Health Care System Choices: The Out of Pocket Model

In my previous blogs we have looked in depth at three of the four major models for health care systems:  Beveridge National Health Service Model , the Bismarck Model, and the National Health Insurance Model.  Today’s blog post will discuss the final Out-of-Pocket Model (1)(2).

common health care system finance models chart

The Out-of-Pocket Model: Market-driven Health Care

Examples: rural areas in India, China, Africa, South America.
Relevance to the U.S.: similar to treatment for uninsured or underinsured.

We have discussed in great detail the American For-Profit Health Care Insurance Model.

Three-Party System Graph

And the large out of pocket costs in a fee-for-service environment.

The 2019 Reality Basics of Healthcare chart

A Summary of The Pros and Cons of the ACA-The Healthcare Law of the Land (3)

PROS

Did more Americans obtain health insurance? The answer is yes, as most estimates indicated that more than 16 million Americans obtained health insurance coverage within the first five years. It is of interest to note that the coveted age group of young adults — age 18-26 — appeared to be included among those newly insured. If a parent’s health insurance plan covered dependents, young adults usually could be added to their parent’s plan — either ACA marketplace or employer’s — and stay on it until they turn 26. (4)

Was health insurance MORE AFFORDABLE? Again, it would appear that the answer was mostly YES, but not for the obvious reasons. Insurance companies are required to spend over 80 percent of insurance premiums on medical care and improvements. (5) It is still not totally obvious if the ACA failed at the bare minimum of preventing insurers from making unreasonable rate increases or whether there were other causes.

The major positive was for people with PRE-EXISTING MEDICAL CONDITIONS. This segment of the population was no longer left out in the cold due to denial of coverage. No longer did pre-existing medical conditions incumber coverage. You did run out of insurance coverage — until recently. Insurance companies previously “set limits on the amount of money they would spend on an individual patient called the PRE-SET DOLLAR amounts.” (6) After the ACA, insurance companies could no longer maintain that pre-set limit on the coverage. This is an important issue to you, the healthcare consumer. I will expand on this subject a little later on.

PREVENTIVE CARE received a boost as more healthcare screenings were covered. A long list of evidence-based screenings became available at little or no cost. LOWER PRESCRIPTION DRUG COSTS — another one of your current concerns — became a reality as the number of prescription and generic drugs covered by the ACA grew every year. “Savings on prescription drugs exceeded $15 billion within the first five years of the ACA.” (3) Yet, as we discussed earlier in Chapter Six, pharmacy costs remain a major issue.

CONS

Many people did indeed PAY HIGHER PREMIUMS. Cost went up as insurance companies provided a wider range of benefits and covered people with pre-existing conditions. Premiums rose for a segment of the population who already had health insurance. If you didn’t have insurance, your wallet became lighter due to the mandate.

Something to consider here: insurance cost strategy is based on getting a number of people who are healthy to pay premiums. This way, there are enough premium dollars to pay for those who are sick. What we may not be discussing in this debate is that by allowing children to remain covered by their parent’s insurance up to age 26, it removes the premium dollars from the risk pool. Someone has to subsidize this premium loss. (7)

This was the downside risk to the understandable and basic important ACA goal of everyone carrying uninterrupted insurance because not having insurance passes healthcare costs on to everyone else. Yet, the requirement that the uninsured without an exemption must pay a modest fine was viewed in some circles as “government intrusion.”

Taxes went up for segments of the American population. “The Affordable Care Act (ACA) made several changes to the tax code intended to increase health insurance coverage, reduce healthcare costs, and finance healthcare reform.”  Excise taxes were to be applied to high cost health plans, health insurance providers, pharmaceuticals, and medical devices, but new taxes alone were not the only funding created; additional funding from Medicare payments was added. The American wealthy subsidized payments to cover the poor (high income surtaxes).

Keep an eye out for my soon to be published book:  Earthquake: How America’s Ever-changing Healthcare System Victimizes Americans

FOOTNOTES:

(1) Chung, Mimi, “HEALTH CARE REFORM: LEARNING FROM OTHER MAJOR HEALTH CARE SYSTEMS,” 2 Dec. 2017, Princeton Public health Review, pphr.princeton.edu/2017/12/02/unhealthy-health-care-a-cursory-overview-of-major-health-care-systems

(2) Weisbart, ED MD, CPE, FAAFP, Chair, MO Chapter of Physicians for a National Health Program

(3) Roland, James. “The Pros and Cons of Obamacare.” Healthline, Healthline Media, 15 June 2015;  healthline.com/health/consumer-healthcare-guide/pros-and-cons-obamacare

(4) “Health Insurance Coverage For Children and Young Adults Under 26.” HealthCare.gov, 31 Dec. 2018, www.healthcare.gov/young-adults/children-under-26/

(5) Norris, Louise. “Billions in ACA Rebates Show 80/20 Rule’s Impact.” Healthinsurance.org, 31 Dec. 2018:  healthinsurance.org/obamacare/billions-in-aca-rebates-show-80-20-rules-impact

(6)   Page, Leigh. “What’s At Risk in Repealing the ACA? How Will It Affect You?” Medscape Family Medicine, 23 Feb. 2017;  medscape.com/features/slideshow/aca-repeal

(7) Brill, Joel MD, Medical Director, Predictive Health

By | 2019-04-23T12:08:12+00:00 April 23rd, 2019|Categories: Healthcare|Tags: |0 Comments

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