Healthcare Benefits/Systems Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The organized provision and delivery of healthcare services constitutes a healthcare system. The 2000 World Health Report states the goals for healthcare systems to include good health; making the health status of the entire population as good as possible across the entire life cycle; responsiveness to the expectations of the population; and fair financial contribution: ensuring financial protection for everyone with costs distributed according to one’s ability to pay.

Systems

There are several types of healthcare system models. Entirely private healthcare systems are relatively rare. Where they exist, they are usually for a comparatively well-off subpopulation in a poorer country with a poorer standard of healthcare, for instance, private clinics for a small, wealthy expatriate population in a poor country. Yet there are countries with a majority private healthcare system with a residual public healthcare system. Other major health system models are primarily public insurance systems. These include a social security healthcare model whereby workers and their families are insured by the state; a publicly funded healthcare model wherein the residents of the country are insured by the state; or a social health insurance healthcare model in which case the whole population or most of the population are members of a sickness insurance company. Almost every country that has a government healthcare system allows private healthcare systems as well. This is sometimes referred to as a two-tier healthcare system. The scale, extent, and funding of these private systems vary.

In most developed and many developing countries, healthcare is provided to everyone regardless of their ability to pay. The United States is the only country among developed nations except South Africa that does not have a universal healthcare system. However, healthcare in the United States has different and significant publicly funded components. The United States spends more on healthcare, both as a proportion of gross domestic product (GDP) and on a per capita basis, than any other nation in the world. Current estimates put U.S. healthcare spending at approximately 16 percent of GDP. The health share of GDP is expected to continue its historical upward trend, reaching 19.5 percent of GDP by 2017. In 2007, the United States spent a projected $2.26 trillion on healthcare, or $7,439 per person.

A few U.S. states have taken serious steps toward universal healthcare coverage, most notably Minnesota and Massachusetts, with the most recent example being the Massachusetts 2006 Health Reform Statute. Other states, while not attempting to insure all of their residents, cover large numbers of people by reimbursing hospitals and other health-care providers using what is generally characterized as a charity care scheme. New Jersey demonstrates the best example of a state that employs the latter strategy. Normally, most forms of general liability insurance sold in the United States, like home, automobile, or business insurance, have a significant premium allocation for medical damages. The U.S. legal system, which has the highest number of attorneys per capita of any country in the world, is available to assist in proving liability and collecting the money for medical bills from such insurances.

Benefits

Healthcare benefits were introduced into the United States marketplace in the 1940s. They include medical coverage, dental and vision insurance, prescription drug plans, some type of disability coverage, employee assistance programs, and in some cases, flexible spending accounts, which allow the subscriber to pay for certain medical and dependent care expenses from pre-tax dollars. Most people cannot afford to pay the full amount of their healthcare costs. Healthcare benefits are a mechanism for people to protect themselves from the potentially catastrophic costs of healthcare in case of severe illness, and also to assure that people have access to healthcare when it is needed.

Health benefits are provided by a variety of both public and private sources in the United States. Public sources include Medicare, Medicaid, the State Children’s Health Insurance Program, federal and state employee health plans, the military, and the Veterans Administration. Medicare covers the elderly and disabled with a historical work record, Medicaid is available for some, but not all of the poor, and the State Children’s Health Insurance Program (SCHIP) covers children of low-income families. The Veterans Health Administration provides healthcare directly to U.S. military veterans through a nationwide network of government hospitals, while active duty service members, retired service members, and their dependents are eligible for benefits through TRICARE. The Indian Health Service provides publicly funded care for indigenous peoples. Together, these tax-financed programs cover about 27 percent of the population and make the government the largest health insurer in the nation. These programs also account for 45 percent of healthcare expenditures in the United States.

Private health benefits, on the other hand, are obtained primarily through jobs or covered through a family member’s insurance. Employer-based health insurance is rather common with larger employers. About 60 percent of Americans receive health insurance through an employer, although this number is declining, and the employee’s expected contribution to these plans varies widely and is increasing as costs escalate. About 158 million non-elderly people were insured through employer-sponsored health plans in 2006.

Workers injured on the job are covered by government-mandated worker compensation insurance and wage replacement benefits. These benefits vary considerably state to state, and employers bear the cost of this insurance. Businesses with considerable risk, such as bridge-building, mining, or meat processing, face far higher worker compensation insurance costs than do office-based clerical businesses. Although medical colleges and research institutes form a backbone structure for providing healthcare, private hospitals and nursing homes also are becoming an increasingly necessary part of the healthcare structure in the United States.

Insurance

Employer-sponsored health plans are known as group insurance. With group insurance, very often the employer pays most or all of the costs. It is estimated that the spending on employer-sponsored health insurance will hit $355.9 billion this year, of which employers contribute about 83 percent, while employees and retirees contribute the rest. Some organizations offer only one health insurance plan and others offer a choice of plans: a fee-for-service or indemnity plan, a health maintenance organization (HMO), or a preferred provider organization (PPO). Individual policies can be purchased when the employer does not offer group insurance or if the insurance offered is inadequate. Individual plans may not offer benefits as extensive as those offered under the group policy. About 14 million non-elderly people bought individual health insurance directly in 2006.

A significant and growing number of people cannot obtain health insurance through their employer and are unable to afford individual coverage. The U.S. Census Bureau estimates that about 16 percent of the U.S. population, or 47 million people, are uninsured.

More than one-third of the uninsured are in households earning $50,000 or more per year. Sixty percent of the uninsured work in businesses with less than 500 workers or are family members of those who do. Some uninsured are people under age 30 who don’t believe they need to purchase healthcare; others are eligible for Medicaid but have not applied.

Indemnity or fee-for-service health insurance plans allow one to go to the doctor of one’s choice and pay for services at the time of the visit. The amount that the health insurance company will pay is a predetermined benefit level of covered medical expenses, based on the deductible and co-insurance amounts. To receive payment for medical expenses, one may have to fill out forms and send them to the insurer. There is also need to keep receipts for prescription drugs and other medical costs. With this type of coverage, the patient is responsible for keeping track of all their medical expenses. This type of plan is rare these days.

Unlike an indemnity plan, managed care is a health insurance plan like a health maintenance organization, preferred provider organization, or point of service plan (described below) that encourages or requires insured individuals to use certain providers. The theory underlying managed care is that by improving the overall health of the entire population, primarily through prevention, the employer gains through reduced absenteeism, increased productivity, and employee retention. The goal of the managed care organization is to keep costs down, while having broad coverage. The managed care plan requires or creates incentives for an insured person to use providers that are owned, managed, or under contract with the insurer. These incentives may be financial incentives or additional benefits. Coverage usually includes routine physicals, pediatric immunizations and checkups, emergency care, hospitalizations, surgery, X-rays, lab tests, maternity and newborn care, and mammograms. While managed healthcare plans differ widely in their details, they all direct the patient toward a preapproved network of doctors and facilities, as well as limit coverage of any treatment sought outside the network.

In an effort to reduce healthcare costs, many organizations switched from the traditional indemnity plans to a health maintenance organization (HMO) in the late 1980s. HMOs require that a fixed monthly fee is paid, called a premium. In return, the health insurance company and its physician network provide a variety of medical benefits. From this network, a primary care physician is chosen who is then responsible for the subscriber’s overall healthcare as well as for making referrals to specialists and approving further medical treatment. Usually, one’s choice of doctors and hospitals is limited to those within the network, since they have agreements with the HMO to provide healthcare. However, exceptions may be made in emergencies or when medically necessary. Generally, the healthcare services offered will require a copayment to be made at each visit. The drawback of any HMO policy is that care received outside the healthcare network is not covered. The benefits of HMOs include reduction in paperwork, broad coverage for a range of medical services, including routine physicals as well as regularly scheduled preventive care visits.

Preferred provider organization (PPO) healthcare plans operate like an HMO in that a fixed monthly premium is paid, and the health insurance company and its healthcare network provide medical benefits to the subscriber. However, under a PPO insurance plan, a primary care physician is not required. As a result, seeing a specialist does not require a referral. Healthcare provided from outside the network incurs a higher copayment or co-insurance than if the provider were from within the PPO network. Thus, the subscriber gets to decide between a higher-cost plan with freedom of choice and a lower-cost plan that restricts care to within a network.

A point of service plan (POS) attempts to combine the freedom of a PPO with the lower cost of an HMO. The POS is based on the basic managed care foundation: lower medical costs in exchange for more limited choices. When enrolled in a POS plan, the subscriber is required to choose a primary care physician from within the healthcare network, who becomes the “point of service” for the subscriber. The primary POS physician may then make referrals outside the network, but then this will incur higher copay and deductibles than for the network provider. For medical visits within the healthcare network, paperwork is completed for the subscriber. However, if care is sought outside the network, it is the subscriber’s responsibility to fill out the forms, send bills in for payment, and keep an accurate account of healthcare receipts.

New Developments

Recent changes in federal law have led to establishment of new types of healthcare benefits. These include health savings accounts (HSAs) and health reimbursement accounts (HRAs). These are tax-exempt accounts that can be used to pay for current or future qualified medical expenses. Employers may make these savings mechanism available to the employees, and if the employer contributes to the HSA, these amounts are not included in the employee’s gross income. To be eligible to open a health savings account, the employees must have health coverage under an HSA-qualified high-deductible health plan (HDHP).

HDHPs can be provided by the employer or purchased from any organization. HRAs are employer established benefit plans funded solely by employer contributions that are excluded from the employee’s gross income, with no limits on the amount an employer can contribute. HRAs are often paired with HDHPs, but are not required to be. Many employers also offer consumer-directed health plans (CDHPs). CDHPs usually have lower health insurance premiums for the employees.

Long-term care insurance (LTCI) is the emerging healthcare benefit for the aging population to provide healthcare costs associated with skilled or custodial care. It provides benefits for nursing facility care, assisted living, and adult day care as well as personal services needed in the home and hospice care. Medicare and Medicaid will not pay for most of these services, and importantly, individuals with this type of insurance can protect their assets.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows employees to purchase extended healthcare coverage. Extended healthcare coverage can be purchased under COBRA if one’s job ends for any reason other than gross misconduct, or if work hours are reduced. To qualify, the employer must have 20 or more employees, and the employee must have been a participant in the employer’s group health plan, and the employer must continue to maintain a health benefit plan. In these circumstances, when a job ends, the insurance plan must provide written notice explaining the employee’s rights under COBRA. The employee has 60 days from the date the notice is provided or from the date coverage ends—whichever is later—to elect COBRA coverage.

It begins the day the healthcare coverage ends and lasts for up to 18 months (and longer in some cases). Under COBRA the group rate premium may be paid for healthcare coverage.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) protects the employee and their family from discrimination because of pre-existing medical conditions. Enacted in 1996, HIPAA requires that most plans provide coverage for pre-existing medical conditions after 12 months, in most cases. Further, HIPAA requires a new employer’s plan to offset this 12-month exclusion period by providing credit for the number of days the employee had previous coverage— unless there was a major break in coverage. The former employer is required to provide a certificate that documents the employee’s “creditable coverage.”

Bibliography:

Anne Austin and Victoria L. Wetle, The United States Health Care System: Combining Business, Health, and Delivery (Pearson/Prentice Hall, 2008);
Gary Claxton and Janet Lundy, How Private Health Coverage Works: A Primer 2008 Update (Kaiser Family Foundation, 2008);
Committee on the Consequences of Uninsurance, Insuring America’s Health: Principles and Recommendations (Institute of Medicine, 2004);
DeNavas-Walt, B. D. Proctor, and J. Smith: Income, Poverty, and Health Insurance Coverage in the United States: 2006 (U.S. Government Printing Office, 2007);
National Health Expenditures, Forecast Summary and Selected Tables (Office of the Actuary in the Centers for Medicare & Medicaid Services, 2008);
Margaret Schulte, How Healthcare Works: An Introduction to Hospitals, Health Systems and Other Providers of Care (Productivity Press, 2009);
Leiyu Shi and Douglas A. Singh, Delivering Health Care in America: A Systems Approach (Jones and Bartlett, 2008);
World Health Organization, The World Health Report 2000—Health Systems: Improving Performance (World Health Organization, 2000);
World Health Organization, Core Health Indicators; National Health Expenditure Data: NHE Fact Sheet (Centers for Medicare and Medicaid Services, 2006);
World Health Organization, The World Health Report 2006—Working Together for Health (2006).

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