Over the last few decades, the cost of health care has increased at an alarming rate. In today’s competitive environment, many organizations have been unable to carry the increasingly high cost of health care and health insurance for their employees. A recent study by AON, a global human resource management consulting and outsourcing company, suggested that many organizations are sharing the increased cost of health care with their employees and are implementing strategies to incentivize employees to understand and manage their health. A 2012 Kaiser Family Foundation study suggested that the average health insurance plan offered by large organizations cost roughly $15,745. The Kaiser study also suggested that while the overall cost of health insurance has slowed in recent years, it is still increasing at a rate much faster than wages. For this reason, employers must consider how to share the burden of the cost while also providing value to employees. There are numerous explanations for the rise in health care, some of which are:
- Deteriorating overall health in society
- No accountability on patient’s part for health care costs
- Aging population
- Advanced technologies that increase the desire for expensive equipment and procedures
- An increased focus on saving the lives of premature babies and morbidly ill patients (e.g., cancer patients)
The Affordable Care Act
Over the last few years, healthcare in the United States has changed dramatically. In 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (PPACA), also known as the Affordable Care Act (ACA) Or simply “Obamacare”. The Affordable Care Act represents the most significant regulatory overhaul of the U.S. healthcare system since Medicaid and Medicare were passed in 1965.
The purpose of the Affordable Care Act is to lower the number of Americans without health insurance as well as to lower the overall cost of healthcare for individuals, businesses, and government. Since its inception, the Affordable Care Act has been a topic of great debate among politicians, ethicists, and academics.
The Affordable Care Act prohibits insurers from denying coverage to individuals with pre-existing conditions, sets minimum standards for health insurance policies, includes an individual mandate for individuals to have a health insurance policy, and expands Medicaid eligibility for many individuals and families.
Under the Affordable Care Act, businesses with more than 50 employees must provide health insurance to their full-time employees or the business will be required to pay a tax penalty. The mandate that employers provide health insurance to their employees is known as the employer mandate.