Healthcare finance has changed drastically since 1950. Please discuss the changes that have occurred and the effect on healthcare delivery with each chang
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Assignment:
The History of Healthcare Finance. Write a 2000-2500 word essay addressing each of the following points/questions. Support your ideas with at least three (3) scholarly citations in your essay. Use strict APA guidelines to format the paper. The cover page and reference page do not count towards the minimum word amount and an abstract and table of contents are not necessary and if included are not part of the overall word count.
- Healthcare finance has changed drastically since 1950. Please discuss the changes that have occurred and the effect on healthcare delivery with each change.
Expert Answer and Explanation
The History of Healthcare Finance
The US healthcare finance has experienced many changes over the past seventy years. Papanicolas et al. (2018) noted that rapid advances in medical technology and science, budget-busting increases in health care expenditures fueled by public and private insurance, and substantial gains in health outcomes attributable to medical care have marked the financial changes in the US healthcare system in the past seven decades.
As the country struggles to get out of a multiyear economic and financial crisis, the public and policymakers have increasingly in on healthcare expenditures that are rising sharply (Waxman, 2012). In other words, since 1950, US healthcare finance has changed drastically regarding payment sources and objects of expenditure. This purpose has discussed the changes that have occurred in US healthcare finance since 1950 and how they have impacted healthcare delivery.
In the 1950s, various changes in US healthcare affected healthcare finance. For instance, the Revenue Act of 1954 excluded employers’ contributions to workers’ health plans from taxable income (Permanyer & Scholl, 2019). This law impacted healthcare delivery by ensuring that employees received various health services. In 1956, the military program was enacted to provide health insurance to family members of officers of the Armed forces. The change improved the accessibility of care to family members of Armed forces officers.
The 1960s marked a huge milestone in US healthcare finance. In 1960, the Federal Employees Health Benefits Plan (FEHBP) was formed to provide health insurance for federal workers (Permanyer & Scholl, 2019). This law improved federal workers’ access to care by reducing the cost of care. In 1965, President Johnson passed the Medicare and Medicaid programs and signed them into law, with Truman on his side. The two programs marked a fundamental healthcare finance change in the American healthcare system.
Medicare Part A was designed to pay for home health care, limited skilled nursing, and hospital care. Optional Medicare Part B was to support paying for physician care. Medicaid was a separate program. It was designed to help states cover healthcare services for long-term care, the disabled, and people from poor classes (Waxman, 2012). Medicare was developed for people aged 65 years and above, people with End-Stage Renal Disease, and certain younger people with disabilities. The program pays for hospital and medical costs.
Medicare Part A helps pay for a limited time at a skilled nursing facility after a hospital stay. This part also pays for some hospice and home health care (Malekinejad et al., 2018). Part B helps eligible people pay for services from care providers such as doctors, home health care, outpatient care, preventive services, and durable medical equipment. The program may also cover the cost of hearing, health and wellness programs, and dental care. It also pays for prescribed drugs.
Medicaid was developed to provide health coverage to some people with limited resources and income. This program is run by states with the help of the federal government. The mandatory benefits the federal government requires states to provide include physician services, inpatient and outpatient hospital services, home health services, and laboratory and x-ray services, among others (Waxman, 2012). Optional benefits include case management, prescription drugs, occupational therapy, and physical therapy.
The Medicare and Medicaid programs impacted healthcare finance by ensuring that older people aged 65 years and above, people with disabilities, individuals with End-Stage Renal Disease, and those with limited resources and finance access care at an affordable cost. Medicaid covers over 70 million American citizens today, and in 2014, it reimbursed about 50% of all hospitals’ medical expenses. The Congressional Budget Office forecasts that Medicare and Medicaid programs will survive indefinitely due to sweeping spending reforms that have been made.
The Medicaid program was amended in 1967 to include additional services to the program. The amendment allowed the program to provide insurance coverage to Americans not receiving cash assistance. The amendment also added Early and Periodic Screening and Diagnostic Testing (EPSDT) to the program. In 1972, Supplemental Security Income (SSI) program was created. The program was created to provide monthly payments to children and adults with disabilities whose resources or income are below federal financial limits.
The program also provided financial assistance to older people aged 65 and above without disabilities who meet the financial qualifications. This program impacted healthcare finance by providing older people and individuals with disabilities who are below the poverty line with the ability to access healthcare services at an affordable cost.
The program pays for the care costs of people who meet eligibility criteria. Two years later, Hawaii Prepaid Health Care Act was passed. This act required employers in Hawaii to cover any worker working for them for more than 20 hours a week. The law was amended in 1989 when the State Health Insurance Program was added to cover people not eligible for employer-based insurance or Medicaid. This law changed healthcare finance in Hawaii by allowing people who do not qualify for employer-based insurance or Medicaid to receive care funded by the state government.
In 1977, the Health Care Financing Administration (HCFA) was developed within the Department of Health, Education, and Welfare (HEW). The program was created to manage the federal government’s largest healthcare financing programs, evaluate authority, and exercise regulations designed to assure the quality of healthcare services for many people in the US. The program administers Medicare programs that buy medical care for 39 million disabled and elderly individuals. It also provides a Medicaid program operating jointly under the state and federal authority to offer care services to 33 million low-income people.
The creation of HCF ensured that federal and state authorities assign funds for Medicaid and Medicare to one organization, ensuring that the money is distributed properly. The change made it easy to get Medicaid and Medicare complaints. In 1980, the HEW was named the Department of Health and Human Services (DHHS). The Department of Education was separated from the DHHS, and the funds allocated to the DHHS were meant for health only. During the same year, the federal government provided federal funding to states to improve care and adoption assistance. This move ensured state governments had enough funds to support state-sponsored healthcare programs.
In 1983, Diagnostic Related Groups (DRGs) were introduced by Medicare as a payment system for hospital payments. This initiative improved healthcare finance by making it easy for hospitals to determine payor reimbursement rates and better control hospital costs by categorizing patients with similar clinical diagnoses. Emergency Medical Treatment and Active Labor Act (EMTALA) was enacted in 1986. This law greatly impacted healthcare finance, especially in the emergency department. The law requires hospitals in partnership with Medicate to screen and provide emergency treatment to all who come into their emergency rooms, even if they cannot pay.
The same year, Consolidated Omnibus Budget Reconciliation Act (COBRA) was enacted. This law changed healthcare finance by allowing workers who have lost their jobs to continue enjoying their health insurance plan for 18 months. Therefore, workers who have lost their jobs must not worry about their health and finances for one and a half years. Another vital law was created in the 1980s. The law is the Medicare Catastrophic Coverage Act (MCCA). MCCA was enacted in 1988. The law expanded Medicare coverage to include a cap on beneficiaries’ out-of-pocket expenses and prescription drugs.
In 1996, the Health Insurance Portability and Accountability Act (HIPAA). The law protects US workers by permitting them to carry their health insurance policies from employment to employment (Edemekong et al., 2018). It also allows employees to lose coverage and adjust to changes such as adoptions, births, and marriages by applying to a select group of health insurance plans. The law also blocks insurers from discriminating against people applying for plans because of health problems. The Mental Health Parity Act was enacted in the same year. The law improved health coverage for patients with mental health problems.
Personal Responsibility and Work Opportunity Act was also enacted in the same year. This law allowed the state governments to provide health coverage to children and parents at present Aid to Families with Dependent Children (AFDC) levels and higher. The law prohibited Medicaid from providing cover to legal immigrants within the first five years in the US, except when they need emergency care.
The State Children’s Health Insurance Program (S-CHIP) act was enacted as part of the Balanced Budget Act (BBA) in 1997. The law provided block grants to states allowing them to provide health coverage to low-income children above Medicaid eligibility levels. The law also allowed states to cover the health services of disabled workers whose incomes are up to 250% of the poverty level.
The Breast and Cervical Cancer Treatment and Prevention Act of 2000 expanded the Medicaid program. It allowed it to provide coverage to uninsured women who are receiving treatment for cervical or breast cancer if they have been diagnosed following the Center for Disease Control (CDC) screening program, regardless of resources or income. In 2003, the Medicare Prescription Drug Improvement and Modernization Act was enacted.
Pakizegee and Stefanacci (2018) noted that the act is the most significant expansion of Medicare since it was enacted. This low included prescription drug benefits. It mandated Medicare to provide cover for prescription drugs. The State of Massachusetts passed legislation to offer healthcare coverage to nearly all its residents in 2006.
The law needed the residents of Massachusetts to attain health insurance coverage and called for shared responsibility among employers, individuals, and the government in financing the expanded health coverage program. The program cut the uninsured rate by half within two years of its implementation.
In the same year, the City of San Francisco created the Healthy San Francisco program, which provided universal care to city residents. Mental Health Parity Act was amended in 2008. It required insurance companies to treat mental health problems, including alcohol and substance abuse disorders equality and physical problems when health policies cover both.
The last grand change in healthcare finance is the Affordable Care Act (ACA). This act greatly changed healthcare finance in the US. This law was a modified version of the all-inclusive coverage US presidents in the 1900s imagined. The act aimed to provide health insurance to the majority of US citizens. The act needs most Americans to apply for health insurance coverage. Individuals who have not applied for cover will be penalized. However, few protected groups are exempted from the penalty.
Companies that employ more than 200 employers are bound to offer their workers’ health insurance coverage under the law (Zhao et al., 2020). The act created the American Health Benefits Exchange allowing Americans to review and compare health insurance plans to identify the best plan. The act also provides healthcare professionals the opportunity to take parting in improving the delivery of care.
According to Zhao et al. (2020), the healthcare industry can benefit from programs that deliver effective and efficient services to the growing patient population while decreasing care expenses. The ACA led to the creation of accountable care organizations (ACOs). This value-based care program requires healthcare professionals to pay for the quality of care provided instead of quantity (Zhao et al., 2020). ACOs coordinate care for patients who have a specific health insurance program.
Conclusion
The US healthcare system has experienced a lot of changes in terms of healthcare finance since 1950. The first change was the Revenue Act of 1954 was enacted to exclude employers’ contributions to workers’ health plans from taxable income. The second important change was the creation of the Medicare and Medicaid programs. The two programs marked a fundamental healthcare finance change in the American healthcare system. The two programs provide health insurance coverage to more than 70 million Americans.
The HIPAA is another major healthcare reform that impacted health finance. The law protects US workers by permitting them to carry their health insurance policies from employment to employment. The ACA is recent major healthcare reform that impacted healthcare finance in the US. The act aimed to provide health insurance to the majority of US citizens. The act needs most Americans to apply for health insurance coverage. Individuals who have not applied for cover will be penalized.
References
Edemekong, P. F., Annamaraju, P., & Haydel, M. J. (2018). Health insurance portability and accountability act.
Malekinejad, M., Horvath, H., Snyder, H., & Brindis, C. D. (2018). The discordance between evidence and health policy in the United States: The science of translational research and the critical role of diverse stakeholders. Health Research Policy and Systems, 16(1), 1-21.
Monica Hendrix, M. J. (2019). Getting Health Care Costs Under Control While Improving Quality of Care: The Maryland Way. Journal of Health Care Finance.
Pakizegee, M., & Stefanacci, R. G. (2018). Value-based clinical pathways in the world of reference-priced Medicare Part B drugs. J Clin Pathways, 4(10), 38-39.
Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health care spending in the United States and other high-income countries. Jama, 319(10), 1024-1039.
Permanyer, I., & Scholl, N. (2019). Global trends in lifespan inequality: 1950-2015. PloS one, 14(5), e0215742.
Waxman, T. (2012). Financial and Business Management for the Doctor of Nursing Practice. Springer Publishing Co.
Zhao, J., Mao, Z., Fedewa, S. A., Nogueira, L., Yabroff, K. R., Jemal, A., & Han, X. (2020). The Affordable Care Act and access to care across the cancer control continuum: A review at 10 years. CA: A Cancer Journal For Clinicians, 70(3), 165-181.
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