Financial Analysis of US Healthcare System: A Reflective Analysis

This report provides a comprehensive financial analysis of the US healthcare system. It begins with an introduction highlighting the complexities and costs of the system, influenced by both public and private insurance. The report then traces the evolution of the US healthcare financial system, detailing key milestones such as the introduction of private health insurance in the 19th century, the impact of the Social Security Act, and the establishment of Medicare and Medicaid. It explores the increasing involvement of the US government in healthcare finance, citing expenditure trends and the roles of various government payers. The report examines healthcare delivery, discussing the roles of physicians, hospitals, and insurance plans, and offers policy solutions to improve access, focusing on adjustments for hospitals, physician payment, and patient education. It concludes by summarizing the dual nature of the US healthcare finance system, which is funded through both public and private programs.

Running Head: FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
Name of the Student
Name of the University
Author Note:

1FINANCIAL ANALYSIS
Introduction
The US healthcare system is financed with various resources. The US healthcare system
is expensive for the inclusion of advanced technology. The economy of the American health care
system is a mix of public and private insurance. According to researches, the US government
provides the coverage for 53 million generally through Medicare, and 62 million lesser-income
through Medicare. This paper is going to picturise the evolution of financial healthcare of the
United States. It will reflect on the government influence on healthcare finance along with the
delivery and policy in the field of healthcare finance (Cms.gov, 2020)
.
Evolution of the financial system of US healthcare
The presidential election during the year of 2008, the Senator Hillary Rodham Clinton
suggested for the enactment for the universally compulsory insurance plan for health as a part of
the entire campaign. During the 19th century, the concept of private health insurance was
established in the USA. During this time, some insurance agencies provided a response for the
public demand for coverage from accidents related to rail and steamboat (Jacobs & Skocpol,
2015). During the year of 1940, the private health insurance agencies only covered 6% of the
entire population of American for hospitalization (Centers for Medicare & Medicaid Services.
2015). However, by the end of 1941, the rate increased up to 12.4%. The Stabilization act during
the year of 1942 implemented price control on recruiters by lowering the increased employee
wages.
The Social Security Act (1935) provided the allowance of including the medical care cost
into the monthly support payments. However, the rate was too low that the employees could

2FINANCIAL ANALYSIS
hardly afford the basic requirements. During the beginning of 1960, John Kennedy was elected
as the president. He proposed the modern version of the Medicare program by introducing the
King-Anderson bill (Stabile & Thomson, 2014). The bill provided the allowance of payment for
hospitalization of the senior people via the social security system that covered almost 14 million
beneficiaries of social security crossing the age group of 65. During the beginning of the 1970s,
the health expenditure was appearing as a complex problem with the new administration in
Washington (Shazali et al., 2013). Moreover, the 19th century is observed with various legislative
initiatives that influenced the health insurance industry within both the public and private fields.
According to the Congress enacted the Balanced Budget Act,
 The private plans expanded alternatives including a fee-for-service program in the
Medicare program.
 The act also generated an original insurance program of health for the children as the
Children’s Health Insurance Program.
 Thirdly, the act clarified the provision that was comprised in HIPAA 1996 for the long-
term insurance care.
Entering into the 21st century, the Long-Term Security Act was passed by Congress. This act
provided the founding of a package under which the care insurance of long-term would be
accessible to federal personnel, an associate of the uniformed equipped facilities and citizens and
military pensioners (Cleverley & Cleverley, 2017). The year 2012 is observed with some
remarkable activities of health by the federal government including Medicare and Medicaid,
HIPAA, COBRA, HMOs, coverage of prescribed drugs, PROs, TEFRA, and ERISA.

3FINANCIAL ANALYSIS
Figure 1: Health expenditure per capita
Involvement of the US government in Healthcare finance
The pattern of government is increasing in the real per capita spending on health.
According to the record of 2017, the government expenditure represented about 60% of universal
spending on health which has increased from the observed 56% during the year of 2000. One of
its reason is economic growth and the global increase of out-of-pocket spending per capita
between the years 2000 and 2017. According to the report of 2006, the expenditure in the domain
of health was 8.7% of GDP (World Health Organization. 2019). In low-income countries,
external sources are becoming more active. Almost 17% of the expenditure was represented by
the external resources in the low-income country (Moradi-Lakeh & Vosoogh-Moghaddam,
2015). The government plays a different role according to the type of healthcare product and
service.

4FINANCIAL ANALYSIS
 Expenditure in the field of hospital care increased by 4.6% to $1.1 trillion in the year
2017. The expenditure of the hospital care slowed between the important payers
including Medicare, private health insurance, and Medicaid.
 Expenditure of physician and clinical services enhanced 4.2% to $694.3billion in the year
2017.
 Expenditure in the field of retail prescribed drugs has slowed in the year 2017.
 The private insurance agencies of health care comprised of 34% share.
 Medicare represents the 20% share of the entire healthcare expenditure.
 Medicaid expenditure increased into 17% share.
 Out-of-pocket expenditure raised 2.6% in 2017 (comprised 10% share).
Figure 2: Major sources of healthcare expenditure
Healthcare delivery
The entire healthcare sector of the US consists of an array of physicians, hospitals, and
other health care services, planning of insurance, and operation configuration plans. The
competitive history of healthcare service in the US evolved from the collapsed situation of the

5FINANCIAL ANALYSIS
early 19th century. The faltering time of the private health care system handled by the
government and public healthcare sector with the providence of basic healthcare facilities.
Insurance from the private sector is purchased through the worker-based groups with a lower
extent via individual policies. On the other hand, publicly funded insurance is offered initially
through various government programs.
Policy Solution
 Some of the hospitals are getting low-volume adjustments that may not be required to
protect the Medicare recipient contact to care. Hence focus should be provided in this
area as the criteria for core community hospitals allows the dependence of Medicare
beneficiary on the hospitals.
 Alteration is required in the field of payment for the standard physicians. Medicare
should focus on strengthening the aid to cure the patients and considering this service as
the primary focus.
 The government should take initiatives to educate the patients about the various facilities
and insurance facilities provided by both the public and private sectors of the United
States.
 New payment policies of Medicare is focusing on payment programs to reduce the
overall spending of Medicare. The policy must consider providing quality service to the
patients. Hence, policies are required to increase the supply of workforce for better
quality services.

6FINANCIAL ANALYSIS
Conclusion
As a conclusion, it should be mentioned that the finance system of US healthcare is
funded with both public and private insurance programs. It is a huge free-enterprise system that
refers to both competitive and capitalistic nature. Organizations and individuals are provided
with equal opportunity to select plans according to their needs via the utility of existing coverage
of healthcare finance.

7FINANCIAL ANALYSIS
References
Centers for Medicare & Medicaid Services. (2015). National health expenditures 2013
highlights. Retrieved July, 17, 2016.
Cleverley, W. O., & Cleverley, J. O. (2017). Essentials of health care finance. Jones & Bartlett
Learning.
Cms.gov. (2020). Historical | CMS. Retrieved 17 February 2020, from
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/NationalHealthAccountsHistorical
Jacobs, L., & Skocpol, T. (2015). Health care reform and American politics: What everyone
needs to know. Oxford University Press.
Moradi-Lakeh, M., & Vosoogh-Moghaddam, A. (2015). Health sector evolution plan in Iran;
equity and sustainability concerns. International journal of health policy and
management, 4(10), 637.
Shazali, N. A., Habidin, N. F., Ali, N., Khaidir, N. A., & Jamaludin, N. H. (2013). Lean
healthcare practice and healthcare performance in Malaysian healthcare
industry. International Journal of Scientific and Research Publications, 3(1), 1-5.
Stabile, M., & Thomson, S. (2014). The changing role of government in financing health care: an
international perspective. Journal of Economic Literature, 52(2), 480-518.
World Health Organization. (2019). Global spending on health: a world in transition (No.
WHO/HIS/HGF/HFWorkingPaper/19.4). World Health Organization.