Explain health care costs in the United States. In the United States, several funding sources are available: publicly funded insurance, privately funded insurance, cash, and charity care.
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) Staff model: hires physicians and providers as employees to perform services for members of the HMO Group model: contracts with a group of physicians and providers to exclusively perform services for members of the HMO 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 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
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