The Affordable Care Act

1065 Words5 Pages
The method in which healthcare services are funded has gone through many changes over the past fifty years. The country has seen the expansion of insurance from paying medical bills for hospital stays, to the creation of managed care, and the passing of the Affordable Care Act (ACA). In order to prevent future issues with financial options for healthcare services, healthcare administrators must analyze past funding systems to understand the oversights and misinterpretations. This paper will investigate fee-for-service practices and how this practice led uncontrolled utilization. Before the 1970’s, the main method in which healthcare services were provided was through a fee-for-service system. Fee-for-service or indemnity insurance…show more content…
Competition between providers has caused physicians and hospitals to offer the most current healthcare technologies and modern, eye-catching settings has contributed to increasing healthcare costs, as well as providing unwarranted highly technical services (Shi & Singh, 2015). Renovations of the physical settings and the acquisition of expensive technologies elevated healthcare services prices to cover the additional costs of providing high technical services and attracting clients. Another issue for fee-for-service system is that the providers set the prices for services. Patients were free to seek any type of healthcare services that they thought they required, while providers set the costs for each service that was billed to indemnity insurance companies (Shi & Singh, 2015). Insurance companies had little control on the types of services that the patient received and prices billed for each service. The fee-for-service model encourages excessive and unwarranted procedures and offers no incentives to utilize economical services (Smith, 2010). While the patients enjoy the freedom of being able to seek out their own services, over-utilization of expensive services on unnecessary and highly technical services increased healthcare costs. Defensive medicine has also contributed to the over-utilization of healthcare services. Providers tend to order unnecessary tests, medications, and procedures in order to evade malpractice
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