Modern health insurance in the US traces popularity to the Great Depression, a time when the high hospitalization cost was a threat to the economic stability of hospitals and individuals (Shi and Singh, 2013). During that period, the American Hospital Association sponsored hospital insurance in addition to helping in the organization of hospital plans and incorporating them into the Blue Cross network. It is also reported in literature that the California Medical Association founded the Blue Shield plan that would be used in the payment for outpatient services offered by physicians. According to Shi and Singh (2013), these two entities merged into the medical insurance system that the US has presently. Private health insurance started evolving and expanding in the country in the 1920s, which drove the congress into discussion and reforming healthcare insurance so that it would meet the needs of the older populations, those that were underserved, as well as those that lived in poverty. These reforms and discussions resulted in the creation of Medicaid and Medicare programs, which would then receive Federal funding. This paper compares and contrasts private health insurance and Medicare in terms of their methods of payment.
The Medicare health insurance program covers more than 50 million US nationals that are 65 years or older, those under this age but living with disabilities, and people of any age but suffering from end-stage renal disease. The plan is useful in paying for physician and hospital visits, drug prescriptions as well as other post-acute services. The program is made up of four parts, A, B, C, and D. Part A of the plan covers inpatient hospital care, hospice care, home healthcare, and some skilled stays at nursing facilities (Sultz and Young, 2014). People whose spouses have worked for atleast 40 quarters and remitted their Medicare payroll taxes qualify for this coverage and are not required to pay for their premiums, which is also called premium-free Part A. Generally, Medicare Part A is funded by a section of the Social Security Tax, and most individuals do not pay premiums for the fact that their spouses paid the Medicare taxes during their working in the US Medigap policy so that they pay the healthcare cost gaps (Sultz and Young, 2014).
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Part B, also called the Supplementary Medial Insurance, is used in the payment for outpatient hospital care, physician services, and a number of home visits that Part A does not cover. The program also covers ambulance services, outpatient mental healthcare, outpatient speech, physical, and occupational therapy, specific preventive services such as screenings for prostate cancer and mammograms, durable medical equipment, and laboratory as well as diagnostic tests. The people that choose this type of insurance remint premiums on a monthly basis, and most of them have automatic Social Security deductions. As of 2012, $99.90 was the standard premium per month for this type of insurance plan while the amount varied according to the incomes of the policyholders (Shi and Singh, 2013). It should also be understood that individuals are required to pay some out-of-pocket fee ($140 as of 2012) before the Medicare plan commences and that most of the services provided under this plan require a 20% coinsurance.
Part C of the Medicare plan allows the policyholders to take part in private insurance plans, which are called Medicare Advantage Plans, which include Health Maintenance Organizations or Preferred Provider Organizations. This type of plan should cover all the services that Parts A and B cover and usually include Part D (Shi and Singh, 2013). it also covers additional benefits that traditional Medicare does not cover, such as regular dental and visual care. The policyholder is required to pay fixed amounts of premiums per month to the firms that offer Medicare Advantage Plans. It should also be understood that each Medicare Advantage Plan may deduct a different out-of-pocket amount, but the plans must stick to the rules of Medicare. Medicare started offering part D of the plan in 2006 as a way of offering prescription for drugs for outpatient services (Sultz and Young, 2014). This plan is optional for most individuals that are covered by the Medicare program and is given only through the private plans for Medicare. People that have Original Medicare and desire to have Part D are able to obtain a stand-alone PDP (prescription drug plan) while those covered by part B may get part D through a general plan called the Medicare Advantage prescription drug plan. The plan requires the insured people to pay premium on a monthly basis, and the amount of premiums are variant according to the plans. However, as of 2012, the standard deductible amount for this plan was $320 and a 25% coinsurance (Sultz and Young, 2014).
On the contrary, holders of the private insurance policy are required to pay the entire premium remitted on a regular basis, usually a month (Sultz and Young, 2014; Shi and Singh, 2013). This, in comparison, indicates that as much as part of the Medicare plan could be paid for by the Federal government, getting more privileges will require that individuals pay regular premiums as indicated in Parts B, C, and D. on the contrast, however, Medicare is subsidized while private insurance is not subsidized, which overall means that private insurance is more expensive of the policy holders than Medicare.
References
Shi, L., & Singh, D. A. (2013). Delivering health care in America . Jones & Bartlett Learning.
Sultz, H., & Young, K. (2014). Health care USA. Burlington, MA: Jones & Bartlett Learning .
