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Health Financing: PPACA, HIPAA, MMA Comparison


The Health Insurance Portability and Accountability Act (HIPAA) was passed and approved by both the Senate and the House in 1996. The act was put in place to ensure that there was continued delivery of health care for the citizens through the provision of health insurance coverage. Emphasis was made on accountability in the health sector. This was to be achieved through combating fraud cases in health care delivery. On the other hand, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) were enacted in 2003 with its major focus on the launching of Medicare Part D. These two acts outlined effective procedures that would directly make positive contributions to the health delivery system in the United States. This paper will focus on the attributes that are conflicted by the Patient Protection and Affordable Care Act (PPACA) when compared with the two acts.

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The Patient Protection and Affordable Care Act (PPACA) was one of the reform agendas that President Obama’s administration intended to introduce in the health sector within four years. The act was comprised of several health provisions all intended to improve the level of health care delivery to the people of the United States. Chovan, Chen, & Buck (2009) identified that “the law includes a large number of health-related provisions to take effect over the next four years, including expanding Medicaid eligibility, subsidizing insurance premiums, providing incentives for businesses to provide health care benefits, prohibiting denial of coverage/claims based on pre-existing conditions, establishing health insurance exchanges, and support for medical research”. All these objectives required an efficient funding mechanism for them to be effective. These funds were to be obtained through taxation, fees payment, taxation on indoor taxes, taxes on the high-income earners. Frum (2006) noted that “this law also proposed cuts to the Medicare Advantage program in favor of traditional Medicare, and fees on medical devices and pharmaceutical companies”. Therefore, PPACA identified all the possible means to fund health care delivery including penalties on those citizens who failed to acquire health insurance.

Medicare prescription benefit

PPACA differed from the Medicare Prescription Drug, Improvement, and Modernization Act in the perspective of Medicare prescription. Part D of the later outlined the Voluntary Prescription Drug Benefit Program; subpart 1, section 1860 of the act provided the information on eligibility and enrollment. Bell & Friedman (2005) noted a provision like “a new Medicare Part D is created, providing access to prescription drug insurance coverage to individuals who are entitled to Part A or enrolled in Part B”. The act provided private health care providers the opportunity to administer such a prescription. This provision does not exist in PPACA since this action does not have an outpatient prescription drug benefit. According to this act, drugs administration is restricted to the services provided by a physician or an authorized health care institution.

Medicare advantage plan

The passage of the Balanced Act of 1997 improved the quality of MMA in terms of Medicare. Medicare beneficiaries got the opportunity to receive Medicare benefits from private health insurance firms. This was an improvement in service delivery since the Medicare beneficiaries did not require to use the original Medicare plans referred to Part A and B. These plans were referred to Medicare + Choice. According to Frum (2006) “according to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the compensation and business practices for insurers that offer these plans changed, and Medicare+Choice plans became known as “Medicare Advantage” (MA) plans”. However, the PPACA decided to eliminate this provision in the favor of traditional Medicare.

Health Insurance Portability and Accountability Act of 1996

The act’s major focus was on accountability and waste reduction in the health care sector as a way to improve the success of health delivery. Frum (2006) identified that ‘to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance” were some of the major aims of the act. Most of the provisions in this act provide standards for which health care providers should comply with and failure to which penalties are provided for the same. According to Chovan, Chen & Buck (2009) Part C, section 1172 (a) of the act states that “except as provided in paragraph (2), any standard adopted under this part shall be a standard that has been developed, adopted, or modified by a standard-setting organization”. Section 1173 (a) of the act provides standards that ensure electronic exchange of transaction and data information. Chovan, Chen & Buck (2009) noted that this section states that “other financial and administrative transactions determined appropriate by the Secretary, consistent with the goals of improving the operation of the health care system and reducing administrative costs”. The difference between this act and the PPACA can therefore be noted since PPACA does not focus on accountability as one of the core values in management. Instead, PPACA’s main focus is to provide an efficient funding mechanism that ensures that there are adequate funds to provide a reliable health delivery system. Funds for this case are obtained from the citizens, pharmaceutical firms, and health providers through taxation.

Reference List

Bell, D. & Friedman, M., (2005). “E-Prescribing and the Medicare Modernization Act of 2003”. Journal of Health Affairs, 24 (5): 71-76.

Chovan, T., Chen, C., & Buck, K. (2009). Reductions in Hospital Days, Re-Admissions, and Potentially Avoidable Admissions among Medicare Advantage Enrollees in California and Nevada. Journal of America’s Health Insurance Plans, 4 (10): 42- 48.

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Frum, D. (2006). How We Got Here: The ’70s. New York, New York: Basic Books.

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