Understanding Costs – Response


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1. Marshawn

The Affordable Care Act is controversial as it has faced a surplus of pushback from the republican party. By many, it is known as Obamacare. It is a common debate amongst politicians. While enacted in 2010, the Affordable Care Act has been altered throughout the years. The Affordable Care Act impacts many aspects of healthcare. The ACA provided many structural changes in healthcare aimed at reducing healthcare costs while improving patient health outcomes. “The ACA was the largest federal health policy initiative since the creation of Medicare and Medicaid. It brought about structural changes in the healthcare system, which included efforts to improve access to health-care insurance” (National Academies of Sciences, Engineering, and Medicine, 2018, p. 39). Through this, patient-centered care has been a leading principle in healthcare. Providers, insurers, employers, and the government are the stakeholders that have transformed this act. The healthcare delivery system in the United States consists of numerous healthcare professionals, facilities, insurance plans, and purchasers.

Incentive Changes by the Affordable Care Act

The Affordable Care Act has changed incentives for insurers and providers. This can be seen through the implementation of accountable care organizations (ACOs), bundled payments, patient-centered medical homes (PCMHs), and value-based insurance designs (Lee, 2019). Alternative payment methods can make a difference in the provider’s incentives. Payment systems include salary, volume-based, per-service, case-based, and value-based payments are the four basic payment systems. “Provider revenues increase as more services are provided—and insured (and some uninsured) patients do not bear the full cost of the services—the fee-for-service model creates incentives to increase utilization of health-care services” (National Academies of Sciences, Engineering, and Medicine, 2018, p. 44). The Affordable Care Act brought forth efforts to improve access to health insurance through expanding Medicaid. The payment-reform provisions incentivized more efficient healthcare delivery models.
The ACA’s architects intended to encourage individual-market insurers to no longer compete based on their ability to avoid risk, but rather on their ability to deliver high-quality care at an affordable price” (p. 437). Risk corridors, reinsurance, and risk adjustments were implemented so insurers wouldn’t avoid consumers based on health status.

Accountable care organizations allow groups of clinicians, hospitals, or other healthcare providers to establish high-quality patient care. By participating in an ACO, these healthcare professionals assume responsibility for improving the cost of care and the quality of care for patients under Medicare. Penalties and bonuses are present to ensure that the quality of care aligns with the payment to value. Pay-for-performance models rely on structure. Set targets and goals need to be established.

Biblical Integration

To the biblical audience, a relevant scripture may be, “Don’t copy the behavior and customs of this world, but let God transform you into a new person by changing the way you think. Then you will learn to know God’s will for you” (English Standard Version Bible, 2001, Romans 12:2). In this scripture the Lord reveals to his believers that in this world they will face times where they will need to adapt, adjust, or change. This is relevant to the healthcare delivery system as, with the unique and complex structure, change is constantly occurring. This also relates to the Affordable Care Act. As healthcare changes often, the legislation and regulations do as well. It is essential to think of evolution as a way for the Lord to provide a new transformation.


In conclusion, the Affordable Care Act has made many efforts and changes since 2010. While doing so, the act has faced a great deal of adversity from a political aspect. The ACA allowed for reform in insurance and the care providers give. This change can be seen through pay-for-performance and other payment methods. It gives providers an incentive to provide better quality care. For insurers, the focus is on incentives to manage risk rather than avoid it.


Chernew, M. E., Conway, P. H., & Frakt, A. B. (2020). Transforming Medicare’s payment systems: Progress shaped by the ACA. Health Affairs, 39(3), 413–420. https://doi.org/10.1377/hlthaff.2019.01410Links to an external site.

English Standard Version Bible. (2001). ESV Online. https://esv.literalword.com/Links to an external site.

Lee, R. H. (2019). Economics for healthcare managers (4th ed.). Chicago, IL: Assoc. of Univ. Programs in Health Administration

National Academies of Sciences, Engineering, and Medicine. (2018). Health-care utilization as a proxy in disability determination. The National Academies Press. https://doi.org/10.17226/24969.


Health care in the United States is known for incredibly high costs, with decreased ability for populations to access or afford care. This led to the 2010 health care reformation of the Affordable Care Act (ACA). The implementation of the ACA has led to major changes for insurers and providers. With the ACA insurers are incentivized to have lower premium plans. Provider incentive was drastically changed from the traditional fee-for-service plan, with payment being focused on quality of care delivered.

Insurance agencies have been incentivized, like providers, to shift towards value-based insurance plans. This is designed to decrease the out-of-pocket costs for products and focus more on the value of care delivered (Lee, 2019). This method aims to help increase the quality of care provided, while decreasing the cost of care and therefore insurance. This has been in response to findings that 30% of consumer cost are attributed to “wasteful spending on low- or no-value services” (Perez et. al., 2019). These services do come with trade-offs. Determining the value of care can be an extremely difficult task and is largely based on consumer reports. A study done in 2016, in Northern California found that when consumers were presented with a value-based insurance design, skepticism of the design were met and caused conflict in implementing the design (Perez et. al., 2019). With more transparency and education of healthcare costs, quality and anticipated outcomes for consumers the more autonomy consumers are able to have over health care decisions. This has been though to lead to higher quality of care and supports the idea of value-based insurance plans. However, there is not sufficient evidence to support this idea (Perez et. al., 2019). The goal of healthcare moving forward is to create more of a free market for consumers to be able to purchase health care plans and be autonomous in healthcare spending.

Providers are incentivized through providing value-based care. The higher the quality of care provided, the higher the amount reimbursed. This differs from the traditional fee-for-service model where consumers are billed based on procedures and supplies used. This method could create issues with wasteful or unnecessary procedures and spending, that would ultimately fall on consumers. Providers are now incentivized to use products such as the electronic health record (EHR), to make information sharing between providers and patients more efficient. This is an example of the changes and incentives that providers have seen with the implementation of the ACA. Providers are now focused on the experience and outcomes of the patients, instead of simply focusing on the current problem and procedure. Providers are now faced with ensuring that adequate information (via the EHR) is available for the patient, as well as the outcomes that occur post hospitalization (Berkowitz et. al., 2019). Providers are incentivized to focus on preventative medicine and prevent hospitalizations, rather than treatment focused. Re-hospitalization and health acquired illnesses now affect the payment of providers and hospitals, which have made the practices, values, and goals of care for providers.

Healthcare organizations, at baseline, are businesses. Current health reform focuses on placing more standards for not only the organizations, but insurances to provide affordable and quality care. From a biblical worldview this concept is relatable to the moral qualities that the Bible promotes. Ephesians 5:11 states “And have no company with the works of the dark, which give no fruit, but make their true quality clear” (English Standard Version Bible, 2001). This verse serves as a reminder that the product of work, especially in healthcare, should be focused on helping and benefiting the population. Focusing on value and incentivizing insurances and providers to decrease cost and focus on providing quality care are one of the goals of current health care reform.


Berkowitz, S. A., Baggett, T. P., & Edwards, S. T. (2019). Addressing health-related social needs: Value-based care or values-based care? Journal of General Internal Medicine, 34(9), 1916–1918. https://doi.org/10.1007/s11606-019-05087-3

English Standard Version Bible. (2001). ESV Online. https://esv.literalword.com/

Lee, R. H. (2019). Realizing the Triple Aim. In Economics for healthcare managers (4th ed., pp. 89–109). essay, Health Administration Press.

Perez, S. L., Gosdin, M., Pintor, J. K., & Romano, P. S. (2019). Consumers’ perceptions and choices related to three value-based insurance design approaches. Health Affairs, 38(3), 456–463. https://doi.org/10.1377/hlthaff.2018.05048

Each thread must demonstrate course-related knowledge. Include at least 2 peer reviewed citations and course text book (3 sources) and biblical integration

Course textbook: Lee, R. H. (2023). Economics for healthcare managers. Health Administration Press.

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