The Controversy of The Affordable Care Act, Obamacare

If I was ever honest about an act that was supposed to be good for the people, this isn’t one of them. I think this written essay may become one of the most controversial ones after you read this but here’s why. I have read about Obamacare act a while back and I had also read articles from Jonathan Gruber, an MIT economist professor who stated that this act was established to gain the attention of American voters and taking advantages of, he quotes, “the voter’s stupidity” to create a law that ultimately benefits them yet there were no guarantees that the bill would actually bend the cost curves. I personally dislike this topic because of the lack of transparency this act actually has, of course, I can easily write only the positive points about this that’s plastered all over the internet. But that won’t make me an honest economist if I wanted to become one. So, in this essay, I will keep it short and simple, explaining the basis of Obamacare and show the economic impact it had, as well as more on Gruber’s thoughts around this topic.

 

Obamacare, also known as the Affordable Care Act (ACA) is a law, that was enacted by the U.S. Congress and signed by President Barack Obama back on March 23^rd, 2010. The ACA introduced an expansive access to health insurance aimed to reduce healthcare costs to low-income individuals and families, protecting them from apparent insurance company abuses and help promote preventive care. It has also decreased a significant number of uninsured Americans though it’s Medicaid expansion; this slowed the rise in healthcare costs. However, the hospitals and health care providers would often pass on to insured individuals in the form of higher prices at the cost of people who are not insured getting the care they need (A trade-off to put it simply). This would lean towards as a requirement for the individuals who can afford this health insurance or else they have to pay a penalty; to prevent free riding.  Without this trade-off, then everything would go back as it were, driving up costs for everyone. Similarly, from a business standpoint, businesses with over a certain number of employees had to provide health insurance as well. Furthermore, due to the high costs for these coverages resulted in people losing their jobs. Throughout the years, the ACA had gone through several reforms due to their imperfect designs. These reforms were then stated as market failures to some states which caused instability due to the lack of options for consumers and insured Americans leaving the market as well as problems where people who had high health risk could not afford their coverages.

 

Jonathan Gruber is an American economist and a professor of economics at the Massachusetts Institute of Technology (MIT), where he taught since 1992. He is also one of the directors of a Health Care Program called the NBER (National Bureau of Economic Research). Gruber’s involvement with the ACA included developing microsimulation model that projected the changes of various health policy on insurance coverages, health care costs and budget. This model was to try and understand how this law/act would affect federal spending likewise. From the research I have done, he has published more than 150 articles that revolve around Public Finance and Policy. In 2014, Gruber became one of the most controversial debaters due to the remarks he left about the American Public’s understanding of the Act and the tactics that were used to pass the law. He suggested that the act had a lack of transparency, and the sole complexity of the legislation was advantageous toward its process before the law was enacted. This had brought an incredible amount of criticism toward Gruber, and he later apologized for using the wrong choice of words. However, his perspective highlighted the economic efficiency of expanding coverage with ACA throughout the country, noting that this would decrease the number of uninsured Americans at the cost of higher costs for the ones insured.

 

To put this into a simpler perspective, imagine if someone who had Obamacare, during the time he was working, he had to pay around $500-1000 per month for his/her coverage. If he/she was fired from his job, the coverage would then decrease down to a mere $100 a month. One day, unemployment goes away and returns to work; the cost goes right back to its original price.  The health care cost curve was never cheap, it has always been expensive at the cost of someone else. This is the reason why I dislike this topic to an extent due to its controversy, it’s hard to judge or breakdown if an action that was taken is either good or bad for the economy and for the people as a whole.

 This article is a part of the class
“751309 Macro Economic 2”
supervised by Asst. Prof. Napon Hongsakulvasu
Faculty of Economics, Chiang Mai University

This article was written by
Gon Kodama 651615503

I will leave all the articles I have read to make this simple point.

Sources:

Affordable Care Act – Wikipedia

About the ACA | HHS.gov
The Pros and Cons of Obamacare (healthline.com)
Jonathan Gruber | MIT Economics
The Jon Gruber controversy and what it means for Obamacare, explained – Vox

Jonathan Gruber of M.I.T. Regrets ‘Arrogance’ on Health Law – The New York Times (nytimes.com)

How Little-Known MIT Professor Jonathan Gruber Shook Up Washington This Week – ABC News (go.com)