HCS440/Economics: The Financing of Health Care
November 25, 2011
Health Care Spending
In the early 1930’s, the Blue Cross/Blue Shield Organization led consumers to hospitalization and medical coverage under their own charter for everyone who sought coverage for one prepaid fee. Years later, other insurance companies, such as Kaiser Permanente began to offer coverage to consumers within their geographic boundary. However, health care spending is on the rise. Over the last couple of decades the expenditures have risen from 724.0 billion dollars in 1990 to 2,486.3 billion in 2009(US census, 2011). Today, we are a nation with Health Care Reform signed into law by President Obama on March 23, 2010, also known as the Patient Protection And Affordable Care Act (PPACA). Over the years, there have been many changes ranging from the Health Maintenance Organization (HMO) boom in the 80’s and 90’s to the more current trend of companies moving toward Consumer Driven Health Plans (CDHP). In 2008, health care spending accounted for 16.2% of the nation’s Gross Domestic Product, highest of all industrialized countries (Kaiser Foundation, 2010). The grow rate for health insurance over the past decade has been around 4.4%, which is higher than the growth rate for national income. Many people enrolled in the HMO plans at a low monthly rate because there was little to no co-payment for medical visits and services provided. Most costs were paid by the carrier, however, carriers were able to pay for services using their own discretion and requiring many restrictions for the more expensive services to be provided. The carrier would consider these expensive procedures a “risk’, and not provide coverage to the consumer. The attraction to the consumer for this option was low cost health care. On the surface, the HMO plans offered a cost savings to the consumer. Since the HMO companies would only cover a procedure based on...