By Sean Williams, The Motley Fool
Filed under: Investing
With the passing of the Patient Protection and Affordable Care Act in 2010, also known in shorthand as Obamacare, lawmakers and President Obama ushered in the winds of change in the health-care industry. Having witnessed the successful implementation of socialized and subsidized health care in Canada and Switzerland — and seeing the average health-care premiums paid by employers and individuals rise by 62% and 82%, respectively, from 2000 to 2010 — the time had come in 2010 to make sweeping reforms… and the PPACA was it!
Both sides of the aisle have presented very convincing and heated arguments over the past couple of years about why Obamacare is right or wrong for America. It nearly didn’t make it into law when the constitutionality of its individual mandate, as well as other aspects of the bill, was brought into question in the highest of all U.S. courts — the Supreme Court – last year. However, in June the Supreme Court ruled in favor of upholding the validity and nearly all aspects of the PPACA, paving the way for its full implementation by 2014.
Source: WhiteHouse on Flickr.
Whether you’re for or against Obamacare, it’s clear that advantages and disadvantages exist. Today, I plan to focus on the advantages of Obamacare and lay out five ways that it will succeed in bettering our health-care system.
1. It will reduce hospitals’ exposure to doubtful accounts.
Under our current system, no one is required by mandate to carry insurance. This means that any of the 48.6 million uninsured Americans as of the end of 2011, according to the U.S. Census Bureau, could walk into a hospital and receive stabilizing treatment in an emergency room since public hospitals can’t turn away people in need of care, regardless of their financial status.
Unfortunately for many hospitals, this has exposed them to a rather large annual provision for doubtful accounts (those accounts where treatment is given but payment goes uncollected). In 2012, HCA Holdings , the largest hospital operator in the U.S., generated $36.8 billion in revenue, but set aside $3.77 billion, or 10.25%, for doubtful accounts. The smaller rival of HCA, Tenet Healthcare , set aside less on a percentage basis in 2012, just 7.9% of total revenue. But it also saw its provision for doubtful accounts rise by nearly 10% year-over-year.
Obamacare will solve the majority of this problem by mandating that employers with more than 50 employees provide health-care solutions to their employees, and that individuals and small business with fewer than 50 employees get health insurance either themselves or through their state’s insurance pool. With fewer uninsured and underinsured people walking into hospital emergency rooms, hospitals will be setting significantly less aside for doubtful accounts and should ultimately see a boost to their bottom line. This boost in profits could be used to reward shareholders through share repurchases or a dividend payout, but, in all likelihood, it could be used to buy …read more
Source: FULL ARTICLE at DailyFinance