Who Pays For You? (Purchasers of Health Care)
Unlike in Europe, Canada or Japan, the United States relies on employers to provide health care coverage for most Americans. In 1998, 75% of Americans who had health insurance obtained their coverage through an employeriii, as opposed to insuring themselves or having government coverage like Medicareiv. As the primary financiers of insurance, employers are a powerful force in determining the nature and quality of American health care, as well as who gets coverage and to what extent, as managed care companies tailor their products and services to the demands of the employer-based marketplace. Yet as a group, employers receive little attention in the health care debate.
Since the 1960s health care costs have grown dramatically, and beginning in the late 1970s employers began covering fewer and fewer people. That decline bottomed out in 1993, but as managed care has grown, keeping inflation in check, the employer share of coverage has inched back to where it was in 1989, around 2 in 3 people nationwide.v,vi While employers have curbed their slow decline in coverage for now, they've also shifted a much greater share of the cost of health insurance onto their employees. Between 1988 and 1996, employers nearly doubled the share that employees had to pay for single person coverage, and raised the worker's portion of family coverage by more than a third.vii And with health care costs once again rising, many fear that employers will shrink their contribution further, drop more workers entirely from their health rolls, or both. There is also concern that as employment shifts to smaller businesses in the New Economy, employer-based coverage will decline, as smaller employers cover fewer of their workers, and offer less generous benefits.viii
Traditional Medicare: Medicare is a federal program available to some disabled individuals and qualified seniors 65 and over. It is funded by payments made by employees and employers as well as premium payments made by qualified seniors. There are two parts to Medicare. Part A offers hospital coverage. Part B, which must be paid for through a regular premium, offers medical coverage for doctors' office visits. Medicare resembles traditional indemnity insurance and does not place restrictions on which doctors or hospitals a patient may use. But because Medicare does not cover the broad spectrum of medical expenses that might be incurred in the case of a catastrophic or chronic illness, some people opt for alternatives.
Medigap: Medigap policies help those patients with Medicare coverage bridge the gap that exists between traditional Medicare coverage and health care needs. There are a variety of policy options, from affordable basic plans to premium plans that offer extended benefits like prescription drug coverage. The AARP website reviews Medigap coverage by the various plans. Consumer Reports also has a few articles on trustworthy Medigap plans.
Medicare HMOs: Many seniors choose Medicare HMOs as a lower cost alternative to Medigap insurance. Medicare HMOs emphasize preventive care, and some offer special extended benefits for things like prescription drugs or optical care. Seniors must continue to pay their Part B premium to enroll in a Medicare HMO.
Before joining a Medicare HMO, experts advise patients to think carefully about their decision. While Medicare HMO patients are legally entitled to the same coverage as in traditional Medicare, managed care companies selling HMO coverage to seniors may restrict access to certain doctors or hospitals in the HMO's network and will require special referrals to leave the network. Patients in a Medicare HMO may be required to see a primary care physician before they may see a specialist. They may be instructed to use specific facilities for diagnostic tests rather than a more convenient facility they used in the past. There may also be financial incentives for doctors in the health plan. In addition, there may be geographic limits: A retiree living in Illinois during the summer will find she loses coverage from her HMO when she travels to Florida in the winter months. The Medicare Rights Center offers more information on Medicare HMOs and patient rights.
To leave or disenroll from an HMO, you may either notify the HMO in writing or complete a form at your local Social Security Office. If you write to the HMO it is a good idea to send your request by certified mail, return receipt requested, so that you have proof that the HMO received your letter. Currently, beneficiaries who are dissatisfied with their HMO plan are locked-in for no longer than one month. This will continue through 2001. In 2002, enrollees may change their plan only during the annual enrollment period. Within the first three months of that enrollment if you are dissatisfied you can withdraw from the HMO and return to traditional Medicare. After these first three months you must wait until the next annual enrollment period to withdraw or you will be without any health coverage. This open enrollment period will take place the month of November. If you join a new plan in November your coverage with that plan will begin January 1st.
Medicaid: Medicaid is the government's largest program to pay for health care for the poor. Signed into law by President Lyndon Johnson in 1965, Medicaid is funded by federal and state tax dollars. Individual states run Medicaid programs following federal guidelines. Medicaid pays for the health care needs of approximately 37 million Americans, 75% of whom are mothers and children. It spends nearly $150 billion per year.
Children's Health Insurance Plan (CHIP): The Children's Health Insurance Plan, or CHIP, was created in 1997 to provide affordable health care for children of the working poor who make too much to be eligible for Medicaid but not enough to afford insurance. Overall, 24 billion federal dollars were set aside to go to states over a five year period. CHIP was intended to reach about 3 million children. Each state is setting up its own program to spend the money and there are wide variations in the success they have had in reaching the intended children.
When people without health insurance get sick they create big financial problems for themselves and for the health care system. The uninsured put off simple health problems that would be easy and cheap to fix until they become big health problems that are difficult and expensive to fix. In addition, since the discounts negotiated by the health plans for treatments and procedures do not apply to the individual, people who are not on an insurance plan are charged much more than people with a plan. Hospitals send bills to people, even if they cannot pay. If the hospitals don't get paid, they turn to collection agencies for help. The agencies can, in some states, take payment directly from people's paychecks, take their cars, and even take their homes.
Non-paying customers put hospitals and clinics in a bad position. In the past those institutions were able to take some of the profits made on their paying customers to cover the costs of those unable to pay for care. Now, with both Medicaid and managed care reducing the amount hospitals are getting for their paying patients, there is less money available to cover care for the non-paying patients. Hospitals, doctors, and clinics are increasingly protesting that they are not getting paid for the work they do and that they are the ones picking up the tab left by those who cannot afford to pay.
You as an Individual
100 million Americans, or more than 1 in 3, are not covered by an employer's health benefits nor qualify for a government program. Most of them have no health insurance (see uninsured section above). In 1998 nearly 10 million Americans, 4.1 percent of the non-elderly population, chose to pay entirely for their own health insurance, carrying individual policies. Besides the up-front costs, people who insure themselves face additional burdens as individual policies are more expensive and offer fewer benefits than the group policies that employers are able to purchase.
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