Healthcare Insurance in USA

Healthcare Insurance in USA:

In the United States of America, nearly everyone is covered under some type of insurance. What is the need for this healthcare insurance and how long has insurance been around?

Insurance has been around in USA for about 100 years. After the world war II, the initial reason insurance was launched was due to wage freeze brought about by the Federal Govt which prohibited employers from hiking the wages of employees beyond a certain limit to curb inflation. To deviate from this and to offer a better salary package for deserving employees and to entice top performers in the industry, employers offered fringe benefits in the form of insurance. This grew popular and insurance payers sensed the market was set to grow immensely in the future and started investing in it.

Some countries offer universal health care. This simply means everyone is covered under the health insurance and so there is no need to worry about medical cost during a sudden medical emergency situation. There will be a copayment depending on the service offered but mostly the health care of the whole nation will be taken care of. But this did not work out in the USA. There are many reasons for this. The primary among them is the fear that doctors will be forced to join HMO (health maintenance organization) and the rising healthcare cost which would form a substantial portion in the budget. So this led to the failure of HillaryCare which was a form of universal health care for all including aliens settled in the US.

Managed care is quite widespread throughout the country. Managed care simply means that there is a tie-up between the insurance and doctors and they agree to provide care at a fixed amount for patients who are enrolled in that insurance.

So what exists now is HMO, PPO and EPO. The government funds Medicare and Medicaid for the underprivileged and elderly population. Medicare and Medicaid form the biggest chunk in the US budget.

Based on data from April 2017, here is a rundown of the top 5 largest health insurance payers in the US:

1. United Health Group – 2016 Net revenue - $184.8 billion.

2. Anthem – 2016 net revenue - $89.1 billion

3. Aetna – 2016 net revenue - $63.1 billion

4. Humana – 2016 net revenue - $54.3 billion

5. Cigna – 2016 net revenue - $39.7 billion

Health insurance premiums are nontaxable. IRS brought this rule in 1954. Due to this USA endures a deficit of $250 billion every year.

After the Affordable Care Act (ACA) was passed, more people were included in the health care insurance fold which of course puts more pressure on the federal budget. Now roughly about 90% of Americans are covered under the insurance. The total healthcare expense for 2015 was a whopping amount of $3.2 trillion. And quite surprisingly a big chunk of that amount is earned by the hospitals and not doctors. Surgeons are the highest paid doctors. Anesthesiologists also earn a lot.

Defensive Medicine: This term refers to “Attack is the best form of defense.” In Medicine, this boils down to some doctors who practice defensive medicine by ordering numerous tests like x-rays, lab tests to diagnose a disease or at least to prevent any new developments. Though this helps prevent the disease in some patients, a huge number of patients are being subjected to these unnecessary tests who may never develop the illnesses. Ultimately the healthcare costs expand even more due to this.

As President Trump has recently acknowledged, healthcare is a complicated affair in the US.

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