Financial Flow in U.S. Health Care System

Financial Flow in U.S. Health Care System

Introduction

Patients either under the contract of their Insurance companies, Tax-Funded Health Insurance or Uninsured use different ways to finance their Personal Health Care Services such as dental services, hospitalization or any other Medical Services that are provided directly to the Patient. The Patient's or the insurance company's selection of the payment program plays a vital role in the financial flow of a country's health care system. Among the different financing methods used by Patients, the two major are Fee-for-Service and Capitation. The selection of the method from these two has a direct impact on the Cost of the Medical Service and also on the quality of delivery of the Medical Service i.e. its execution.

Discussion

Payment Programs

Patients or their Insurance Providers make payments to Medical Professionals and Physicians through one of the two methods i.e. Fee for Service or Capitation.

Fee-for-Service

According to Lave & Peele (2002), under the fee-for-service payment method, the Medical Service Provider receives payments on the basis of each of the services provided by them such as separate payments for X-ray, Dental Checkup and Blood Test. Mostly, Fee for Service plans cover service costs related to hospitalization, drugs, professional care such as Doctor Visits, and surgery etc. The payments in Fee-for-Service method are based either on the charges set by the Medical Professional or Third-Party fee schedules like Medicare in the U.S.

Capitation

On the other hand, Lave & Peele (2002) defined Capitation as paying the Medical Professionals using a defined, per-patient, periodic (usually monthly or yearly) basis for all the individuals covered under an insurance plan. This payment is made regardless of how much care might be provided, how the Patients require it or if they even avail the Medical Service or not. For example, under Capitation an insurance company might reserve one comprehensive service like a generalized Eyesight Checkup for numerous Patients. The payment in the Capitation payment method may vary in accordance with the Personal Characteristics such as Age of the Patient enrolled in the Insurance Plan.

Comparison and Contrast

Majority of the Patients in U.S. are covered under insurance by their employers; the rest are covered with the government and some Patients are uninsured. The insurance companies usually choose a method of payment according to its designed plan & contract, and with the selection of the payment program come its related advantages and disadvantages. According to Bayley & Gordon (2004), if the insurance company pays on the Fee for Service basis, the hospital and patients have an advantage since the patients stay longer and choose to receive extensive treatments and the Doctors are also paid accordingly. The patients insured under such a plan can enjoy benefits of detailed medical treatments including multiple types of tests; professional cares etc. in response to paying the Medical Service Provider for the individuality of services. This, however, results in an increase in the overall cost due to excessive and customized services used by the Patient. Keeping the higher costs in mind, the Medical ...