USA’s Medical Insurance essay
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There are several issues, involved in the potential reduction in USA’s medical insurance reimbursement of 40%. This report has a list of issues for the board of directors on the ways possible for meeting the impacts of the proposed funding costs. While listing the issues, this report is also sensitive to the healthcare issues as well as the needs of the community and the patients, while focusing on the legal, financial as well as the alternative health care models with specific stating examples. The structure of this report consists of the introductory part, the body or rather the findings on the issues of the reduction of the medical insurance, the results of these issues and finally, the conclusion that clearly draws out the findings’ implications as well as the deductions based on the main facts. The proposed reduction of the medical insurance reimbursement would highly affect several citizens. It is, therefore, necessary for the government to create solutions of improving healthcare. The government must also set up data services. These data services help in analyzing the provision of healthcare from time to time as well as enough funds for the citizens’ healthcare. This will ensure that all citizens receive quality healthcare whether rich or poor.
Findings on the Potential Reduction of Medical Insurance in the USA
Medical and Medicare reimbursement in the USA has skyrocketed since the beginning of Medicare in the year 1965. Despite the different measures, mainly aimed at controlling growth, there are slight improvements over the years. Several legislative fixes have always had time aimed at developing long-term solutions, whereas several stakeholders stand to winning and losing as they deal with the current reimbursement of 40%. Several of these stakeholders are the federal government in the USA and its’ stakeholders, the healthcare providers, the third-party payers and even the Medicare recipients. There have been several problems in implementing the reimbursement cuts. This is because of the fact that there are other issues that need consideration like financial and legal issues, affecting the citizens. These obstacles mainly include barriers on financial capacity of the healthcare providers that rely on the Medicare revenue and also the obstacles surrounding the patient care. There are several questions put forward over the purposed cutting of medical insurance reimbursement in the USA. Medicare, over the years, has monumental progress since its beginning in 1965. At the moment, several hospitals’ plans on compensation are, mainly to the outpatient services, covered by the Medicare sector. This potential reduction on the medical insurance reimbursement of 40% has caused several issues. These range from problems to the physicians as well as creation of barriers to healthcare and also problems of their own Medicare recipients. It is important to study these problems deeply in order to understand them (Wiley-Blackwel, 2010).
Medical insurance is a type of insurance that is against the risks of the citizens, incurring higher medical expenses, when seeking treatment. The medical insurers often develop routines of financial structure, for example, payroll tax or monthly premium in order to ensure that there is the availability of money used for the payment of healthcare benefits often specified in given insurance agreement. The benefits of the medical insurance are in several situations distributed by a country’s central organizations like the private businesses, the government agencies or the not-for profit entities. Most of the Americans rely on the private medical insurance, as concluded in a research conducted by the CBC. It is currently the principal source of insurance among the Americans. The public programs only provide for the poor or rather the low income children as well as the senior citizens (Kessler & Summerton, 2006).
There are several groups in the USA currently searching for answers to the problem of the potential reduction of the medical insurance reimbursement of 40%. The groups involved include the economists, the interest groups, the physician organizations as well as the hospital organizations. The USA House of Representatives as well as the USA Senate are separately working on the ways, aimed at the reduction in the expenses as well as the reimbursements, while at the same time trying to come up with the long-term solutions to these issues. The main significant challenge to the implementation issue is mainly the financial effect to providers who rely mainly on the reimbursements. These include the providers, the physicians and hospitals. The medical insurance mainly accounts for a larger part of the revenues to the health facilities and to the healthcare providers. The potential reduction of the reimbursements for the services, therefore, will lead to the generation of a considerable financial impact. The healthcare communities have also been resistant to the additional cuts. Generally, the implementation issues surround the potential reduction of the medical insurance reimbursement of 40%. Implementing it has not been possible, therefore, as it is one of the issues at hand at the moment. This is because of the constant refusal by the healthcare communities mainly because they understand the consequences of its implementation to the community and the patients (NB & MB, 2006).
From the late 1990’s into the early 2000’s, the health advocacy groups in the USA mainly began to help their patients to deal with the difficulties of the medical system. This mainly led to a variety of problems among the public. A study counted was able to come up with results that close to 62% of people in the USA declared that financial problems as well as bankruptcy in the year 2007 was mainly because of the unpaid medical expenses amounting to a lot of money. 92% of the people’s cases consisted of the medical debts and close to 80% that filed for bankruptcy mainly had medical insurance. The Medicaid as well as the Medicare programs on the country, mainly accounts for about 50% of the country’s national spending. The pilling up of these financial issues has constantly caused confusion in the healthcare and medical care insurance sector of the country (Health, 2006).
The financial issues prompted the USA President Barrack Obama in the year 2010 to sign into law the ‘America’s Health Insurance Plans’, which mandated that each American must have a given medical insurance either private or public insurance (Krisberg, 2005). The America’s Health Insurance Plans also stated that failure for one to be insured would lead to heavy fining as it would be seen as breaking the law. The purpose of the medical insurance was to act as a pro quo’ that is the falling or the dropping of the unpopular features of America’s medical insurance system, for example, the exclusions for the pre-existing conditions, the premium weightings as well as the screening of the applicants of insurance. The other bill signed into law was the ‘Patient Protection and Affordable Care Act’. All these bills signed into law aimed at streamlining the country’s healthcare sector (Kessler & Summerton, 2006).
The major problem with the American health care at the moment is what several experts refer to as ‘perverse incentives’. This is the pay that the doctors as well as the hospital bill insurers get for each individual service be it MRI, office visit or even hour of operating-room time. It is a fee for the service that drives the health care inflation by rewarding providers that order the potentially unnecessary tests or to the people that perform the potentially unnecessary surgeries or even to the ones who make mistakes in the operating room. A patient’s readmission to the hospital causes billable expenses to the hospitals’ administration. In most cases, the fee, paid to the doctors, is quite high, and therefore, plunges the hospital into expenses (Kite-Powell, 2011). There has been a proposed reduction of the medical insurance reimbursement of 40% and doing this would significantly affect the patients. In order to avoid the latter impacts on the patients, it is mandatory for the hospital’s administration and even the government to come in and ensure there is a reduction of the bills paid to the doctors for everything they do, even when there is the readmission of a patient. Their ‘perverse incentives’ should be cut to ensure equality and to bring the nation up from the downward healthcare problems.
Financial problems fall under the main issues affecting healthcare. It requires fundamental addressing, when studying the impacts of reduction of medical insurance reimbursement. USA’s health costs in comparison to other countries show that America’s health costs stand at 40 % above the costs incurred in other countries. Currently, people prefer seeking treatment from other countries like India and Germany. Despite the high costs, there is no apparent benefit in the improved health as compared to the other advanced countries. It would, therefore, be highly affected, if the reform groups would lower the medical insurance reimbursements. The healthcare savings of the people would come in three crucial ways: one of them is reducing the administrative expenses. When addressing this issue, results show that wide information and technology mainly lead to immense administrative expenses, ranging from the excessive personnel to the wasted time (Warner, 2012). There is also the issue on the reduction of marketing as well as underwriting costs, whereby the medical insurance administration on several occasions cover only 12% of the overall cost and only 50% in the large firms, finally, lesser and fewer acute episodes. This is whereby excellent healthcare facilities charge more on the acute diseases by paying lesser attention to prevention measures even on the acute diseases like cancer diseases and the heart diseases that have become rampant in several countries USA being a prime country.
These three financial issues demonstrate the effect of the potential reduction of medical insurance reimbursement on the community and the patients. If the insurance firms cover only 12 % of the costs, then, it means that the patients cover close to 88%, and this is a high amount of money. The potential reduction of the medical insurance reimbursements means that patients and the community at large would end up having lower finances to spend in hospitals. The excellent healthcare facilities are also well-known for charging highly on some rampant acute diseases, therefore, creating an enormous strain on the patients. The potential reduction of the medical insurance reimbursement would cause a massive strain on patients. This is because they would be forced to pay part of the bills, since there would be less insurance money for them to use. Avoiding the giant administration expenses would, therefore, enable the hospitals to channel some of the money they can save into helping the patients, especially the ones suffering from acute diseases (Dedi, 2007).
While addressing the issue of the proposed funding, it is of high importance to discuss the problems affecting the physicians. A dark cloud, looming over the physicians, consists of Medicare issues as well as the issues of potential reduction of the Medicare insurance reimbursements. If the Congress does not get into full action, then, the payments, made to the doctors, will be lowered by up to 5% as well as their medical insurance benefits (Kessler & Summerton, 2006). This, therefore, creates a financial breakdown, which can wreak havoc with the already strained medical practices. Cumulatively, the proposed cuts by the federal government represent close to 31% reduction in the Medical reimbursement. The American Medical Association has stated that if there is a readjustment of these cuts in the year 2013 for cost inflation, then, the Medicare payment rates to the physicians would be lower, even less than a half of what these same physicians got in the year 1991. If there is no fixing of the situation on the potential reduction of the medical insurance reimbursement, the physicians’ practices would be devastating and this would impact on the community as well as the patients, therefore, leading to high mortality rates due to poor medical attention from the physicians. Several physicians’ practices at the moment are scarcely performing and even surviving. When coupled with the current problem of the soaring professional legal responsibility costs, the Medical reimbursement is currently a critical issue for the physician's practice and viability. The failure to come up with a solution for this problem would only lead to the endangering of the older patients’ and the younger children access to the much needed healthcare services. This is mainly because they are the main people in need of constant medical attention. The estimated reduction in the physician Medicare reimbursement in 2006 stood at 4.8%, same as in 2007, 2008 and 2009. Addressing the physicians’ issue and ensuring their satisfaction should be the governments’ task before deciding on the potential reduction of the medical insurance reimbursement.
Poverty is another problem. It is indispensable to clearly state how this issue can be dealt with, to avoid problems, in case the potential reduction of the medical insurance reimbursement pushes through. On the issue of poverty, cutting down the medical insurance reimbursements would not be fair to the poor USA citizens. Not everyone in the country can afford excellent Medicare, since there are poor as well as rich people. It is vital for the federal government to consider the state of some of the people before considering the possible reduction of medical insurance reimbursement. The impact of this would be the failure of the poor citizens to seek quality healthcare due to lack of sufficient medical insurance. Poverty in the USA, as a sole factor, does not allow anyone to receive Medicaid insurance benefits not unless they also fall into a defined eligibility category (Decker, 2007). Medicaid in the USA does not fully provide medical healthcare to the poor people. It does not provide even healthcare providences to the poor people, not unless these people are in a designated eligibility group. This, therefore, means that the reduction of medical insurance reimbursements does not only mean poor healthcare but it also means the citizens have nowhere to turn to. Another impact of the reduction of the medical insurance reimbursements on the community that is closely related to poverty is also the reduced life standards. Reduction of medical benefits on the community lowers the life standards of the people. It increases the mortality rates since people are more prone to diseases unlike before.
When compiling a report on healthcare issues it is necessary to consider the legal issues, when talking mainly about the issues, affecting the patients and the community at large. Since the year 2010, the National Health Law Program in the USA has been working closely with the healthcare advocates as well as the leaders who educate the policy makers as well as the consumers on the several benefits that the ACA offers. The ACA stands for the ‘Affordable Care Act’ that ensures that healthcare costs are in line with the law. Their provisions include protections for the consumers mainly from the unfair medical insurance companies’ practices as well as advocating for better preventive care coverage. Their provisions also advocate for new dependency coverage rules. These rules allow the young adults to be covered under their parents’ insurance plans even up to the age of 26 years. This is already in effect in the USA. Over the recent years, the legislative attention as well as the media both paid much attention and focus on women and the importance of the women accessing proper healthcare anywhere in the country (Warner, 2012).
Current Situation in the Country
The current healthcare situation in the USA is at the moment on the spotlight mainly as part of President Barrack Obama’s policies on health. In the year 2008, it became a leading priority issue, used by all the candidates before the 2008 presidential election. This is mainly because the healthcare issues in the USA have been on the spotlight during the earlier years before the 2008 general elections. Reports show that a high number of Americans are uninsured despite the high annual costs spent in healthcare. This has made the public increasingly worried because this is the main reason that has contributed to the rising costs of healthcare. The federal government spends a higher amount of money on the health sector as compared to the other sectors. Research has even showed that in 2017, the government will be spending close to 17,000% per each citizen for health. Reports show that only close to six in ten of the USA citizens have the employer provided healthcare insurance. The percentage of people, covered with the USA governments’ health insurance programs, stood at 27% in the year 2005. Close to half of the USA population was under Medicaid coverage. Studies, conducted on the public opinion of the USA citizens on the Healthcare issues, showed that close to 83% of the insured Americans expressed satisfaction (NB & MB, 2006).
How to Meet Impacts of the Reduction of Costs
Over the past months in the USA, there have been discussions on the need for reforming the healthcare sector. This has always been in consideration with the capital budgeting. The healthcare industry in the USA has been under high scrutiny because of the USA administrations’ efforts in curtailing increasing healthcare costs. Several citizens cannot access healthcare in the USA due to high costs. It is no longer seen as only survival sustenance. The absence of proper capital budgeting policies might lead to potential disasters for the hospitals. This is mainly because increasing of costs as well as decreasing in the governments’ revenue often impacts negatively on the bottom line as well as when there are limited funds. It is, therefore, necessary for the government to have a wise game plan that accompanies the reduction of costs. They also need to have a wise game plan on how to use funds because despite this the hospitals might plunge into a truly serious situation (Westin, 2005).
Capital budgeting entails the investment analysis of the alternatives that mainly involve cash flows and when talking about healthcare costs, healthcare reforms on cost and even the reduction of medical insurance cost reimbursement, capital budgeting in the USA is mandatory. In order to better understand how the capital budgeting occurs in the USA healthcare industry, it is essential to study few scenarios that surround the hospital vicinity. The first scenario involves the human resources department. The human resources department could propose, for example, a daycare facility for employees who have children. The justification here is that the turnover rates of the employees will be lower and the nurses, on the other hand, would be potentially attracted to the hospitals as a result of the day care services offered. This is one of the ways, in which the reduction of the medical insurance reimbursement can be less effective to patients and the community. This is because despite the reduction of medical insurance the patients would still have nurses to attend to them (Dedi, 2007).
The imaging services in the hospital can also be of help by purchasing additional CT scanners to help in easing the bottleneck as well as the backlog of work in various departments. Purchasing a scanner is quite costly and someone may argue out that there is no need for purchasing a second one. The high demand for the use of one scanner creates high tension in between employees and the machine can also wear out. There is also the issue on maintenance costs, the increased overhead costs and also the overtime payment for the technicians in case of breakdown. The hospital would also be left vulnerable, if the current scanner, for example, stops or seizes to function. The costs, incurred at the end, would be higher (Decker, 2007).
The last scenario is on the doctors, purchasing a remarkable machine, aimed at the elimination of any potential patients’ house hospitalization. With the purchase of the machine, there is also the benefit of reduced hospitalization, and therefore, reduced costs incurred by the patients at the hospital. With the machine, the hospital would also aim at the reduction of variable costs since only the sickest patients would remain in the hospital. These are some of the ways that can be used to meet the impacts of the proposed funding cuts (K & M, 2010).
In order to meet the impacts of the reduction of costs, it is necessary to consider the financial, the legal as well as the healthcare costs. It is also essential to state some examples of healthcare models in order to clearly demonstrate the impacts and how to meet them. In order to help meet the information needs of the health care reforms, the USA Agency for Healthcare Research Quality’ brought a group of researchers, policy makers as well as producers of the health care data. The purpose of the meeting was mainly to begin the development of a strategy, aimed at optimizing availability of data and information for the enactment as well as implementation of the healthcare reform. Informing as well as tracking the healthcare reforms mainly requires remarkably solid data on all aspects of USA’s healthcare systems. This is from the coverage of insurance to the care delivery and also to outcomes. MEPS provided for information on insurance coverage, utilization as well as expenditure by employers and the patients. The groups’ recommendations also aimed mainly at improving these databases as well as the simulation on the insurance coverage and the expenditures (JA, 2006). The attendees on their part suggested that the longitudinal design and the clinical information could be improved in the country.
There are some of the examples of the healthcare models used in finding ways to meet the impact of cutting costs in the USA. There are close to 200 countries situated on planet earth and each country has its own ways and sets of arrangements aimed at meeting three basic healthcare costs. These include treating sick people, keeping the people at their best health as well as ensuring that families are not financially ruined from the astronomical medical bills. There are examples of models, applied in this case in the USA (Kite-Powell, 2011).
The National Health Insurance Model
This system mainly uses the private sector providers but at the end, the payment is from a government run program of insurance that each USA citizen pays into it. These insurance programs mainly tend to be less cheap as well as exceptionally much simpler in administration matters, rather than the normal American profit style of insurance companies. The single payer, therefore, tends to possess considerable power for negotiating the prices to lower costs. The system, used in Canada, for example, has highly negotiated lower prices from the pharmaceutical and medicine companies that the Americans have left their own drug stores in a bid to run to the North and secure drugs at a cheaper cost. The national health insurance plans also controls the costs incurred by limiting medical services that they will pay for or also by making the patients to wait for treatment (Health, 2006).
The Beveridge Model
This model came from William Beveridge, an extraordinarily daring social reformer, accredited for designing the UK’s National Health Service. In this model, healthcare provision and financing is by the government through the tax payments like the public library and police force. Many, but not all, clinics and hospitals are under the ownership of the government and there are private as well as public doctors. In the USA, this model is the same as the Veterans Administration as an example of a socialized science medicine and healthcare model. There is also the Bismarck model, which is prominent in Germany and unlike the United States of America’s healthcare insurance, whereby they aim at making a profit, the Bismarck model found in Switzerland, Belgium, Germany and Spain covers everybody and does not make profit (Health, 2006).
Solutions to the proposed reduction of funds
On the case of the physicians, after studying the situation as well as the problems at hand surrounding the potential reduction of the Medicare Insurance Reimbursement, the USA Medicare Payment Advisory Commission stated their stand in the month of January 2006. This body is an independent USA federal body, mainly set up with the aims of advising the Congress on Medicare issues as well as the medical insurance reimbursement issues on both the community and the patients. In recommending the increasing of the physicians’ rated, Med Pac stated that the doctors practice expenses would increase by close to 3.6%. This, therefore, means that even a 2.7% increase of the medical reimbursement would still leave the country’s physicians in worse financial position. Senator Edward M. Kennedy even stated that he believed that the physicians’ reimbursements must not be cut. Med Pac also argued for the changing of the formula used in calculating the doctors’ reimbursement (M, 2010). It is, therefore, indispensable to put into consideration the doctors’ welfare, as they are a mandatory sector responsible for the providence of healthcare. Without them there would not be any need to come up with medical insurance in the first place. Plans are also underway so that by the year 2013, USA Medicaid would be expanded to cater for an estimated higher 16 million lower-income USA citizens.
On the issue of finances, findings show that if the healthcare is in a reasonable manner, then, there would be no apparent reason to cut the medical insurance reimbursement of 40%. There is even a greater potential of the reduction of the costs, while at the same time improving the healthcare quality. This cannot just happen since it requires meaningful use of the information technology department issues, the redesigning of the private as well as the public payment systems and finally, putting emphasis on prevention rather than cure. The streamlining of the administrative system would save a lot of money that can be channeled to the patients’ welfare. The movement of individuals into the larger firms would lead to the saving of over ten billions of USA dollars, whereas paying attention to the prevention measures lowers chances of getting sick in the first place (P, 2010).
The other solution, therefore, to the issue of the potential reduction of medical insurance reimbursement dwells on the healthcare itself. This is because the reduction of medical insurance reimbursement would not be seen as a big issue if certain measures are in place at the beginning. This can be achieved by coming up with a reform bill on the healthcare costs mainly by ensuring the Congress focuses on the cost trigger issues. It is crucial to come up with a bill that is costless (JA, 2006).
The thesis statement for this report was that the potential reduction of medical insurance reimbursements would negatively impact several citizens. As seen in the above report several problems would arise in case of any potential funding cuts. The government must, therefore, put aside enough funds for providing healthcare to the citizens. It should also come up with excellent ways of meeting the impacts of reduced funding. The issue on the costs is noteworthy, since the USA healthcare costs are currently at 40% higher than the healthcare costs in other countries. There should be reforms to correct this in order to ensure all citizens have quality healthcare. The congress should also include enough money for the healthcare department in the country.