The Affordable Care Act (aca): Can Obamacare Regulate the Rn Nursing Market?

The Affordable Care Act (ACA): Can ObamaCare Regulate the RN Nursing Market?

HCAD 640 Financial Management For Health Care Organizations

Professor Katherine Anderson, PhD.

Taina Hogu

Spring 2013

Introduction- The RN Nursing Market Shortage

With the demand for nurses greater than supply, experts are asking ‘who will treat patients under ObamaCare?’ (Tobler, 2012). ObamaCare otherwise known as The Affordable Care Act (ACA) promises to insure about 32 million more Americans by 2019 without a clear plan as to who will treat them (Tobler, 2012). In 2008, the U.S. had a shortage of 135,000 registered nurses (RN) and with many nurses retiring within the next decade, that number will only grow exponentially. In 2010, the demand for RNs was 2.35 million with a supply of 1.95 million; which comes out to a shortage 400,000 of nurses (HRSA, 2004). By 2015, that shortage will rise to 680,000 and to 1 million by 2020. With the nursing shortage expected to increase, the present paper investigates whether or not the ACA can stop the shortage. Conversely, if the ACA can’t stop the shortage than what can it do to increase RNs nationwide?

The nursing market is a sub-market of the larger health market consisting of institutional, educational and manpower markets which nursing falls under. The overall health care market is plagued by high costs, inadequate care, and lack of insurance for many Americans (Feldstein, 1993). Despite profits hospitals bring in, many the nursing manpower to treat current and newly covered patients under ObamaCare. The fact is, hospitals have long ago “colluded” to fix RN nursing wages thus prohibiting more nurses to enter into the market as would take place in a “free” market. Typically, demand drives wages upward and with more demand for nurses the higher the wage (Feldstein, 1993). However, if hospitals are exerting control over the market by “fixing” wages, then the nursing market is a “quasi market” with external factors influencing supply and demand.

Instead of paying RNs market rate wages, hospitals instead hire foreign RNs, licensed practical nurses (LPN) or nursing assistants considered substitutes within the manpower market (Feldstein, 1993). However, research shows that the more educated nurses are, the better the care patients actually receive (Wakefield, 2010). Therefore, it would be beneficial for hospitals to employ more RNs versus LPNs and nursing assistants. Hospitals also hire a lot of agency nurses who are temporary nurses or casual employees but not trained to work full-time at a given hospital. Although visiting nurses fill a void and accomplish tasks that full-time staff do, they are not accounted in the hospital’s vacancy rate which remains high nationwide. Since RNs are credited for improving quality of care, and compose the largest group of nurses within the nursing workforce, the present paper focuses on the RN labor market activity (Feldstein, 1993).

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