Assignment 3: Health Care Costs
The U.S. has experienced a significant increase in the cost of health care.
In 2004, 16% of the Gross Domestic Product (GDP) was spent on health care.
In 2010, President Obama signed the ” Affordable Health Care for America Act (HR 3962)” that has been a topic of heated debate since discussions began decades ago. Health care funding and design has been a major issue for U.S.
Write an eight to ten (8-10) page paper that addresses the following directives below.
1. Provide a discussion that demonstrates you have an understanding of the impact the cost of health care has on the economy. Be sure to discuss the Gross Domestic Product (GDP).
2. Health care legislation impacts an array of factors such as quality of health care, insurance coverage, the free market, etc. Select two to three (2-3) areas impacted by health care legislation such as HR 3962, and provide an argument in support of the health care act and two arguments that are in opposition to such a health care act.
3. Compare the three (3) main types of health insurance in the U.S. and assess the solvency of each. Make a prediction regarding the longevity of each type over the next 30 years.
4. Debate whether or not private health insurance violates the standard principles of insurance.
5. Analyze the evolution of the promotion of health and disease prevention in the U.S. and identify the point at which a clear shift in the thinking in the dominant culture occurred resulting in the greatest impact on the health care insurance system in the U.S.
6. Use at least three (3) quality academic resources in this assignment.
Note: Wikipedia and other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
– Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions.
– Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required page length.
The specific course learning outcomes associated with this assignment are:
– Analyze the different ways of financing the health care system and the impact on individuals.
– Explain the impact that policy, social and financial forces have on health care access and quality of care in the United States.
– Use technology and information resources to research issues in health services organization.
– Write clearly and concisely about health services organization using proper writing mechanics.
Health Care Costs
Impact of Healthcare on the Economy
In the United Sates, healthcare costs form a large proportion of the country’s budget. Spending on health among American citizens increases annually and outpaces expenditure on the other consumer goods and services which consequently means that its proportion in the economy increases annually (Kaiser Family Foundation, 2012). The general economy comprises of households, businesses, and the federal state apart from the health care sector, therefore, the rising costs of health care have a significant impact on the other areas (Kaiser Family Foundation, 2012).
Increasing health costs have made health insurance increasingly inaccessible for individuals, families, and businesses. Due to the increasingly high pressure is especially those businesses that provide health insurance to their employees (Kaiser Family Foundation, 2012). This may place a huge financial burden on families including those who are covered with insurance as they may be unable to access the much needed health care services (Kaiser Family Foundation, 2012). Medicare and Medicaid, for example, form the federal states’ major budgets. This implies that additional revenue will be required, or the benefits reduced to meet the budgetary costs, which have a negative translation for the taxpayer (Kaiser Family Foundation, 2012).
Families are a component of the economy and, therefore, a good indicator of the impact of health costs on the economy. Due to the increased costs of health, families are experiencing financial problems and hence cut down back on care (Kaiser Family Foundation, 2012). For example, tracking results from the Kaiser Family Foundation found out that 50% of families reported to having cut back on medical care. 33% of them preferred home remedies and over the counter drugs than Doctor Visits and consultations, 31% skipping dental visits while 28% postpone getting health care they needed (Kaiser Family Foundation, 2012)
As stated above, health care costs form a great proportion of the national economy. For example, federal health spending was approximately 5.6% of the Gross Domestic Product in 2011 and projected to increase to 9.4% by 2035 (Kaiser Family Foundation, 2012). Spending on health care is projected to reach $ 4.8 trillion by 2021 an increase from $2.6 trillion in 2010 and $75 billion in 1975. These projections imply that implication that health care costs alone will form almost 20% of the GDP by 2021 (Kaiser Family Foundation, 2012).
Impact of Health Care Legislation
On Employer Provided Insurance Coverage
Since the 40s and growing over the years different factors have merged and established job based benefits as the primary means to health insurance protection. This was due to the insurance companies’ realization that they could lower administrative costs and negative effects by selling insurance to large employers (Blumberg, Buettgens, Feder, & Holahan, 2011).
The critical question here is assessing ACA’s impact on employers’ assessment of compensation packages they are required to offer their employees. ACA was designed to build on health insurance that is sponsored by employers which most working Americans have (Blumberg, Buettgens, Feder, & Holahan, 2011).
ACA’s politically feasible financing, for covering subsidies for low income households, was achieved by avoiding displacement of the privately financed employer-based insurance coverage. Research conducted indicate that employer-based insurance will be either left intact or worsen (Blumberg, Buettgens, Feder, & Holahan, 2011). However, benefit consultant reports of employers’ high interests in dropping coverage initiated arguments that earlier researchers such as CBO underestimated subsidy costs for employers under the ACA (Blumberg, Buettgens, Feder, & Holahan, 2011).
Some economists see ACA’s incentives will bring a shift from employer based insurance coverage. While others predict a mild but still substantial shift, this is because employers will raise premiums which encourage the low-income modest workers to shift to the public subsidized insurance coverage offered under ACA. These economists, therefore, raise prospects that the subsidy costs under ACA will be higher than expected.
However, ACA’s impact on employer-sponsored insurance (ESI) is determined by whether employers for most workers will view their employees as valuing the employer based insurance over alternatives created by ACA (Blumberg, Buettgens, Feder, & Holahan, 2011). Given the terms of the ACA and the pressure on the competitive market, most firms will have a dominant number of workers receiving better benefits via the employer provided insurance than through the new options created by the ACA hence ACA would not impact negatively on employer-based insurance coverage (Blumberg, Buettgens, Feder, & Holahan, 2011).
On Health Care
Affordable Care Act has provisions for improvement on efficiency and quality of the system. Part of these strategies include performance appraisal for evaluation of how well care is being provided (Dubow, 2010). The findings will be used in public reporting programs, reforms for payment, and improvement of quality. The law, in addition, provides strategies like strengthening of primary care, support for clinical and patient decisions, and acceleration of incorporation of health information technology (Dubow, 2010).
Performance appraisal infrastructure will be strengthened to improve quality, payment, efficiency, and delivery reform. For example, the Centre for Quality Improvement will research the best practices to improve quality and translate such findings for incorporation into clinical practice (Dubow, 2010). Furthermore, ACA encourages transparency so at to promote accountability. In addition, it offers incentives for the provision of quality care and efficiency in Medicare, Medicaid and the private sector (Dubow, 2010). For example, in Medicare, legibility for payment incentives for rewarding achievement and improvement will be determined by a hospital’s standard of performance and efficiency in utilizing resources (Dubow, 2010).
On the other hand, ACA is seen as having a negative impact on health insurance on three levels. First, the ACA will increase deficits as it creates a new group of middle class who are dependent on ACAs subsidized health insurance benefits (2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical, 2010). This further expands the Medicaid program and hence increases deficit it.
Second ACA increases insurance costs and reduces employment (2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical, 2010). This is because to adopt the new insurance regulations small businesses will experience extra charges. To cater for this, they will increase insurance premiums charged on employees, therefore, increase their insurance costs. In addition, to cut back on expenditures due to the new regulations, employers are forced to reduce the number of employees, therefore, reducing employment (2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical, 2010).
Comparison of Types of Health Insurance
The healthcare system in the United States is subject to many polarizing debates. One group argues that it has the best health care system globally due to the technology that is available and the state of the art facilities (Chua, 2006). The other group, on the other hand, claims that the system is inefficient and fragmented the reason being t it is the highest spender on health care globally, but it still has massive uninsurance, uneven quality, and administrative wastes (Chua, 2006).
To comprehend these differing arguments one needs to comprehend and compare the three main types of insurance in the US. The US has two institutions that provide insurance that is, the public and private. They offer different types of insurance coverage but the main ones are; Medicare, Medicaid, and Employer sponsored insurance (Chua, 2006).
Medicare is a federal program covering the older population (65 and above) and disabled individuals. It is administered by the government with a single-payer program. Financing here comes from federal income taxes, shared payroll taxes, and individual enrollee premiums. Part A benefits cover hospital services part B covers physician services, and part D offers prescription drug benefits. (Chua, 2006). However, several gaps are present in Medicare in a skilled nursing facilities, preventive care coverage, and lack of coverage for dental, hearing, or visual care. This makes the majority of enrolled individuals seek supplementary insurance (Chua, 2006).
Medicaid, on the other hand, is for the low-income and disabled individuals. By law, cover should be provided for pregnant women that are poor, the disabled, the elderly, and parents, but each state has the power to increase eligibility. Childless adults do not qualify for coverage while the majority of the poor make a lot of money to qualify for this (Chua, 2006). Administration of the program can only be done by the states and District of Columbia while financing is shared by the states and federal government via taxes. The benefits here are comprehensive and include prescription drugs; however, few medical providers accept Medicaid (Chua, 2006).
Finally, there is employer-sponsored insurance, and this forms the main way in which Americans are insured. These are provided in the form of employee benefits. The insurance plans are administered via private companies that are for-profit and not-for-profit, but there are other companies that are self-insured. Financing here is through the employers who pay the highest premium and employees with benefits varying depending on the type of insurance plan.
A third of the spending in health care in the United States is from the elderly. In the next three decades, the population of people (65 years or older) is expected to increase due to an increase in expectancy. Over two thirds of health expenditure is made through Medicare. In Medicare, increased longevity on medical expenditure is hampered by two factors; decrease in payment during the last year before death as the beneficiaries’ age increases. In addition, the additional period of any enrolled member covered comprises of low-cost years before the individual develops a terminal illness (Lubitz & Beebe, 2011).
Therefore, in the next thirty years Medicare expenditure will drastically increase. The present rate of technological improvement and development in medicine including the increased quality of life imply that the life expectancy will increase and thus increase Medicare expenditure
The life expectancy in the last century has increased to 30 years. This is good news for the population; however, insurance companies and pension managers are concerned with the impact such gains on retirement finances (Walsh & Wilson, 2013). Therefore, as long as the gains due to increased life expectancy can be accounted for when planning for retirement, their effects are negligible. However, life expectancy and mortality improvements lack certainty and the longevity. For example, in 30 years, the mortality rate can be projected and their implications considered, pension managers can, therefore, adjust and balance the account (Walsh & Wilson, 2013).
Employer-based health insurance has been declining sharply with the greatest decline for individuals have an income of between above 100% and 0% of poverty and smaller decline for those below the poverty line. The decline can be attributed to declining coverage for dependents. Approximately 18% lack employer-based coverage with approximately 5% having health cover for themselves and not their children.
Currently, most firms instruct individuals require employees to share to share family health insurance costs, therefore, employers choose not to cover their dependents when cost is high. In addition, firms demand workers to share costs in family coverage, but costs for covering the employee alone are usually cheaper. This has discouraged employers from acquiring insurance for their dependents through the employer
This, together with the introduction of the ACA options for insurance that are cheap discourages employer-based insurance. Therefore, the longevity of employer-based insurance is very low and in terms of family coverage. In the next 30 years, it will still be beneficial but only for the employer.
Debate on Private Health Insurance and Health Principles
Insurance of any form including health is governed by 6b main principles. That is insurable risk, utmost good faith (Uberima Fides), proximate cause, subrogation, indemnity, and contribution principles that all private health insurance providers satisfy. Private health insurance providers undergo through the same scrutiny before registration, therefore, by the time an insurance company is allowed to operate, it would have gone through every check required to ensure its legitimacy and ability to provide insurance services (Belmont Virtual Academy, 2013).
Moreover, there is usually continuous monitoring and reporting of a provider’s code of conduct in regards to practice that would have led to closure of any private health insurance provider whose conduct appeared to be contrary to the insurance regulations. In addition, the health sector is a sensitive and one of the important sectors of a country. This means that number of stakeholders who have set regulations that any provider should observe so as to be deemed as legitimate. For example, the American Medical Association, the American Nurses Association provides 10 guidelines that act as the code of conduct for insurance providers in the health sectors. This implies that every insurance provider who operates in the sector must have met the criterion for operation.
Finally, different patient reports indicate that the quality of services from private insurance providers is usually higher than those of private. Although they may charge higher premiums, the services they provide are commensurate with premiums paid, hence satisfying the indemnity rule. Private insurance companies operate within certain laws, rules, and regulations. They, in addition, operate in a market that undergoes a lot of scrutiny where any gross misconduct would be quickly noticed and addressed. This gives all indications that they satisfy all the principles of insurance.
Evolution of the Promotion of Health and Disease Prevention in the U.S
In the past major groups advocated for annual physical examinations and routine screening, a review of medical evidence in order to provide preventive approaches were missing in the 80s (Eaton, et al., 2001). There was increasing doubt as review articles relied on data that was unavailable for delivery of services. The Canadian Task Force on the Periodic Health Examination (CTFPH) published the first seminal report using evidential systematic rules to support the preventive services (Eaton, et al., 2001).
The Public Health Service in 1984 established the United States Preventive Services Task Force (USPSTF). This extended the Canadian Task Force approach to address a set of preventive services. It was though reviewing scientific evidence systematically for clinical preventive services and provision of recommendations for medical practitioners on routine services to be offered (Eaton, et al., 2001).
USPTF comprised of generalists who were experts in research methodologies and prevention among other professionals. This lessened the probability of conflicts of interest arising. They published several journal articles on individual services and in 1989 produced the Guide to Clinical Preventive Services (Eaton, et al., 2001). The guide was an evidence based review of 169 screening test results, immunizations, counseling approaches, and regimens for chemoprevention. The recommendations were graded from A-E reflecting the quality of evidence supporting the findings for all age groups (Eaton, et al., 2001).
The preventive medicine environment and treatment based on evidence tremendously changed by the time second guide was printed. Organizations providing managed care added preventive care services and shifted from the traditional fee-for –service insurance (Eaton, et al., 2001). This marked the major shift in health promotion as individuals engaged in preventive measures and, therefore, spans the growth of the health insurance sector to protect individuals from future eventualities in terms of health.
There then followed an increased competition due to the introduction of managed care and individuals started paying attention to the cost and value of care. The recommendations in the guide shifted from being just for clinicians and it knowledge spread to a wider audience including health insurers. These insurers used the guide to sell and defend their insurance programs and packages to evaluate the performance of health plans with the recommendations found in the guide used by the National Committee on Quality Assurance (Eaton, et al., 2001).
2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical. (2010). Statement of Actuarial Opinion, 282.
Belmont Virtual Academy. (2013, April). Belmont Virtual Academy. Retrieved March 6, 2014, from Belmont Virtual Academy Web site: http://www.belmontint.com/_uploads/Belmont_Virtual_Academy/The-six-principles.pdf
Blumberg, L., Buettgens, M., Feder, J., & Holahan, J. (2011, October). Why Employers Will Continue to Provide Health Insurance: The Impact of the Affordable Care Act. Timely Analysis of Immediate Health Policy Issues, pp. 1-8.
Chua, K.-P. (2006, February 10). American Medical Students Association. Retrieved February 6, 2014, from American Medical Students Association Web site: http://www.amsa.org/AMSA/Libraries/Committee_Docs/HealthCareSystemOverview. sflb.ashx.
Dubow, J. (2010, July). How Health Reform Will Affect Health Care Quality and the Delivery of Services. Fact Sheet, pp. 1-5.
Eaton, S. B., Strassman. B., Nesse, R. M., Neel, J. V., Ewald, P. W., Williams, G. C., et al. (2001). Evolutionary Health Promotion. Preventive Medicine, 109–118.
Kaiser Family Foundation. (2012, May). Health Care Costs: A Primer. Key Information on Health Care Costs and their Impact. Kaiser Family, 1-32.
Lubitz, J., & Beebe, J. (2011). Longevity and Medicare Expenditures. The New England Journal of Medicine.
Walsh, E., & Wilson, W. (2013). An Introduction to Funding Long-Term Care withou t Medicaid. A Journal of the Commission of Law and Aging. , 35 (1).