Cost containment strategies in United States healthcare financing

Financing Health Care in the 21st Century

Cost Containment: the United States government

Unlike virtually every other industrialized country in the world, the United States provides medical care to its citizens through the private workplace, primarily financed through private insurance. Expenditures on such public programs as Medicare and Medicaid have increased the government's portion of the nation's healthcare burden since World War II. Still, the majority of health care funding still comes from the private sector. This has left millions uninsured whom are too 'wealthy' or young to qualify for public assistance, but do not work at places of employment where they receive benefits. It has also left many Americans underinsured for their healthcare needs. (News batch, 2003)

Although the United States spends far more on health care in actual dollars and as a percentage of the GDP than any other country of the world, the U.S. ranks low among industrialized countries in overall life expectancy and infant mortality. Recently, President Bush proposed a tax credit of $2,000 for the purchase of health insurance for the millions of uninsured Americans. But this would not address another serious problem of uninsured and underinsured Americans, namely that employees who have medical problems cannot get health insurance at all. Not only are they unable to obtain insurance, their condition often prevents them from obtaining employment from employers who offer medical insurance because they are bad risks. (News batch, 2003)

In contrast, the Clinton Proposal of 1993 would have mandated employers to provide health insurance and pay 80% of the premium costs. Neither, however, addresses the problem the workplace insurance system together with Medicare and Medicaid tend to over insure Americans leading to unnecessary spending and consumption of medical services. (News batch, 2003)

Cost Containment by the Commercial Insurance Industry

Managed care has attempted to address such over consumption. The most common solution the health care industry has resorted to has been managed care. Managed care networks and health maintenance organizations (HMOs). Though such companies have been praised for their efforts in providing affordable health coverage to a wider range of consumers than government programs of the past, HMOs, to cut costs, have been criticized for cutting costs by limiting treatment options and patient choice. Doctors and patients increasingly have asked Congress to regulate the managed care industry by giving patients new rights, the foremost of which is the ability to sue their health plans, when they refuse to provide necessary treatment. Such proposals, however, have faltered in recent years, as lawmakers battled over how to protect patients without further driving up already expensive health care costs. (Open Secrets, 2003)

The difficulty in obtaining referrals for specialists, and limited choice for physicians they feel understand their special needs and are located close to them are other problems with the managed care system. Some networks, usually the cheapest, only offer EPOs, limiting individuals to health care providers limited to the network, or exist in the slightly more refined format of PPOs, which, "prefer" certain physicians and will only pay a small, proportionate percentage of one's health care, if one chooses to leave the network of preferred providers of certain services. (Open Secrets, 2003)

Looking into the Future of Health Care

Despite recent efforts to curtail prescription drug costs, more and more consumers are taking health care costs into their own hands, using the Internet to medicate themselves. The current legislative efforts by congress seem to favor litigious concerns by physicians rather than patients. The uninsured have less powerful lobbying groups than either the pharmaceutical industry, the AMA, or health care providers and representatives. Thus, the future looks bleak, and a holistic plan for health care for the entire nation seems dim.