Financing Healthcare A Consumer's Perspective

How would you rank the various forms of health care financing by consumers? Which characteristics of health insurance are most important to customers?

While some nations such as the United Kingdom have a single, national health insurance system funded by the government, the United States has embraced a hybrid system in which financing encompasses private insurance, government-provided insurance, and self-financing (Trivedi 2017). Individuals may receive healthcare coverage as part of employer-provided benefits or they may purchase such plans themselves and pay a monthly premium. Private health insurance companies include both for-profit and nonprofit entities. The Affordable Care Act (ACA) placed additional limits upon private insurance companies such as prohibiting them from barring individuals based upon preexisting health conditions and limiting how much variation can exist in terms of the premiums other than factors such as geographic area, age, and tobacco use (Trivedi 2017). Despite these protections, many consumers still struggle to pay for healthcare, particularly if their plans have high deductibles and high premiums (Trivedi 2017).
Because of the high cost of healthcare, most consumers desire some form of health insurance through their employment. For consumers who do not have this benefit, purchasing their own health insurance if they do not qualify for government programs is the alternative option. Younger, healthier consumers may choose to take the risk of not obtaining health insurance coverage and merely paying for expenses out-of-pocket. The tax penalty placed by the ACA on consumers who did not have health insurance was designed to ensure that such consumers still purchased health plans and did not take such a gamble. The ACA’s mandatory insurance policy for all consumers was also designed to foster a more diverse risk pool consisting of sick and well consumers, given that individuals with serious health conditions would likely wish to purchase health insurance plans already (Trivedi 2017).
The ACA also expanded Medicaid subsidies which allowed more people to pay for their premiums. Medicaid is the state-run government health insurance program for the poor although it does receive some federal funding assistance (Trivedi 2017). The other major government health insurance program is Medicare, which provides health insurance coverage for the elderly and disabled. Unlike Medicaid, Medicare is entirely federally funded and run. There are also some other government insurance programs such as CHIP (Children’s Health Insurance Program) for children of parents who lack health insurance coverage due to poverty but who do not qualify for Medicare; government health insurance programs for military servicepersons and veterans; and for Native Americans (Trivedi 2017). Approximately 30% of the US population is covered by some sort of government health insurance program, despite widespread fears of the negative impact of universal socialized medicine (Trivedi 2017).
Consumers have a wide variety of potential concerns when selecting health insurance plans. For consumers who qualify for government health insurance programs due to poverty, there may be little flexibility and choice in terms of the program they select. Consumers without employer coverage have benefited from the ACA’s subsidies although not all in need of self-financed coverage qualify for the additional subsidies. Regarding consumer self-financing for healthcare, some employers do offer options such as flexible savings accounts for healthcare expenses (which must be used by the end of the year) or health savings accounts (for consumers with high-deductible plans; these funds do not have to be used by the end of the tax year) (Trivedi 2017). These forms of self-financing are often inadequate and despite the many forms of private and government insurance which exist, 17% of all healthcare costs in the United States are still paid out-of-pocket by consumers (Trivedi 2017).

References
Trivedi, A. (2017). Overview of healthcare financing. Merck Manual. Retrieved from:
http://www.merckmanuals.com/home/fundamentals/financial-issues-in-health- care/overview-of-health-care-financing