Health Insurance in the United States is a topic of great importance, if effects every citizen of our nation. Health care is a topic of significance as it is influenced by politics, economics and medicine. There are two very large health systems public and private, and within those systems that are various forms of health insurance. There are strengths and weaknesses in both the public and private insurances. In this paper those strengths and weaknesses will be compared and contrasted. In general the positive aspects of the private system include the ability to choose one’s own provider, more plan options, and a wider network of provides from which to choose. The negative aspect of the private insurance is cost; it is usually very expensive compared to the public insurance.
The premiums are paid whether the insurance is utilized or not. The better coverage and greater flexibility has increased costs both in deductibles, copayments and out of pocket expenses. Typically private insurance is employer sponsored, if one loses his or her job they lose coverage. There is a temporary form of government insurance post job loss known as the Consolidated Omnibus Budget Reconciliation Act (COBRA). Its duration is short (eighteen months) and it is cost prohibitive. Public insurance is less expensive, although one must meet income and other eligibility guidelines. When enrolled in public insurance a beneficiary may then also be eligible for other public programs. Many of these public plans do not have deductibles, copayments or out of pocket costs. In the public system there is less flexibility to choose providers. Many health care providers are not accepting new patients or do not accept public insurance at all. Often times there are limitations on covered services even though the service is deemed medically necessary. (Shi & Singh, 2015)
Medicaid also called title 19 of the Social Security Act was established in 1965, it was initially meant to be a form of a medical assistance supplement for the poor, blind, aged, disabled and those receiving public welfare assistance. Throughout the years Medicaid has been expanded and now covers sixty two million Americans, it insures more people than Medicare and all-private insurances combined. For those who meet the eligibility and income guidelines, Medicaid is a system that provides a relatively solid safety net. Medicaid is a major source of healthcare financing it is the funding source for one sixth of national spending on health care. Medicaid is a major funding source for hospitals and health care centers that serve the. low income and uninsured. The federal government finances Medicaid with matching funds from the individual states. The states contribution is based on its per capita income. The federal matching or Federal Medicaid Assistance Percentage is regulated by law. The amount cannot be less than fifty percent or greater than eighty three percent of total state Medicaid program costs. (‘Medicaid Primer,’ 2013)
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Nine million people are beneficiaries of both Medicaid and Medicare as they meet the dual requirements. Usually this group includes disabled young adults who qualify for Medicare and meet the financial guidelines for Medicaid. (‘KFF Dual Eligible,’ 2015) Medicaid was not expanded nationally as the Affordable Care Act had originally intended. Instead due to a court ruling the states were given the option to expand. The Medicaid guidelines changed only for those states that chose to expand. Under the ACA expansion, the means test is no longer used as a factor in determining eligibility; it is based solely on income. This has allowed for people with significant assets but low income to take advantage of the program. This area of the program requires revision and attention. (‘Medicaid Primer,’ 2013)
The ACA allowed for the states to establish medical health homes. These have proved beneficial for those with chronic conditions by allowing for comprehensive care management. Medicaid increases access to health care and reduces the financial barriers to care. It has led to improved health outcomes for women and children, increases in cancer screenings and the frequency of primary care visits. Medicaid recipients have less medical debt and better self reported mental and physical health with fewer visits to the emergency room. This is in sharp contrast to low-income people on private health insurance.
Medicaid has a managed care division, which is separate from the standard Medicaid. The managed care division of Medicaid is poorly run. There are large gaps in coverage and provider networks are completely inadequate. For both Medicaid programs about half of the doctors who accept Medicaid are no longer accepting new patients. Private insurance accepts new patients the majority of the time. There are gaps in access to Medicaid because of the low participation rates and the geographical distribution of providers in certain areas. The largest gaps are in specialty and dental care services. The leading barriers are low reimbursement rates and administrative red tape. (‘Medicaid Primer,’ 2013)
The Children’s Health Insurance Program (CHIP) is also known as title 21 of the social security act. Many states cover children in families with up to and above the 200% threshold of the federal poverty level. By law, eligibility for CHIP can only take place when the child is previously denied for Medicaid. CHIP is a good safety net for children in families that are on the cusp of not meeting the federal poverty guidelines and cannot afford private insurance. (Shi & Singh, 2015)
Tricare is the insurance arm of military healthcare. All Tricare plans meet the test of the ACA’s minimum essential coverage. Active duty military are automatically enrolled at no cost in Tricare Prime a comprehensive managed care organization (MCO.) Dependents of active duty and retirees can enroll through paying a premium with cost sharing options. Tricare for Life is a program for those eligible for Medicare parts A and part B it covers services Medicare does not cover. Tricare is a good option for active military, retired military and dependents. (Shi & Singh, 2015)
The Veterans Health Administration provides health coverage for veterans with service related illnesses or disabilities, low income and special health needs. Care is based on priority, which is established upon enrollment and based on the severity of one’s disability. The VHA covers dependents of disabled veterans through the Civilian Health and Medical Program. The VHA has been plagued by both financing and capacity limitations. These issues lead to restrictions in access and timely care for many veterans.
Indian Heath Service (IHS) is a division of the Department of Health and Human Services, which provides comprehensive health care services to members of federally recognized Indian and Alaska Natives Tribes and their descendants. IHS has access issues due to its location in isolated areas. IHS overall has financial, geographical and provider constraints. However those eligible for IHS are also dually eligible for Medicaid and Medicare if they are US citizens.
Medicare also known as title 18 of the Social Security Act was established in 1965 by the federal government. It covers people over 65 years, disabled adults of any age who are entitled to social security and adults of any age with end stage renal disease. Medicare has four parts A, B, C, and D. Part A is a hospital based indemnity plan for those who paid into it. Part B is federally financed with cost sharing, Part C is an MCO geared towards low income, and Part D is the pharmacy benefit. Medicare does not cover long-term care, dental, hearing aids, custodial care or services not related to injury or illness.
It has high deductible, and out of pocket costs. There is no limit on out of pocket expenses, on average these total about $4,600 annually. There are three main factors that have the potential to affect the future solvency of Medicare. The cost of delivering care is growing at a much faster rate than inflation in the general economy. The large number of aging Americans will use a greater quantity of health care services. The workforce is shrinking and the wages increases to pay for Medicare are smaller than the rise in medical inflation. (‘Medicare,’ 2018)
Private health insurance is usually employer based, retiree based and comes in different versions. In 2011 89% were enrolled in employer based and in 2005 that number was 91%. Economic downturns have a direct effect on health insurance coverage. Managed Care Organizations have both PPO’s and HMO’s, with the PPO offering more flexibility in choosing a provider. All types have deductibles, cot sharing and out of pocket expenses. Premiums usually increase on an annual basis and policies have several areas of exclusions. Types of private insurance include group, self-insured programs with stop loss coverage, managed care organizations and high deductible plans. (‘AMA,’ 2015) The ACA requires all private insurance to cover essential benefits in ten categories and preventative services. Private health insurance remains a significant expense with gaps in coverage, deductibles and out of pocket expenses. For those people who earn a very good income and have secure employment this type of health insurance is a decent option. For most people however, it is a significant expense and leaves the beneficiary with high out of pocket expenses. (‘AMA,’ 2015)
Federal policy has an extremely strong influence on both private and public insurance because it is the single largest payer of health care in the country, and accounts for one quarter of all US spending on health care. The federal government is currently paying ten times the amount that employers are paying to the major health insurance carriers .The Centers for Medicare and Medicaid Services (CMS) have tremendous power over all health care systems. CMS determines which treatments and technologies are going to be covered if at all and the reimbursement rates. The Agency for Health Care Research and Quality (AHRQ) sets mandates for quality and safety in the delivery of health care in both private and government systems. (Larrat, Marcoux, & Vogenberg, 2012) Even the ACA although somewhat weakened with the current administration in power has set standard benefit packages in the health care market place. These packages have set a benchmark in the industry for private health insurance carriers. (‘ACA,’ 2018)
Since the federal government is the single most powerful payer and regulator it has been responsible for a number of health insurance company mergers within the past few years. These mergers have had a significant impact on the health insurance market. The federal policies for Medicare reimbursement rates affect payments and cost shifting in the private health insurance sector. The government favors certain preferred payment models, private insurance quickly adopts these so they may remain in good standing with their most powerful payer. These payment methods are bundled payments and accountable care organizations. The increase in popularity of both payment methods is solely due to the federal government. The government drives the revenue growth of the major private insurance carriers. (Gruber, 2017)
The federal government began promoting mergers years ago beginning with Medicare Managed Care Plans. The ACA continued this process with its push to enroll more people in to government-sponsored programs. The influx of the large number of retirees into the health market place has further caused a shift. The trend today is that government run systems covers more people than private insurance. This has resulted in decreased competition in the health care market place. Payments to Medicare and Medicaid for dual eligible beneficiaries are usually involved in some form of cost shifting. The health care providers cost shift between the two agencies to their benefit. This is because the federal government pays Medicare in full and Medicaid payments are split between the government and the states. The low reimbursement rates for Medicaid and Medicare beneficiaries are ultimately passed on to the private sector. The difference in pricing is made up by charging more for health services in the private sector.
Reimbursement rates affect how new medical technology will be integrated into the health care system. Medicare sets the standards for reimbursement in tele medicine. (‘Medicare,’ 2018)
The federal government impacts the coverage of pharmaceutical products nationally in both systems. As the single largest payer it influences which medications will be covered and sets the reimbursement costs. CMS makes National Coverage Determinations (NCD’S) to determine the coverage and the private health insurances adopts the same policy.
There are strengths and weaknesses in both government run and non-government health systems. Currently more people are covered in the government system due to the cost prohibitive and employer linked coverage in the private sector. Federal health policy has tremendous impact and influence on the private health insurance industry, as the federal government is the single largest payer of both private and public systems. It would appear that the government as the single largest payer might help guide the US towards a national health system similar to those in England and Canada.
References
- American Medical Association competition in health insurance A comprehensive study of US markets. (2015). Retrieved from https://www.ama-assn.org/ama/pub/news/news/2015/2015-09-08-analysis-anthem
- CDC legislation regulations and policies. (2018). Retrieved from https://www.cdc.gov/st/publichealthpolicy/legislation-regulation-policies-html
- Gruber, J. (2017). Delivering public health insurance through private plan choice in the US. Journal of Economic Perspectives, 31(4), 3-22. http://dx.doi.org/10.1257/jep.31.4.3
- Kaiser Family Foundation: Dual eligible. (2015). Retrieved from https://wwwkff.org/tag/dual-eligible
- Larrat, E. P., Marcoux, R. M., & Vogenberg, F. R. (2012). Impact of federal and state legal trends on health care services. Pharmacy and Therapeutics, 37(4), 218-220. Retrieved from https://www.ncbi.nimh.nih.gov/pmc/articles/PMC33518561
- Medicaid: primer- key information on the nation’s health coverage program for low income people. (2013). Retrieved from https://www.kff.org/medicaid/issues-brief/medicaid-a-primer
- Office of the Federal Register Patient Protection and Affordable Care Act. (2018). Retrieved from https://www.federalregiter.gov/d/2018-07355
- Public vs. private health insurance on controlling spending. (2018). Retrieved from https://www/kff.org/health…/public-vs-private-health-insurance-on-controlling-spending
- Shi, L. (2014). Novick and Morrow’s public health administration (3rd ed.). Burlington, MA: Jones & Bartlett Learning.
- Shi, L., & Singh, D. A. (2015). Delivering healthcare in America A systems approach (6th ed.). Burlington, MA: Jones & Bartlett Learning.
- The official US Government site for Medicare. (2018). Retrieved from https://www.medicare.gov
- The Patient Protection and Affordable Care Act. (2018). Retrieved from https://www.dpc.senate.gov/healthreformbill/health
