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Paying for Health Care in the US

Paying for Health Care in the US

Author: Paul Hannan

Examine the methods of paying for healthcare in the United States.

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Source: Intro Music by Mark Hannan; Public Domain Lego; Public Domain Thermometer; Public Domain US Map; Public Domain

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[MUSIC PLAYING] Welcome to this episode of Sociology, Studies of Society. Today's lesson is on paying for health care in the United States.

As always, don't be afraid to pause, stop, rewind, or even fast forward to make sure you get the most out of this tutorial.

Now in general, we have what's called the direct fee system in America. So when you are sick, patients have to pay directly for medical services. Now, I'm going to try to explain in some detail here some of the ways our health care system works, but understand that the health care system in America is very complex and very messy. And so I'm just going to try to give you an overview of the general system, and not every detail that you hear from me is that crucial, necessarily, for you to understand. Hopefully, they will all fit together with your own personal experience so you can start to build your knowledge of the health care system in America.

So I like to divide up the health care system into looking at specifically looking at health insurance into three different aspects. We have people who are insured privately, people who are insured publicly, and the uninsured.

The majority of people in America are insured privately, and generally, it's being paid for through employer sponsorship. So what that means is that you work at a company. Your company takes money out of your paycheck and puts it towards health care. And with that money they're taking out of your paycheck, they are contributing, they're helping contribute some money to make your costs lower. So what that means is that your paycheck is a little bit less, but also, you're paying less for health insurance than you would have on your own.

Another type of private insurance is individually purchased insurance. This is when an individual is buying insurance for themselves. Now, health care co-op Is a relatively new form of private insurance, and that's when a group of people band together to help leverage their purchasing power.

Now, this is crucial for understanding all of health care. A lot of the way health care works is that the more people you have that are in your group, the better rates you're going to get because you can negotiate a lower rate.

So if I'm a group-- I have a group of 1,000 people, and we all have insurance together, whether we're-- let's say we're employer-sponsored for this example. There's 1,000 people. We all work together at this company. The company goes out and they get bids from different people. Well, the more people that are they have that are in the same group, the lower the premium is going to be, the less people pay for that. So the health care cooperative's idea is that individuals or groups of individuals come together to try to get a bigger purchasing power so they can get a better rate.

Now, another type of insurance is public insurance. Now, public insurance is really government controlled and funded health insurance. And primarily, it applies to three different people, people who work for the government, people who are poor, and people who are old.

There are some other-- actually, if you look on the screen, it says or disadvantage. There's some other ways you can qualify for health care. Some states have health care for a lot of kids when they're younger, to make sure that all kids have it. But basically, here in the United States of America, if you work for the government, they're almost in some way doing like an employer-sponsored kind of health care, where they're giving health care for their workers. And then they're trying to make sure that people that maybe couldn't afford health care on their own, people that are old and retired or about to retire or have been retired for a while, and people who don't have a lot of money, so they can have health insurance.

The last group, but you really have to talk about when you talk about health care in the United States of America, are the uninsured. And these are people who don't have health insurance. And so if they get sick, they go to the hospital. They have to pay the whole bill out of pocket.

And a lot of the issues that come from-- that happen in the health care system are based on those uninsured. Because if they have an emergency and they have to go to the hospital for an emergency surgery, not only is that individual is spending a lot of money, sometimes they don't have-- the reason they don't have health insurance is they can't afford to spend that money, so then the hospitals in the soaking up that cost. And often, that emergency room might have been avoided if they would have had preventative care.

So if they'd been seeing their doctor regularly, maybe they'd notice that they had low blood pressure. So instead of having to go in because of a heart attack, instead they would start blood pressure medication. They'd start a different, healthier diet, so they would never actually have to have that big, expensive surgery.

Now, underneath those feet basic ways, it's important to know what an HMO is. An HMO is a health maintenance organization.

What really makes them different is that-- first off, they're a system where patients pay a monthly fee for comprehensive care. That really isn't that different. The real thing that sets them apart is that for an HMO, there's really an agreement between the HMO, the people that are providing it, and the clinics that people go to. And there are some basic guidelines that the HMO writes out about if this person suffers from these things, you're going to do these things first, then these things. And there are ways to help keep costs down.

And so the HMO signs an agreement with all the clinics, all the doctors, all the people that work in these HMO clinics. They have to follow-- they have to sign this agreement and follow the HMO guidelines. And they're a type of health maintenance that has been rising in the American system.

Now, 2010 was a major year for health care in the United States of America. And that's when the 2010 health care reform bill passed. It's been called a couple different things, but that's the way I like to call it. Maybe you've heard it called Obamacare is maybe another popular one.

But this health Care reform, what it did was it was really an attempt to make health care affordable by reforming the system. Health care prices have been rising astronomically through recent time here. And what's happening is that many people are becoming priced out of effective, good health care.

In fact, America is often known for having the best high end health care in the world. So we have some of the best individual clinics. If you can afford to buy it, you can get some of the best health services here in the United States of America. But they're very expensive, so they're not accessible to everyone. And this health care reform act is trying to keep the price lower.

In the beginning, when I outlined if you were public or private or uninsured, these high prices are really affecting people in all three categories. So more people are becoming uninsured. Public institutions are having trouble finding money to pay for people to pay for insurance. Private companies and private individuals are having trouble finding money to pay for insurance, so this law was passed to try to reform the system.

Now, not all the provisions of this health care system have been implemented as of 2012. But there were three main goals of this reform. They are as follows.

First thing is they want to limit costly health care practices. So they think there are some bad habits that health care people do. So for example, you are charged on how many services you provide, not how good your services are. They think that's a bad thing, and they're trying to limit that as much as possible.

Another goal was they want to have more access to health care. So they're trying to increase the ways that people can get health care and get on health care and stay on health care, so that more people are insured.

And then there are also a bunch of other provisions in it that are just in general trying to keep the health care costs down. There's places where you're supposed to be able to buy insurance across state lines and have these cooperatives and being able to trade different rates, and many different confusing aspects of this. But the basic idea of every one of the provisions is that it's trying to keep the price down.

And the balance that is being struck there is that you are saying to health care companies, lookit, you have to keep your price lower. But we also want to make sure more people are on health care, so your profits shouldn't actually be hurt. And that's how this bill ended up getting enough support from people in the health care industry, who was totally just trying to limit cost. People in the health care industry would probably fight really strong against it. But instead, this just trying to be this balance of yes, you're going to lower costs, but we're going to get more people onto our insurance.

So today's take away message. We talked about a lot different things here, looking at paying for health care in the United States of America. But in general, it's a direct fee system, where patients pay for medical services directly. We looked at a couple of different types of insurance, and we looked at health maintenance organizations. And it's a system where people pay a monthly premium for their services. Then we looked at the 2010 health care reform act, and that's this reform that's attempting to provide health care for everyone to make it affordable for everyone in America.

Well, that's it for this lesson. Good work, and hopefully, you'll be seeing you on your screen again soon. Peace.

Terms to Know
2010 Health Care Reform

A health care reform in the US attempting to make health care affordable by reforming the system.

Direct-Fee System

A system which has patients pay for medical services directly.

Health Maintenance Organization

A prepaid health care plan in which a fee is paid in advance for all necessary health care.