Health insurance in United States

Health insurance in United States

Health insurance in United States

Main articles: Health insurance in the United States and Health care in the United States

The United States health care system relies heavily on private health insurance, which is the primary source of coverage for most Americans. As of 2012 about 61% of Americans had private health insurance according to the Centers for Disease Control and Prevention.[48][49] The Agency for Healthcare Research and Quality (AHRQ) found that in 2011, private insurance was billed for 12.2 million U.S. inpatient hospital stays and incurred approximately $112.5 billion in aggregate inpatient hospital costs (29% of the total national aggregate costs).[50] Public programs provide the primary source of coverage for most senior citizens and for low-income children and families who meet certain eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors and certain disabled individuals; and Medicaid, funded jointly by the federal government and states but administered at the state level, which covers certain very low income children and their families. Together, Medicare and Medicaid accounted for approximately 63 percent of the national inpatient hospital costs in 2011.[50] SCHIP is a federal-state partnership that serves certain children and families who do not qualify for Medicaid but who cannot afford private coverage. Other public programs include military health benefits provided through TRICARE and the Veterans Health Administration and benefits provided through the Indian Health Service. Some states have additional programs for low-income individuals.[51]

In the late 1990s and early 2000s, health advocacy companies began to appear to help patients deal with the complexities of the healthcare system. The complexity of the healthcare system has resulted in a variety of problems for the American public. A study found that 62 percent of persons declaring bankruptcy in 2007 had unpaid medical expenses of $1000 or more, and in 92% of these cases the medical debts exceeded $5000. Nearly 80 percent who filed for bankruptcy had health insurance.[52] The Medicare and Medicaid programs were estimated to soon account for 50 percent of all national health spending.[53] These factors and many others fueled interest in an overhaul of the health care system in the United States. In 2010 President Obama signed into law the Patient Protection and Affordable Care Act. This Act includes an 'individual mandate' that every American must have medical insurance (or pay a fine). Health policy experts such as David Cutler and Jonathan Gruber, as well as the American medical insurance lobby group America's Health Insurance Plans, argued this provision was required in order to provide "guaranteed issue" and a "community rating," which address unpopular features of America's health insurance system such as premium weightings, exclusions for pre-existing conditions, and the pre-screening of insurance applicants. During March 26–28, the Supreme Court heard arguments regarding the validity of the Act. The Patient Protection and Affordable Care Act was determined to be constitutional on June 28, 2012. SCOTUS determined that Congress had the authority to apply the individual mandate within its taxing powers.[54]

History and evolution

Main article: History of insurance

In the late 19th century, "accident insurance" began to be available, which operated much like modern disability insurance.[55][56] This payment model continued until the start of the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance.[57]

Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. This firm, founded in 1850, offered insurance against injuries arising from railroad and steamboat accidents. Sixty organizations were offering accident insurance in the U.S. by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in the U.S. effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911.[58]

Before the development of medical expense insurance, patients were expected to pay health care costs out of their own pockets, under what is known as the fee-for-service business model. During the middle-to-late 20th century, traditional disability insurance evolved into modern health insurance programs. One major obstacle to this development was that early forms of comprehensive health insurance were enjoined by courts for violating the traditional ban on corporate practice of the professions by for-profit corporations.[59] State legislatures had to intervene and expressly legalize health insurance as an exception to that traditional rule. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and most prescription drugs (but this is not always the case).

Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of Blue Cross organizations.[58] The predecessors of today's Health Maintenance Organizations (HMOs) originated beginning in 1929, through the 1930s and on during World War II.[60][61]

Health plan vs. health insurance

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Historically, Health maintenance organizations (HMO) tended to use the term "health plan", while commercial insurance companies used the term "health insurance". A health plan can also refer to a subscription-based medical care arrangement offered through HMOs, preferred provider organizations, or point of service plans. These plans are similar to pre-paid dental, pre-paid legal, and pre-paid vision plans. Pre-paid health plans typically pay for a fixed number of services (for instance, $300 in preventive care, a certain number of days of hospice care or care in a skilled nursing facility, a fixed number of home health visits, a fixed number of spinal manipulation charges, etc.). The services offered are usually at the discretion of a utilization review nurse who is often contracted through the managed care entity providing the subscription health plan. This determination may be made either prior to or after hospital admission (concurrent utilization review).

Comprehensive vs. scheduled

Comprehensive health insurance pays a percentage of the cost of hospital and physician charges after a deductible (usually applies to hospital charges) or a co-pay (usually applies to physician charges, but may apply to some hospital services) is met by the insured. These plans are generally expensive because of the high potential benefit payout — $1,000,000 to $5,000,000 is common — and because of the vast array of covered benefits.[62]

Scheduled health insurance plans are not meant to replace a traditional comprehensive health insurance plans and are more of a basic policy providing access to day-to-day health care such as going to the doctor or getting a prescription drug. In recent years[when?], these plans have taken the name "mini-med plans" or association plans. The term "association" is often used to describe them because they require membership in an association that must exist for some other purpose than to sell insurance. Examples include the Health Care Credit Union Association. These plans may provide benefits for hospitalization and surgical, but these benefits will be limited. Scheduled plans are not meant to be effective for catastrophic events. These plans cost much less than comprehensive health insurance. They generally pay limited benefits amounts directly to the service provider, and payments are based upon the plan's "schedule of benefits". As of 2005, "annual benefit maxima for a typical mini scheduled health insurance plan may range from $1,000 to $25,000".[63]

Factors affecting insurance prices

A recent study by PricewaterhouseCoopers examining the drivers of rising health care costs in the U.S. pointed to increased utilization created by increased consumer demand, new treatments, and more intensive diagnostic testing, as the most significant.[64] However, Wendell Potter, a long-time PR representative for the health insurance industry, has noted that the group which sponsored this study, AHIP, is a front-group funded by various insurance companies.[65] People in developed countries are living longer. The population of those countries is aging, and a larger group of senior citizens requires more intensive medical care than a young, healthier population. Advances in medicine and medical technology can also increase the cost of medical treatment. Lifestyle-related factors can increase utilization and therefore insurance prices, such as: increases in obesity caused by insufficient exercise and unhealthy food choices; excessive alcohol use, smoking, and use of street drugs. Other factors noted by the PWC study included the movement to broader-access plans, higher-priced technologies, and cost-shifting from Medicaid and the uninsured to private payers.[64]

Other researchers note that doctors and other healthcare providers are rewarded for merely treating patients rather than curing them and that patients insured through employer group policies have incentives to go to the absolute best HCPs rather than the most cost-effective ones.[66]

Military

The price of health insurance for retired and active duty military personnel has gone up from $19 billion just a decade ago to $49 billion in the last year. Now, TRICARE, the government health insurance program, makes up nine percent of the total budget for the Pentagon.[67]

California

In 2007, 87% of Californians had some form of health insurance.[68] Services in California range from private offerings: HMOs, PPOs to public programs: Medi-Cal, Medicare, and Healthy Families (SCHIP).

California developed a solution to assist people across the state and is one of the few states to have an Office devoted to giving people tips and resources to get the best care possible. California's Office of the Patient Advocate was established July 2000 to publish a yearly Health Care Quality Report Card[69] on the Top HMOs, PPOs, and Medical Groups and to create and distribute helpful tips and resources to give Californians the tools needed to get the best care.[70]

Additionally, California has a Help Center that assists Californians when they have problems with their health insurance. The Help Center is run by the Department of Managed Health Care, the government department that oversees and regulates HMOs and some PPOs.

Standards of hospitals and clinics used by insurance companies

A key factor in patient safety is that the health care providers should be safe and fit for purpose.

In the USA, insurers will often only make use of health care providers that are independently surveyed by a recognized quality assurance program, such as being accredited by accreditation schemes such as the Joint Commission and the American