History/Overview of Financing in the United States Health Care System

The topic addressed in this blog is the history of Finance regarding the United States Health Care System; an issue dating back to the beginning of Health Care as we know it. Along with healthcare, comes a certain amount of cost. Because there is always a cost for service, as this developed, so did the finances which support it. Some excellent examples of this are Medicare and Medicaid. The Medicare program provides health insurance coverage for people age 65 and over, younger people who are receiving social security benefits, and persons who need dialysis or kidney transplants for treatment of end-stage kidney disease. Medicaid is a medical assistance program jointly financed by the State and Federal governments for eligible low-income individuals. This program covers health care expenses for all recipients of Aid to Families with Dependent Children, and most states cover the needy elderly, blind and disabled who receive cash assistance under the Supplemental Security Income Program. Both of these were enacted in 1965 as Title XVII and Title XIX of the Social Security Act. Another type of financial support for US Health Care is Private Insurance. These are generally companies which are affiliated with employers and give their employees coverage while under their payroll. The issue with this throughout history has been that if you are to lose your job, you will also lose this insurance, along with any other family coverage. Lastly, if unable to receive help from government or an employer, patients may cover the financial burden of their health care services on their own, a main reason why millions of citizens are filing bankruptcy.

There are multiple ways to describe the finances of Health Care. In using a dollar amount to measure this topic, take into account that in 2005, 2 trillion dollars was spent in this nation on health care, equaling $6,997 per capita. Also, Health Care makes up 16% of the nations GDP today. However, this rate is projected to grow to 20% by 2015. Lastly, in the 4th quarter of 2008, the GDP shrunk by 3.8% while medical spending continues to rise. In relation to finance and access, we must consider that 1/6 people do not have insurance in the United States. This relates to the finances, because the level of one’s insurance greatly affects their access and outcomes in regards to care. Another important factor of this issue is the quality of services which due to financial problems, may be late and in turn, further complicate pre-existing health concerns in the first place.

National Health Expenditures, Selected Years
Year , Amount (in billions) , Percentage of GDP , Amount per Capita
1960, 26.9, 5.1, 141
1965, 41.1, 5.7, 202
1970, 73.2, 7.1, 341
1975, 130.7, 8, 582
1980, 247.3, 8.9, 1052
1985, 428.7, 10.3, 1735
1990, 717.3, 12.4, 2821
1995, 1,020.4, 13.8, 3762
2000, 1,358.5, 13.8, 4729
2005, 1,987.7, 16, 6697

National Health Expenditures 2006

Total = $2.106 Trillion
Source: Centers for Medicare and Medicaid Services, Office of the
Actuary, National Health Statistics Group.

As the cost for care rises due to matters such as growth in technology, aging populations, and administrative costs, the use of these systems continues to increase. Another major factor in the need for increased health care financial support resides on the current economy of citizens and their households. Many of us, have experience with this and battle weighing out the cost of health care to the cost of daily living expenses. Unfortunately the latter usually wins, putting our health and lives at stake due to financial burdens. The financial aspect of history is one that has dictated US Health Care in our world today. For this reason, finances are by far the most important of all others: Workforce, Technology, Outpatient and Primary Care, Inpatient Care, Managed/Integrated Systems, Long Term Care, and Special Populations. In order for all of these to continue their existence, financial costs must be addressed and supported. If not, utilization of these other topics will not occur and the Health Care system as we know it will diminish. Although some people may see this as an unimportant factor for the US Health Care system, if they look back to the origin of any service, it always starts with money. Therefore, even an argument against the importance of finance will be defeated.

Some major years in history that affected the finances of our system include:
1935- Passage of the Social Security Act.
1939- The Federal Security Agency was created, bringing together related federal activities in the fields of health, education and social insurance.
1962- Passage of the Migrant Health Act, providing financial support for clinics serving agricultural workers.
1965- Creation of the Medicare and Medicaid programs, making comprehensive health care available to millions of Americans.
1977- Creation of the Health Care Financing Administration to manage Medicare and Medicaid separately from the Social Security Administration.
1980- Federal funding provided to states for foster care and adoption assistance.
1988- Creation of the JOBS program and federal support for child care. Passage of the McKinney Act to provide health care to the homeless.
1993- The Vaccines for Children Program is established, providing free immunizations to all children in low-income families.
1995- The Social Security Administration became an independent agency.
1996- Enactment of welfare reform under the Personal Responsibility and Work Opportunity Reconciliation Act.
1997- Creation of the State Children's Health Insurance Program (SCHIP), enabling states to extend health coverage to more uninsured children.
1999- The Ticket to Work and Work Incentives Improvement Act of 1999 is signed, making it possible for millions of Americans with disabilities to join the workforce without fear of losing their Medicaid and Medicare coverage. It also modernizes the employment services system for people with disabilities.
2001- The Centers for Medicare & Medicaid is created, replacing the Health Care Financing Administration.
2003- Enactment of the Medicare Prescription Drug Improvement, and Modernization Act of 2003, the most significant expansion of Medicare since its enactment, including a prescription drug benefit.

Sources:
Shi, Leiyu, and Douglas A. Singh. Delivering Health Care in America. 4th ed. Boston: Jones and Bartlett Publishers, 2008.
http://www.hhs.gov/about/hhshist.html
http://www.pbs.org/healthcarecrisis/history.htm
http://www.cms.hhs.gov/HealthCareFinancingReview/01_Overview.asp#TopOfPage
http://www.kaiseredu.org/topics_im.asp?imID=1&parentID=61&ID=358
http://findarticles.com/p/articles/mi_m0795/is_2_27/ai_n16108607