Healthcare System Evolution - Essay Example

Running Head: Health Care System Evolution Paper Health Care System Evolution Paper Inserts His/Her Inserts Grade Course Customer Inserts Tutor's Name 23 June 2009 Introduction The US health care system has a long history goes back to the World War II, when insurance programs were introduced by the government. These large, expensive, and complicated programs touch the lives of every American. No other programs provide more extensive protection, and no other federal domestic programs cost more. In the development of these programs, certain themes have endured as persistent policy issues and driven the political discussion. In particular, four general themes or issues illustrate the choices implicit in Social Security and Medicare (Ruskinm 2009). Even as the range of benefits has broadened, the program still contains what some see as gaps and others regard as areas in which private and state programs need to be strengthened. Either way, most people agree that long-term care represents a contingency for which most are psychologically and financially unprepared. Some suggest that the list of Medicare benefits should be expanded to include payments for nursing homes and other long-term care services. Historical Context Social Security consisted of two sets of rules. One set governed the payroll taxes, and the other set described the benefits to which workers were entitled. Both the level of taxes and the amount and types of benefits changed over the years. In 1965, legislators raised the tax level and established a major new type of benefit. By adding hospital insurance to the array of Social Security benefits, they launched Medicare. In addition to the original retirement benefits for workers over 65, the new benefits included payments to the wives and children of retired workers and to the widows and children of workers who died before age 65. After 1939, therefore, Social Security included benefits to a worker's survivors (Ruskinm 2009). The second milestone occurred in 1950 when Congress decided to raise the tax rate, and, updating benefit levels for price changes in the 1940s, to increase substantially the level of payments to retired workers and the survivors of workers. Social Security--that is, the Old-Age, Survivors, and Disability Insurance program--is by far the largest American social insurance program, with the greatest impact on individuals and families. In 1992, for example, 132 million American workers and their employers paid Social Security taxes and about 41 million Americans received Social Security benefits each month (Peltz, 2008). As living standards improved, more Americans expected to retire, and retirement became widely perceived as a period of earned leisure. State welfare programs for the elderly provided real competition to the Social Security program in the 1930s and 1940s but declined as a threat to Social Security in the 1950s. Medical care became increasingly desirable as a good to consume in the 1940s and 1950s, and the supply of private health insurance increased exponentially in these decades (Ruskinm 2009). Modern Health Care System Medicare and Medicaid programs are based on early insurance programs and plans improved and redesigned by the government. Even so, many indirect infusions of general revenues are made into the program, including the revenue produced from treating a portion of Social Security benefits as taxable income. The second proposal would put Social Security financing on a pay-as-you-go basis. In this approach, Congress collects, through payroll taxes or some other means, only the amount of money necessary to sustain the program on a current basis. This approach, however, has the benefit of keeping taxes low, avoiding the difficult problem of how to preserve the supposed surpluses in the program (Staff 2009). This approach has the disadvantage of leaving the future to take care of itself, arguably bequeathing large burdens to future generations (Staff 2009). The government does not permit this activity to occur in a vacuum. State governments regulate insurance companies. The federal government protects those who invest in banks or savings and loans (that is what people who open bank accounts are doing). These forms of regulation have led to significant unintended costs in recent years, as the federal bailout of the savings and loan industry and the state bailout of some insurance companies indicate. Regulations and Insurance Today, occupational welfare provides one of the many examples of the interaction that regularly takes place between private and public transfers. Governmental subsidies encourage employers to provide fringe benefits by allowing employers to deduct some of their fringe benefit expenses from their income and in this manner to reduce their taxable income and lower their taxes. A dollar spent on health insurance, in reality, costs the company less than a full dollar, since that dollar will lower the taxes that the company might otherwise have paid. This policy represents a hidden transfer of money from all taxpayers to private companies and their employees (Staff 2009). The driving principle of social insurance programs is concern for adequacy, that benefits meet the basic needs of persons these programs are designed to protect. The emphasis on social adequacy is consistent with societal goals directed at providing for the general welfare, protecting the dignity of individuals, and maintaining the stability of families and society. Another difference: people choose to buy private insurance; they are often forced to pay taxes for social insurance. Because of this feature, social insurance programs are not hindered by what economists call "market failure" even though these programs are structured to accept all, that is, to include persons who for such reasons as illness or advanced age would not be considered suitable for many private insurance plans. The very concept of adequacy also raises a fundamental question of just how far social insurance should go. If it went all the way, its beneficiaries could rely upon it exclusively and not need to make other arrangements for their old age. If it went part of the way, its beneficiaries would have to supplement their Social Security benefits with private savings. Americans have chosen social insurance as a basis upon which individuals and their families can build toward their economic security. Except for the poorest individuals, our social insurance programs go only part of the way (Ruskinm 2009). Conclusion In sum, the evolution of healthcare system influenced the structure and context of the modern one. With few exceptions, social insurance coverage is compulsory and, ideally, includes nearly everyone in the category of people being protected. Some argue that this condition violates a citizen's fundamental freedom, but the Supreme Court has ruled otherwise. Voluntary participation would heighten the similarity between social insurance and private insurance, with the exception that social insurance would not be able to deny anyone coverage. Of necessity, the characteristics of social insurance programs reflect taxpayers' and politicians' concerns for stable financing. Workers contribute directly to the financing of most social insurance programs, often through a very visible payroll tax contribution as in the case of Social Security and Medicare, and indirectly through the contribution made by employers on their behalf. This practice reinforces both the receipt of benefits as an earned right and the dignity of beneficiaries. References Peltz, Marlene C. (2008). Medicare and Medicaid: Critical Issues and Developments. Nova Science Publishers Inc; 1 edition. Ruskinm A. D. (2009). Medicare and Medicaid Reimbursement Update, 2009 Edition. Aspen Publishers. Staff, A. B. (2009). The Legal Impact of Medicare and Medicaid: Leading Lawyers on the Role of State and Federal Agencies, Effective Compliance Programs, and Enforcement Trends (Inside the Minds). Thomson West; Aspatore Books. Read More