Health Care Costs

Health care costs have become a major issue in the United States, both socially and politically. According to the U. S. Census Bureau, 50. 7 million people, or nearly one in six U. S. residents, were uninsured in 2009 (Kaiser Health News, 2010). This is because the high cost of health care has driven the cost of insurance out of the reach of many Americans. Contributing factors to the continuing increase in the cost of health care are the generally unhealthy lifestyle practiced by many Americans (obesity, smoking, etc. and the advances in medical technology.

Insurance companies have sought ways to keep the cost of health care down by offering incentives to insured persons to live healthier lifestyles and use less coverage, and by making discount arrangements with providers. The government has tried to make health care more accessible and affordable through the Social Security Amendments of 1983, the Health Insurance Portability and Accountability Act of 1996 and the current Patient Protection and Affordable Care Act.

Historical Trends in Financing Health Care Modern health insurance traces its beginnings to the 1920s when hospitals began providing pre-paid plans for hospitalization days to individuals and groups. These hospitals joined with the help of the American Hospital Association under the name of Blue Cross. Physicians then began to provide their own pre-paid plans under the name of Blue Shield (randomhistory. com 2009). As the market for health care coverage grew, the government encouraged participation in employer-employee benefit plans, which were often backed by strong labor unions.

In 1954, the Internal Revenue Code exempted employer and employee contributions to these plans (Thomasson 2003). In 1965 the government entered the health care arena as a third-party payer with the signing by President Lyndon B. Johnson of the Social Security Act Amendments. These amendments created Medicare, a health insurance program for the elderly, and Medicaid, a health insurance program for the poor. Almost 20 million people enrolled in the Medicare program in the first three years, greatly increasing access to medical care for the elderly (allamericanpatriots. comn. d. ).

This increase in access contributed to increased utilization and the rise in health care costs. These increased costs led both the public and private sectors to look at ways to contain health care costs. In the 1970s, as an early attempt to contain health care costs, insurers used usual, customary, and reasonable (UCR) as the guideline for provider reimbursements. The next phase of cost containment was the passage of the Social Security Amendments of 1983, which allowed Medicare to create diagnosis related groups (DRGs). DRGs reimburse hospitals based on the patient’s diagnosis, not on the services performed.

This led to the next major change in insurance plans, managed care, in which insurers negotiate lower fees for service for groups of people through health maintenance organizations (HMOs) and preferred provider organizations (PPOs). HMOs are provider groups that provide services to their members on a pre-paid basis. The healthier they keep their members, the more profit they make. PPOs are a group of providers within a network. Members must seek care from a provider within the network or pay penalties. Network providers agree to provide services for substantial discounts.

Both of these types of groups are still in use today. Impact of Health Care Costs on Access and Delivery As health care costs have risen, access to care has declined. According to the book Introduction to U. S. Health Care: The Structure of Management and Financing of the U. S. Health Care System, “One-third of physicians do not accept charity patients, 10 percent do not accept new Medicare patients, and 22 percent do not accept new Medicaid patients. ” This makes treatment in a physician’s office inaccessible to a large number of Americans.

Their only option is to seek treatment in the emergency department of a hospital where they cannot be turned away because of their inability to pay. Use of emergency room facilities is more costly than visits to doctor’s offices, so this model of care for the indigent contributes to the increasing cost of health care and insurance. Managed care as a cost containment measure has caused a shortage of primary care physicians. This definitely has had an impact on health care delivery as well as patient satisfaction. Primary care physicians are reimbursed at lower rates than specialists, so more medical students are choosing to specialize.

Fewer primary care physicians means those remaining have heavier patient loads and less time to spend talking to patients and building relationships, which leave both patient and physician less satisfied. The number of medical students going into primary care annually has dropped by more than half since 1997. (Carmichael 2010). As a result of the shortage of primary care physicians, there has been an increase in the use of nurse practitioners and physician assistants. However, these practitioners can also make more money working in specialty practices than in primary care practices.

Recommendations for Improvement The first recommendation would be to limit litigation against doctors. According to a study by the U. S. Department of Health and Human Services, 79% of doctors said that they had ordered more tests than were medically necessary; 74% have referred patients to specialists more often than was medically necessary; 51% have recommended invasive procedures to confirm diagnoses more often than they believed was medically necessary and 41% said they had prescribed more medication than they judged to be medically necessary, all to protect themselves against litigation (aspe. hs. gov 2003).

Obviously these unnecessary medical interventions are not only putting patients at risk, but are also adding to the already high cost of health care. The next recommendation would be to improve care at the primary care physician level. This would entail encouraging more medical students to make primary care their career choice. The way to do this is for insurance to reimburse primary care physicians on par with the way they reimburse specialists. Having more primary care physicians would allow them the time to talk to their patients and build a relationship.

Better care at the primary care level would translate to better health for most patients and less need for specialist visits and invasive procedures. Finally, it is recommended that competition be increased among health care insurers. Studies conducted by the Agency for Healthcare Research and Quality have shown that when insurers are forced to compete, the cost of health care insurance is lowered (ahrq. govn. d. ). Conclusion Health insurance has taken a long time to evolve to where it is today.

Both private insurance carriers and the government have taken steps to try to contain the rising cost of health care with limited success. Some of the steps taken to reduce health care costs have had the effect of reducing accessibility by limiting the number of doctors entering primary care. This has led to dissatisfaction for both doctors and patients. Limiting litigation against physicians, improving care at the primary level and increasing competition among insurers are all ways to help bring down the cost of health care.

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