The Healthcare System in the United States of America: the Organization of Health Insurance – PART 2/3

In our previous blog we discussed the nature of the Affordable Care Act, and key figures of pre- and post Obamacare implementation, in regards to total healthcare market costs, individual medical debt and spending, insured rates and user satisfaction. In this USA healthcare system article we will discuss the backbone organizations that are funding and insuring the American population for healthcare needs; i.e. Medicare, Medicaid, CHIP and the Health Insurance Marketplace.

The United States has a GDP of €14,840 bn, with a GDP growth rate of 2.4% in 2015. Over the last 5 years it has spent an average of €7,600 per capita on public healthcare, equivalent to approximately 17% of its annual GDP.

The Organization: Centers for Medicare and Medicaid Services

As part of the Department of Health and Human Services (HHS), the body managing the public financing programs is called Center for Medicare and Medicaid Services (CMS), holding 10 regional offices serving as the state’s local presence.

Approximately one third of US citizens are enrolled in one of the programs managed by the CMS.

Apart from Medicaid, Medicare, and CHIP, the CMS also runs the Health Insurance Marketplace, quality programs and an innovation center.

Health Insurance Marketplace

Since 2014, the Health Insurance Marketplace, also named the Affordable Insurance Exchange, has been active as the state-run market space offering private health insurance to SME employees and other individuals. It serves to offer health insurance to those not entitled for coverage under their employment benefits, Medicaid, Medicare or CHIP.

It is intended to provide affordable and competitive healthcare coverage packages, on a single easily-accessible and comparable platform. The funding for this platform and its supervision comes from federal grants to the participating states.

Exchange members/subscribers that meet eligibility criteria can benefit from subsidies and financial exemptions when seeking insurance in the Marketplace.

Recent reforms regarding these insurance providers, made through the Affordable Care Act, include:

  • Banning annual dollar limits; plans cannot limit coverage expenditure for hospital, physician and pharmaceutical benefits
  • Children are covered up to age 26
  • A standardization of health insurances’ pricing
  • The Patient’s Bill of Rights; protects and facilitates care for Americans with pre-existing medical conditions

In effect, 60% of Americans should be covered for €90 or less via the Marketplace; the average cost levelling just above €70 a month.

Medicare

Medicare is a public insurance program for the following patient population:

  • People aged 65 years and over
  • People younger than 65 years with certain disabilities
  • All ages with End-Stage Renal Disease

It provides support in 3 principal ways:

  1. Part A Hospital Insurance
    • Helps pay for inpatient hospital care, critical hospital care, nursing services, hospice care and certain domestic services.
    • Is paid for most commonly via a payroll tax contribution, and can be covered via a spouse’s contribution
    • Typically not intended to provide long-term care (exceptions apply)
  1. Part B Medical Insurance
    • Helps pay for outpatient care, doctor services, related supplies, and other care not covered under Part A, e.g. occupational therapy or domestic care.
    • Financed via a monthly premium
  1. Prescription Drug Coverage
    • Helps reduce cost of prescription medication, with variable drug plans from which the beneficiary can chose
    • Financed mostly through monthly premiums.
    • Coverage is provided through the private sector

Medicaid

Medicaid provides cheap and/or free healthcare to the following groups:

  • Low-income individuals, families and children
  • Pregnant women
  • Elderly
  • People with disabilities

States may independently chose the extent of benefits and coverage provided in their Medicaid plan. They also have the option of “expanding their Medicaid”, a term one will commonly come across in discussions regarding the USA healthcare system; meaning the state program is covering a wider range of income levels.

Expanded Medicaid coverage entails:

  • Income-based criteria is sufficient to qualify for coverage.
  • Incomes that are 133% below the federal poverty level qualify.
    • This is equal to approximately €13,380 per individual annually, and €26,760 for a family of four.

Medicaid and CHIP combined cover around 60 m US citizens, equal to 18.7% of the total US population.

CHIP

The Children’s Health Insurance Program (CHIP) serves to cover healthcare needs for children from families earning more than the threshold for eligibility under Medicaid. In some states CHIP also provides benefits for pregnant women and parents.

The basic package for children includes:

  • Emergency care
  • Routine check-ups
  • Vaccinations
  • Doctor consultations
  • Dentistry and ophthalmology
  • Prescriptions
  • X-rays and lab work
  • In- and outpatient hospital care

Some states charge a monthly premium or nothing whatsoever; the monthly premium should never exceed 5% of a family’s annual income.

Non-standard and more complex services often incur a copayment.

Approximately 6 m children are enrolled with CHIP.

Conclusion

There is no particularly convincing evidence either way whether pre-or post-Obamacare healthcare services were much better, or worse, or much more accessible, or less so.

A country attempting to obtain universal coverage is no easy feat, and time has yet to show which way the healthcare system will be steered, and how it will address its foremost challenges regarding financing, accessibility and coverage. With the presidential elections this year, it is an exciting time to observe the possible healthcare reforms coming later this year, and how these can impact the hospital and medtech sectors.

In our next blog, we will present the American presidential candidates and their planned approaches to handle the financing and organization of the USA healthcare system if they are elected.

About Laura Weynants

Performs primary and secondary market research to create Country Deep Dive Reports at TforG. Interviews KOLs and medical sector professionals to build on TforG’s healthcare market expertise and competence networks. Complementing five years of sustainability policy and CSR communication, she now focuses on grasping key medical market trends, structures and opportunities in medical sectors worldwide. Coming from an international background of living in Germany, Spain, USA, UK and Belgium, she has gained a keen insight in international organizations and language skills to perform first hand investigations. She graduated from Sussex University Brighton, UK with a BA English Literature and Sociology and achieved a Master Degree in Sustainability and Corporate Social Responsibility in EOI Business School in Madrid, Spain.