Who’s Paying For Health Care?

America spent 17. 3% of its gross domestic product on health care in 2009 (1). If you break that upon an individual level, we spend $7, 129 per person annually on health attention… more than any other country in the world (2). With 17 mere cents of each and every dollar Americans put in keeping our country healthy, it’s no wonder the government is determined to reform the system. In spite of the overwhelming attention health care is getting in the media, we know hardly any about where that money comes from or how it makes their way into the system (and rightfully so… the way we pay money for health care is insanely complicated, to say the least). This convoluted system is the unfortunate result of a series of programs that attempt to control spending layered on top of one another. What follows is an organized attempt to peel away those layers, helping you become an informed health care consumer and an incontrovertible debater when talking about “Health Care Reform. inch¬†ActionPro

Who’s paying the invoice?

The “bill payers” fall under three distinct buckets: individuals paying out-of-pocket, private insurance agencies, and the government. We all can take a look at these payors in two different ways: 1) How much do they pay and 2) How many people do they purchase?¬†

The the greater part of individuals in America are insured by private insurance agencies via their organisations, followed second by the government. Those two sources of payment combined are the cause of near 80% of the money for health care. The “Out-of-Pocket” payers fall into the uninsured as they have decided to take the risk of medical expense independently. When we look at the amount of cash each of these teams spends on health health care annually, the pie moves dramatically.

The government at the moment pays for 46% of national health care costs. How is the simple fact possible? This will make far more sense when we examine all the payors singularly.

Understanding the Payors

Out-of-Pocket

A select portion of the citizenry chooses to bring the risk of medical expenses themselves rather than buying into an insurance plan. This group seems to be younger and healthier than insured patients and, as such, has access to amounts much less frequently. Because this group has to pay for all incurred costs, they also tend to be much more discriminating in that they access the system. The result is that patients (now more appropriately called “consumers”) comparison shop for tests and elective methods and wait longer before seeking medical attention. The payment method for this group is not hard: the doctors and hospitals charge arranged fees for services and the patient pays that amount directly to the doctor/hospital.

Private Insurance

This kind of is where the full system gets far more complicated. Non-public insurance is purchased either individually or is provided by employers (most people get it through their employer as we mentioned). With regards to private insurance, there are two main types: Fee-for-Service insurers and Maintained Care insurers. These two groups approach paying for care very differently.

Fee-for-Service:

This group causes it to be relatively simple (believe it or not). The employer or individual buys a health plan from a private insurance company with a defined set of benefits. This benefit package will also provide what is called a deductible (an amount the patient/individual must pay for their health attention services before their insurance pays anything). Once the deductible amount is fulfilled, the health plan compensates the fees for services provided throughout the health care system. Often, they will pay a maximum payment for a service (say $100 for an x-ray). The plan will demand the individual to pay a copayment (a posting off the cost between the health plan and the individual). A typical industry standard is an 80/20 split of the payment, so in the case of the hundred buck x-ray, the health plan would pay $80 and the sufferer would pay 20 dollars… remember those annoying medical bills stating your insurance would not cover all the charges? That’s where they come from. Another problem with this model is that health care providers are financially incentivized and bound legally to perform more tests and types of procedures as they are paid additional fees for every single of these and/or held officially accountable for not buying the tests when things go wrong (called “CYA or “Cover You’re A**” medicine). If ordering more tests provided you with more legal protection and more compensation, wouldn’t you order anything justifiable? Can easily we say misalignment of incentives?