If medical bankruptcies are reduced, how will that affect nationwide levels of household spending?

Use comparative-effectiveness evaluations to guide
decision-making for prescription drugs, tests and medical devices
(save $28 billion)
As the provisions of the Affordable Care Act (ACA) are gradually
put into place, the economics of the program are a subject of great
debate. Some of the debate seems driven by political philosophy
(should the U.S. be a nation of “big” government or “small”
government?) or by ethical considerations (is affordable health
care a basic human right?). Regardless of your own opinions on the
matter, it’s clear that the economics of the ACA look quite
different from the perspectives of the patient, the employer, and
the provider.
Patient Perspective
Health care analysts estimate that 30 million U.S. citizens who
currently don’t have health insurance will be covered by the ACA;
some of these citizens will be eligible for federal subsidies to
help cover the cost of their health insurance premiums. In
addition, a baseline of coverage will be required for all health
insurance policies, avoiding today’s phenomenon of
Surely this means the demand for health insurance policies will
increase, and to a certain extent the price to consumers will be
moderated by federal spending. However, for those who have
previously chosen not to purchase health insurance, the ACA will
require them to join the “pool” of insured citizens, and a certain
amount of their disposable income will no longer be available for
other purchases. Will spending on food, clothing, shelter,
transportation, or even savings drop as a result?
Another economic impact may relate to personal bankruptcy.
Currently, 62% of U.S. bankruptcies are due to illness or medical
bills, and 69% of those who have experienced medical bankruptcies
were insured at the time. If medical bankruptcies are reduced, how
will that affect nationwide levels of household spending?
Employer Perspective
Employers with 50 or more employees will be required to offer
health insurance policies with at least baseline coverage to
employees working 30 or more hours per week. This may represent a
significant additional expense of doing business for firms who have
not previously offered this benefit. What other company expenses
may be scaled back to offset new health care costs? Hiring,
research and development, and capital investments are just a few
In addition, employers with a significant number of part-time
employees may scale back work hours for individuals, resulting in
smaller paychecks but a larger number of employees. Will this
create additional employment opportunities, or will it result in
more workers who are “under-employed?”
Provider Perspective
Cost control in Medicare and Medicaid spending is an important
feature of the ACA. Through a combination of changes in Medicare
payment structure, slowing of inflation-related price increases,
and incentives for improved performance (such as reducing repeat
hospital visits and minimizing hospital-acquired illnesses), the
federal government intends to reduce the rate of growth in health
care costs as a share of the U.S. economy. In the last 50 years,
U.S. health care costs have increased roughly 800%, while the
nation’s economy has only grown about 150%. It is reported that
U.S. spends $750 billion more each year for health care than other
developed nations, even when relative incomes and costs of living
are considered. How might an additional $750 billion a year help to
resolve ongoing issues of debt reduction, infrastructure spending,
and investments in education or research at the federal level?
An important element of cost control is increased transparency
for health care charges. The so-called “chargemaster” rates, or
standard prices charged by hospitals for specific services are now
available to the public for comparison purposes. For instance,
government data shows that one hospital in Dallas, Texas charged
$14,610 to treat pneumonia, while another Dallas hospital charged
$38,000 for the same care. It is hoped that better-informed
consumers will make smarter choices among providers, through access
to this cost data.
Not Merely Supply and Demand
As a heavily regulated industry, health care certainly doesn’t
operate simply on the principles of supply and demand. In the U.S.,
demand is strong and getting stronger (almost 25% of the population
will be over 64 years old by 2030), while supply seems easily able
to keep pace in most communities. The question then becomes “health
care, but at what cost?” As both a patient and a provider, you have
a responsibility to become better informed on the factors of ACA
that may either increase or decrease those costs.

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