Financial Implication on Health Care Reform

When President Barack Obama entered the white house, he made reform of the American health care system, making it his top domestic priority. United States of America spends nearly twice the amount of average developed countries but record of healthcare is dismal.

Infant mortality is higher, life expectancy is lower than other countries, plus the negative health statistics that shows Americans to be twice as likely to be obese.

Here is the current healthcare coverage situation in the United States. Employers provide their employees with healthcare and insurance coverage. Others sign up for insurance scheme. Under most plans, people are required to pay part of the cost (deductible) and this varies according to their plan. Some employers stopped offering insurance to employees due to the high cost.

A writer of the BBC News states that one problem America is facing on healthcare today is the cost. America spends 16.2% of GDP – nearly twice the average of other countries in the OECD (Organization for Economic Co-operation and Development).

Another issue is coverage where in it is estimated that in 2008 46.3 million people in America, out of a population of 300 million, were uninsured. There were also millions of Americans who were considered “under-insured” (2010).

US declares half of personal bankruptcies as the result of medical expenses paid by someone without insurance or with inadequate cover when they fall ill. This is because these people are obligated to pay their medical expenses out of their own pocket.

The US government has been spending more and more on Medicare and Medicaid and this is one of the biggest contributing factors to the spiraling US budget deficit.

On March 21, 2010, the House of Representatives passed the biggest reform of health care in the country for 40 years (BBC News, 2010).

This will provide healthcare for 30 million uninsured Americans. According to the CBS News Capitol Hill Producers, it would cost $940 billion over ten years. It will expand its coverage to 32 million uninsured Americans.

This will take coverage across the country to 95 percent. Its main provision is to make health insurance almost mandatory, with exceptions to the low-income people. This will prevent insurers to deny coverage to people who have pre-existing medical conditions.

This will also reduce the price of drugs available to the public (Cairns, 2010). The changes, Obama said, would help reduce the federal deficit by $100bn over the next 10 years, by dealing with misuse, fraud and abuse.

Individuals and families who have income between the 133 percent and 400 percent of poverty level would be able to purchase insurance through state-based exchanges with subsidies. They are not eligible for Medicare and Medicaid, or be covered by their employers, though.

CBS News laid the plans of the Healthcare reform bill. Starting in 2012, the Medicare Payroll Tax will be extended to include unearned income (2010).  Insurance companies will pay 50% excise tax on high-end insurance plans in 2018. There will also be 10 percent excise tax on indoor tanning services. Medicaid will also be expanded to include 133 percent of federal poverty level.

This reform will help establish health standard boards wherein there will be an annual health budget for the nation to limit both public and private expenses.

There will also be a clear out on billing fraud and eliminate incentives that encourage abuse. Government spending on Medicare and Medicaid is sustainable with the health care reform. The cost will increase from 6% to 15% of GDP by 2040 (Amadeo, K., 2010).

Drug price gouging would also be stopped. Health care reform will bring down prescription drug prices. It will eliminate tax breaks for drug companies that raise their prices fast. It will also discourage drug companies from expending more on marketing than on research and development (Luce, G. and Dutton, T., 1993).

The new bill suggests increase in the economic well-being of about two-thirds of a percent of GDP per year. This is visible when taking into consideration the comparison of the total benefits of coverage to the uninsured and the total cost of insuring them (, n.d.).

Decent health care insurance will be affordable to Americans with creditable efforts to control the health care inflation rate. There is no guarantee yet that this new policy will produce this degree of change, the benefits of having successful reform would be very important to Americans: individuals, businesses, and the economy itself.


David Cairns. (2010). Obamacare Briefing: What US Health Reform Means. The First Post.       Retrieved July 9, 2010, from,news-comment,news-     politics,obamas-triumph-what-us-healthcare-reform-bill-means-obamacare.

Jackson, J. and Nolen, J. (2010). CBS New Politics. Health Care Reform Bill Summary: A Look            At What’s in the Bill. Retrieved July 9, 2010, from      503544_162-20000846-503544.html

Luce, G. and Dutton, T. (1993). Healthcare Reform: Models and Implications. Retrieved July 9,           2010, from

Romulo, B. D. (2010).  There will be healthcare reform in the US. Manila Bulletin. Retrieved    July 9, 2010, from   reform-us.

The Economic Case for Health Care Reform. (n.d.).  Retrieved July 9, 2010, from            rm/

Q&A: US Healthcare Reform. (2010). One-Minute World News. Retrieved July 9, 2010, from   


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