The Affordable Care Act

The new date for government shutdown is October 1, 2013. In a stroke of irony, that is the exact same day of the start of the Affordable Care Act’s enrollment - of which the latter has seen a significant delay. The government shutdown is another term used to describe the debt ceiling that needs pushed upward once more. As the American deficit feeds new debt levels, the debt ceiling has to constantly be ordered higher by legislatures. The very nature of this debate is hot; however, regardless of sentiment towards the ceiling, the option of not moving it would create a government not able to pay for current programs. The Republicans and Democrats alike have no means, or want, to get out of this pinch. They keep moving the ceiling higher and higher.

The Act was affirmed by the U.S. Supreme Court and “is expected to provide insurance coverage for about 25 million Americans now lacking it, at a cost of about $1.8 trillion over the next decade (Przybyla & Wayne, 2013). The biggest question is how exactly America is going to pay for such an expensive program. According to “Obamacare’s Cost Revealed” by Lebon (2013) “our federal debt exceeds $16 trillion today…Obamacare will end up adding $6.2 trillion to the deficit over the next 75 years. That is roughly a 40% growth rate of expense burden on the American people. It’s safe to say the taxpayer revenue will not reflect that growth in support of the Act’s passage. The solvency of the Act is the most troubling aspect of the debate. How exactly do we plan to pay for such an increase in program expense? The economy is on the decline with taxpayer revenues stale. The Republicans who have acted to delay the implementation of the Act have been acting under uncertainty. Figures vary and even the academics of America cannot agree on the actual costs and economic implications of the Act.

The director of the Congressional Budget Office was quoted as saying “a shutdown per se doesn’t stop the Affordable Care Act.” I think the accuracy in his statement may be found in “per se.” I think it would also be a safe bet to say “enrollment per se doesn’t cost any money.” While enrollment of people in the Act can continue, a steady stream of taxpayer dollars will be needed to support its success. A government shutdown does in fact equate to an Affordable Care Act without any money to propel its provisions.

A government spending shutdown will directly impact spending within the Act in the short-run and long-run. The Center for Disease Control, for example, would have to stop “a variety of activities” (Przybyla & Wayne, 2013). These programs have a mission of preventing diseases that are chronic, preventing Medicare fraud, and assistance for the elderly and disabled. The shutdown would have an immediate impact on some programs by slashing discretionary spending capabilities throughout government. The effects of a government shutdown would be felt immediately in the communities that need it most.

Finance leaders in organizations subjected to the Act’s mandates are spectators in a government debacle. They are watching and waiting until they have enough information to respond in a reasonable manner. Some companies are taking unknown risks by implementing managerial practices ahead of the information. For example, some companies are already cutting full-time hours to stay under the Act’s 30-hour threshold rule. That rule states that anyone who works 30 hours or more will receive “affordable” healthcare or the company will be subjected to increased taxation. The companies are simply guessing at the direction of the Act’s provisions as there is a strong Republican attempt to stop the Act altogether. Finance professionals are designed to project financial health and respond at a moment’s notice with strategic planning. Adaptability is what they do. The Act’s uncertainty drives an environment where finance managers want to act, but are paralyzed in a sea of uncertainty – not knowing what move is the next right move.

References

LeBon, C. (2013). Obamacare's costs revealed. Independent, 23(2), 1-7.

Przybyla, Q.  & Wayne, Z. (2013). Obamacare enrollment continues if government shuts down. Retrieved from, http://www.bloomberg.com/news/2013-09-23/obamacare-enrollment-continues-if-government-shuts-down.html