Healthcare: USA

Paper Summary:

For the majority of Americans healthcare delivery in the United States has been via a market driven system, usually through purchase of health insurance, participation in HMOs or other types of collective agencies. This paper briefly discusses how those who qualify enrollment in Medicare and Medicaid programs cover or defray costs of healthcare, but how for a growing number of people in the U.S. medical care costs are not covered by insurance or government programs, for them out of pocket and indigent services are their only options. This paper looks at the how financing healthcare affects both costs and use of healthcare services.

From the Paper:

"Private health insurance in the United States developed around the 1930's during the Depression4 and grew during the economic expansion of the post-WW II years. "Under most private insurance and Blue Cross--Blue Shield plans, fee-for-service, with physicians determining the economic value of their own services, became the established method of reimbursement for physician services covered under the benefit structure of most insurance policies." 5 Payment for healthcare services through private insurance arrangements removes the cost knowledge for the consumer of what the physician / hospital is actually charging of delivery of the services. In economic terms this indifference by the consumer to the costs of service removed the ?market discipline.?6 Healthcare providers have little reason to contain costs. To offset the removal of market discipline insurance companies initially developed two approaches, either insurance companies will pay up to a predetermined specified amount on or will pay based on a predetermined schedule of allowances, regardless of the charges."

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