Methods of Health care Financing in the United States

[Name of the Institute]Methods of Health care Financing in the United States

Introduction

The quality of health care depends upon the way health care payments are made, and the resources devoted for the purpose. The health care costs have been rising every year, and it is not a surprise. The United States had total spending of around $2.1 trillion in 2006 which equals to twice the amount in 1996. It is expected, that this will double itself in 2017(National Health Expenditure Data for 2006). This leads to a problem of financing health care facilities. The American business directly finance about one fourth of the total health care spending in the United States (Health-Cost Crossroad: Why American Businesses Urgently Need Health System Reform, 2008). Insurance premiums financed by employers rose by 98% between 2000 and 2007, which is four times faster than the cumulative increase in the wage rate. The yearly average spending on an employee by an employer equals to $12,105 under the insurance based plan. This is equal to the sum of the monthly salaries up to a year of a minimum wage job. With fewer affordable options, people who loose employer coverage are uninsured and the problem of financing health care arises again.

Discussion

Usually, health care is primarily financed by government or any other organization, which is associated with the government. However, business enterprises also provide health insurance to their employees. The government provides the health care service against the taxes collected. In the United Kingdom, only the government makes the payment for health care thus having a ''single payer '' system. In some countries, the payment is partly made by the government and partly by the employer of the individual or the individual makes self arrangement. Such system prevails in Germany and France.

In United States, the financing of health care is partly market based, i.e. health care payments are made by the employers of the individuals. These private entities make payments for their employees. However, in such systems even the governments pay for the health care of the vulnerable elder citizens of the country. In America, federal funds are used for this purpose. This fund is for disabled elderly and low income people of the country. Hence primarily there are two methods of financing available government based and market based. The two methods of financing have different advantages and disadvantages associated with them, and none of the two is perfect.

Private Funding

Health care spending of business organizations on their employees have been increasing thus causing a trouble for them. On average the health care coverage offered by employees currently represents around 10.7% of the total payroll (C. Eibner, K. Kapur, and S.M. Marquis, 2008). The increasing health care cost of employees is hurting the business. The business enterprise faces problems in expanding the business, hiring new employees, making good compensations to employees and satisfying the strategic objectives of the organization. Most of the business organizations believe that they can't sustain the health care ...