Obamacare: A Case Study

Summary: Since the passage of Medicare and Medicare in 1965, controlling the costs of health care has been problematic. The United States currently has a fragmented health care system, which means that implementing any type of cost-control method throughout the entire system has proven difficult and largely ineffective. Controlling health care costs are important because when the United States keeps devoting a larger percentage of their economic resources towards health care, it forces the country to give up other goods and services to cover the costs and it ends up hurting the economy overall. Controlling the administrative costs that lead to high costs in healthcare is possible with a move to a single-payer system.

Background: Healthcare …show more content…
Obamacare has done well to decrease the rate of those uninsured, but cost containment has been largely ineffective. With Obamacare and the fragmented health care system that is in place, not enough emphasis has been placed on reducing costs as the United States still spends the most by a wide margin in comparison to other countries. Obamacare rewarding ACO’s for keeping costs below a set limit per person covered is an example of Obamacare reducing costs, but the effects of efforts like this have been minimal. For the most part, Obamacare has done what it can to reduce costs, but implementing the regulation in the fragmented system that is in place is difficult because of the presence of private insurance providers. The reason Obamacare is failing is due to the complexity of the system where there are many insurance providers. The complexity of the system is evident when looking at administrative costs and the amount of waste. With the private insurers under Obamacare, each insurance company has different rules and regulations. When each insurer has different rules and regulations it dramatically drives up the administrative costs. A large part of the administrative costs is BIR (Billing and Insurance-related costs) which accounts for $375 billion a year and 15% of America’s health care spending. The …show more content…
The first step to greatly reducing the costs of health care in America is the move to a single-payer system. In 2012 under the current system, BIR costs totaled $471 billion and $375 billion of that was waste. If the United States sticks with Obamacare, it is incurring a loss of $375 billion dollars a year due to a fragmented system. The fragmentation of Obamacare leads to a variance in factors like coverage, billing and eligibility which causes waste. In order to eliminate the waste of $375 billion dollars, Obamacare needs a simpler financing system. The simplest financing system would be moving to a single-payer system because instead of having multiple insurance providers where each insurance provider varies greatly, a single-payer system would have only one insurance provider. By moving to a single-payer system, waste from BIR is cut by $375 billion and total health care expenditures is reduced by

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