Wednesday, August 11, 2010

Health Care Reform Part I

“On March 23, 2010, President Obama signed the Affordable Care Act. The law puts in place comprehensive health insurance reforms that will roll out over four years and beyond, with most changes taking place by 2014.”

We are planning to run a mini-series examining different aspects of the Act. In this part, we will talk about the effects of expanding preventive services to millions. The Act states that for health plan years beginning on or after September 23, 2010, “All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance.”

How will it affect consumers?

Although it is a blessing to consumers, the actual cost of health-care might go up. Insurance companies will provide the preventive care at no extra cost, but in effect, they will raise the cost of providing overall insurance. So, consumers can expect that their overall deductible/coinsurance/copays to rise.

Good news for medical device manufacturers!

Demand for all devices that helps in preventive care will rise. As preventive care becomes more affordable, people will have regular routine care. So, demand for mammograms, colonoscopies and other preventive care are expected to rise and medical devices manufacturers will have to keep up with this extra demand. It is a very positive news for medical device manufacturers.

How will it affect the overall society?

“Prevention is better than cure.” Early detection of diseases can prevent life-threatening episodes that need emergency visits or costly health-care procedures. So, preventive services are expected to lower costs of health-care, by preventing frequent emergency visits and other costly medical procedures. Hence, the overall benefit to the society is considered to outweigh the cost. However, many studies have pointed out that availability of improved preventive care has sometimes led to higher cost of care. It is stated that with the availability of better preventive care, doctors ask to have more preventive care services which shoots up health-care expenses. If preventive care services are available to consumers at no extra cost, then we do not see that problem. However, we also have to be careful that insurance companies do not shoot up the overall health-care costs, as mentioned earlier.

by Roy Tutu

About the author:

Roy Tutu is the publisher of the blog, “” – a blog that covers topics related to economics, business, society and entertainment.

Roy is an economist with a passion for writing. According to Roy, “our informal conversations leap from one topic to another, transforming and reshaping our views and opinions. is an avenue that brings in such informal discussions to curious readers.”

Contact Roy Tutu at

No comments: