The Affordable Care Act and American Bankruptcies


Although the intention of the government is to create a strong healthcare system, some mistakes, shortages, and problems might provoke new organizational, financial, or emotional challenges. In 2010, President Obama signed the Affordable Care Act (ACA) to provide more people with health insurance, expand the existing Medicaid program, and support the development of effective care delivery (Antos & Capretta, 2017). Racial disparities were minimized, and American society got an opportunity to focus on diseases and health improvement. However, current studies show that it is not enough to rely on the ACA, as this document is not able to eradicate bankruptcies that are frequently related to patient medical bills (Conley, 2019).

In addition to certain healthcare improvements in the delivery system, patients should understand how to protect their finances. Huge expectations are connected with the chosen legal event, and a number of questions must be answered. Financial concerns have different causes, and this paper uses the healthcare system as their background. The Affordable Care Act cannot solve the American economic crisis and leads to bankruptcies due to high medical costs, little protection for middle-income families, and the complex nature of common illnesses.

Background and Terms

When people visit hospitals or other medical facilities, they want to believe that the services they are offered are of high quality. However, social wants and needs are not enough to enhance care standards, and health law emerges to regulate the way of how healthcare services are introduced. This field aims at controlling the relationships between healthcare providers and patients. The first attempts to stabilize the sphere of health care were made in the middle of the 20th century.

Two federal programs, Medicaid and Medicare, were proposed and approved by President Johnson as a part of the Social Security Act (Fontenot, 2014). Another change was made several decades after when the Emergency Medical Treatment and Labor Act was created to compensate costs of care American citizens had to spend in an emergency situation (Fontenot, 2014). These statements showed that the current medical system was not perfect, and experts continue working to discover the best options.

After several laws were discussed and analyzed by the government, the ACA was developed to expand Medicaid eligibility under which insurers should accept all applications, and all citizens have to buy healthcare insurance. President Obama believed that this step could “protect citizens from the spiraling costs of medical care” (Sugden, 2012, p. 442). However, even being properly prepared and aware of potential social needs and healthcare obligations, the representatives of the government were not able to predict all threats and both negative and positive outcomes. Bankruptcy is one of the states individuals and organizations experience as a result of the ACA.

Medical debt is one of the possible causes of personal bankruptcy cases (Sugden, 2012). According to Baird and Morrison (2005), bankruptcy is a relevant unit for analysis of an owner and an operator, not the business itself. Therefore, the ACA’s impact on health care and the American economy (not on people only) has to be investigated in this research paper.

American Economic Crisis and Health Care

As well as any legal procedure or act, the ACA has its impact on the development of the economic situation in the country. On the one hand, it is normal for the law’s enactment to improve employment conditions and healthcare costs. On the other hand, many researchers admit that the ACA cannot successfully solve the problems associated with the economic crisis (Sugden, 2012). There are many cases when high medical bills are offered to patients with different social incomes, and their healthcare-related costs result in unpredictable but hardly avoidable financial crises (Conley, 2019).

For example, the Consumer Bankruptcy Project (CBP) showed that about 66.5% of all the bankruptcies cases between 2013 and 2016 (after the ACA was signed) were connected to the inability of families to pay for their medical bills (Conley, 2019). Similar results were demonstrated a decade ago when the supporters of the Bankruptcy Abuse and Prevention and Consumer Protection Act (BAPCPA) investigated the threats of medical depts. (Hackney et al., 2010). It was believed that the ACA expanded people’s opportunity to get their health insurance coverage and avoid risks of high medical costs.

At the same time, the benefits of the ACA cannot be ignored in terms of regulating the economic crisis of the country from the point of view of healthcare services. The offered law made it possible to limit total expenditures and ensure equal clinical services for the population, including $6,350 for a person and $12,700 for a family (Fontenot, 2014). Millions of Americans were satisfied with their access to affordable health insurance and continuous care without racial, financial, or social judgments. Still, the truth was that the majority of American consumers put high expectations with little financial responsibilities being determined by the government (Fontenot, 2014).

Many problems began discovering within the next year after the adoption of the ACA liked increased income tax rates either for healthcare facilities or for ordinary people. The economic crisis was hard to solve because the ACA provoked new bankruptcy cases by means of the existence of high medical costs, the lack of protection for some families, and the necessity to deal with complex diseases.

High Medical Costs

The establishment of high medical costs is one of the main reasons for a negative impact to be created by the ACA on the economic situation in the United States. When President Obama introduced the Act to the government, the goal was to limit costs on health care and protect the population against financial burdens. Health insurance helped people to predict costs for serious accidents or diseases that required specific treatment and medications.

Out-of-pocket expenses, as well as financial liabilities of patients, were reduced, and subsidies were distributed in accordance with families’ incomes and possibilities (Sugden, 2012). However, these limits were applicable to “new and not grandfathered health plans” only, and it was a question of time when all these plans could lose the required status (Sugden, 2012, p. 465). In other words, the ACA aimed at protecting patients against their medical costs, but there were many standards and concepts that were poorly explained.

At the same time, the already defined out-of-pocket limits did not include all indirect costs related to a disease or an injury. Therefore, many Americans should still pay for transportation or even child care because it was not a separate term for insurance. Children were under the protection of their parents’ or other caregivers’ insurance plans, and it turned out to be difficult to understand what healthcare services could be offered to children for free. Many families were challenged by the necessity to take care of their children. Fontenot (2014) shared an example when a mother became a cost-conscious consumer. The woman had to deal with her skepticism over the diagnosis given by the doctor, the price of a drug, and the need for an antibiotic for a child who had no fever (Fontenot, 2014). The ACA had to remove all these questions and barriers in care, but, on the contrary, more cost-related concerns emerged.

The expansion of Medicaid was the desired outcome and improvement under the legacy of the ACA. However, this step did not decrease the number of personal bankruptcies, and the situation remains unstable either in states where the program was successfully expanded or in regions where changes are still required (Conley, 2019). Some organizations and researchers believe that bankruptcy could be regarded as “a fresh start” for all people regardless of their previous experiences and knowledge (Conley, 2019, par. 16).

However, the level of financial and emotional costs is impressively high, and some families are not able to cope with all bankruptcy-related outcomes and “stop the financial bleeding that the healthcare system imposes” (Conley, 2019, par. 16). Medical workers, including nurses, doctors, and administrators, do everything possible to protect patients, offer them the best services, and create a healing environment. However, some financial aspects are hard to solve, and high costs bother millions of Americans, either insured or uninsured.

Middle-Income Families Opportunities

Although the ACA underlined the importance of health equality for Americans, this law questions the level of protection that can be offered to middle-income families. Along with a number of unpredicted and uncovered by the ACA services, citizens turn out to be responsible for their health and its enhancement. Their financial opportunities identify their possibilities in the healthcare field. Sugden (2012) calls such situations “double whammy” when medical costs are raised, and even the ACA is not sufficient to protect against “a budgetary crunch” (p. 466). Families with high incomes do not recognize this problem in their healthcare services and are ready to pay as much as it is required by the system. However, low- and middle-income families do not feel the promised protection.

There are many examples of how the ACA put people under threat. David Himmelstein (as cited in Conley, 2019) explains that the ACA did not remove all financial loopholes and economic deductibles, and it could happen that one illness puts the whole family in the poorhouse. If the disease requires a prolonged treatment plan, a person should have sick leave. However, some companies are not ready to pay for such leaves, and, as a result, fire employees. Families lose the only source of income, become unable to pay for treatment, and call themselves bankrupts.

Sometimes, it is hard for society to recognize the line between benefits and shortages imposed by the ACA. On the one hand, Sugden (2012) explains the ACA as an opportunity for more than 32 million uninsured and low-income people to become a part of the healthcare marketplace and choose between consumer-choice health plans. It means that people who are not financially stable could rely on the law, ask for help, and cover their medical expenses.

On the other hand, the same author admits that despite the existing changes and improvements, there is always someone who loses in this system and faces certain financial troubles (Sugden, 2012). In fact, the ACA just encourages the industry and makes people obliged to enroll in health insurance. Therefore, middle-income individuals should search for additional services to pay for their insurance to be confident that they can receive help without other negative consequences.

Illness Complexity

Finally, in many cases, the medical expenses depend on the quality of a disease a person has and the required treatment plan. Nowadays, a variety of symptoms are combined to develop the most accurate diagnosis, including the personal histories of patients, environmental factors, genetics, and lifestyles. In some cases, people of the same social status and similar diseases are in need of different treatments due to allergies, family anamneses, or access to equipment.

The ACA ensures that patient needs are met in any planned network, but many aspects remain poorly covered. For example, the responsibility shared by insurance companies to assist patients includes surgical and in-hospital treatment (Sugden, 2012). Still, consumers must (or recommended to) also pay doctors and other medical staff for other routine care services, the costs of which depend on the severity of the diagnosis. There are many unnecessary services that create problems of inefficiency and waste in the healthcare system (Antos & Capretta, 2017). Some hospitals are ready to deal with these challenges and investigate the quality of disease to predict all possible costs. However, some regions do not pay close attention to these concerns.

Health spending is a complex issue in the American system of health care. Organizations and providers aim to investigate all aspects of services to understand how to decrease the number of unexpected costs and protect patients against losses when their health is under threat. Conley (2019) investigated the possibility of the program known as the Medicare for All system to shorten medical bankruptcies. This idea is based on the first-dollar coverage rule for everyone in the United States (Conley, 2019). However, today, the Trump administration demonstrates its unwillingness to promote equality by shortening Medicaid. Therefore, the quality of care is still a questionable issue, and people are afraid to ask for medical help because one illness could be the cause of bankruptcy, job loss, and other problems.


In general, this research paper shows that the ACA is characterized by a number of positive and negative outcomes on patients and the quality of care they should expect. The intention to reduce costs, provide all American citizens with similar services, and deliver medical help quickly and fairly cannot be ignored today. The government under which the ACA was signed set clear purposes and demonstrated its care for people. However, the system continues changing today, revealing new holes in the law, as well as in the healthcare system. High costs of medical services are hard to eliminate. As a result, middle-income families are not always able to pay for their services.

Parents should improve their knowledge about child care to make sure children’s treatment does not lead to their bankruptcies. A variety of diseases and diagnostic tools contribute to the introduction of different treatment plans according to which some families do not face serious financial problems, and some individuals lose their jobs and regular incomes. The US healthcare system is not perfect, and its ACA serves as evidence that even the best intentions do not promise good results.


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Baird, D. G., & Morrison, E. R. (2005). Serial entrepreneurs and small business bankruptcies. Columbia Law Review, 105, 2310 – 2368. Web.

Conley, J. (2019). Despite promises of ACA, study shows two-thirds of personal bankruptcies still caused by illness and medical bills. Common Dreams. Web.

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Sugden, R. (2012). Sick and (still) broke: Why the Affordable Care Act won’t end medical bankruptcy. Washington University Journal of Law & Policy, 38, 441 – 474. Web.