Affordable Care Act’s Attempt to Cut Costs

Affordable Care Act's Attempt to Cut Costs

As of the 1st of October, the government has been essentially shut down. Congress is deadlocked, debating the benefits of the Affordable Care Act (ACA) implemented by President Obama. The plan itself has many aspects that are hoped to help the American citizens save money on health care, or afford health care in the first place. There is some confusion as to what the ACA’s cost cutting programs are, so here are a few:

  1. It is now encouraged for hospitals and other care providers to join Accountable Care Organizations (ACOs), which is designed to help patients stay out of the hospital and receive all the care they need, while still cutting out extraneous costs and placing more financial responsibility on the health care provider.
  2. The ACA also requires health insurers who spend less than 80% of the premiums from customers to reimburse many of those patients. According to CNBC, insurers of large companies must spend at least 85% of those premiums that they get on refunds or benefits to their patients.
  3. Independent Payment Advisory board, which is designed to recommend reductions in Medicare spending. This will happen when Medicare per capita exceeds the costs of specific targets, such as overall medical supplies. The reductions the board makes will stay in place unless Congress can come up with a different one that saves the same amount of money.
  4. Lastly, the ACA also implemented preventive care for customers that is hoped to save money over the long term. The idea suggests that those who have and use preventive care are less likely to bear chronic or long-term disease later in life.

     Health care spending accounts for nearly one-fifth of the American economy, and it is a cost that needs to go down. The ACA offers some options, and maybe those options will end up making all the difference.

2017-05-23T11:36:49-06:00 October 6th, 2013|

About the Author:

The Wayne Brown Institute was founded by the late Dr. Wayne Brown in 1983. Dr. Brown held positions in mechanical engineering and served as Dean of the College of Engineering at the University of Utah. In addition to his academic postings, he was a founder of Kenway Engineering (HK Systems), TerraTek, NPI (Agridyne Technologies), the Utah Innovation Center (the world’s first venture accelerator/incubator) and Utah Ventures (now Pelion Partners, Utah’s first and largest venture fund). By virtue of his academic, government, and business background, Dr. Brown was a leading authority in technological innovation and entrepreneurship. Many of the world’s science/research parks, innovation centers, and incubators have their roots with Dr. Brown. In addition to his many accomplishments, he has affected the role of government in innovation and entrepreneurship as the architect with Roland Tibbitts of the national Small Business Innovation Research (SBIR) program. Later, as head of the State’s Science Council he spearheaded legislation to create the Utah Technology Finance Corporation (UTFC, now Innoventures), and Utah’s Centers of Excellence program. He successfully negotiated with the U. S. government to obtain military land for the establishment of the University of Utah’s Research Park, and key in the establishment of the USU Research Park and Timpanogos technology Park in Orem (Novell campus). His knowledge, experience and passion live on in the Wayne Brown Institute, its staff, its investor-led Board, and its countless supporters.