Health Care Finance in the U.S.A
Table of Contents
The health care sector is a very crucial sector for the economic development of any country. The United States government is increasingly spending a lot of public funds in this sector, almost accounting for a fifth of the country’s GDP. This paper discusses some pertinent issues in this sector.
Distribution of National Health Spending
The analysis of the trend how the US citizens finance their emergency visits to health centers can show us the overall distribution of health spending. A majority of the US citizens still finance their medication by themselves (private spending); a whopping 44 % of Americans. This was the case almost two decades ago, which simply means that there has been relatively no change in this kind of health spending. The second most popular financier is Medicare, accounting for about 24% of the total spending. Medicaid and other philanthropic organizations account for about 17% of the spending. The least popular mode of financing is through the uninsured means. This distribution is similar to the one observed almost 20 years ago (KFF).
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Distribution of Health Insurance Coverage
It is estimated, that about 48 million Americans don’t have health insurance coverage, which is about 15% of the total population and 18% for persons under the age of 65. In this category (under 65), 61% of them have private insurance cover (CDC).
For adults (18-64 of age), around 22% of them don’t have insurance. A majority of adults 64% have subscribed to private insurance services, while 15% have sought public insurance. The percentage of children and small adults (under the age of 18) that are uninsured is 7%. On the other hand, those under private insurance account for 53% of this age group. The rest, almost 40%, are under public insurance (CDC).
Impact of Protection and Accountable Care Act (ACA) on Insurance Coverage
The ACA has some new requirements with the purpose of increasing the rates of health insurance coverage. These requirements include expansion of Medicaid to the poor, individual states to develop health insurance exchanges for individuals and small businesses. These companies provide coverage to qualified persons or are slapped with penalties (RAND, 2010).
An analysis ‘RAND COMPARE’ was conducted in California. The results from this study can be argued to be similar to the other states in the US. On overall, it is estimated that, when the Act becomes fully operational in 2016, health insurance coverage will be 96%, a big jump from the current 80%. Additionally, almost a fifth of the insured elderly will be covered. It was also estimated that enrollment in Medicaid will be 58%, many of whom are new eligible adults. The figures above clearly indicate that the health insurance coverage is bound to increase, not only in California, but in the whole country. The coverage is estimated to reach around 95% of the whole population (RAND, 2010). 85% of workers at businesses will be covered, a 25% increase from the current coverage (Hussley et al, 2010).
Origin of Employment-Based Health Insurance
Employment-based health insurance is believed to have originated from two separate events. President Roosevelt after being elected in 1932, resolve not to effect health care coverage for all A set of federal rules in the mid 20th century is outlining how employment-based insurance should be applied according to federal rules as well as in labor negotiations. Roosevelt did so after fearing that the then potent American Medical Association would oppose, and hence shoot down, the Social Security Act in 1935. The passage of health insurance was closely connected to the Act. Another proposition put forward, is that Roosevelt favored social security to health care. However, his decision led to a growing need for other forms of health protection as the cost of illness grew constantly. This gap was filled by private insurance firms, Blue Shield and Blue Cross. This form of insurance grew in popularity until the Second World War, when these companies were forced to sell insurance to employers (Blumenthal, 2006).
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During this time, the federal government’s move to control inflation was by limiting employers’ freedom to increase the wages of the workers. Other forms of benefits such as employee insurance were allowed, however. Their uptake grew in popularity. This trend was further enhanced by federal rules aimed at increasing the attractiveness of employment-based insurance. By 1949, unions could negotiate health insurance during contractual talks. This type of insurance was finally made attractive even further in 1954, when it was passed that contributions of employers in purchasing insurance for their workers would not be taxed (Blumenthal, 2006).
Difference between Fully-Insured and Self-Insured Health Plans
A fully-insured plan is one in which an employer may opt to pay part or the entire premium to an insurance company. The insurer will thus pay claims from the amount of premiums it has collected from its clients. On the other hand, a self-insured plan is one in which an employer collects or funds a pool of premiums. The employer will then be required to pay the health care claims using the company’s assets. Self-insured plans are subject to federal laws, while fully-insured plans are subject to state law (PACER).