INTRODUCTION
Health care is not free. Someone must pay. But how? Does each person pay when receiving care? Do people contribute regular amounts in advance so that their care will be paid for when they need it? When a person contributes in advance, might the contribution be used for care given to someone else? If so, who should pay how much?
Health care financing in the United States evolved to its current state through a series of social interventions. Each intervention solved a problem but in turn created its own problems requiring further intervention. This chapter will discuss the historical process of the evolution of health care financing. The enactment in 2010 of the Patient Protection and Affordable Care Act, commonly referred to as the Affordable Care Act, ACA, or “Obamacare,” created major changes in the financing of health care in the United States.
MODES OF PAYING FOR HEALTH CARE
The four basic modes of paying for health care are out-of-pocket payment, individual private insurance, employment-based group private insurance, and government financing (Table 2-1). These four modes can be viewed both as a historical progression and as a categorization of current health care financing.
Table 2-1abHealth care financing in 2013a
View Table||Download (.pdf)
Table 2-1 Health care financing in 2013a
| Type of Payment | Percentage of National Health Expenditures, 2013 |
| Out-of-pocket payment | 12% |
| Individual private insurance | 3% |
| Employment-based private insurance | 30%b |
| Government financing | 47% |
| Other | 8% |
| Total | 100% |
| Principal source of coverage | Percentage of population, 2013 |
| Uninsured | 13% |
| Individual private insurance | 7% |
| Employment-based private insurance | 47% |
| Government financing | 33% |
| Total | 100% |
These figures precede implementation of most of the Affordable Care Act.
Source: Data extracted from Hartman M et al. National health spending in 2013: growth slows, remains in step with the overall economy. Health Aff 2015;34:150–160; US Census Bureau: Health Insurance Coverage in the United States, 2013. September, 2014.
a
Because private insurance tends to cover healthier people, the percentage of expenditures is far less than the percentage of population covered. Public expenditures are far higher per population because the elderly and disabled are concentrated in the public Medicare and Medicaid programs.
b
This includes private insurance obtained by federal, state, and local employees which is in part purchased by tax funds.
Out-of-Pocket Payments
Fred Farmer broke his leg in 1913. His son ran 4 miles to get the doctor, who came to the farm to splint the leg. Fred gave the doctor a couple of chickens to pay for the visit. His great-grandson, Ted, who is uninsured, broke his leg in 2013. He was driven to the emergency room, where the physician ordered an x-ray and called in an orthopedist who placed a cast on the leg. The cost was $2,800.
One hundred ...
FAQs
premiums. The amount you pay for your health insurance every month. In addition to your premium, you usually have to pay other costs for your health care, including a deductible, copayments, and coinsurance.
Do US citizens have to pay for healthcare? ›
There is no universal healthcare. The U.S. government does not provide health benefits to citizens or visitors. Any time you get medical care, someone has to pay for it.
How do people pay for their healthcare? ›
Of the 58 percent of all health spending that was not financed by public budgets, 33 percent was paid for by private insurance payments, 20 percent by individuals out-of-pocket, and 5 percent by other private payments, including philanthropy (Levit et al., 1991a).
What happens if someone Cannot afford healthcare? ›
If you do not have health insurance, Covered California can help you determine if you qualify for Medi-Cal or federal subsidies, and can provide you with coverage options and plan costs. You can contact Covered California by phone at (800) 300-1506, TTY: (888) 889-4500 or by visiting their website at www.coveredca.com.
What are the two types of healthcare payment? ›
The 3 Core Types of Payment Models in Healthcare
- Fee-For-Service (FFS)
- Capitation.
- Episode-Based.
The four basic modes of paying for health care are out-of-pocket payment, individual private insurance, employment-based group private insurance, and government financing (Table 2-1). These four modes can be viewed both as a historical progression and as a categorization of current health care financing.
How do poor people pay for healthcare? ›
If you are poor, Medicaid is there to cover your healthcare cost. However, finding a doctor to treat you is the challenge. Most doctor do not accept Medicaid patients. Therefore, safety net facilities exist, as well as Public health facilities.
Can the US afford free healthcare? ›
If you look at the numbers, there simply isn't enough spare money in the budget to be able to afford to put every citizen on a Medicare/Medicaid program. However, if a deeper look is taken into other programs and tax breaks, affordability is possible.
How many people struggle with paying for healthcare? ›
As of 2022, more than 100 million Americans carried debt related to obtaining health care, according to the Kaiser Family Foundation. Commonwealth Fund President Joseph Betancourt, M.D., also suggested that high health care costs are linked to Americans having one of the highest rates of chronic disease in the world.
Why can't Americans afford healthcare? ›
In many households, health care costs take up so much of monthly budgets that they affect the ability of people to pay for other living expenses. And the reverse can also be true: when the cost of other living expenses rises, it can affect families' ability to pay for their health care.
There are many possible reasons for that increase in healthcare prices: The introduction of new, innovative healthcare technology can lead to better, more expensive procedures and products. The complexity of the U.S. healthcare system can lead to administrative waste in the insurance and provider payment systems.
Why we shouldn't have to pay for healthcare? ›
Universal health care would lower costs and prevent medical bankruptcy. A June 2022 study found the United States could have saved $105.6 billion in COVID-19 (coronavirus) hospitalization costs with single-payer universal health care during the pandemic.
What is pay in healthcare? ›
Finally, the catch-all for all other healthcare facilities sets the minimum wage for covered healthcare employees at: $21.00 per hour from June 1, 2024. $23.00 per hour from June 1, 2026. $25.00 per hour from June 1, 2028.
What is a payment system in healthcare? ›
The US healthcare payment system is a multifaceted web of interactions between various entities, from individual patients to large insurance companies. It's structured through processes, protocols, and payment models. One key component of this system is Medicare's Prospective Payment System (PPS).
What is meant by the term health care costs? ›
Definition. The costs for individuals, organizations, or a society directly or indirectly incurred by the provision of health-care goods and services, aimed at maintaining or recovering the health of a person or of a population.
What is the term for a patient paying for services? ›
Out-of-Pocket (OOP)- Payment for medical services due from the patient, including copayments, co-insurance and deductible. Outpatient (OP)- A patient who does not need to stay overnight in a hospital.
