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Affordable Care Act Repeal and Demand and Supply Research Paper

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Updated: Jun 15th, 2022

Introduction

The Affordable Care Act changed many aspects of US health insurance and the healthcare system. One of the most significant changes was the Medicaid expansion because it allowed many Americans to receive benefits and afford insurance. Consequently, the abolition of the ACA will take away this opportunity from many people, which will significantly reduce the demand and supply for health insurance and affect the purchasing power of citizens and the labor market.

Impact on the Health Insurance Market

The first most significant and predictable impact of the ACA’s potential repeal is reducing the demand for health insurance. Popken (2017) notes that ASA has created 20 million new insured clients, which is a significant number of clients for insurance companies and healthcare providers. Since there is no other plan today that could replace the ACA, its cancellation is likely to result in the same insurance conditions that were in 2010. This fact means that most Americans who cannot afford insurance due to low income will refuse to buy it. At the same time, the consequences of quarantine and the pandemic are the loss of jobs by many employees, which only increases the number of people who cannot afford insurance. Consequently, the repeal of the ACE will cause a sharp drop in demand and affect both the work of insurance companies and healthcare facilities.

A decrease in demand will also lead to a reduction in supply because it will not be profitable for companies to offer a variety of insurance plans for people who cannot afford them. In addition, the ACA also had clauses on the compulsory services that insurance must cover and the elimination of discrimination against people with illnesses; thus, its cancellation could also reduce the offers for individual private insurance (Guo et al., 2017). In other words, if these requirements do not work, companies can reduce the number of insurance plans to a minimum but increase costs to cover the shortage due to low demand. Thus, health insurance can become even less affordable for the population.

Effect on the Labor Market

Moreover, the lack of insurance for most people means the unavailability of medical services, which will increase costs and decreases the number of jobs in the healthcare sector. According to Wishner and Burton (2017), the adoption of the ACA forced healthcare providers to adapt to the growing demand for medical services; as a result, thousands of workers were hired in clinics, emergency, and information centers. Consequently, since many Americans cannot afford medical services because of their high cost, their demand will also fall, as will the need for medical personnel. Thus, thousands of unemployed will appear in the labor market due to the low supply of jobs. Such changes will also negatively affect the US economy because a high unemployment rate leads to a drop in government revenue from taxes.

Impact on Citizens’ Purchasing Power

Another consequence can be a decline in the demand of buyers for various goods and services or a decrease in their purchasing power. In their study, Caswell and Waidmann (2017) noted that residents of states that expanded their Medicaid programs had improved their financial situation. However, the potential repeal of the ACA will lead to opposite outcomes due to higher insurance prices, larger medical bills, and unemployment.

First, the loss of jobs for thousands of healthcare workers can lead to a difficult financial situation in which they cannot afford to purchase devices, cars, entertainment, or other things that are not essential for life. People who lose their benefits but are forced to buy insurance because of their health conditions or pay bills themselves can also cut costs. This prognosis also applies to people with low income who will have to cut costs to pay medical bills in the event of illness or urgency. At the same time, the threat of COVID -19 and its severe consequences for some people shows a high probability of treatment costs for any person. Consequently, the demand for various non-essential goods and services will decrease due to the high costs of healthcare services that do not correspond to the income of most people.

Conclusion

Therefore, the repeal of the ACA will harm the supply and demand of health insurance, healthcare jobs, and consumption in general, due to the elimination of benefits for the low-income population. First, Medicaid’s return to 2010 conditions will make many Americans unable to afford insurance, which will reduce demand for it and medical services. For this reason, companies can fees but decrease coverage to generate income from people who need and can afford insurance. The jobs created after the adoption of the ACA will become unnecessary, which will reduce the supply in the labor market, and many health workers will lose their jobs. The lack of insurance benefits, the high cost of healthcare services, and increased fees will force the population to cut their costs, which will reduce the demand for non-essential goods. Consequently, the repeal of the ACA will harm almost all areas of the US economy and affect the health and financial stability of a significant part of the population.

References

Guo, E., Jacobs, D. B., & Kesselheim, A. S. (2017). . American journal of public health, 107(2), 253–254.

Caswell, K. J., & Waidmann, T. A. (2017). . Medical Care Research and Review, 76(5), 538–571.

Popken, B. (2017). . NBC News.

Wishner, J., and Burton, R. (2017). H The Urban Institute.

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