Health care should be funded by the government

Overview of health care funding

Of

Roger I. Fright

, MD, Merck Manual

Last full review / revision Mar 2020 | Content last changed in March 2020
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Considering health care costs is an important part of any health care planning.

  • Healthcare costs are higher in the United States than in other countries and are a drag on the economy as a whole.

  • Many consider these higher costs unsustainable.

  • Health care is financed through government programs (such as Medicare and Medicaid), private health insurances (usually through the employer) and by the patients themselves (out of pocket).

Healthcare in the United States is technologically advanced but expensive. In 2018, healthcare costs were approximately $ 3.6 trillion (1). The amount per capita spent on health in the United States is higher than in other countries. In the United States, the share of health care costs in gross domestic product (GDP) is also significantly higher than in any other country in the world. (GDP is the value of all goods and services produced in a country. GDP is the main measuring instrument that government agencies use to monitor the short-term development of the economy.) According to the Organization for Economic Co-operation and Development (OECD), the United States in 2018 accounted for around 16.9% of GDP for health care. In comparison, the next countries follow with 12.2% (Switzerland) and approx. 11% (Sweden, Germany, France and Japan), while the average of the 35 OECD countries (OECD35) is 8.8% (2nd ).

The higher healthcare costs can have negative effects such as: B .:

  • When government health care costs rise, the government deficit grows and funds available for other programs decrease.

  • When people spend more on health care, they have less money to spend on other things, and when health insurance is paid for by their employer, they get less money.

  • When employers have higher health insurance costs, the cost of their goods and services increases, which can lead to jobs being relocated to countries with lower health insurance costs.

  • Many people cannot afford health insurance. If a person who does not have health insurance receives health benefits, he or she cannot usually pay for them financially. In this case, the costs of care are borne by those citizens who pay into the health system. It is also possible that the person without health insurance does not seek medical help, which can lead to a serious illness that could have been prevented.

  • Medical bills that are not covered by health insurance can lead to bankruptcy.

Although the United States spends more per capita on healthcare than any other country, many people in the United States do not have health insurance. The number of uninsured people has decreased due to the Affordable Care Act (ACA), which came into effect in 2014, but recent changes to the ACA such as the abolition of the individual mandate in 2019 (the requirement that residents of the Buying health insurance in the United States) could reverse this trend. In contrast, people in other developed countries have universal access to health insurance, even though health costs are lower.

For example, healthcare spending in the United States is currently in flux as the state seeks ways to increase the number of people on health insurance and reduce their costs.

Bibliography

Health services

Health care providers (e.g., doctors and hospitals) in the United States are paid by:

  • Private insurance carriers

  • State health insurance programs

  • Patients (personal, funds out of pocket)

In addition, the state provides some health services in public hospitals and clinics that are staffed by state employees. Examples are the Veteran's Health Administration and the Indian Health Service.

Private insurance carriers

Private health insurance can be obtained from commercial and non-commercial providers. Although there are many health insurance plans in the United States, the choices in each state are usually limited.

Most private health insurances are purchased by companies as a benefit for their employees. As a rule, the costs are shared equally between the employer and the employee. The amount paid by the employer for the employee health insurance does not have to be taxed by the employee. In fact, the state subsidizes this insurance to some extent. Citizens can also pay for their private health insurance themselves.

The Patient Protection and Affordable Care Act (PPACA or Affordable Care Act [ACA] for short), which came into force in 2014, is a health reform law in the United States that aims to improve the availability, affordability and use of health insurance, among other things (see also the official ACA - US Department of Health & Social Services website). Many provisions of the ACA include an expansion of private health insurance. It creates incentives for employers to offer health insurance and originally required that almost all people who are not covered by their employer or a government health insurance program (e.g. Medicare or Medicaid) take out private health insurance (individual mandate). In 2019, the individual mandate came to an end with corresponding changes to the ACA.

The ACA requires the establishment of health insurance markets (exchanges), which are government-regulated, standardized health plans that are administered and sold by private insurance companies. Health insurance markets can be established in any state, or states can form a multistate exchange. The federal government can also set up a market (exchange) in states that do not do this themselves. There is a separate market for individuals and small businesses. The ACA requires that private health insurers meet the following:

  • no annual or lifetime limits on coverage

  • no exclusions in the case of already existing diseases

  • Children can remain insured with their parents up to the age of 26

  • limited price differences (premiums can only vary based on age, geographic area, tobacco consumption and number of family members)

  • Limitation of co-payments (based on the income of an insured person or family)

  • no revocation of insurance cover (so-called cancellation), except in cases of fraud

  • Coverage of certain defined preventive services without cost sharing

  • at least 80 to 85% of the premiums must be used for medical services

Recent and upcoming changes affecting the ACA:

  • Deduction of state funding of contribution tax credits and cost sharing

  • Expansion of Health Insurance (AHPs) and Reimbursement Agreements (HRAs), which are cheaper and less comprehensive than insurance on the ACA marketplace

  • Lower regulatory burden from the Notice of Benefits and Payment Parameters (NBPP), which gives US states more leeway in determining essential benefits

  • Cancellation of the individual mandate

These changes serve to reduce government and individual health spending. However, some authors fear that this will not reduce overall health care expenditure and that it may increase the number of uninsured or underinsured people.

State health insurance programs

The largest government insurance programs are:

Other government programs are:

  • State Children's Health Insurance Program: This program was created to cover uninsured children when their parents' income is below average but too high to be accepted into Medicaid. The federal government grants the individual states reimbursement funds for the health insurance of these families (see also InsuredKidsNow.gov).

  • Children and Adolescents with Special Health Needs: This program coordinates funding and resources to care for people with special health needs (see also Children with Special Health Needs - Maternal and Child Health Bureaus of the Health Resources & Services Administration).

  • Tricare: This program cares for approximately 9 million active and retired military personnel and their families (see also TRICARE - Defense Health Agency (DHA), part of the military health system).

  • Veterans Health Administration (VHA): This state-run health program provides comprehensive health benefits to eligible military veterans. Around 9 million veterans are insured with it (see also: Veterans Health Administration).

  • Indian Health Service: This government hospital and clinic program provides insurance coverage for approximately 2 million American Indians and Native Americans who live on or near a reservation (see also Indian Health Service - Federal Health Program for Native Americans and Alaskans).

  • The Federal Employee Health Benefits (FEHB) program: This program allows private insurance companies to offer insurance plans within the guidelines set by the government for the benefit of active and retired federal employees and their survivors (see also the Federal Employee Health Benefits) - US Office of Personnel Management).

  • Substance Abuse and Mental Health Services Administration (SAMHSA): This agency within the US Department of Health Care and Social Services directs efforts to further develop behavioral medicine measures nationwide (see also SAMHSA.gov).

  • Refugee Health Promotion Program: This program offers newly arrived refugees short-term health insurance (see Refugee Health Promotion Program (RHP) - US Department of Health and Social Services, Administration for Children & Families, Office of Refugee Resettlement).

Around 35 percent of the total population are insured through state or state-provided care programs.

Deductible

If there are no other sources for their own insurance, the person concerned has to bear the costs themselves. In this case, those affected fall back on their savings for small bills and may have to borrow money if larger bills are incurred.

Some employers offer flexible benefit accounts. In the case of such an account, a small amount is deducted from the employee's wages every month to cover self-financed health costs. The amount deducted from the wages is not taxable. However, the account does not generate any interest income, and the employee does not get back any amounts that have not been used by the end of the year.

To finance health costs from your own resources, you can also Health savings accounts be used. These accounts generate interest income, and the unused amounts are not lost. To be able to use health savings accounts, the person concerned must have health insurance with a lower premium (insurance contribution) and higher deductible (the amount that the insured person has to pay each time the insurance is taken out) than traditional health insurance. Such plans are called high deductible health plans.

In the United States, around 17% of health care costs are paid from own resources. The burden of self-paying healthcare costs is responsible for many bankruptcies in the United States.

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