Healthcare | Michael R Lewis, ASJA

August 24, 2013January 3, 2024

Medicaid – How It Works

Many health officials believe that Medicaid is the glue that helps to hold our healthcare system together, taking on the highest-risk, sickest, and most expensive populations that cannot qualify for outside private insurance or Medicare. It is America’s ultimate safety net. Unfortunately, it is also extremely costly: Medicaid, Social Security, and Medicare – the “big three” entitlement programs – accounted for 44% of the federal budget in 2012, according to The Heritage Foundation, and collectively consumed more than $2 trillion of services, with total revenues of $2.4 trillion.

According to the Congressional Budget Office, the Federal Government spent $275 billion in 2011 for Medicaid, covering on an average month 54 million Americans. Medicaid expenditures including federal funds is the largest government expenditure in each of the 50 states. Considering only state funds, Medicaid expenses trail only primary and secondary education expenses in state budgets.

Without fundamental change, our social welfare programs (including Medicaid) will ultimately bankrupt the country or drive taxes to unsustainable levels. A distinct possibility is that millions of poor Americans – the elderly, disabled, and children – will face a future without adequate healthcare or long-term nursing care.

The Future of Medicare – Two Approaches

The costs of healthcare in the United States is a potent issue in the forthcoming election. Both political parties agree that immediate steps must be taken to reduce the proportion of the nation’s gross domestic product (GDP) dedicated to healthcare, but approach the problem from vastly different perspectives and, as a consequence, propose equally diverse solutions. In particular, prospective changes in Medicare – the public health insurance program for people age 65 and older – has become a battleground as both parties seek to capture the senior vote.

The financial cost of Medicare alone, distinct from the larger category of general healthcare, is exceeded only by the expenses of Social Security and military spending. Medicare costs were 3.7% of gross domestic product (GDP) in 2011, and are projected to grow to 6.2% of GDP by 2085. As President Barack Obama stated in a message to Congress on September 8, 2011, “Millions of Americans rely on Medicare in their retirement. And millions more will do so in the future. But with an aging population and rising healthcare costs, we are spending too fast to sustain the program. And if we don’t gradually reform the system while protecting current seniors, it won’t be there when future retirees need it.”

All About the Health Savings Account (HSA)

An inability to pay medical bills is the single greatest cause of personal bankruptcies in the United States. While this result may not be surprising since the American health care system is the most expensive in the world, the study paradoxically found that three-quarters of the people filing a medically-related bankruptcy have health insurance. According to Steffie Woolhandler, M.D. of Harvard Medical School, “Many of them were bankrupted anyway because they had gaps in their coverage, like co-payments, deductibles, and uncovered services.”

Due to the continued increase in the cost of insurance premiums, employers are transferring a rising percentage of the cost of health insurance to their employees by raising the employee’s share of premiums, increasing co-payments and deductibles, and restricting access to specific providers. In fact, the passage of the Patient Protection and Affordable Care Act may accelerate this process. Barron’s, a leading business and financial publication, declared that the impact of the law will be “a new wave of rising prices or a rationing of medical care – or both.”

Considering the dire predictions, an HSA may help you to best afford and adequately protect yourself and your family from a devastating medical event.

What is Health Insurance & How It Works

The purchase of a health insurance policy for the first time is, in many ways, a rite of passage – a signal that you have passed from child to adult. The purchase of a health insurance policy is also one of the more expensive acquisitions you will make during your life, rivaling the expense of buying a home. At the same time, most people do not understand health insurance or the components of the contract between insurance companies and themselves, often learning to their dismay that coverage they thought they had is actually nonexistent.

The way to avoid lacking vital health coverage when you need it most starts with understanding policy basics. Read more . . .