Abstract
In leiu of the various reforms and proposals being undertaken to rehabilitate the ailing health care industry in the United States and elsewhere, this paper presents the benefits and advantages of succumbing to one excellently managed system of health care delivery – through a managed care health insurance plan. It is the best proposal to reform the already cost-burdened health care system of the country. This is due to the fact that with the insurance system, the government is able to reduce its spending and save trillions of money through the unification of the government sponsored Medicare and Medicaid with the health insurance plans. The system will also ensure that the linkages of health professionals, facilities and providers will provide the best health care and medical services to its patient-members. The application of this well managed health care system in the future is further explored in this paper.
Introduction
Today’s health care system is very complex and sophisticated. It is far from the old system of health service delivery. The reforms constitute a major shift towards a managed health care system against the old indemnity plan. The U.S. health care system has required various alterations within two generations and it still continues to need many sophisticated matters in aspects like primary care, third party sytem and cost efficiency. The future of a managed healthcare system is to deliver quality service in the most cost effective and efficient manner.
Different factors influence the dynamic growth and reforms required by the healthcare system and these include the following: the growing population and the number of elderly in the population; rising costs of health care and the emerging technologies; increase of health care professions; the dramatic rise in pharmaceutical and drug costs; and prevalence of malpractice and their corresponding health insurance, case settlements and court awards (Kovner, Knickman, & Jonas, 2011).
The number one agenda is how the different governments and health care systems can maintain enhanced medical care and reducing the costs. This brought us to the synergy in healthcare delivery such as coordinating services among health care providers by formal or informal ways (Kovner, Knickman, & Jonas, 2011). Proponents believe that a properly managed health care delivery system can save a lot of money and promote a healthier population. It can also aid in reducing hospitalizations, lessen the need for expensive rehospitalizations and avoid duplication of health services (Kovner, Knickman, & Jonas, 2011).
This paper asserts that the main problem with health care systems is about its costs. Hence, health insurance should be treated as key in the new healthcare system. Within the new healthcare system, insurance can be of great benefit to individuals of a nation (Epstein, 1997). Managed care is now considered as both a health care insurance and a health care delivery system (Carlson, 2009). It usually secures a 24-hour, seven-day-a-week access to health care for its members. Under most insurance plans, a primary care doctor links all the care needed by a patient. When specialists are needed, the primary care provider sends a referral. The insurance plan member chooses a primary care doctor from a list given by the insurance plan (Carlson, 2009).
Managed healthcare system manages the costs of healthcare services, control the use of services and measures the performance of health care providers. Under this system, doctors and other medical professionals, hospitals, and other health care providers are integrated contractually into networks (Epstein, 1997). These providers agreed to give patient care to members at established fees. Network providers also agree to follow other cost control and practice guidelines created by the network. The most common types of managed care are the Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) (Epstein, 1997). Others are just variants of these types. Since plans are different, it is for the individual insurance holder to know the specifics of the plan.
Managed care differs from the old health insurance in various ways. For instance, the patient’s plan is assured of qualified doctors. There is also a regular assessment of the patients, their assessments and the quality of their care to maintain the excellent service (Gruber, 2009). Some plans also provide a grievance system wherein the patient-members are encouraged to utilize if they are not satisfied with the quality of the care. The regular payment for managed care is called “capitation” (Gruber, 2009). Healthcare providers are paid a fixed amount for each patient-member registered in the plan. There is no extra payment whether or not the patient is using the plan. The capitated fee is often paid by the employer or Medicare. Some plans also allow members to pay a small co-payment for each consultation (Yedidia, 2007). Under managed care, member patients are being encouraged to be more responsible for their own health. They actively partake in any health decision. Some plans also stress bigger decision making especially for lifestyle decisions (Yedidia, 2007).
How Does Managed Care Control Costs?
By networking with health care providers, managed care strategy control costs. They also spread the high financial risks to the providers. This is because under a capitated system, the provider takes on some of the responsibility for providing health care (Enthoven, 2009). As an outcome, these providers have an ulterior motive of maintaining that their patient-members are healthy. Their access to more expensive tests and procedures are also well managed (Enthoven, 2009). The related risk to the members is that too few services are supplied. To protect the members, they must be familiarized with their plan’s grievance systems (Enthoven, 2009).
Managed care insurance plans also manage costs by establishing criteria for provider selections and by creating formal programs to maintain the quality and the quantity of health care bein provided (Atun, et. al., 2010). Evaluation of utilization is usually being used as a popular monitoring strategy. Physicians often need the insurance plan’s approval before hospitalizing a member or providing costly medical tests and procedures (Atun, et. al, 2010).
The private insurance cover is offered to patients who decide to be treated at the private health facilities. It has subdivisions, which include hospital cover, general treatment cover and the ambulance cover. This cover is offered in that the patient is left at liberty to choose his or her own doctor and decide where they would want their treatments to be carried out. This cover is expensive since it involves the consultation fees of the doctors and caters for patients who are well off, and would not want to visit public health facilities. Meanwhile, the public insurance cover is offered to the patients who attend public health facilities. Since the governments provide this cover, the citizens are required to pay for it since the charges are subsidized.
According to Kolstad and Lindkvist (2013), from the insurance and liability view, risk financing for these new scheme has to be integrated. The attraction for these linkages includes the following motivations:
- Resolving the difficulties in separating the liabilities within the system. There are shoddy areas and the exposures and liabilities are unclear.
- Less bureaucracy. It is far better to negotiate with one insurer and get one single expiration date, and to pay a single premium.
- The market leverage. There may be one unit of coverage which may not be as attractive to the health care market. Supporting business may make this unit more interesting.
- Premium credits according to mass economies.
- More creativity on the risk retained, such as those trust or captive.
Are There Concerns About Managed Care?
There are no popular managed care models yet which can illustrate the efficiency of this health care delivery system. However, research illustrates that HMOs are attaining cost reductions. While this is one benefit to managed health care in surance, critics emphasize several disadvantages. They say that managed care might result in too scant medical services being supplied (Atun, et. al., 2010). Most health insurance plans lessen a member-patient’s “free choice” of healthcare providers. Managed care does not also resolve the issue of healthcare access to those who cannot have or afford health insurance (Atun, et. al., 2010). It also does not resolve the access for those who live in the rural communities where this delivery of health care system is not feasible.
Effects on Medicare and Medicaid to Managed health care
According to Young (2010), the biggest U.S. health insurance UnitedHealth Group, Inc. acknowledged a US$1.62 trillion savings in 25 years when the dual recipients of Medicare and Medicaid are enrolled into managed-care plans. About 9 million Americans are Medicare recipient (elderly and disabled), including the poor who receives Medicaid (Young, 2010). A single managed care insurance plan will integrate the benefits of these government health care programs to ensure better patient care. The Bloomberg analyst Young also stated that this proposal will reduce the U.S. public and private healthcare spending by as much as $3.5 trillion in 25 years. However, this integration will need reforms from both the Medicare and the Medicaid (Young, 2010).
The Future Role of Government Regulations
The future role of government regulations, including ERISA and HIPPA health care policies, shall persist to be functionally linked with managed care and the protection of the rights of employees and/or citizens. The containment of cost of health care benefits and the escalating deductibles are hitting the citizens, especially the employees. Generally, their medical and health care needs are not met for the lack of revenue to pay for the deductibles (Gruber, 2009).
In designing the HIPAA insurance rules, for instance, the U.S. Congress centered mainly on the employer-group coverage, with the individual health insurance market as a secondary goal (Gruber, 2009). This government agency is primarily intent on working through the transition between the employer-group health care covergaes to the individual coverages (Gruber, 2009).
On the other hand, The Employee Retirement Income Security Act (ERISA), the federal law regulating the administration of private employer-sponsored benefits including health benefits (i.e., health insurance offered by an employer), blocks the administration of private employer-sponsored health insurance plans if their provisions interfere with ERISA’s provisions (Jacobson, 2009). However, patients under the ERISA health plans do not have a malpractice clause for a managed health care agency’s negligence, unlike the patients under other types of insurance.
Three Recommendations Related to quality and Changes in Medicare and Medicaid managed health care plans
The Obama plan aims to spend $1.7 billion in 2014 to enforce penalties for Medicare fraud and abuses, inlcuding the anomalies in the federal insurance program for the elderly and Medicaid (Gowrisankaran, et. al., 2011). Proposals to reform existing healthcare policies to reduce costs of healthcare services:
- Increasing co-payments, co-insurance or deductibles
Increasing co-payment, co-insurance and co-deductibles means increasing the fixed medical fees paid by the individual in addition to what his insurance covers on a percentage basis (Gowrisankaran, et. al., 2011). This reform is a crude method of matching health care services with health needs. They posit that sharing the expenses deter the patients from seeking medical care, such as effective medical treatment. It is argued that designing a new health system must not only deter its costs through co-sharing without damaging the quality of health care available. This implies the negative effects of increasing co payments to quality healthcare.
2. Health savings account (HAS)
This is a tax-advantaged medical savings account that can be availed by American taxpayers when they enroll in a high-deductible health plan (HDHP) (Gowrisankaran, et. al., 2011). In comparison with various specialties, the emergency department (ED) will be greatly affected by the HAS. Visits to the ED are urgent and as HAS holders become more conscious of their expenses, these visits may forego the appropriate care or treatment as holders may just opt for substitute care in less serious conditions. CNN Money considers the HAS as a positive thing for health care holders (Gowrisankaran, et. al., 2011). It believes that it enables medical care for a lesser premium and it is advantageous for young people who do not always use their medical plans (Gowrisankaran, et. al., 2011).
HAS provides monetary advantages. It shows how one can take advantage of the plan for medical and investment purposes. In monetary terms, HAS has many benefits. However, the quality of health care was not discussed. On the other hand, there are also medical implications of spending one’s own savings for medical care. The quality of health care is reduced when one anticipates the reduction in his HAS. This is a sad plight for policy holders.
3. Further Medicare Impact Studies
The Medicare Advantage program has a spillover effects on the traditional Medicare program and other patients. Studies must decipher where there are advantages of changes in Medicare Advantage payment policy to distinguish the exogenous increases in Medicare Advantage enrollment (Baicker, et. al., 2013). This will also help decipher the effects of greater managed care introduction on hospital utilization and spending throughout the general health care system.
Conclusion
While trends can be discerned are usually predicted, there are various "wild cards" in the future that make the evolution of the U.S. health care system obscure and volatile. The factors include the following: changes in the demographic trends and the escalating number of elderly people in the population; reimbursement rates for home health care services; modern cost containment and cost-shifting approaches; emerging technology; economic recessions or expansions; legal and administrative restrictions on managed care plans; the malpractice insurance, settlements, and jury awards; universal health insurance laws; and, of course, the shift from a private and public insurance model to a nationwide delivery of a well managed health insurance system.
As shown by this paper, the main problem with health care systems is about its costs. Hence, health insurance should be treated as key in the new healthcare system. It can be of great benefit to individuals of a nation. Managed care is now considered as both a health care insurance and a health care delivery system. This is looked upon as the next best thing in the cost ridden healthcare industry in the U.S.
Thus, health care financing is welcome news to the ailing healthcare industry. It is also very encouraging to note that the budget for health care has been extended to include health insurance for everyone and the closing of the health care deficit in the span of ten years (Gruber, 2009). As people will be expected to assume the management of their own health in the future, it is best to know that even at this point, the proposals for the more cost effective and efficient delivery of an excellent health care management system is underway.
However, health care financing is met by criticisms for the public perceives the Federal government to be dictating the types of health care coverage they can avail. The new coverage may also negatively affect the business sector because employers may have various schemes for their health plans or packages. The financing scheme would also give extra burdens to the budget deficits which the U.S. government has.
Health insurance is one of the best solutions in the array of the health care delivery models. This will solve the cost cutting dilemma which the US health agencies are confronting. For one, a single managed care health insurance plan will eradicate the redundancies of the government initiated Medicare and Medicaid. Likewise, this system of a networked group of health care providers will ensure that patient members are getting the best medical help they can avail of. They are also ensured that they are managing their health more actively so as to curb unnecessary medical costs and treatments in the future.
While this proposal is rosy, it is also important to point out that not all citizens can afford to secure for himself and/or his family a managed care insurance plan. The increasing share of expenses for medical expenses is not an equitable way to share the total costs of medical care in the country. Most people will not be able to squeeze something out of their pockets when they need medical help.
Other recommendations have all its pros and cons. For instance, the features and benefits of the HAS far outweighs its disadvantages (Carlson, 2009). In the U.S., many middle class families and young generation groups can take advantage of this health care reform. However, when taken wholly as a national healthcare reform, this is not also advantageous for low income family. It will be disadvantageous for them since they cannot subscribe to the income bracket for tax reductions.
On another instance, the employers’ payments for their employees’ health benefits are not taxed and thus translate to tax breaks. However, the tax shelter does not benefit the employee more than the employers. Zhang (2009) reported that President Barack Obama will spend on various health reforms, constituting about $630 billion reserve fund over 10 years to finance the reforms in healthcare. The reserve would be funded through Medicare savings and tax increases.
However, the pragmatic call for the best solutions nominates the health insurance as the best options since it can allocate more savings as the health care resources for the lower class. More than anything else, it also secures the best quality of health care for those patient-members because it screens the health professionals and facilities and the health care providers before they are included in its linkages of providers. Lastly, it promotes wellness and preventive approach to medical care.
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