Funding for Health Care Providers in the USA

Sources of funding for health care providers in the United States:

• Private insurance;
• Government insurance programs;
• Cash expenses of individuals.

In addition, the state directly provides some medical care in public hospitals and clinics with government personnel. Examples are the clinics of the War Veterans Administration and the Indian Reservation Health Administration.

Private insurance

Private insurances are purchased from commercial and non-commercial insurance companies accredited separately in each state. Although there are many health insurance companies in the United States, there are a limited number of them in each state.

Most private insurance is purchased by companies as a benefit to their employees. Bonuses are usually split between employers and employees. But since The cost of employer-provided health insurance is not considered taxable income for the employee, and the government essentially provides some subsidy. People can also purchase private health insurance on their own.

The Patient Protection and Affordable Care Act [PPACA], or Affordable Care Act [ACA], is a reform of US health care law aimed at, among other things, increasing the availability, marketability and applicability of health insurance (see US Department of Health and Human Services ACA information). Many of the provisions of this law contribute to the expansion of the private insurance market; it creates incentives for employers to provide health insurance and obliges virtually everyone not covered by employer or government insurance (eg Medicare, Medicaid) to purchase private health insurance (compulsory health insurance).

To cover the total risk and minimize overhead costs, the law requires the establishment of health insurance exchanges in each state. These exchanges are government regulated, standardized health insurance products that are operated and sold by private insurance companies. States can unite to create common exchanges. The federal government can set up exchanges in states that won’t do it on their own. There are separate exchanges for individuals and small businesses. To qualify for a listing, insurance must provide a certain minimum level of basic coverage plus contraceptive and breastfeeding coverage. Subsidies may be available to individuals on a sliding scale based on income.

The law requires that private insurance plans, including those available on exchanges, meet the following conditions:

• There were no annual or lifetime limits on coverage;
• Allowed no exceptions for existing conditions;
• Provided the opportunity for children to remain on their parents’ health insurance until the age of 26;
• Provided limited fluctuations in value (value added may only vary by age, geographic area, smoker status, and number of household members);
• Allowed only limited non-refundable expenses (currently $ 5,950 for individuals and $ 11,900 for families);
• Did not terminate the collateral (so-called waiver), except in cases of fraud;
• Covered certain preventive measures without splitting costs;
• Spent at least 80-85% of the premium on medical needs.

Recent and upcoming changes that will affect the Affordable Care Act include:

• Termination of government funding of premium tax credits and reduction of equity participation in expenses;
• Expansion of Association Health Care Plans (AHPs) and Health Care Reimbursement Mechanisms (HRAs), which are expected to be less expensive and less comprehensive than the Affordable Care Act market plans;
• Reducing the regulatory burden imposed by the Notice of Benefit and Payment Parameters (NBPP), which gives states more leeway to determine the core health benefits;
• Cancellation of compulsory medical education.

These changes are aimed at reducing public and private spending on health plans, but some authors warn that spending cuts may not work while they may be causing an increase in the number of uninsured or inadequately insured people.

State insurance and assistance programs

Major government insurance programs include:

• Medicare, which funds seniors, people with disabilities, and long-term dialysis users;
• Medicaid, which funds certain categories of people whose incomes roughly correspond to the poverty line or are living below the poverty line and / or have a disability.

Other government programs:

• The State Children’s Health Insurance Program, which provides appropriate federal funds to states for health insurance for families with children, and which was designed to provide medical coverage for uninsured children if the family income is below average but too high to apply for Medicaid;
• A program for children and young people with special health needs that coordinates funding and resources to diagnose care for people with special health needs;
• The Tricare program, reaching about 9 million active and retired military personnel and their families (almost 9.5 million Tricare users receive government-provided health care);
• Veterans Health Administration [VHA], which is a public health system that provides comprehensive health services for eligible war veterans (serving about 9 million veterans);
• Indian Health Service, which is a system of public hospitals and clinics providing health care to the nearly 2 million American Indians and Alaska Natives living on or near reservations;
• Federal Employee Health Benefits (FEHB), which allows private insurers to offer insurance plans in accordance with government-set guidelines to protect the interests of current and retired federal employees and their heirs;
• Substance Abuse and Mental Health Services Administration (SAMHSA) —Agency within the US Department of Health and Human Services that leads public health efforts to advance the nation’s behavioral health;
• Refugee Health Promotion Program, which provides short-term health insurance to newly arrived refugees.

In total, about 35% of the population receives government insurance or government health care. The Health Care Accessibility Act expands eligibility criteria for Medicaid and provides federal funding for government Medicaid programs. However, it is not yet clear how publicly available Medicaid will be in individual states, and therefore how many additional individuals will be enrolled.

Personal funds

People pay for health care that is not covered by other sources of personal funds, often using their savings for small expenses and loans (including through credit cards) while making large spending.

Contingency savings accounts are offered by some employers. From these accounts, workers can choose whether to have a limited amount of money deducted from their wages to pay out-of-pocket medical expenses. Deductions are not subject to federal income taxation. However, no interest income is credited to the accounts, and unused money at the end of the year is not canceled.

Medical Savings Accounts (MSS) can also be used to pay expenses at your own expense; interest is charged on these accounts and unused balances are not canceled. Most of the people eligible to open these accounts do because their health plans limit reimbursement enough to qualify them as high uninsured health plans.

About 17% of health care costs in the United States are funded from personal funds. Health care fees are generally much higher for individuals than for large payers such as insurance companies, who can bargain for discounts. Thus, individuals who pay out-of-pocket expenses that are not covered by insurance can have particularly large bills; these bills can be so large that it is simply unrealistic to pay them to one person. Personal medical expenses are the cause of a large number of bankruptcies in the United States.

The law requires almost all people to have some kind of health insurance. However, the penalties for non-compliance with this regulation are only financial in nature, and they are much cheaper than paying for health insurance, so a significant number of people are likely to be left without insurance and continue to pay for health care out of their own pockets.