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HealthCareSystemOverview - Overview of the U.S Health Care...

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Overview of the U.S. Health Care System Written by Kao-Ping Chua AMSA Jack Rutledge Fellow 2005-2006 February 10, 2006 INTRODUCTION The U.S. health care system is the subject of much polarizing debate. At one extreme are those who argue that Americans have the “best health care system in the world”, pointing to the freely available medical technology and state-of-the-art facilities that have become so highly symbolic of the system. At the other extreme are those who berate the American system as being fragmented and inefficient, pointing to the fact that America spends more on health care than any other country in the world yet still suffers from massive uninsurance, uneven quality, and administrative waste. Understanding the debate between these two diametrically opposed viewpoints requires a basic understanding of the structure of the U.S. health care system. This primer will explain the organization and financing of the system, as well as place the U.S. health care system in a greater international context. ORGANIZATION OF U.S. HEALTH CARE SYSTEM As with all other countries, there are both private and public insurers in the U.S. health care system. What is unique about the U.S. system in the world is the dominance of the private element over the public element. In 2003, 62% of non-elderly Americans received private employer-sponsored insurance, and 5% purchased insurance on the private non group (individual) market. 15% were enrolled in public insurance programs like Medicaid, and 18% were uninsured. Elderly individuals aged 65 or over are almost uniformly enrolled in Medicare. 1
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Public Health Insurance Medicare 2 o Basics: Medicare is a federal program that covers individuals aged 65 and over, as well as some disabled individuals. o Administration: Medicare is a single-payer program administered by the government; single-payer refers to the idea that there is only one entity (the government) performing the insurance function of reimbursement. o Financing: Medicare is financed by federal income taxes, a payroll tax shared by employers and employees, and individual enrollee premiums (for parts B and D). o Benefits: Medicare Part A covers hospital services, Medicare Part B covers physician services, and Medicare Part D offers a prescription drug benefit. [Medicare Part C refers to Medicare Advantage – HMO’s that administer Medicare benefits]. There are many gaps in Medicare coverage, including incomplete coverage for skilled nursing facilities, incomplete preventive care coverage, and no coverage for dental, hearing, or vision care. Because of this, the vast majority of enrollees obtain supplemental insurance. Overall, seniors pay about 22% of their income for health care costs despite their Medicare coverage. Medicaid 3 o Basics: Medicaid is a program designed for the low-income and disabled. By federal law, states must cover very poor pregnant women, children, elderly, disabled, and parents. Childless adults are not covered, and many poor individuals make too much to qualify for Medicaid.
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HealthCareSystemOverview - Overview of the U.S Health Care...

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