health insurance in the united states
Health care in the United States is funded by a combination of public and private insurance, employers, and individuals who pay out of pocket. In 2015, 37 percent of the US population received health care through a public insurance program at some point (USCB, 2016). The main public insurance systems are Medicare and Medicaid. Medicare is a national health insurance program for people age 65 and older, people who have end-stage renal disease or amyotrophic lateral sclerosis, and people who have long-term disabilities once they have qualified for social security disability insurance ( ssdi). It is paid for through a combination of Medicare payroll tax revenue, federal tax revenue, and beneficiary premium payments (and a small amount of state funding for the Medicare Part D prescription drug benefit). In 2016, Medicare benefit payments totaled $675 billion and represented 15 percent of the federal budget, according to a report by the Kaiser Family Foundation (2017a).
Medicaid is a means-tested public insurance program that is jointly funded by the federal and state governments, but administered by the states. Before the ACA, Medicaid covered people who were categorically eligible for benefits based on income and other requirements determined at the state level. Eligibility categories include low-income children and their families, low-income individuals age 65 and older, and low-income adults and children with disabilities. Some states voluntarily extended Medicaid to other eligibility categories, such as people with high medical costs and the long-term unemployed. Total Medicaid spending was $574.2 billion in Federal Fiscal Year (FY) 2016 (KFF, 2016a).
according to a report by the kaiser family foundation (2015a), medicaid is the leading insurer, public or private, providing comprehensive coverage for institutional and community-based long-term services and supports (ltss), possibly the most important service for people who have disabilities and need assistance with daily personal care tasks. since the supreme court’s olmstead decision in 1999, medicaid has moved from providing ltss to people with disabilities in institutional settings, such as hospitals and long-term care facilities, to providing ltss in home settings and community ( kff, 2015a). Although the Supplemental Security Income (SSI) qualification provides categorical eligibility for Medicaid, individuals who are not enrolled in or may be applying for SSI or SSDI but who need long-term services and supports can obtain Medicaid coverage if their income and assets are below designated thresholds. In some states, people with slightly higher incomes may qualify if they meet disability-related functional criteria and, in some cases, pay a monthly “buy-in” premium (KFF, 2015a). The ability to purchase Medicaid is critical for many low-income people who have disabilities and require personal care assistance at home or in the community in order to work; Private insurance plans, including employer-sponsored plans, do not provide comprehensive LTSS coverage. the aca, by expanding access to medicaid coverage, extended that benefit to more people with disabilities. Medicaid spending for institutional and community-based LTSS totaled more than $123 billion in 2013 and represented 28% of total health care spending in that year and 51% of total national spending on LTSS (KFF, 2015a). In addition, the federal government provides funds to Federally Qualified Health Centers whose mission is to provide direct medical services to the uninsured.
Other public insurance systems include more specific programs, such as the Children’s Health Insurance Program (CHIP), a means-tested health insurance program for uninsured children in low-income families (administered through Medicaid in some states, but as a separate program in others); the indian health service (ihs)1; the US Department of Defense (DOD) health care system (providing medical care to active duty and retired US military personnel); the dod disability system (which provides ssdi benefits for injuries sustained during military service); and the united states department of veterans affairs (va) health system, which provides health care to veterans, many of whom qualify for disability benefits through va and ssdi or ssi.2
Private health insurance is the most common form of health insurance in the United States, with 67.2% of the population having private coverage at some point during 2015 (USCB, 2016). private health insurance continues to be predominantly employer-based. in 2015, 55.7% had coverage through an employer and 16.3% purchased private individual coverage directly from an insurer (uscb, 2016).3 employers offer health insurance as a tax-advantaged benefit to employees , paying a portion of the premium for employees and their dependents. Although the employer share of health insurance premiums is considered an expense to employers, like other forms of compensation, employer contributions are tax-free for employees, and employees can pay their share of the premiums of health insurance before taxes through payroll deductions. Before the ACA, dependent children could stay on their parents’ insurance policies until age 18 or until they completed a college education, but could have a gap in insurance coverage if they didn’t start work before coverage expired. . after the aca, dependents could stay on their parents’ policies until age 26.
As health care costs have risen in recent decades, employers have increasingly asked employees to share more in the cost of their health care. Employees now pay a larger share of premium costs and face higher coinsurance, copayments, and deductibles than they did a decade ago (see Figure 3-1). for example, while the average premium increased by 58% since 2006, the average employee contribution to the premium increased by 77% (kff, 2016b).
In addition, employees are increasingly likely to face increased cost sharing in the form of high deductibles (see Figure 3-2). About 29 percent of people with employer-sponsored health insurance are enrolled in a high-deductible health plan (HDHP) (KFF, 2016b). By not providing first-dollar coverage for health care services, HDHPs create strong incentives for people to reduce their consumption of health care services. People enrolled in HDHPs with deductibles of at least $1,300 for an individual ($2,600 for a family plan) can save for medical expenses on a pre-tax basis in Health Savings Accounts (HSAs). If not spent during a calendar year, the HSA savings roll over to the next year with interest. Some employers offer HSAS as an employment benefit. Although HDHPs are intended to reduce low-value care and encourage selection of lower-priced providers, recent evidence shows that they result in reductions not only in low-value care but also in potentially high-value care (brot -goldberg et al., 2017) ).
Smaller employers buy health insurance for their employees through the small group market, which is more expensive than health insurance sold through the large group market because small employers have fewer employees to spread among the risk of health expenses. the smaller populations in these plans make them more vulnerable to adverse selection: the tendency for those with higher expected health care expenses to both enroll in health insurance and select plans that have more generous coverage. The same happens with the individual market, in which people can buy private insurance directly from some insurers. Before the ACA, individual insurance plans were considered to pose a high risk to insurers because people who had higher expected utilization were more likely to enroll in health insurance, and this would lead to serious adverse selection. when that happened, insurers raised premiums to cover higher claims costs, which in turn caused healthier people to drop plans. that cycle repeated itself until only the high-cost participants remained and the plans ended.
The risk of adverse selection motivates many structural features of private health insurance that are designed to ensure that health plans have large risk pools with enough healthy and low-cost participants. In the individual market, insurance companies would protect themselves financially by using medical underwriting (charging higher premiums for those with chronic conditions) and excluding benefits for pre-existing medical conditions for a fixed period. Adverse selection is also why most states have created high-risk pools as a way to ensure that the sickest, highest-cost people who would otherwise be uninsurable have access to health coverage. health insurance. high-risk insurance plans have higher premiums than regular insurance plans, but premiums are regulated and capped (kff, 2016c).
In 2009, the year before the ACA passed, about 52 million people, or 15 percent of the US population, lacked health insurance. This included low-income people who did not meet Medicaid income limits or categorical eligibility and working people, typically those who were self-employed or who worked for a business that did not offer health insurance as a benefit. But a lack of insurance did not necessarily mean a total lack of health care, due to the Emergency Medical Treatment and Labor Act (EMTALA) and access to federally qualified health centers. emtala ensures that eds provide patients with emergency care regardless of their insurance status or ability to pay (cms, 2012). emtala guarantees universal access to emergency care for all americans, but it is an unfunded mandate partially addressed through disproportionate medicaid hospital payments (dsh).4 hospitals bear the burden of providing not only Uncompensated emergency care to patients, but of the uninsured use EDs for all of their health care needs, knowing they will not be turned away (American College of Emergency Physicians, 2016). emtala ensures access to care for the uninsured, but emergency room visits are costly and tend to cause people to return to the hospital for reasons that could have been prevented with proper primary and specialty care.
A primary goal of the ACA was to extend health insurance coverage to the 32 million uninsured people in the United States. the aca had two main components: expansion of the medicaid program and new structures to support individual and small group health insurance markets.
the aca eliminated the concept of categorical eligibility and replaced it with standard eligibility criteria of 138 percent of the federal poverty level. In 2012, the Supreme Court ruled that the federal government could not force states to expand Medicaid coverage. As a result, only 32 states and the District of Columbia chose to expand Medicaid (KFF, 2017b).
For the individual and small group markets, the ACA established state health insurance exchanges to allow individuals and small groups to purchase standard insurance policies with income-based subsidies ranging from 138% to 400%. % of federal poverty level (kff, 2015b). the aca eliminated medical subscription and imposed a legal mandate to buy health insurance with a penalty for those who did not comply. Before the ACA, insurance companies used medical underwriting to determine whether to offer coverage to a person, at what price, and with what exclusions or limits based on the person’s health status; the purpose was to ensure a healthy risk pool by requiring people to pay premiums that reflected their expected medical costs. Due to medical underwriting in the individual and small group markets, people who were sick often paid higher premiums or were denied coverage. The ACA’s individual mandate, by contrast, was designed to force the healthiest people to purchase insurance to balance risk pool and lower premiums for all. states could set up their own health insurance exchanges or use the one created by the federal government. however, access to care (except for increases in insurance coverage) did not show improvement until the time period between 2014 and June 2017 (kff, 2017c).