Explain health care costs in the United States.As health care spending has continued to increase over the years, it is imperative that health care administrators understand how it is financed.
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
The Financial Aspects of Health Care
Explain health care costs in the United States.
Financing
Who pays for the health care services?
Who produces or provides the health care service?
How much the producer or provider will be paid for this health care service?
Primarily funded through insurance, which is a protection against loss and risk should a catastrophic incident occur
Ways health care costs are covered
Publicly funded insurance
Privately funded insurance
Individual out-of-pocket expenses
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:
Illegal Immigrants
Young, healthy individuals who choose not to purchase health care insurance
People who do not file income taxes and do not qualify for Medicaid
Exempt people under the PPACA
Identify types of health insurance.
The marketplace (www.healthcare.gov) exchange divides insurance into five categories of plans based on cost: bronze, silver, gold, platinum, and catastrophic.
Private insurance can be obtained through a group or by an individual.
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.
Health maintenance organization (HMO): must see a primary care physician before seeing a specialist (referral)
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