Healthcare Management: Affordable Care Act and Risk Management Report

This report provides an in-depth analysis of the Affordable Care Act (ACA), also known as Obamacare, focusing on its role in healthcare management and risk assessment within the United States. The report explores the ACA's objectives, including expanding access to healthcare services and reducing treatment costs, and examines the establishment of insurance exchanges designed to protect American patients. It delves into the eligibility criteria, benefits, and various plan designs of the ACA, such as the Silver Plan and Cost Sharing Reduction, while also highlighting the indicators of potential issues and existing risks, including debates surrounding the program, low enrollment rates, and the challenges associated with risk corridors and health underwriting. The report further discusses relevant theories, such as the Theory of Insurance for Insurers and Power and Incentives for Efficacy, in the context of the ACA. Finally, it proposes areas needing improvement within the ACA and suggests criteria for evaluating alternative approaches, emphasizing the need for comprehensive plans, increased enrollment, and a focus on overall benefits across various aspects of healthcare.

Running head: HEALTHCARE MANAGEMENT 1
Healthcare Management
Student’s Name
Institutional Affiliation

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Human beings are faced with various health problems and often visit hospitals for
diagnoses and check-ups. In many occasions, people experience issues whose origins and
time are unknown. For that reason, President Barack Obama, during his reign, came up with
an initiative that could help reduce the health risks and the cost of treatment. The effort drew
support from different political affiliations and thus was developed into a rule known as the
Affordable Care Act, commonly known as the Obama care (Klinger, 2014, March 21). The
primary motive of this paper, therefore, is to analyze a case based on the Affordable Care Act
and Risk Management and to provide a profound understanding of the initiative in terms of
the risks of insurance exchanges with which the action is associated.
The Affordable Care Act is a form of health insurance that allows for the provision of
universal healthcare services to all citizens of the United States of America and also
recommends a change in the way healthcare services are disseminated to the people. The Act
includes various insurance exchanges whose primary aim is to protect American patients by
selling life insurance plans to both individuals and small employer groups. The case study
provides multiple facts regarding the Affordable Care Act and how it is used to manage the
health risks of the citizens. All American citizens are eligible for the Obama care not only as
a matter of insuring themselves against any unseen health issues but also as a form of
complying with the law.
The amounts that people pay to insure themselves or access Obama Care initiative
vary from person to person depending on the person/household’s income and the number of
people who use a single insurance cover. The United States’ government and relevant
agencies have a different definition of the Federal Poverty Level (FLP) and therefore, use
FLP to ensure the range of people’s incomes and how it should affect the registration of the
Care Act. For example, it is provided that any individual or household whose income falls
400% below the Federal Poverty Level (FLP) are qualified to acquire the insurances at the

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exchange. The calculations of the Federal Poverty Levels are based on the number of people
in a household, and the result thus influences the amounts that should be paid for the
purchase of the insurance. For example, the US Affordable Care Act provides that 400% of
FLP for a single individual should be $47 080 while that of a family consisting of four people
should be $97 000 (Klinger, 2014, March 21).
People who opt to take the Affordable Care Act (ACA) insurance initiative have
several benefits. However, the primary role of the insurance is based on its plan design
known as the Silver Plan. The silver plan takes up to 70% of the expenses of patients with
ACA care plan. The cost cut-off allows the patients to struggle and get 30%. The other
benefit is that healthcare services are made to be generally cheap, affordable, and accessible
to citizens of all financial backgrounds. Patients may not feel the pain of paying the
remaining 30% because it is mostly paid via such things like the co-pays, deductibles, and
coinsurance funds.
Another category of the Affordable Care Plan is Cost Sharing Reduction. All
individuals and households whose incomes are between 100% and 250% of the Federal
Poverty Level. This type of plan can be regarded as second after the Silver Plan, and
members of this class of insurance are ranked based on their Actuarial Values(AV) so that the
lower the percentage of Federal Poverty Level, the higher the Actuarial Value plan
percentage. Some of the plans as provided in the Risk Management Aspects of Legislation- 3
R's. (2017) include the following
100% – 150% of FPL goes for 94% of AV Plan
151% – 200% 0f FPL goes for 87% AV Plan
201% – 250% of FPL goes for 73% AV Plan.

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The Indicators That Something is not as it was Expected to be and Existing Risk
Issues
The first indicator to show that something might be wrong with the role and
performance of Obama care is the constant debate that faces it. Different people have had a
different perception of the purposes of the program, and their knowledge significantly
influences their choice (Kantarjian, 2017). The political houses in the US have engaged in
several debates with some people supporting the idea that such an Act should be repealed and
improved accordingly. Other people, however, feel that the Act is in its better state and only
relevant improvements should be allowed on it.
Another indicator is the number of people who have resolved to take the care plan. It
is reported that out of the 50 states of the United States of America, only 39 states had
decided to take the cover as per the 2015 data. Within the states that accepted, the number of
people is still very low, and that clearly shows that there could be a problem that is associated
with the care plan. Studies provide that up to 85% of the people who take the insurance cover
from the exchanges are entitled to subsidies (Lanford & Quadagno, 2016). Thus, any form of
price increase of the premiums does not affect them.
However much the ACA healthcare insurance has been praised for being outstanding
in aid of American citizens, several analyses realized that it’s faced with some negative
aspects that may affect the patients or insurance holders either immediately or after some
time. Obama Care has the risk corridors which have turned out to be problematic in the
successful dissemination of healthcare services (Greenwood, 2012, August). The working of
the risk corridors involves keeping the prices of premiums at relatively lower rates but
counterbalancing all the risks that would have formed part of the original premium prices.
The effect of this act is that it lowers the costs of the plans offered by insurers, which thus

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contributes to the affordability of the arrangements. The problems associated with such deals
include those mentioned below.
The Affordable Care Act aims at providing cheap healthcare plans for patients.
However, the inclusion of the Risk Corridors has been viewed as a hindrance to the provision
of low health insurance covers. The insurers can offer low-cost insurance covers for patients
and households. However, data shows that most of the people who registered/signed up for
the covers were sick, while not many healthy people took the covers (Rocco, 2017). The
effect of such a trend is that other initiatives like the UnitedHealth Care will need to rethink
and restructure their manner of delivering their Obama Care initiative.
Another issue faced in Obama Care is the lack of health underwriting. Health
underwriting is defined as a process whereby a health insurer put all the people they have
insured so that they can analyze the possibility of health risks occurring and the level of
damage it can cause. It is complicated to estimate the number of people who can suffer from
diseases because some of the diseases may have unforeseen origins. Therefore, there is often
over or underestimation of the resources that can be used to cater for the health risks which
have already occurred.
Issues with Theories
The Theory of Insurance for Insurers
According to Layton, McGuire & Sinaiko (2016), the approach of insurance for
insurers provides that in the case of an incomplete budget, an insurance policy on its prime
state includes coverage once all deductions have been made. The analyst uses the model of
Arrow to infer that the medical budgets and expenses of many people remain low and
disregarded because they never vest of the anticipation of their tomorrow’s lives. Their
consumption for nonmedical items thus remains very low. The idea brought is that people

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love to take coverage of issues which may result in huge losses compared to those that occur
in small losses (Serhal, Arena, Sockalingam, Mohri & Crawford, 2018). The insurers, on the
other hand, usually reap vast amounts of profits when they offer cover for something with
considerable effects in the case of an occurrence.
At the same time, the model described provides that it might be unworthy of getting
involved in reinsurance under some circumstances, for example, in a case where a moral
hazard is lacking. The reason for this argument is that reinsurance is aimed at covering
personal losses, therefore, if there is an insurer with an outcome on the left-hand side, then
the inference would be that they either have many low or high-cost cases (Layton, McGuire &
Sinaiko, 2016). The insurers whose result falls on the right-hand side of the cost distributions
may show that they have a lot of cases and for that reason have high probabilities of not
getting payments. The primary reason for the lack of payment may be that the realized costs
may be slightly or highly above the estimated costs.
Power and Incentives for Efficacy
The power and incentives for efficacy mostly base its arguments on the people’s
expenditure systems or their need to spend. This theory provides that the so-called pay-for-
services form of operation might contribute to the rising prices of services. Therefore, it
provides a better way that consumers, who are in this case, the patients and households in
need of healthcare services, can reduce the amounts they do spend which shall consequently
reduce the costs of services they need (Greenwood, 2012, August). The cost-based manner
of acquiring services has been examined and seen to contribute to undesirable effects in the
market sector. Therefore, the frameworks which can reduce the cost of risks like reinsurance
and risk corridors, among others, would be needed to help stabilize the situation created.
Areas Needing Improvement

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Through the insemination of the Affordable Care Act, the US government has thrived
to achieve some of its promises based on quality healthcare. The program, through various
theories, has been successful in multiple ways. However, in as much as it has achieved a lot,
there still exists a feeling that a part of parts of it need to be improved to make the pan more
affordable, accessible and acceptable to a higher percentage of the American population
(Klinger, 2014, March 21). The first part that needs to be improved is the range of plans that
are available in the exchanges. The current ACA provides a limited range of covers including
mandatory mental health, cover against drug abuse, free preventive care, and contraceptives,
among others. However, it would be better if the plan created a space for all or significant
plans like catastrophic health plans which allow people to only make regular payments for
major medical events.
Affordable Care Act remain to face the challenge of low registration by American
citizens. The care plan was installed to cater for everybody, but issues like poor
understanding may have made other people not to sign up for it. If the targeted number
registers, pooling the risks would be very easy because several people or the whole country
will bear the spread. To improve this portion, Carroll (2017) proposes that the government
needs to increase the penalties of an individual or household, and because people will not
accept losing money quickly, they will opt to register.
Criteria for Choosing an Alternative
Choosing an alternative to an existing project is never easy and may require a lot of
research. The criterion, however, for replacing Obama Care would be based on the benefits
measurements methods. The benefits should be realized in all aspects, including the
economic platform, the level of achievement, and the values limiting in the existing care plan.

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Feasible Action Alternatives
Finding a perfect replacement for Obamacare is and may not be secure. Therefore,
there is a need to come up with a criterion that entails all the procedures, the outline, and the
improvements that have been done to make Obamacare look inferior. The research and
legislation criteria can be the best. Research should be done to come up with a better method
of disseminating healthcare facilities to the public (Greenwood, 2012, August). During the
study, all the significant points will be highlighted, including but not limited to the
advantages of the alternative over the previous plan. One of the alternatives that could be
recommended is the indemnity coverage where a person is allowed to choose their medical
providers, which they deem fit to handle their health issues.
Consequences of Probable Action Alternatives
Every alternative chosen must have a consequence, and the results may be more
dangerous in some unseen ways compared to Obama care. For example, if the indemnity care
plan is chosen, it’s known that this care does not give room for negotiation of costs.
Therefore, there are high chances that most of the healthcare services would not be covered
even after the client has achieved the possible deductibles.
If the repeal and replace request is applied to Obama care as many people always
need, there would be chances that the performance and acceptability are improved. However,
chances of hiking the current premium prices with between 20% and 25% would be
encountered (Carrasquillo & Mueller, 2018). The argument means that a better program will
be more expensive, thus doing away with the notion of affordability of the care.
Course of Action
After analyzing both the existing Obama Care and one possible alternative, there is a
realization that people may be adversely affected in terms of the healthcare service delivery

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and affordability. The adverse effects may arise due to increased costs of acquisition.
Therefore, the best course of action is to retain the current care as further improvements are
made on it to ensure that it causes no harm to any platform.
Implementation of the Plan
The application of the chosen alternative program would follow a series of steps. With
reference to the provisions of Sligo, Gauld, Roberts & Villa (2017), the following
implementation plan could be generated.
Task Name Resource Number of days
allocated
Communication
of the program
Need a draft of all the items required to
spark of the program and also need to meet
different relevant people.
A maximum of one
week
Setting up
strategies for
the
implementation.
This part will need skilled personnel who
can reason to come up with viable
decisions.
Two days to enhance
demonstrations on the
foreseen impacts of the
project.
Measuring the
success of the
program.
Items that can be used to gather information
on the performance would be required.
This step may take as
long as up to 2 months
to give a clear progress.
Communicating
the results
This part is very important as it is based on
evidence of performance. Therefore, the
major resource is the evidence of
performance.
The communication
may take two days then
shall be followed by an
advocacy for people to
start using the initiative.

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Plan for Assessing the Action to be implemented
Once the gathering of information regarding the new project is gathered, it is better to
provide a plan on how it will be assessed. The assessment plan will be based on various
elements. The elements would include the following
The mission, goals, and objectives of the anticipated program.
All the activities that should be covered under the assessment.
The amount of time that the assessment should require.
The relationship between the program and the healthcare service provision
The responses of the relevant departments towards the plan
Conclusion
Obama Care or rather the Affordable Care Act as it is commonly known is essential
and has significantly transformed the lives of Americans. The care program provides an
insurance cover against unforeseen health risks and giving protection based on the family
financial backgrounds and the number of member in a particular household. The initiative
gives people from different financial abilities the opportunity to register and secure
themselves. However, some of the negative things include the fact that members are not
given opportunities to choose the care plans for which they wish to take. People of different
calibers and political affiliations have consistently debated with controversial opinions with
some supporting the care plan and others needing a repeal and replace strategy. Any decision
that would be made based on the two ideas shall have a significant effect on the delivery of
the healthcare services. Therefore, any adverse effects should be analyzed and withheld to
avoid increased costs for the people that would see the affordability of the service cracked.

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References
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perspective. Annual review of medicine, 69, 29-39. https://doi.org/10.1146/annurev-
med-090916-120540
Carroll, A. E. (2017). A Look at Republican Plans for Repealing and Replacing Obamacare.
Jama, 317(4), 348-349. doi:10.1001/jama.2016.19913
Greenwood, K. (2012, August). The Affordable Care Act’s Risk Adjustment and Other Risk-
Spreading Mechanisms: Needed Support for New Jersey’s Health Insurance
Exchange. Retrieved from https://law.shu.edu/Health-Law/upload/affordable-care-act-
risk-adjustment-9520.pdf
Kantarjian, H. M. (2017). The Affordable Care Act, or Obamacare, 3 years later: A reality
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