The Affordable Care Act Case Analysis

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One of the Affordable Care Act’s goals beyond providing affordable health care to all Americans was to create a competitive market for insurance. Before the enactment of the Affordable Care Act, many viewed health insurance as a failing market (Greany 2011). This view was based on the fact that not all who needed insurance were able to purchase it, along with other faults in the market structure. This created the need to ‘correct’ the market by fixing perceived faults and establishing regulations that would enhance conditions and competition. However, if the current conditions of the market continue in the fashion they are now, then the market will eventually be monopolized. A perceived fault of the health insurance market prior to the Affordable Care Act was having differentiated base insurance policies. This meant that not everyone had equal benefits, even if paying the same price for the similar…show more content…
The occurrence of mergers has been a recent headline in the news, as the five big for-profit insurance companies are looking at becoming the big three (Gottlieb 2015). These companies are actively seeking to do this in order to stay afloat in the market. Mergers are a result of the constrain put on earning a profit (Sorkin 2015). When companies merge, it allows them to spread their costs out onto the number of clients they have, resulting in savings for the company (Gottlieb 2015). While mergers may help these companies stay in business, they are also slowly decreasing the market size. Fewer companies selling insurance results in less competition, fewer options for consumers to purchase insurance and higher cost for the products. If mergers continue, there is a possibility that a monopoly could arise, giving complete control of the market to one company. This may be avoided as long as there are other equal competitors still active in the
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