America spent 17. 3% of its gross domestic product on health care in 2009 (1). If you break that upon an individual level, we spend $7, 129 per person every year on health treatment… more than any other country in the world (2). With 17 pennies of each and every dollar Americans put in keeping our country healthy, it’s no wonder the government is determined to reform the system. Irrespective of the overwhelming attention health care is getting in the media, we know hardly any about where that money comes from or how it makes their way into the system (and rightfully so… the way we purchase health care is insanely intricate, to say the least). This convoluted system is the unfortunate result of a series of programs that attempt to control spending layered on top of one another. What follows is a methodical attempt to peel away those layers, helping you become an informed health care consumer and an incontrovertible debater when speaking about “Health Care Reform. inch¬†Senior Home Care kl

Who’s paying the costs?

The “bill payers” get into three distinct buckets: individuals paying out-of-pocket, private insurance agencies, and the government. We all can check out these payors in two different ways: 1) How much do they pay and 2) How many people do they spend on?¬†

The vast majority of individuals in America are insured by private insurance firms via their organisations, followed second by the government. Those two sources of payment combined are the cause of near 80% of the money for health care. The “Out-of-Pocket” payers fall into the uninsured as they have decided to take the risk of medical expense independently. When we look at the sum of money each of these groupings spends on health health care annually, the pie adjusts dramatically.

The government at present pays for 46% of national health care bills. How is the reality possible? This will make far more sense when we examine all the payors independently.

Understanding the Payors

Out-of-Pocket

A select portion of the people chooses to hold the risk of medical expenses themselves rather than buying into an insurance plan. This group is likely to be younger and healthier than insured patients and, as such, has access to amounts much less frequently. Because this group has to pay for all incurred costs, they also tend to be much more discriminating in that they access the system. The result is that patients (now more appropriately classified as “consumers”) comparison shop for tests and elective techniques and wait longer before seeking medical attention. The payment method for this group is straightforward: the doctors and hospitals charge established fees for services and the patient pays that amount directly to the doctor/hospital.

Private Insurance

This kind of is where the entire system gets far more complicated. Personal insurance is purchased either individually or is provided by employers (most people get it through their employer as we mentioned). In terms of private insurance, there are two main types: Fee-for-Service insurers and Handled Care insurers. These two groups approach paying for care very differently.

Fee-for-Service:

This group helps it be relatively simple (believe it or not). The employer or individual buys a health plan from a private insurance company with a defined set of benefits. This benefit package will have what is called a deductible (an amount the patient/individual must pay for their health health care services before their insurance pays anything). Once the deductible amount is attained, the health plan pays off the fees for services provided throughout the health care system. Often, they will pay a maximum cost for a service (say $100 for an x-ray). The plan will demand the individual to pay a copayment (a showing off the cost between the health plan and the individual). A typical industry standard is an 80/20 split of the payment, so in the case of the hundred buck x-ray, the health plan would pay $80 and the sufferer would pay 20 dollars… remember those annoying medical bills stating your insurance would not cover all the charges? This is when they come from. Another problem with this model is that health care providers are financially incentivized and bound legally to perform more tests and techniques as they are paid additional fees for every single of these and/or held officially accountable for not buying the tests when things go wrong (called “CYA or “Cover You’re A**” medicine). If ordering more tests provided you with more legal protection and more compensation, wouldn’t you order anything justifiable? Can easily we say misalignment of incentives?