Current Health Care Insurance Models
In the United States, the health care delivery system is characterized by diversity and complexity. Several insurance models co-exist which the United States citizens rely on to pay for medical services. These are: employment-based, individual-based and government-financed insurance.
Employment-Based Health Coverage
Employment-based health insurance was most popular in the 1980s and is on a decline ever since (Enthoven & Fuchs, 2006, p. 1539). Employment-based health coverage implies healthcare coverage provided by the employer. Typically, the costs are shared between the employer and the employee, and health coverage is lost either when an individual leaves their job, or shortly after. As such. employment-based health insurance might be seen as one of the factors which limit labour mobility (Enthoven & Fuchs, 2006, p. 1542). Since coverage is provided only to the employed, the elderly and self-employed are not eligible for coverage.
Low-wage workers are also typically not covered by employment-based health insurance (Enthoven & Fuchs, 2006, p. 1544). Most employers limit employee’s choice to a single carrier (Enthoven & Fuchs, 2006, p. 1542).
Government-Financed Health Coverage
Government-financed health coverage implies that health insurance is financed by the government from state and federal funds. Two national insurance programs, financed by the government, currently exist. They are Medicare and Medicaid. Medicare is financed by federal funds and covers the elderly and disabled (Financing Health Care, n.d., p. 1). Medicaid is financed by federal and state funds and covers the poor (Financing Health Care, n.d., p. 1).
New federal laws have been introduced to expand the reach of federal insurance programs, such as the Affordable Care Act (ACA) and the Health Equity and Accountability Act (HEAA). The introduction of these laws means that accessibility barrier is lower and more people are eligible for government-financed health insurance.
Individual-Based Health Coverage
Individual-based health coverage puts an individual into position to make their own purchasing decision. With this type of health insurance, people are free to choice their own carrier, plan, delivery systems and doctors. Mostly due to the high costs of individual health insurance, 11% of working population not eligible for government-sponsored health insurance is without health coverage (Marken, 2016). This number has been on the decline even since health reform expanded the reach of government programs.
Private Health Insurance Plans Economic Goals
Private health insurance plans aim to provide various types of medical services. As such, the types of medical services provided to the insurer depends on a particular insurance plan. Private health insurance plans offer health care coverage in exchange for a fee, and is only available to those able to pay. As such, the following economic goals might be outlined:
- Reduce financial burden placed on patients by providing health care coverage.
- Improve the well-being of insured individuals by providing access to health care services.
- Provide all types of medical services.
- Control and reduce health care costs through the design of payment system, the optimization of healthcare delivery, and the application of technologies such as e-medicine.
Public Health Insurance Plans Economic Goals
Public health insurance aims to provide only medically necessary services to vulnerable populations, such as the poor, the elderly and the disabled. As such, it promotes the principle of social equity and allows those who are unable to afford private insurance have access to medical services. With public health insurance, costs are subsidized out of federal and state funds. The following economic goals for public health insurance plans might be outlined:
- Reduce financial burden placed on patients by providing health care coverage.
- Improve the population health by providing access to healthcare services for those unable to pay.
- Provide medically necessary health care services.
- Subsidize costs of healthcare services using the funds of paying patients.
- Control and reduce health care costs through the design of payment system, the optimization of health care delivery, and the application of technologies such as e-medicine.
The main difference between the private and public health insurance is the demographics, source of funding and main economic goal.
Private health insurance is only available to paying individuals, and health care costs are covered by the profits generated by the insurance company. An insurance company, like any other commercial organization, is looking to maintain and increase profits.
Public health insurance is a government’s initiative aimed at providing medical services for those unable to pay. As such, the source of funding is national budget, and the goal of this type of coverage is to increase the general health of the population.
Success Potential of Key Economic Goals
In terms of population covered, key economic goals of private insurance are achieved by providing health care coverage to paying population. Profits are the main goal of any business, and private insurance companies make profits by providing health coverage only to those who make the required premiums.
Public health insurance aims to improve the health of the general population by lowering the accessibility barrier and offering health coverage to the low-income and other disadvantaged populations. The main goal of public programs is not to generate profits, but reduce health disparities.
In terms of services included, private insurance offers any type of medical service the patient is willing to pay for. Public insurance typically covers medically necessary services only to keep costs down.
When it comes to financing arrangements, private insurance offers health care coverage in exchange for a fee or a premium. This fact means that the insurance company is able to generate profits by adjusting the input and output costs. Public health insurance is financed by the government as it is in its best interests to keep its citizens healthy.
In terms of reimbursement strategies, various strategies exist, including fee-for-service and capitation model. Fee-for-service, as the name implies, requires the payer (either the patient, the agency or insurance company) to pay for each medical service as it is performed. Capitation model is not unlike a subscription model which requires the payer to make regular payments and have unlimited access to a physician, who is referring the patient to a specialist.
In terms of economic competition policies, such policies are introduced to establish fair business practices. Since the introduction of ACA, health insurance exchanges have been set up in every state to offer government-regulated insurance products eligible for subsidies. Health insurance exchanges are “a promising practice for introducing managed competition into the insurance market” (Young & Olsen, 2010, p. 360).
Key Effects of Labour Market Factors
Healthcare delivery system is very labor-dependent. Both labor qualification and the number of healthcare personnel affect the quality of healthcare delivery. There is no doubt that higher quality labour force results in better patient outcomes. However, higher patient to medical personnel ratio is also associated with better patient outcomes, since it typically implies a better quality of medical services (Aiken, L. et al., 2010, p. 15).
Key Effects of Insurance Market Factors
The United States citizens rely on insurance to pay for medical services. Due to the high costs, accessibility of health care is low and a number (11%) of the population does not have any insurance (Marken, 2016). Discrepancies between insured and uninsured populations exist (Squires & Anderson, 2015, par. 4). The United States government initiated the Affordable Care Act (ACA) to minimize health disparities by lowering costs and improving the accessibility of healthcare.
Key Effects of Competitive Market Factors
Insurance companies and government agencies are responsible for establishing a network of hospitals which agree to offer medical services for the insured and uninsured respectively. As such, healthcare delivery system includes public and private institutions operating in a for-profit and not-for-profit manner, some of which offer services to the uninsured. Insurance companies with larger networks of medical facilities offer insurance products more valuable to the customer and have a higher premium (Gaynor & Town, 2012, p. 525). Hospital price competition exists, since hospitals have market power over insurance companies. Hospital quality competition also exists, which encourages providers to improve the quality of care, while maintaining competitive prices (Gaynor & Town, 2012, p. 624).
Occurring Regulatory Changes
The current healthcare landscape is characterized by the focus is on improving the quality and accessibility of health care, while controlling costs. Major regulatory changes occurred in the last several years which radically changed the healthcare industry. The Affordable Care Act (ACA) in particular showed that major changes were needed to improve the quality and affordability of health care.
In 2016, the Health Equity and Accountability Act (HEAA) was introduced, aimed at further advancing the improvements brought by ACA. HEAA proposes using cultural competency techniques such as improving language access services and diversifying workforce to improve the health of minorities.
Occurring Economic Changes
Economic changes also affect the healthcare industry. Healthcare costs are increasing faster than inflation or wages, which prompted discussions on how can costs be controlled (Impact of the Economy on Health Care, 2009). The economic instability affects the ability of United States citizens to pay for medical services. The economic instability also results in falling revenues of medical organizations. The government aims to gradually expand public health insurance coverage to minimize health disparities. New payment models are established between physicians and hospitals to offer steady income, such as capitation model (Impact of the Economy on Health Care, 2009).
Key National Trends
As such, key national trends which currently affect competition and pricing initiatives are:
- Reducing access barriers: making more people eligible for government-subsidized health insurance through the expansion of Medicare and Medicaid.
- Cost reduction: introducing rationing and focusing on preventative care to reduce health care costs.
- Introduction of culturally and linguistically appropriate care: improving language access services and diversifying workforce to enhance the health of various ethical minorities.
- Increasing involvement of medical personnel in the legislative arena: focus on the transformation of nurses and other medical personnel into agents of change.
Main Quality Indicators
Quality indicators (QIs) are the tools which can be used to promote quality improvement in various healthcare settings. The indicators can be put into four groups:
- Prevention Quality Indicators;
- Inpatient Quality Indicators;
- Patient Safety Indicators;
- Pediatric Quality Indicators (Farquhar, 2008, p. 41).
The first group includes those indicators which are related to outpatient care and its ability to prevent hospitalization. Second group includes indicators of the quality of hospital care, such as inpatient mortality. The third group comprises indicators of the level of patient safety in healthcare settings. The fourth group reflect the quality of pediatric services, or the quality of care provided to children and adolescents.
It is evident that the system of healthcare in the United States is characterized by complex relationships between healthcare providers, insurance companies and the government. Main types of funding include employee-based, individual-based and government-based health insurance. Healthcare industry is labour-dependent, has limited accessibility due to the prevalence of insurance-based financing model, and is influenced by such competitive market factors as hospital price and quality competition.
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Marken, S. U.S. Uninsured Rate at 11.0%, Lowest in Eight-Year Trend (2016).
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