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Read Me First HCA/210

Weeks Seven and Eight

Introduction

DURING WEEK SEVEN, YOU EXPLORE SOME OF THE ECONOMIC DRIVERS THAT ARE AFFECTING HEALTH CARE SPENDING AND EXAMINE THE PRIMARY PAYERS OF HEALTH CARE SERVICES. THE FINANCING OF HEALTH CARE IN THE UNITED STATES HAS EVOLVED SINCE THE SECOND HALF OF THE 20TH CENTURY AND HAS DONE SO CONCURRENTLY WITH THE HEALTH INSURANCE INDUSTRY. THE UNITED STATES RELIES ON EMPLOYER-OFFERED HEALTH INSURANCE, MEDICARE, MEDICAID, THE MILITARY HEALTH SYSTEM, AND OTHER GOVERNMENT PROGRAMS TO FINANCE ITS HEALTH CARE DELIVERY SYSTEM. HOW HEALTH CARE IS FINANCED INFLUENCES HOW HEALTH CARE IS DELIVERED, THE QUALITY OF HEALTH CARE PROVIDED, AND ITS COST.

Despite all the approaches to financing health care in the United States, national health care expenditures continue to rise and increasing numbers of U.S. citizens are under- or uninsured. Since the passage of Medicare and Medicaid, national health expenditures have increased from 6.3 percent of the gross domestic product in 1960 to 16 percent in 2004. Health care spending in 2004 was $6,289 per person. While the rate of growth is declining, the Centers for Medicare and Medicaid Services (CMS) project that health care spending will increase from 1.9 trillion dollars in 2004 to 2 trillion dollars in 2006 (CMS, 2006).

INCREASING COSTS

THERE ARE MANY REASONS FOR THE INCREASING COSTS OF HEALTH CARE. PRESCRIPTION DRUGS, HOSPITAL COSTS, MEDICARE, AND MEDICAID CONTRIBUTE SIGNIFICANTLY TO RISING COSTS. TOGETHER, MEDICARE AND MEDICAID PAY FOR ONE-THIRD OF ALL HEALTH CARE IN THE COUNTRY. THE LARGEST PAYERS OF HEALTH CARE SERVICES IN THE UNITED STATES ARE FEDERAL AND STATE GOVERNMENTS. THE LARGEST FEDERAL PROGRAMS ARE MEDICARE AND MEDICAID (MANNING, 1998). IT HAS OFTEN BEEN SAID THAT MEDICARE IS THE SECOND LARGEST SEGMENT OF THE FEDERAL BUDGET, SECOND ONLY TO SOCIAL SECURITY PAYMENTS. MANY STATES HAVE INITIATED CHANGES IN MEDICAID TO CONTROL SPENDING—CHANGES SUCH AS REDUCING THE AMOUNT OF PROVIDER REIMBURSEMENTS, CUTTING DISCRETIONARY BENEFITS, AND IMPOSING COPAYMENTS.

HEALTH STATUS

THE U.S. HEALTH CARE SYSTEM IS THE MOST EXPENSIVE IN THE WORLD. IT SPENDS MORE ON HEALTH CARE THAN ANY OTHER INDUSTRIALIZED COUNTRY. YET, ITS CITIZENS DO NOT HAVE THE BEST HEALTH STATUS IN THE WORLD FOR MANY REASONS. ONE IS THAT THERE IS AN IMBALANCE IN THE DISTRIBUTION, ACCESS, AND QUALITY OF HEALTH CARE SERVICES AMONG POPULATIONS. OTHER INDUSTRIALIZED COUNTRIES DO BETTER. IN A COMPARISON OF 13 COUNTRIES, THE UNITED STATES RANKED SECOND FROM THE BOTTOM ON SEVERAL HEALTH INDICATORS. COUNTRIES IN ORDER OF THEIR AVERAGE RANKING (WITH THE FIRST BEING THE BEST) ARE JAPAN, SWEDEN, CANADA, FRANCE, AUSTRALIA, SPAIN, FINLAND, THE NETHERLANDS, THE UNITED KINGDOM, DENMARK, BELGIUM, THE UNITED STATES, AND GERMANY (STARFIELD, 1998).

HMOS PLAY A UNIQUE ROLE IN THE HEALTH CARE ARENA. BY DEFINITION, “HMO’S ARE A TYPE OF MANAGED CARE ORGANIZATION THAT PROVIDES COMPREHENSIVE HEALTH CARE SERVICES FOR A PREDETERMINED ANNUAL FEE PER ENROLLEE” (SHI & SINGH, 2001, P. 603). IT IS IMPORTANT TO MENTION, THERE ARE MANY TYPES OF HMO STRUCTURES. HOWEVER, ONE COMMON FEATURE IS THE INCENTIVE TO CONTAIN COSTS BY USING A PRIMARY PHYSICIAN GATEKEEPER APPROACH.

Health care advances are another area that fuels increasing health care costs. Some of the vast areas of technological growth include the expansion of medical devices, such as pacemakers and other implants; research and development; medical imaging; advances in minimally invasive surgery; gene therapy; genetic mapping and testing; and pharmaceuticals (Austin & Wetle, 2012). However, there are debates among policymakers and experts about the necessity and potential overuse of medical technology in health care.

Perhaps one important development that has occurred in health care is the advent of electronic medical records. While not universally implemented throughout health care, they replace much of the written documentation or old charting method. One major effect of the use electronic medical records is increased patient safety and workflow efficiencies. Electronic medical records access and oversight is a result of HIPAA (1996). This law has changed the manner in which patient information is disclosed and shared.

relationship to the course and the program

THE OBJECTIVES AND TOPICS FOR WEEKS SEVEN AND EIGHT HELP OUTLINE THE CAUSES AND DYNAMICS ASSOCIATED WITH FINANCING, ECONOMIC DRIVERS, FUNDING, AND REGULATORY OVERSIGHT OF HEALTH CARE. THEY ESTABLISH A FOUNDATION FOR FUTURE DISCUSSIONS IN THESE AREAS. THE CONCEPTS IN WEEKS SEVEN AND EIGHT WILL BE ESSENTIAL IN YOUR FUTURE COURSES IN THIS PROGRAM.

Hints for a reading strategy of the assigned materials

SOME OF THE CONCEPTS AND DETAILS FOR WEEKS SEVEN & EIGHT ARE COMPLEX. THEREFORE, IT IS IMPORTANT TO FOCUS ON GRASPING A BROAD UNDERSTANDING OF THE ECONOMIC AND BUSINESS SIDE OF HEALTH CARE AND THE METHODS IN WHICH IT IS FINANCED. THROUGHOUT YOUR READING REMEMBER THAT MOST OF THE AREAS DISCUSSED ARE EVER CHANGING AS NEW INFORMATION, DISCOVERIES, AND LAWS EVOLVE.

Some questions to ask as you hone your critical thinking

AS YOU REVIEW THE INFORMATION FOR THESE WEEKS, CONSIDER THE FOLLOWING QUESTIONS:

1. WHAT ROLE SHOULD THE GOVERNMENT PLAY IN FINANCING HEALTH CARE SERVICES?

2. WHAT ROLE SHOULD THE PRIVATE SECTOR PLAY IN FINANCING HEALTH CARE SERVICES?

3. HOW DOES HEALTH STATUS AFFECT NATIONAL HEALTH CARE EXPENDITURES?

4. WHAT ARE SOME WAYS ELECTRONIC MEDICAL RECORDS CHANGE HEALTH CARE DELIVERY?

SUMMARY

HEALTH CARE COSTS CONTINUE TO RISE. MANAGING HEALTH CARE RESOURCES IS A MAJOR PRIORITY IN THE UNITED STATES AS CONGRESS CONTINUES TO PASS LEGISLATION ATTEMPTING TO REDUCE OR SLOW DOWN RISING COSTS. THE IMPLEMENTATION OF NEW LEGISLATION OR REGULATION HAS RESULTED IN LIMITED SUCCESS TO REDUCE HEALTH CARE COSTS. BECAUSE OF EFFORTS TO REDUCE COSTS, BOTH THE DELIVERY OF HEALTH CARE SERVICES AND THE ROLES OF HEALTH CARE WORKERS CHANGE. AS A HEALTH CARE MANAGER OR ADMINISTRATOR, YOU WILL BE IN A KEY POSITION TO EXPERIENCE FIRSTHAND THE EFFECT OF RISING HEALTH CARE COSTS AND RESULTING EFFORTS TO CONTAIN THEM.

REFERENCES

AUSTIN, A., & WETLE, V. (2012). THE U.S. HEALTH CARE SYSTEM: COMBINING BUSINESS, HEALTH, AND DELIVERY. UPPER SADDLE RIVER, NJ: PEARSON.

Centers for Medicare & Medicaid Services (CMS). (2006). Health care spending growth rate continues to decline in 2004. Retrieved from

MANNING, W. L. (1998). MEDICARE & MEDICAID. RETRIEVED FROM

STARFIELD, B. (1998). PRIMARY CARE: BALANCING HEALTH NEEDS, SERVICES, AND TECHNOLOGY. NEW YORK, NY: OXFORD UNIVERSITY PRESS.

SHI, L., & SINGH, D.A. (2001). DELIVERING HEALTH CARE IN AMERICA: A SYSTEMS APPROACH, 77–106. GAITHERSBURG, MD: ASPEN.

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