If you look anywhere in the world, in any type of business model, you will most likely see some kind of cost shifting. How much cost shifting is multifactorial, but is most likely present in some way. We saw it in retail as the cost of fuel rose to over $5 per gallon, the trucking companies had to charge more to the manufacturers to cover the increase in fuel, which then the manufacturers passed that increased cost onto the individual stores which in turn passed that increase cost onto the customers which were buying the goods. This is a little different in healthcare, however the general idea is the same.
Cost shifting has been in medicine since health insurance first began, or maybe even before that. Whenever there is a loss of money due to charitable/free care there has probably always been a shift in cost to cover the “loss”. Prior to 1965 private insurance was really the only widely available means of payment for health care. This was also mainly for middle class working individuals and their families. The other individuals (elderly, unemployed, and the poor) that needed health care did not have the luxury of having insurance, and so their care was either given on charity, on some of the limited public programs or by their own means. The hospitals or clinics that would render the medical care to these individuals for little or no reimbursement, would then shift that financial loss onto the private insurance group with increase costs to their medical care. In the year
A part of the problem of cost was the establishment of “free” healthcare for those eligible for Medicare and Medicaid, between 1965 and 1971 where there was no limitation on benefits. The cost of healthcare increased from 39 billion in 1965 to 75 billion in 1971. Providers had no concern for the cost of their care seeing that SSA recipients had no limits
“When we debate health care policy, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high? (Sultz & Young 336)”. It’s no surprise for many Americas today to realize that the cost of healthcare and the cost of having insurance is on the rise. Many people wonder why something stressed as important for every individual to have access to, is so expensive and inaccessible for many. So, why is that something that should be accessible for anyone, is lacking this quality? Many people today lack health insurance coverage, because of the high cost for private insurance or because of the loss of employer-based health coverage. Many Americans during the last decade, especially during the years of economic recession and contraction no longer have access to job-based health care insurance coverage (Sultz & Young 290). As a reaction to the many uninsured individuals and to attempt to control short and long term costs, the government had implemented the Patient Protection and Affordable Care Act.
In the healthcare environment, the challenges that providers face are revenue shortfalls due to insufficient payments from the reduction of Medicare reimbursement rates (Shi and Singh, 2015. p238). Payers that have employment-based insurance are charged extra to cover the remaining balance. This process is called cost shifting. In some healthcare systems, the relationship between reimbursement reduction and cost shifting is correlated in an inversely proportional trend. As the decrease in reimbursement from public insurance such as Medicare and Medicaid, the method of cost shifting would increase.
Health System Reform in the United States: Impact of Rising Premiums and Opportunities for System Improvements to Enhance Access to Healthcare Services
Health care expenses are a never ending headache that create numerous liabilities. Liabilities are created when goods or services are purchased on credit and obtained through short- term and long- term loans. Health care expenses create liabilities such that payments are made late or no payments are made at all. In some cases, the cost of health care expenses are unaffordable resulting in those type of payments. To prevent large health care debt, many individuals seek health insurance. Health insurance is provided by private insurance companies or by the government. It covers health care expenses and provides the necessary health care. Although, health insurance is necessary it can also be very costly.
Health insurance in the United States is a highly politicized issue. In recent years, many strides have been made to extend health insurance coverage to all Americans with the passage of the Patient Protection and Affordable Care Act (PPACA). While the program has been vigorously debated in the public realm, arguments are often centered around political ideology rather than economic theory. This paper seeks to challenge the entire structure of the current health insurance model, since its inception in the 1950s. Through the overuse of a third-party payer model, a magnitude of problems have emerged that severely diminish the efficiency of health care allocation in the United States. This paper proposes a model that seeks to correct issues of cost, access, and market efficiency by adapting the Medicare Part D payment scheme for an all encompassing insurance model.
Long time ago, there was no need for health insurance in America, as doctors had many clients because their services were not so expensive and in some cases in rural areas, people could pay by giving other items. Doctors were not as knowledgeable as they are nowadays to care for the sick, therefore this didn't have much effect then on the patients, as they were treated for the basic illnesses.
Supply and demand forms the most fundamental concept of economics. Whether you are a teacher, farmer, medical supply manufacturer, doctor or simply a consumer the fundamental foundation of supply and demand equilibrium is incorporated into the daily behaviors of our society. Consumers naturally look for the lowest price, while producer are influenced to expand outputs at greater cost. This is the same phenomenon in healthcare. With congress enacting the Affordable Care Act, many are seeking out the cheapest form of insurance, while at the same time wanting the greatest benefits.
Another reason for the rising cost of healthcare is the cost of physician care, according to the American Hospital Association “the cost of physician care, both to insurance and patients, has risen 1.3% during the past year.” Because of this increase doctors are put in a corner, they are already locked into an agreement with the insurance companies and do not have much ‘wiggle’ room to negotiate fees and rates. So because of this the patients and consumers are forced to pay a much larger sum. Since there are higher costs and the insurers will not cover them, they are distributes to the customers through higher deductibles, co-insurance, and
The health care system is one of the largest industries in the nation. It employs nearly twelve and a half million people. Even though this many people are employed by health care systems, there is little to no competition between the many different systems. This results in the cost being whatever the system wants. People who are ill or
There are so many different health care providers and types of health care services that we as consumers can receive. All those different services or facilities are going to have competitive prices for our medical care. I think a patient as a consumers are going to benefit from this. Not only do medical facilities have competitive prices but also insurance
Another reason why policy maker are concern is due to sharp practices by provider, they shift costs from one program to the other, exploring the loopholes in the payment structure which can lead to greater fragmentation in care and risk of patient. An instance is when patients shifted from a nursing home, where Medicaid is paying the benefits, to a hospital, where Medicare pays, mainly to maximize provider reimbursement.
America’s Health Insurance Plans (AHIP). (2011, September 9). Rising Health Care Costs. Ahip.org. Retrieved October 22, 2013, from http://www.ahip.org/Issues/Rising-Health-Care-Costs.aspx
How can we justifiably change the status of how we receive health care? In today society, health care services are imbalanced in serving its members. Reform is what is desired of most people who feel that the present standards are insufficient. In fact, numerous reports have surfaced in support of the rights to health care. There will be different reviews examined to determine how health care reform can accommodate the misfortune as well as the fortunate. Inequalities and cost has attributed to the deficient quality of care that is available. Ways to decrease cost and restructure health care will be discussed
Acquiring a private health insurance arrangement is critical particularly for the individuals who have previous conditions. Private health insurance offers countless, however before you pick an arrangement it is critical that you take after the means towards private health insurance comparison. When you compare the distinctive arrangements, you will have the capacity to find the one that is most suitable for your requirements and is additionally spending plan well disposed. The expense of private health care in expanding quickly and having an insurance arrangement can come convenient when you require it.