Health policies and government

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Executive Summary:

One of the most notable inefficient components in United State's Healthcare system is the healthcare payments systems which are unfathomably fragmented and variable with simple tasks such as how to pay for what service being exceedingly difficult than it needs to be. This paper has addressed this problem by looking at how Healthcare payment system can be integrated and improved to be more patient centered and to reduce wastes and fraud and to improve the quality of healthcare. It has in essence developed a policy proposal for a more efficient and integrated healthcare payment system where it recommends an overhaul of the current fee for service payment system to replace it gradually with a more flexible and integral system; a combination of comprehensive care and episode-of-care payment systems. In this new system a single price is charged for all healthcare service required to treat a patient with a given illness in certain conditions which are momentary episodes such as fractures or deliveries, while in other conditions that may be long term or repeated episodes such as chronic illness or heart failure a comprehensive care system is used where a single price for healthcare be charged for all healthcare services required for a given group of people or patients over a year. For instance payments by people who suffer from diabetes. In addition the paper evaluates possible conditions in terms of macroeconomic factors which would stimulate the need for this policy reform such as rising Healthcare cost and it describes the political process to get the policy through to enaction and the various measures of performance and evaluation on the success of the policy if enacted

Introduction:

Healthcare in the United States is cited as having one of the most expensive in the developed worlds with very high and aggressive growth rates in expenditure. In 2010, expenditures in healthcare reached about $2.6 trillion, more than ten times was had been spent in 1980, with these expenditures having been 17.9% of the Gross National Product (Kaiser Edu, 2012). Despite these high expenditures in healthcare, research finds that the US health care provision is no better than those in the other countries. In fact, the system is faced with a problem in the sense that about a sixth of Americans (representing more than 47 million people) do not have insurance coverage and hence not able to access healthcare, due to the extremely high cost of healthcare (Robert Wood Johnson Foundation Initiative, 2011; Farrell, 2009). Even more baffling is the high level of fragmentation in the healthcare which has been the main cause of inefficiencies, fraud, unnecessary care, and uncoordinated care in the system (The Economist Online, 2011). One of the most notable inefficient components in the system is the payments systems which are unfathomably fragmented and variable with simple tasks such as how to pay for what service being exceedingly difficult than it needs to be. This paper seeks to address one among many of the problems in the system by looking at how Healthcare payment system can be integrated and improved to be more patient centered and to reduce wastes and fraud and to improve the quality of healthcare

The problem defined:

United States has been awash with the various ailments that plague the healthcare system and with over $2 trillion being spent a year for healthcare, the quality and efficiency in healthcare delivery does not reflect this humongous expenditure which takes much of the national budget. One of the reasons that have notably been cited as a cause for the rising cost of health in the United States is the high level of variability and fragmentation in the country's payment system that has created loopholes for inefficiencies, fraud and wastages in the system and has increased high administrative costs in healthcare spending (Reinhardt, Hussey, & Anderson, 2004).

In addition, the payment systems have complex paying terms and attaches higher financial penalties to healthcare providers which have also acted as disincentive for low cost high quality efficient care, and an incentive for inefficiently expensive care (Miller, 2007). A McKinsey company report notes that about 15 cents per dollar is lost in the healthcare payment system translating into approximately $300 billion per year which could potentially be saved with a more integrated healthcare payment system (Finn, Pellathy, & Singhal, 2009). With the system becoming more customer centric as more healthcare burden shifts to individuals and employers shift the healthcare costs to their employees, the payment system has become even more confusing with this changing trend. Though a number of policy reforms have been proposed to change healthcare payment system, most of these are only seen to address a small part of the problem but not resolve it (Miller, 2011).

Literature review on the problem:

In the United States, people spend far higher amounts on healthcare than do other industrial wealthy countries, but fares worse in healthcare provision than do the other wealthy countries as shown by the health indicators (Cylus & Anderson, 2007). Spending on healthcare per person is almost double the spending per person in countries such as France, Canada and Germany, and yet this large difference in spending does not reflect in the outcome of healthcare.

In 2009, the U.S spent $ 8,160 per person on healthcare representing 16% of GDP (gross domestic product) unlike in other countries such as Canada which spent only 10.4% of its GDP or U.K. which spend 8.7%. US spend more than double in healthcare than other OECD countries (Fact sheet, 2011). In 2010, the expenditure rose to $2.6 trillion, representing 17.9% of the GDP. Reinhardt, Hussey, and Anderson (2004) cite fragmented payments systems in the Healthcare system as one of the major reasons for this disparity and that high cost of healthcare in the U.S., relative to other countries.

Barriers that the current payment systems pose to efficient high quality healthcare:

The current Healthcare system is viewed to be frustrating to both healthcare providers who are faced with disincentives due to the level of potential financial penalties they may face, and also are frustrating to users due to the very essence and complexity in which payments are carried out with the cost of healthcare ever rising. Miller (2011) analyzes a number of barriers that current payment systems in the U.S. have caused to acquisition of affordable and high quality healthcare in the country.

These include: the fact that the ...