Healthcare Finance in the United States
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Healthcare Finance in the United States
The United States is the country leading in the cost of healthcare around the globe, putting a strain on the economy of the country even as the quality of healthcare is not assured. The country has structures for the compensation of healthcare services in ensuring that people receive care. The cost of healthcare and amount of healthcare spending in the United States have been increasing; growing more than the economy is growing (Chernew, Cutler, & Hirth, 2003). The healthcare spending is higher in the country compared to other states even though a good number of the population is not insured, and healthcare quality is comparing low.
The healthcare services in the US get compensation from private insurance, out of pocket, government insurance and personal plans. Individuals or employers purchase private insurance from insurance companies commonly controlled by states (Lagoe, & Littau, 2012). The Affordable Care Act removes the caps that insurance companies have been basing for individuals depending on their care needs and discriminating while processing covers and setting premiums. The government provides coverage for specific groups or some cases and conditions that other insurance players are not willing to cover. Out of pocket, payments depend on the individual with options of health savings and flexible payments.
The healthcare system and finance of the United States are neither complexes with nor universality in the manner of services payment making the cost of health care spur (Chernew, Cutler, & Hirth, 2003). While some get coverage in an easier way, some get it hard being insured by qualifying for state either cover or the insurance agencies. It is utterly understandable that the health finance is through mobilization of funds and the allocation through state-organized programs. The allocation can be for specific people, regions, healthcare services that government seeks to cover, or those that are in government agenda.
Distribution of National Health Spending and Insurance Coverage
Paying for healthcare in the USA has shifted with the rising cost and expenditures and avenues are being explored to cover the need for finance in healthcare while at the same time balancing the need for services. According to Lagoe, & Littau, (2012), Hospital care receives the highest funding comprising of over a third of the total expenditure on healthcare followed by a physician and clinical services at a quarter of the total cost. Prescription and drugs only accrue a tenth of the total spending as compared to nursing care, other care, and dental services that amass to about 5% each of the total expenditures. At the lowest are the homecare facilities, medical products, and other professional services, which fall around 3% each of the total cost.
The issue of healthcare funding has increasingly dominated the health policy agenda in the US (Galer, 2012). The government offers a proportion of coverage to selected individuals based on the criteria set, with those who are working being covered by the employers through a shared cost. While some enjoy the full coverage, others pay a percentage of the total charges or an amount for administrative expenses. Up to two-thirds of the general populations are under private insurance cover as compared to a quarter, which has an admission to the government cover. Medicare coverage that covers the elderly take up to 13% of the total coverage with Medicaid for low-income mothers and children and the physically challenged makes about 10%.
Impact of the Patient Protection and Affordable Care Act
The Act focuses on ensuring expanded coverage and accessibility of healthcare services to all mandating the states to implement the program (Galer, 2012). The Act expands Medicaid, and State governments are expected to cover some costs that arise and those within poverty level will receive coverage. The Act focuses on expanded coverage with improved quality and may encourage seeking of services though those mandated to participate may get reduced services.
Origin of Employment-Based Health Insurance
The employment-based insurance system is more than 100 years old in the United States, beginning when companies started offering doctor services to employees. In the wake of the 20th century, most insurance only covered hospital rooms and ancillary services. The coverage started increasing when the labor board started freezing funds and companies were using insurance coverage as a way of attracting workers to recruit (Ketsche, 2005). The system-helped companies retain employees as unions supported the system, and the cover was not a subject to taxation. The system has since grown to be deductible under employers’ expense and is not included in workers taxable income. The insurance system is traceable back to late 18th century and is under improvements to stand the changes of time.
Difference between Fully Insured and Self-Insured Health Plans
The difference between the plans majorly depends on who takes the risk and characteristics of the scheme. In a fully insured plan, the employer pays a premium on behalf of the employee to an insurance company that assumes the risk of providing health services to the events covered (Trotter, 2011). Under this plan, the premium varies and depends on different factors that are pre-determined. Under the self-insured plan, the employer other than an insurance agency includes the risks of events by directing pays to healthcare claims by providers instead of paying for premiums (Trotter, 2011). An agent can be contracted to administer the plan and direct the funds for compensation but the employer bears the risks of coverage, and the rates vary depending on services provided.