Concept of Insurance in the US health care
Health insurance refers to an arrangement involving payment of medical expenses for patients (41). Under this concept, the entities involved in catering for the expenditure are private insurance companies, social welfare organizations and social insurance schemes (Niles, 38). Thus, some insurance programs cover the whole medical bill while others cover a certain percentage, leaving the patient liable to clear the balance (53).
Further, the whole US population is not adequately covered under health insurance programs. The percentage of the US citizens without health cover has continuously increased, notably in the period after 2000. This is due to economic recession and increased unemployment rates (44). Additionally, the cost of health insurance has continued to increase, making it unaffordable. Health insurance can operate in the form of employers covering their employees, individuals buying health insurance cover for themselves or the government covering some vulnerable population (76).
Nevertheless, there is a percentage of the population that is not covered by any health insurance program. The US constitution requires that all individuals shall obtain health care regardless of their ability to pay for the expenses. Therefore, the medical cost of individuals who are not covered is shifted to the insured (80). This occurs in form of increased premiums for health insurance payable by the insured. Alternatively, it occurs in form of increased taxes to the public. Therefore, in the US, hospitals and medical professionals are paid by insurance plans instead of being paid directly by patients (92).
Reimbursement methods in the United States health care system
The payment system in the United States health care does not operate directly. There has to be a flow of funds from patients to the insurance companies or the government, who in turn consolidate the funds and continues the flow to hospitals and medical professionals (84). Thus, doctors and hospitals are reimbursed for the medical expenses incurred by patients, making their payments a postpaid service. Doctors and hospitals have to incur the expenses through rendering services to patients, after which they are refunded (55). There are three reimbursements methods normally applied:
This refers to the payment made to a health service provider, based on the cost incurred while rendering services to a patient (60). This method is complex, due to lack of an accurate measure of costs. Therefore, the pay given to the hospitals and doctors is estimated on the basis of reasonable costs (75). This method applies the cost-plus system of payment, which is not popular.
Prospective payment method
This method entails an assessment of the payments to be made before the health service is rendered. It involves cost valuation through some set standards of diagnosis. The value of medical expenditure incurred by a patient is evaluated based on the results of the diagnosis (49). This method is favorable, since it has some standardized measures.
This method entails an upfront pay for medical expenses, based on the number of people enrolled in the program (56). It is an arrangement between a health care provider and the beneficiaries. The arrangement details the pay that a medical service provider should be paid periodically. This pay is obtained from subscriptions made by the beneficiaries (72). Under this method, members pay in advance for the medical services they may require in the future (78). This method is complex, and only suitable to a certain category of managed beneficiaries.
Niles, Nancy J. Basics of the U.S. Health Care System. Sudbury, MA: Jones and Bartlett, 2011. 36-95. Print.