000 per family or individual, dependent on the situation of
that person, the state they reside in, and other factors. This incentive was added to the Affordable Care
Act to appeal to the middle class by making creating more affordable health insurance.
One of the primary aims of the Affordable Care Act is to decrease costs that have, until recently, been
spiraling out of control. Healthcare costs have increased annually since the creation of Medicaid and
Medicare by over 8-16 percent, compared to the average annual inflation rate of 1-3 percent.

2. Budgetwise
Consequently, health care has taken more
and more of the budget of Americans in
the past 40 years. With the baby-boomers
increasingly retiring at ever increasing
levels, and with the fact that elderly
individuals utilized and require healthcare
benefits at a much higher rate than those
who are younger and potentially healthier,
experts are concerned that the healthcare
system will not only be unable to handle
the new demands of the baby boomers,
but also that costs will explode as demand
will far outstrip supply.
To put the onus of responsibility on the hospitals, payments like the Disproportionate Share Hospital
(DSH) payments, Medicaid, Medicare and other payments from the federal government will be moved
from a per service payment to a new form of payment. This form of payment is called capitated, as it
estimates how many people the healthcare provider is expected to see, and pays the provider a flat rate
fee for each of those individuals at the beginning of the year.
If the provider is able to decrease the costs of care for the person, they reap the benefits. If they cannot
decrease the costs of care, the healthcare provider loses money and the government saves money.
Photo Credit: Alan Cleaver, Alex Proimos, peasap,