Health Finance in U.S.A (Essay Sample)

Health care finance
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Module 1
Health Finance in U.S.A
Introduction
The United States is one of the leading countries with higher costs of health care (Gapenski and Pink, 2011). The federal and State government spend a lot of money annually on the provision of health care services to the citizens through health programs like Medicare and Medicaid. The health programs are generally financed by the public programs, private health insurance plans and out-of pocket payments by individuals. Over the recent years, the government has tried to bring a change to the health care sector by introducing new health reforms that aim at reducing the cost of obtaining a health care service, cost of health insurance and increasing the number of people enrolled in such programs (Gapenski and Pink,2011).
Distribution of National Health Spending
The major sources of national health expenditure are health insurance and out-of –pocket payments. By 2014, United States was spending $3.0 trillion on healthcare.. This stood at $3.0 trillion which accounted to 17.5% of the Gross Domestic Product. Data from the Health Affairs indicates that the sources of funds for health expenditure are health insurances (private and public health insurance) plus direct consumer expenditure on health (out-of-pocket). The distribution of the sources is as follow: Medicare spending is amounting to around $618.7 billion, which accounts to 20% of the national health care spending. This is due to faster growth rate in spending for health facilities, health practitioners and the net cost of insurance.
Medicaid spending accounts for 16 % of the whole national wellbeing expenditures. The increased federal government spending on Medicaid has led to its growth in health care expenditure.
Private Health Insurance expenditures stood at $991.0 billion which accounts to33% of the national health expenditure. This high rate is due to the beginning of Marketplace preparations, the tax credit of health insurance premium, health insurance business fees, and mandated gain design changes. Out-of-pocket total spending stands at $329.8 billion. It is the lowest source of funding due to the expansion of insurance coverage. About 17% of the total health care cost re paid for out-of-pocket (Gapenski and Healthcare Financial Management Association (US), 2014)
Distribution of Health Insurance Coverage
Private insurance accounts for the highest percentage of persons enrolled in health insurance schemes. About 63.6% of the U.S population under the age of 65 years is enrolled to private health insurance schemes while 67.3% of U.S population between the ages of 18-64 years is enrolled to private health insurance. In addition, 53.7 % of persons under the age of 18 years have private health insurance. The cost of health insurance premium cost from private insurance is relatively higher than the public health insurance programs.
Public health insurance accounts to 17.7% of the population between the ages of 18-64 years and 42.2% of the population below the age of 18 years. These public health insurance include Medicare and Medicaid that enrolled the elderly people, the disabled, children, and low income earners.
Impact of the Patient Protection and Affordable Care Act
This act was signed by president Obama in the year 2010 with efforts to bring reforms to the health sector. It has since then brought a lot of impacts on the health sector and is facing a lot and challenges (Gapenski and Healthcare Financial Management Association (US), 2014).  
The Act has reduced workers’ compensation and insurer costs. However, it has increased medical professional liability insurer costs by a few percentages. Participating hospitals and other medical institutions are facing difficulties due to financial constraints as result of reduced federal government funding to hospitals. This may limit their implementation to the expansion Medicare and Medicaid Programs such hospitals.
The State governments are given the mandate to implement expansion of the program in their respective states. Because the federal government doesn’t fully fund the expansion exercise, there has been an increased State allocation on health programs. This may limit the state budget due to limited sources of funds. For States with high percentage of low income earners, there have been an increased number of enrollments to the programs. This, however, has not reduced the number of people missing the eligibility for the public health programs. The Act has mounted a lot of pressure on health professionals due to extra attentive care imposed by the Act. This is a challenge since the number of health professionals available slowly decreases with time. It has resulted to over burden and stress on the professionals due to changes and reforms enacted to the health sector.
Lastly the health care providers are exposed to increased penalties which is pushing them to insolvency and risking accessibility for all the citizens. This is also due to reduced funding by the federal government.
Starting point of Employment-Based Health cover
The boss-provided health insurance manufacturing is dated back to the World War II when the federal government was trying to find solution for the post war inflationary post inflationary trends in the country. To respond to this, they introduced tax break to the health care. This led to a high requirement of manager-provided health cover plans over the previously more ordinary individual health cover. Managers received a hundred percent tax deductions while the benefits employees received were exempted from city taxation, state taxation, and federal taxation
In 1940s, the government attempted to stop the tax break and modification of healthcare, but the boss-based health insurance already took effect. Moroever, the employment-based cover was backed up by the labor groups which led to its popularity.
The distinction between Self-Insured and Fully insured Health Plan
In a wholly covered plan, the company always disburses as per-employee first-rate to an insurance corporation, the insurance corporation then assumes the danger of delivering health treatment to the employee. In this plan, premium varies across employer based on company size, member of staff population characteristics, and healthcare use. Payments can as well change over time within the similar company since changes in the demography of the employed groups.
On the other hand, a self-insured plan involves the employer directly paying for the health care claims to providers (Cleverley and Cameron, 2007). In this case, the managers bear the hazard linked with contribution health reimbursements to the employees. In this case health benefit varies by occupation or hours of work and the premium equivalent also varies across the U.S due to difference in cost of health care services across the country. Finally, Government spending on health program has been continuously increasing over the years; however, this has not translated to higher health conditions of the citizens. The government has outlined health reforms to make health services affordable to the public, increase health insurance coverage and control the actions of the private health cover providers. To fully, realize the objectives, the government must address the challenges facing the participants in health provision services.
Module 2
Medicare
Medicare has been federally administering and funding health insurance programs for old people over sixty five years along with persons with disabilities (Cleverley and Cameron, 2007). Medicare is one of the fastest growing federal programs with its spending taking more than twenty percent (20%) of the total federal government spending. Medicare financing and spending still remains to be a point of concern to federal financial controllers. This is due to constantly increasing Medicare enrollments and expenditure over the past years.
Financing Medicare
Finance for Medicare are drawn from three major sources namely the devoted Medicare payroll taxes, which are payments together from beneficiaries, the proceeds from federal returns tax, and payments from states for Medicare drug benefits. Beneficiaries also pay for other services not covered by Medicare through deductibles and coinsurance, and out-of -pocket payments.
Generally, this financing takes place thru two trust funds; that is the Hospital indemnity Trust Fund along with the Supplementary Medical cover Fund. Hospital cover Trust Fund credits the Medicare payroll taxes and other dedicated revenues obtained from employers, employees and high income earners. They also pay for inpatients hospital continues and other payback under Medicare part A. On the other hand, complementary Medical cover Fund is used to compensate for physician visits, part B of Medicare benefits and drug benefits. Part D on the other hand is financed through general revenues and premiums from beneficiaries. Here, beneficiaries earning high incomes pay a higher amount for the coverage. The state also remits payments for those with dual eligibility.
Medical Advantage (part C) beneficiaries pay monthly premiums for the benefits in addition to part B premiums. Medicare Part C is not financed separately.
Medicare uses the Medicare Hospital Insurance Trust Fund solvency to assess its financial position. During period where incomes to the trust funds exceed the remuneration spending, the amount of assets increases and when the earnings level is lower than the benefit spending then the assets level reduces. When spending surpasses income and the assets are fully exhausted, Medicare won’t have sufficient funds to pay all Part A gains. When ass...