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Paying for Healthcare

November 06, 2012
Group owner Richard Martine

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Paying for Healthcare

By: Richard Martine   Post Date : November 06, 2012
It is probably fair to say that in the near term paying for healthcare will be on the minds of most, if not all, Americans. Not a day goes by that some mention of the growing cost of healthcare is made by the various forms of public media (TV, print, Internet, etc.). In addition, this presidential election year has served to amplify the concern for the increasing cost of healthcare. For the year 2012 alone the amount spent on healthcare will exceed $2.7 trillion. Stated another way, the cost of healthcare is now more than 17 percent of the US Gross Domestic Product (GDP). Of even greater concern is the fact that the non-partisan Congressional Budget Office has projected that by 2025 the cost of healthcare will exceed 25 percent of the GDP.

For many Americans it may be difficult to grasp what effect healthcare cost escalation will have on their daily lives. One way to look at it is to consider the cost for every person in this country, or the cost per capita. In 2010 the cost per capita in the US for healthcare was approximately $8,400. A conservative guesstimate suggests that unless major policy changes are made the cost per capita in 2025 will exceed $25,000. If you were fortunate enough to have had no health related issues, paying for healthcare probably doesn't cause you great concern. However, if you have or had a reason to engage the healthcare system - doctor, hospital, need for prescription drugs or various other types of medical products/services, etc. - how, or in what manner, the bills for your healthcare will be paid is a matter of preeminent concern.

At present, healthcare costs are paid for by one of three primary methods. The first method is paying out of pocket for the healthcare you receive. This fee for service approach is appropriate for the most minor of healthcare services. However, if you need a surgery, have an extended hospital stay, require rehabilitation, are prescribed expensive drugs, etc., the cost can easily run into the six figure (and more) range. For most of the 47 million Americans that have no form of healthcare insurance medical-related debt can exceed their savings and can easily lead to a bankruptcy. It is reported that in 2007 more than 60 percent of the 800,000 persons filing for bankruptcy cited medical bills as a major factor in their decision. For those able to avoid bankruptcy, there is often the companion issues of home foreclosure, poor credit, etc., due to medical bills

The second method of paying for healthcare is to acquire and maintain health insurance that covers most if not all healthcare costs. In the past this type of insurance was usually provided by an employer. However, many employers now faced with the rising cost of health insurance, have eliminated the health insurance benefit or require the employee to pay an increased amount based on some type of cost sharing formula. This often results in the employee being underinsured. Even with fully paid comprehensive insurance the employee can expect out of pocket expenses depending on the seriousness of the health related issue being encountered and the small print in the insurance policy itself. This point is illustrated by the fact that three of every five people who have healthcare insurance also have medical debt.

The third method of paying for healthcare applies only to those individuals whose age and income criteria meet certain criteria. They can have their medical expenses covered by the government provided Medicare and Medicaid programs. As in the case of many private health insurance providers, all medical expenses are not covered. The individual must supplement their government provided coverage by acquiring private insurance or pay non-covered expenses out of pocket. Of current concern is the fact that due to continuing decreases in insurance and Medicare reimbursement rates to physicians and hospitals a growing number of these providers will no longer accept patients whose only insurance is that of Medicare and/or Medicaid.

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