Cost Containment

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) Cost Containment by Healthcare Providers Frustrated with a system where 25 cents out of every dollar spent for hospital costs is spent to cover bureaucracy and paperwork, some doctors have resorted to spare, pay as you go programs for potential patients. However, most doctors continue to accept insurance through a variety of plans, although many contend and concede that health plans are overriding their ability to prescribe necessary treatments for patients.

The American Medical Association has sponsored a Patient's Bill of Rights in Congress, to combat some of the excesses of the managed care system, which physicians and nurses say provides no care at all, or limits care at the expense of bureaucracy and dollar figures. However, physicians have also fought efforts to make it easier for patients to sue their doctors and function effectively within the civil litigation system, when care has been compromised by cost.

(Open Secrets, 2003) The Patient's Bill of Rights legislation, brokered by the White House and opposed by Democrats, grants patients only a limited right to sue. It caps punitive damages and shifts lawsuits against employers who administer their own health plans to federal court, rather than state court, where juries are less.