Health Insurance in the United States
Is governed by two federal laws: The Employee Retirement Income Security Act of 1974 (ERISA), which regulates employer-sponsored plans, and The Health Insurance Portability and Accountability Act of 1996 (HIPAA), which was passed to address public concerns about maintaining health insurance coverage when changing jobs. Both statutes have been updated in significant ways since their passage in the 1970s in response to contributions made by life insurers in offering private, voluntary healthcare insurance along with high-deductible health plans.
The government created programs include Medicare for people 65 years old or older, Medicaid for low-income earners, Children’s Health Insurance Program (CHIP) for children under age 19 whose family incomes are too high to qualify for Medicaid, and the Federal Employees Health Benefits Program (FEHB )for civil service employees and retirees.
Employer-based insurance plans
continue to be the most common form of health insurance through which employed people receive their healthcare in the United States. Generally, if employers choose to offer group coverage, it must be offered equally to all employees regardless of age, medical history or gender.
Most major insurance carriers
offer health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) that are paired with high deductible major medical plans in order to help pay for out-of-pocket expenses associated with high deductible plans. These accounts are tax-free when used properly in conjunction with a HSA compatible insurance plan.
United States healthcare
is higher than it is in any other nation, and these high costs continue to spark debate among politicians and economists about what can be done to reduce them.
A September 2013 report from the Organisation for Economic Co-operation and Development (OECD), the U.S. leads all nations with a combined health care expenditure of 17.7% in 2010, more than twice that of the second-largest spender Norway at 9.6%. Per capita spending on healthcare by U.S. citizens is $8,608 per year compared to $3,453 in Switzerland, which spends the second most money per capita on healthcare out of all OECD nations [1].
These high costs for healthcare result from a number of factors. The Congressional Budget Office (CBO), roughly 18% of all health care expenditures in the United States are spent on administrative costs related to private insurance, whereas Canada, which has a publicly funded single-payer system, spends less than 3% on such costs [2].
In addition, only 27% of U.S. citizens have what is defined as “platinum” or “gold” level insurance coverage, considered to be the most desirable and having superior benefits compared with those designated as bronze, silver and finally “catastrophic” and designed primarily for young people just entering the workforce and older citizens nearing retirement age [3].
Studies show that significant savings could be realized if the U.S. were to switch to a single-payer system in which all medical services are paid for by one entity, either the government or some independent administrative body.
Physicians for a National Health Program (PNHP) estimates when New York state proposed an overhaul of its insurance system in early 2014 that would have dropped coverage by insurers and instead provided it through expanded Medicare, the estimated savings of $45 billion per year could be realized [4].
A study conducted by Gerald F. Kominski and his colleagues found that if all Americans had health insurance coverage similar to federal employees who get their coverage from the FEHB plan, more than $350 billion could be saved or redirected to expanded coverage [5]. Despite this, the issue of universal healthcare is extremely controversial, and political gridlock makes it difficult for significant changes to be made.
Medicare has been instituted in America as an entitlement program which means that all legal residents qualify simply by virtue of age (65) or disability regardless of income or medical history.
The Qualified Medicare Beneficiary (QMB) program
provides additional assistance to those whose incomes are 100% – 120% of the federal poverty level, while the Specified Low-income Medicare Beneficiary (SLMB) program provides additional help to those who make between 121% and 135% of federal poverty guidelines.
In addition, QI-1 offers extra help for disabled individuals who are not yet 65 but whose incomes fall between 100% and 120% of the federal poverty level. The QMB, SLMB, and QI-1 programs help recipients pay for Medicare premiums, deductibles, coinsurance, annual wellness visits, and other expenses [6].
While this all sounds good on paper (or should I say in the Constitution?), there are three major barriers to American families taking full advantage of their available healthcare options under Medicare: high cost-sharing requirements; lack of coverage for prescription drugs; and licensure/certification difficulties that limit reimbursement to certain providers.
First among these is the fact that although traditional Medicare does cover 80% of out-of-pocket costs associated with health care services received after one has met the deductible, it does not do so for co-payments.
Under traditional Medicare, patients must generally pay 20% of costs for doctor visits and other non-hospital services while they are required to pay a $1,316 deductible before coverage kicks in [7].
Medicare beneficiaries may have to worry about the fact that there is no standard or “formulary” for prescription drugs under Part D, which means that each drug plan can decide on its own which medications are covered and what formulae will be used when covering them.
This results in confusion on the part of both providers and clients who must guess whether or not particular drugs are likely to be covered by their insurance coverage [8].
Perhaps the most significant barrier to Americans receiving quality healthcare is that of licensure and certification. As David Cutler wrote in an op-ed for The New York Times, “Medicare only pays doctors who have been specially certified as providers for Medicare…For lots of new medical services, there are no doctors who are both willing and able to provide them on a mass scale” [8].
Specifically, this means that many hospitals across the country will not accept Medicare because they do not want to limit their patient pool exclusively to those aged 65+.
Furthermore, reimbursement rates under traditional Medicare vary by geographic area, which has led many rural health care providers to either close down or stop accepting Medicaid/Medicare clients altogether since it does not make economic sense to provide healthcare for so little.
The Affordable Care Act (ACA) is designed to help people pay for health care through a combination of tax credits and cost-sharing subsidies [9]. However, since the Supreme Court ruled in 2012 that states could opt out of Medicaid expansion, only 25 states have opted in, which has left 3 million Americans uninsured with no access to medical care [10].
There are many factors contributing to the United States’ high health care costs, such as drug companies jacking up prices on life-saving medications, unnecessary screenings and lab tests done simply to protect doctors from malpractice lawsuits, the lack of standardization/formulae when it comes to prescription drugs covered under Medicare Part D and licensure/certification restrictions that limit American providers to only accept traditional Medicare (meaning they can’t take Medicaid/Medicare), the problem is clear: lack of coverage.
According to Healthcare.gov, a family of four with a household income between $31,809 and $63,255 would qualify for up to 52% off their premiums (before subsidies) under QI-1 [11].
This means that this family would be paying about $400-$833 per month, depending on where they live before tax credits. They would also pay no more than 5% – 15% of their income towards deductibles which could end up meaning a deductible of $3,500 – $7,000. This means that this family would have to pay about $1,300-$5,100 before any of their medical costs would be covered by insurance [11].
As for a single citizen without a dependent who earns a household income between $11,490 and $45,960 (or no more than 400% of the federal poverty level), they could qualify for tax credits that cover up to 72% of premiums [12].
In addition, they would pay no more than 2%-8% of their annual income on deductibles which could end up being as little as $750 or as much as several thousand dollars [12]. Therefore this person’s yearly cost could range from $900-$5,100 before their medical costs were covered by insurance.
With this information, it is clear that Americans are paying a lot for healthcare coverage but receive very little in return. In fact, according to The Commonwealth Fund’s study conducted from July 2015 – February 2016 of 20 developed countries around the world that provide universal health care, the U.S. was ranked last at number 11 with regard to quality and efficiency [13]. It is also interesting to note that these rankings have not changed much since a similar study was conducted ten years ago [14].
So what can be done?
While there are many ideas out there as to how American citizens could better afford health care, such as changing the standard of living to match that of our European counterparts, doing away with proprietary hospitals, and saving billions on prescription drugs by allowing Medicare to negotiate their prices with pharmaceutical companies, there are two mainstream ideas that have gained enough traction for further discussion.
The first idea is a single-payer system which is a Medicare-for-all plan which would provide all Americans with socialized healthcare [15]. A socialized medical system would directly conflict with American ideals of freedom since it would limit consumer choice but considering this country’s track record in regards to providing health care to those who can’t afford it.
This idea is gaining traction.
Another idea would be for the government to provide tax credits or subsidies that Americans could use on healthcare plans and/or insurance premiums then make those costs deductible from their income taxes [16]. This plan would remove some of the burdens for those who couldn’t afford health care but still put it back on the government, which means more spending through an already bloated budget.
While neither option is perfect (neither involve tort reform nor changing current American lifestyles), one has to wonder if both ideas were implemented into a new law that made it mandatory for all American citizens to have a standard level of coverage with a maximum out-of-pocket spending limit, would that be enough to encourage more Americans to seek out preventative care?
It’s hard to tell since the U.S. has always been the country where everyone is trying to do better, but when it comes down to healthcare, there are no guarantees.
Even so, there are still health insurance companies out there that offer different types of coverage for all sorts of people with different needs. The key is finding one that fits your needs.
Health Insurance in the United States,
For those who don’t want to do the work themselves, there is also the option of using an agent like us or one from our directory. This website can help you find the best insurance policies possible and help you avoid getting ripped off by scammers looking to cash in on your financial situation.
Even better yet, we may be able to adjust our commission, so we make money by finding the most affordable plan for you instead of making money if we sell you a more expensive plan with them as a broker!
One thing’s for sure – there’s no way healthcare costs are going anywhere but up. Some experts have projected that by the end of this year, they will rise by as much as 15% [17]. While nothing is certain, it does appear that a lot of Americans are going to feel this hit pretty hard, and people who need medical care will be forced to choose from one of many terrible options due to financial restrictions. This means choosing between bankruptcy or ignoring health problems until they get so bad it could cost them their lives.
In conclusion, getting good healthcare and health insurance coverage is becoming more and more difficult each day as insurance companies lay off employees and raise premiums while employers decide not to cover their employees at all. Although the ACA has been a step in the right direction, it hasn’t stopped any of these negative trends from unfolding.
In fact, it hasn’t even been fully implemented yet, and already it’s struggling to be affordable [18]. If there was a way for workers to get better coverage while their employers paid less money for their healthcare, maybe more companies could afford insurance policies, but until then, we’re going to have a considerable gap in the U.S. workforce with full-time jobs that offer health care and part-time jobs without benefits.
Health Insurance in the United States, Advocate Health Plans