Various Payment Regimens on Health Care Delivery

Subject: Healthcare Financing
Pages: 2
Words: 374
Reading time:
2 min

An upward trend of the costs of health care delivery is still imminent unless a complete overhaul of the health care system is accomplished. The introduction of health insurance as a way of prepaying health care costs in the beginning of the 20th century has not yielded fruits as such cost continue to escalate. Besides, Physicians must overcome bureaucratic processes between the insurance companies and the government to provide efficient treatment services to the patients. For instance, insurance companies have set labor intensive and costly preauthorization requirements for primary care physicians before diagnosing and treating the patients. Such barriers have impeded the delivery of quality of health care services.

A variety of payment regimens have been adopted since the beginning of the 20th century. To begin with, implementation of cost-plus reimbursement procedure by the Blue Cross and commercial insurance permitted doctors to charge whatever they deemed necessary due to the guaranteed reimbursement. Hospitals on the other hand were compensated based on their capital as well as costs. Consequently, such reimbursement necessitated provision of efficient healthcare delivery to the patients. However, the payment system increased health care costs since all stakeholders including doctors, hospital management and patients had no restraints in their expenditures as the third party would meet the expenses.

Additionally, employers started compensating their workers by offering health benefits following complaints about the increase of health care costs. Such initiative increased the enrollment in hospital plans in the early forties. However, employer-provided health plans that offered first Dollar as well as routine health coverage led to an increase in the health care costs. Moreover, the conditions of individuals without such plans deteriorated due to inflationary effects of the third-party payment.

Lastly, the government-initiated Health Programs and Legislation known as Medicare and Medicaid which ensured health services were provided for free or at highly subsidized rates. Such arrangement provided for reimbursement with great benefits to the medical industry. Physicians had the authority to charge reasonable fees on health care services in addition to controlling ways in which Medicare set such fees. Nevertheless, flaws involving cost inflation were experienced in the aforementioned government programs just as witnessed in the private sector before.