Explain health care costs in the United States.
Overview
Financial aspects of the health care industry are introduced in Week Four. As health care spending has continued to increase over the years, it is imperative that health care administrators understand how it is financed. In the United States, several funding sources are available: publicly funded insurance, privately funded insurance, cash, and charity care.
Insurance is the main source of financing in the health care industry today, and it is important to be knowledgeable of the types of health insurance models available. Some examples include marketplace plans, managed care plans, Medicare, Medicaid, Children?s Health Insurance Program (CHIP), Program of All-Inclusive Care for the Elderly (PACE), worker’s compensation, TRICARE, Veterans Health Administration, and Indian Health Services. As one learns about these different models, it is necessary to understand why they were created. Government funded health insurance models and programs were created to address a vulnerable population whose health care needs were not being met. Privately funded insurance models were purchased either by a group or an individual as a financial protection against loss and risk should a catastrophic health incident occur.
Regardless of the type of health care financing, challenges arise. Health care administrators are continually asked to find solutions to control costs and understand and implement legislative changes as they are adopted into law.
What you will cover
1. The Financial Aspects of Health Care
a. Explain health care costs in the United States.
1) Financing
a) Who pays for the health care services?
b) Who produces or provides the health care service?
c) How much the producer or provider will be paid for this health care service?
2) Primarily funded through insurance, which is a protection against loss and risk should a catastrophic incident occur
3) Ways health care costs are covered
a) Publicly funded insurance
b) Privately funded insurance
c) Individual out-of-pocket expenses
d) Charity care: care that is provided for free to needy individuals who cannot afford the costs associated with receiving care. After the Patient Protection and Affordable Care Act of 2010 (PPACA) was implemented, it is estimated that 25 million to 30 million people will still need charity care. According to Shi and Singh (2015), the following individuals might be in need of this type of financing:
(a) Illegal Immigrants
(b) Young, healthy individuals who choose not to purchase health care insurance
(c) People who do not file income taxes and do not qualify for Medicaid
(d) Exempt people under the PPACA
b. Identify types of health insurance.
1) The marketplace (www.healthcare.gov) exchange divides insurance into five categories of plans based on cost: bronze, silver, gold, platinum, and catastrophic.
2) Private insurance can be obtained through a group or by an individual.
a) Managed care plans: insurance designed to try to control costs by setting up a network of providers and services. Flexibility of options is associated with cost in these plans.
(a) Health maintenance organization (HMO): must see a primary care physician before seeing a specialist (referral)
a. Staff model: hires physicians and providers as employees to perform services for members of the HMO
b. Group model: contracts with a group of physicians and providers to exclusively perform services for members of the HMO
c. Network model: contract with a group of physicians and providers to perform care for covered patients, but they can also see patients who are not members of the HMO
d. Independent practice association (IPA): contract with a group of physicians and providers in private practice to see HMO patients at a contracted rate per visit
(b) Preferred provider model (PPO): Networks are established with physicians and providers who agree to see HMO patients at a reduced or discounted fee schedule. No referrals are needed to see a specialist. Higher costs to patients if they seek treatment outside of the network.
(c) Exclusive provider organization (EPO): Similar to a PPO, but restricts members to the network or exclusive provider when seeking care
(d) Physician hospital organizations (PHO): When a hospital, surgical center, or other medical providers contract to provide health care services for an HMO’s members
(e) Point-of-service model (POS): Hybrid of HMO and PPO models. Member costs are lowered if they seek services within the network, but are not restricted to using only network providers
(f) Provider-sponsored organization (PSO): Physician-provider organizations created to contract with purchases to deliver health care services. They assume insurance risk for their beneficiaries.
(g) High-deductible health plans and savings options (HDHPs) or consumer- driven health care: No restrictions to networks and can self-refer to see a specialist. Large out-of-pocket expenses to member as deductible must be met before insurance benefits begin to cover costs.
3) Government?publicly funded insurance plans are often a type of managed care model.
a) Medicare
(a) Eligibility is determined by the federal government. The plan currently covers individuals 65 years of age and older. Regardless of age, it covers disabled people and those with end-stage renal disease.
a. Part A?hospital insurance that covers hospital care, skilled nursing facility care, hospice, and home health services.
i. Social Security taxes
ii. Medicare trust fund
iii. Noncontributory
b. Part B?voluntary medical insurance that is used to cover physician services, clinical research, ambulance services, durable medical equipment, mental health, inpatient, outpatient, partial hospitalization, getting second opinion before surgery, and limited outpatient prescription drugs.
i. Part B premiums
ii. General tax revenues
iii. Contributory
c. Part C?Medicare Advantage is a managed care model that covers services provided in Part A and Part B.
ii. Part B premiums
iii.ii. General tax revenues
iv.iii. Contributory: often more than Part B
d. Part D?prescription drug benefit created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
i. Prescription drug coverage
ii. Premiums
iii. Choices
b) Medicaid
(a) Definition and eligibility set by each state
(b) About 40% of long-term care spending
(c) Each state designs and administers
(d) Minimal federal requirement for each state
(e) States encouraged to expand Medicaid through PPACA but not mandated
(f) Funded through joint federal and state contribution
c) The Children?s Health Insurance Program, formerly the State Children?s Health Insurance Program
(a) Low-cost health insurance for children who are not eligible for Medicaid but whose guardians cannot afford private health insurance
(b) Financed jointly by federal and state governments and administered by the states
(c) States determine eligibility, benefits, and payments
d) Program of All-Inclusive Care for the Elderly (PACE) (www.medicare.gov/your-medicare-costs/help-paying-costs/pace/pace.html)
(a) Authorized by the Balanced Budget Act of 1997
(b) Helps individuals in need of nursing home level of care to receive these services in their home, community, or a PACE center
(c) Implemented at the state level; however, not all states offer this program
e) Workers? compensation
(a) Paid 100% by the employer
(b) Covers job-related injuries or illness
(c) State run program
f) Military?TRICARE
(a) Military Health System Review is a 2014 report that examines the military health care system. (http://health.mil/Military-Health-Topics/Access-Cost-Quality-and-Safety/MHS-Review)
(b) TRICARE covers active duty, disabled, and retired military
(c) Depending on plan selected and military status, there may be enrollment fees, deductibles, and co-pays
g) Veterans Health Administration
(a) Treats veterans who meet eligibility requirements
(b) If eligible, assigned priority group (1-8) to determine enrollment
(c) Treat family members of veterans with war-related injuries and disabilities
Programs and coverage http://www.va.gov/H
? Summarize each video in your own words with 50 word count or more.
? Films Media Group (2009). Employer Provided Health Insurance (02:58) From Title: Sick Around America.
? Films Media Group (2008). Health Insurance Considerations (01:28) From Title: Reinventing Healthcare-A Fred Friendly Seminar.
? Films Media Group (2005). Reasons for Rising Health Care Costs (01:56) From Title: Peter Jennings Reporting: Breakdown?America?s Health Insurance Crisis.
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