Understanding the US Healthcare System

Introduction

• Focus on a patient to understand money flow in the healthcare system.
• Understanding how money flows is key to understanding the system.

Patient and Healthcare Provider Interaction

• Patient: May have medical problems (e.g., fractured ankle, pneumonia) requiring attention.
• Healthcare Provider: Can be a doctor, nurse practitioner, nurse, etc., working in a hospital, clinic, or other settings.
• Types of Care:
  • Goods: Pills, casts, crutches.
  • Services: Expertise and time, e.g., x-rays by a radiologist.

Role of Insurance Companies

• Purpose: Protect patients from unexpected large medical costs.
• Mechanism: Patients pay premiums, pooling their money and risks (risk sharing).
• Payments: Patients pay smaller amounts (copay/deductible) while insurance covers the majority.

Role of Employers

• Employment Relationship: Workers provide goods/services to employers in exchange for wages.
• Provision of Insurance: Many employers offer health insurance as a benefit. They pay premiums to insurance companies.

Government's Role

• Tax Payments: Citizens pay taxes to the government.
• Services Provided: Education, roads, healthcare (Medicare and Medicaid).
• Healthcare Programs:
  • Medicare: For elderly and certain disabled individuals.
  • Medicaid: For low-income individuals and families.

Distribution of Healthcare Coverage

• Methods of Coverage:
  1. Direct payment by patients to providers.
  2. Premiums paid directly by patients to insurance companies.
  3. Employer-paid premiums for employee insurance.
  4. Government-provided insurance.
• Pie Chart Representation:
  • ~50%: Employer-provided insurance.
  • ~33%: Government-provided insurance (split between Medicare and Medicaid).
  • Small segment: Self-purchased insurance.
  • Remaining segment: Uninsured (47 to 60 million people).
    • Uninsured individuals pay out of pocket, risking financial instability.

Conclusion

• Overview of healthcare payment methods in the US.
• Future discussions will delve deeper into each group.