Disadvantages, Problems & Weaknesses of Affordable Care Act (ACA)

Health Care affordable care act

Affordable Care Act is among the popular insurance option in the healthcare insurance market. Primarily, ACA increases health insurance coverage for the uninsured and implements reforms to the health insurance market. This article will list several unforeseeable disadvantages, problems, and weaknesses of the Affordable Care Act (ACA).

The Affordable Care Act does not guarantee those who buy insurance on the exchanges of a competitive marketplace because it promotes competition by providing information to the consumers which enables them to see their coverage options. Also, the Act has encouraged competition based on price since the insurer has established a strategic pricing perspective particularly when it comes to setting rates for the consumers.

Moreover, the Affordable Care Act does not allow individuals to purchase insurance until they are sick. The Act limits open enrollment periods and demands that most people have their own insurance coverage (Cox et al.). This measure has been aimed at discouraging the behavior that could result in adverse selection.

Moreover, the Affordable Care Act does not allow insurers to charge higher premiums or deny coverage on the pretext of health status (Cox et al.). Thus, these measures do not guarantee the individuals purchasing insurance on the exchanges a competitive marketplace. Perhaps, this becomes a problem because it makes the healthcare sector an Oligopoly which could result in fewer innovations, higher prices, and forfeiture of social welfare. The market power would be shared among the available health providers who may, in turn, affect the competitive marketplace.

Adverse selection is a situation that occurs when the buyer lacks symmetric information prior to making a deal with a seller. On the other hand, moral hazard occurs when both the buyers and sellers have asymmetric information. However, one party changes behavior after the deal is made which leads to undesired results.

The concept of adverse selection contributes to imperfect competition since the buyers and sellers have access to different information. As a result, there will be a lack of efficiency in the prices of services rendered and the number of goods sold.



Cox, Cynthia et al. "Explaining Health Care Reform: Risk Adjustment, Reinsurance, and Risk

Corridors". The Henry J. Kaiser Family Foundation. N.p., 2016. Web.



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Date published: 22/09/2017
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