The traditional model provided health insurance in one of four ways:
Individual private insurance (generally for self-employed individuals). In return for paying a monthly sum, people receive assistance in case of illness.
Employment-based private insurance. Employers usually pay most of the premium that purchase health insurance for their employees as a benefit of employment. In most cases, employment-based plans now require employee contributions and co-payments. The government does not treat the health insurance fringe benefits as taxable income to the employee, so the government is in essence subsidizing employer-sponsored health insurance. A new form of employment-based private insurance is consumer-driven health care (CDH). Defined narrowly, consumer-driven health care refers to health plans in which individuals have a personal health account, such as a health savings account (HSA) or a health reimbursement arrangement (HRA), from which they pay medical expenses directly. The phrase is sometimes used more broadly to refer to defined contribution health plans, which allow employees to choose among various plans, often with a fixed dollar contribution from an employer. The characteristics of a CDH include:
- High benefit level options involve significant employee contributions and deductibles in addition to an employer's contribution.
- Lower benefit level options that involve less employee contributions and deductibles.
- Greater choice and control over one's health plan.
- Economic incentives to better manage care—economic rewards for making good decisions and economic penalties for making ill-advised ones. These economic incentives make patients more likely to seek information about medical conditions and treatment options, including information about prices and quality.
Government financing through government funded programs, such as Medicare, Medicaid, and the Federal Employees Health Benefit Plans.
- Medicare. Administered by the federal government—Center for Medicare and Medicaid Services (CMS)—an agency within the U.S. Department of Health and Human Services, through the extension of title XVIII of the Social Security Act, 1965 (law that created Medicare, Medicaid, and other federal programs). Two different varieties or parts are as follows:
- Part A. On reaching the age of 65 years, people who are eligible for Social Security are automatically enrolled in Medicare part A whether or not they are retired. If a person has paid into the Social Security system for 10 years, his or her spouse is eligible for Social Security.1 People who are not eligible for Social Security can enroll in Medicare part A by paying a monthly premium. People under the age of 65 who are totally and permanently disabled may enroll in Medicare part A after they have received Social Security disability benefits for 24 months. People with chronic renal disease requiring dialysis or transplant may also be eligible for Medicare part A without a 2-year waiting period. Part A helps pay for medically necessary inpatient hospital care (limits the number of hospital days), and, after a hospital stay, a limited inpatient care in a skilled nursing facility, or limited home health care or hospice care (Table 2–1).
- Part B. The part B (Table 2–1...