The Health Care System in the US

Prepared by Elena Turilkina,

American Centre, RGGU

February, 2011

HISTORY Before the 1920s, doctors didn't

know enough about diseases to really provide much useful care to sick people, and therefore they didn't charge very much.

People paid out of their own pockets on a fee-for-service basis.

Hospitals were few and mostly non-profit.

When doctors began learning more about diseases and effective treatments, they started charging more.

They also needed to treat people in hospitals to take advantage of new technology, which further added to the costs.

THE BIRTH OF A HEALTH CARE SOLUTION

During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of Blue Cross organizations in the 1930s.

The Blue Cross (created by Dallas teachers) was the first plan which guaranteed teachers 21 days of hospital care for $6 a year and was later extended to other employee groups in Dallas, and then nationally.

Another plan – the Blue Shield – covered physicians’ services.

The success of the Blue Cross and Blue Shield model encouraged other insurers to enter the healthcare market.

The shortage of labor during World War II encouraged employers to offer health insurance as an added benefit to employment packages.

Soon it was commonplace for employers to provide health insurance, and the government provided tax incentives for them to do it.

This happened at a time when many other countries were moving toward national health insurance - where the government pays for and regulates healthcare services.

The Blues turn course

In the early days, the "Blue” system--a nonprofit organization - charged everyone the same premium.

However, when private, for-profit insurers entered the market, they charged premiums based on: Age, Gender, Health status, Pre-existing medical conditions.

These private insurers ended up insuring the healthiest people and avoiding the sickest ones, which meant more profit for the company.

The Blues had no choice but to follow their lead.

Interestingly, each time the subject of national health insurance was mentioned, it was soundly trounced, even though most other developing countries were heading that way. Doctors, through the American Medical Association, were able to stave off government control of health insurance.

Insurance companies started providing expensive plans under unfair terms

Medicare and Medicaid History: Providing Healthcare for the recently retired, elderly &

poor.

The elderly and the poor were among the most medically needy in society and were the least likely to be covered by an employer's health insurance plan.’

To keep doctors from opposing newly proposed legislation--which led to Medicare and Medicaid--legislators agreed that the government would reimburse doctors at their "usual, customary, and reasonable rate" for taking care of the elderly and the poor.

This means doctors stood to gain a great deal from Medicare. The bill was passed in 1965 and consisted of two parts: part A covered hospital services; part B covered doctor's services.

Although both programs started small, expenditures in Medicare and Medicaid grew dramatically in the late 1960s as the programs began to gear up.

Basic Programs provided by the

GovernmentMedicare (1965) is a social insurance program administered by the United States government, providing health insurance coverage to people aged 65 and over.

Medicaid (1965) is the program for low-income adults and their children and people with certain disabilities.

TRICARE (1965) is a program which provides civilian health for military personnel, military retirees, and their dependents, including some members of the Reserve Component.

Children's Health Insurance Program (1997) - the program was designed with the intent to cover uninsured children in families with incomes that are modest but too high to qualify for Medicaid.

Health care spending

Need for reformMore money per person is spent on health care in the USA than in any other nation in the world.

• 55 million Americans – 18% of the population were uninsured in 2010.

• Medical debt contributes to 46.2% of all personal bankruptcies and 62.1% of filers claimed high medical expenses.

Health Care Reform

March 23, 2010 - Patient Protection and Affordable Care Act

March 30, 2010 – Health Care and Education Reconciliation Act of 2010

Reform includes health-related provisions to take effect over the next four years.

Focus on reform of the private health insurance market, provide better coverage for those with pre-existing conditions, improve prescription drug coverage in Medicare and extend the life of the Medicare Trust fund by at least 12 years.

Main provisions Insurers must offer the same premium to all applicants of the same age,

sex, and geographical location regardless of pre-existing conditions.

Medical eligibility is expanded to include all individuals and families with income up to 133% of the poverty level.

Health insurance exchanges will commence operation in each state, offering a market place where individuals and small businesses can compare policies and premiums.

All employers must provide insurance plans for their employees. Firms employing 50 or more people but not offering health insurance will pay a fine if the government has to subsidize an employee’s health care

Very small businesses will be able to get subsidies from the government.

Those who refuse to get insurance will be fined under the shared responsibility rules.

The law will introduce minimum standards for health insurance policies and remove all annual and lifetime coverage caps.

Additional support is provided for medical research and the National Institutes of Health.

5 important numbers on Health Care Reform

ZER0 for preventive services - As of September 23, 2010, insurers are required to pay the full cost of recommended preventive services, without charging a deductible, co-pay or co-insurance.

50 states now offer options for people with pre-existing conditions - The Pre-Existing Condition Insurance Plan program makes it possible for people who may have previously been denied coverage to purchase health insurance.

1,000,000 checks mailed to seniors - As of August 2010, 1 million rebate checks had been mailed to American seniors who had reached the gap in Medicare's prescription drug coverage, often called the 'donut hole.’

$8 Billion saved in just two years - Provisions in the Affordable Care Act are expected to save Medicare an estimated $8 billion in the next two years and almost $418 billion by 2019.

26 the age up to which young adults can be covered under their parents’ insurance plan - Beginning on September 23, all insurance plans will be offering young adults up to age 26 options for coverage under their parents’ plan.

Change in number of uninsured

The number will drop from current levels by 32 million people.

The share of legal nonelderly residents with insurance coverage will rise from about 83 percent currently to about 94 percent.

This leaves 23 million residents who will still lack insurance in 2019 after the bill's provisions have all taken effect.

2014 Premium costs for a family of four

There are several reason for the cost reductions.

Because the Affordable care act brings more people into the system, the government will pay less for those without insurance.

New exchanges established in 2014 will allow millions of Americans to pull together compare prices and get the best bargain.

Getting better value for every health care dollar, as 80% of the money will go to health care, not administrative services like advertising.

Control of premium. Insurance companies have to justify their premiums.

Tax credits.

Be healthy,Thank you!