The US healthcare system is internationally recognized as a multi-payer system. This is due to the fact that, like most other developed countries, the US health care system employs both public and private insurers. However, unlike most other countries, the US is characterized by the dominance of its private insurers over public providers. Statistics from 2003 showed that 62% of health insurance coverage was employer-sponsored (private) while only 15% came from public sources such as the government’s Medicaid and Medicare program (Chua, 2006, p.
1). The public component of the US Healthcare system is primarily represented by two programs: Medicare and Medicaid. Medicare “is a federal program that covers individuals aged 65 and over, as well as some disabled individuals” (Chua, 2006, p. 2). It is considered a single-payer program that performs the insurance function of reimbursement. It is financed through several means, primarily via federal income taxes, shared payroll tax (employer and employee) and individual premiums. It is sectioned into several parts namely parts A to D.
Part A covers hospital services, part B covers services provided by physicians, part C for Medicare Advantage (“HMO’s that administer Medicare benefits” [Chua, 2006, p. 2]) and part D which provides prescription drugs benefits. Medicaid on the other hand is “a program designed for the low-income and disabled. By federal law, states must cover very poor pregnant women, children, elderly, disabled, and parents. Childless adults are not covered, and many poor individuals make too much to qualify for Medicaid” (Chua, 2006, p.
2). The program is under the responsibility of the District of Columbia and each independent state. Eligibility is flexible thus states can choose to increase/decrease the qualifying criteria for Medicaid benefits. It is jointly financed by state and federal government taxes. Under the program, the government matches at least 100% of every dollar spent by the state on Medicaid services – accounting for 57% of Medicaid costs. Medicaid benefits are comprehensive and include prescription drugs.
However, its low reimbursement rate is an obstacle towards finding providers that accept Medicaid (Chua, 2006, p. 2). Aside from the two aforementioned programs, the US federal government also has the following public systems: first is the State Children’s Health Insurance Program (S-CHIP) which insures children whose family’s income is above that of Medicaid qualifications but is too little to afford private health insurance; and second is the Veteran’s Administration, a program for veterans of the U. S.
military where “[h]ealth care is delivered in government-owned VA hospitals and clinics…funded by taxpayer dollars and generally offers extremely affordable (if not free) care to veterans” (Chua, 2006, p. 2-3). The private component of the US health care system on the other hand is composed of employer-sponsored insurance and private non-group providers. Employer-sponsored insurance (also known as group market plans) is the primary way Americans gain health insurance as it is usually offered as part of the benefits package for employees.
The insurance plans are administered by either for-profit or non-profit private insurance companies such as Aetna for the former and Blue Cross for the latter. However “[a] special case is represented by companies that are “self-insured” – […] they pay for all health care costs incurred by employees directly…[T]he company contracts with a third party to administer the health insurance plan” (Chua, 2006, p. 3). These plans are financed primarily via payments of premiums by both employer and employee.
Non-group providers, also known as an individual market, covers the retired, the self-employed and those unable to get insurance from employers. Unlike employer-sponsored insurance, individual market health insurance companies are allowed to deny coverage based on pre-existing health and financial conditions (Chua, 2006, p. 3). Current Status The US healthcare system is currently the subject of much discussion. At one side it is heralded as one of the best systems in the world.
For the longest time it was known to offer access to the latest in technology and medical advancements and the best medicine can offer. However, in stark contrast, recent developments in the current political and fiscal environment have brought the U. S. healthcare system into a different light. Politicians and health insurance companies could no longer “blithely proclaim that the U. S. had the best healthcare system in the world…as its major shortcomings become more visible” (Bureau of Labor Education, 2001, p. 1) in the light of the present economic problem.
The system is plagued with several issues that stain its former glorious image. The current system is now characterized as being the most expensive worldwide to the point it has become inaccessible and unsustainable. Furthermore, despite its high cost and access to state-of-the-art technology, the quality of healthcare delivery has markedly gone down. Medical errors abound as a result of restrictive coverage; unnecessary and harmful over consumption is rampant; and the inability to acquire coverage is a continuously growing problem. II. Statement of the Problem and Hypothesis
The Problem As previously mentioned, there are several issues facing the current healthcare system the US employs. Heading the list of complains is the issue of high healthcare costs. Figures from recent years already indicate that the US spends 16% of its Gross Domestic Product (GDP) on healthcare expenditures – a figure that is 8-10% higher than most industrialized nations spend. Since the year 2000, premiums for employer-based insurance has risen 81%, straining the budgets of the average American family whose income has only risen 11% in the same time period.
The financial stress does not limit itself to the pockets of the American families but also extends to local businesses and public budgets. Already, the system is found to be markedly wasteful and inefficient (Davis et al, 2007, p. 7&13). The second concern involving the healthcare industry is a direct but unexpected consequence of the cost problem. Families, politicians and healthcare leaders are alarmed at the unequal and decreased quality of healthcare services being provided. Health economists are puzzled by the behavior the industry has displayed over the past years as the industry [d]evolved.
Instead of following the basic fundamental rule of economics that increased costs should result in higher quality product and services, the opposite is what Americans experience. Increased expenditure in healthcare resulted in over consumption resulting in increased risk for and incidence of medical errors. HMO’s and Managed Care Organizations’ efforts in containing costs resulted in even higher prices and – worse – service limitations. Presently, the average insured American has little control of what services are available to him/her as payers continue to contract and limit providers.
Third, and definitely not the least, is the growing problem of access. As healthcare costs continue to rise by leaps and bounds while wages are left behind in snail-pace, coverage throughout the years has become unsustainable. Yearly double-digit increases in premiums have led workers to forego wage hikes in favor of better premium-share options with employers. The high cost of premiums puts a large number of families at risk of losing coverage – potentially adding to the growing number of uninsured which numbers at a staggering 45 million (Chua and Casoy, 2007, p. 2).