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Week 1 Lecture 2.html

How Healthcare Is Financed

Healthcare is financed in the U.S. by a combination of the following:

  1. The US government using tax money to pay for certain groups that require healthcare, such as people who are elderly or disabled;
  2. Private insurance created by large organizations, such as International Business Machines Corporation (IBM) and General Electric (GE), or even by smaller companies;
  3. Commercial insurance companies that sell healthcare insurance to companies that do not wish to have their own insurance or to individuals who do not have insurance through their employers;
  4. Private payers who pay for healthcare out of their own pockets;
  5. Uninsured healthcare that is paid for by all of the above through surcharges in their care.

The government generally pays nearly 50 percent of the approximately $2.7 trillion cost of healthcare in the U.S. through the Medicare and Medicaid programs. These programs are funded by payroll taxes on all employed citizens of the United States. These programs are often referred to as entitlement programs. For example, Medicare coverage begins at the age of sixty-five years, which is the defined retirement age in the U.S. The Medicaid program, which was originally meant for disabled people, has grown and now covers many more categories of people who need help. Coverage for patients with end-stage renal disease is one of these expansions. The government covers another less visible area of healthcare, which is research. While most universities sponsor research, the National Institutes of Health (NIH), sponsored by government tax funding, have extensive programs researching cures in many phases of healthcare.

 You were introduced to Medicare and Medicaid programs. These programs are funded by payroll taxes on all employed citizens of the United States. These programs are often referred to as entitlement programs. Next you will review cost drives in healthcare 

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