Government-sponsored and privately-operated
While broad-sweeping reform was unlikely, the Patient Protection and Affordable Care Act did make two incremental changes that will tip the scales of the U.S. healthcare system to be predominantly funded by the government. These changes include (1) the expansion of Medicaid eligibility from 100 percent of Federal Poverty Level to 133 percent of FPL and (2) the creation of government-subsidies for individual health insurance coverage that take effect in 2014.
The key take away from this is that "government-funded" does not necessarily mean "government-operated." Most government-funded health insurance enrollees are in plans that are underwritten by the government and managed by major commercial health insurance companies. For example:
National health expenditures projections
While the exact date is unknown, there's a high likelihood that the majority of enrollees will be government-sponsored by between 2015 and 2018. CMS's report does not identify within "employer-sponsored" health plans as to how many government employees are in self-funded plans. According to various sources, the number of full-time government employees is about 8 million. This includes:
Taking this into account, the total number of enrollees in Medicare, Medicaid, CHIP, the exchanges and full-time government employees is projected to be 162 million in 2015 and over 180 million by 2020. Based on the Census Bureau's U.S. population projections, this will could represent 50 percent of the U.S. populations as soon as 2015 and as late as 2018.
Conclusion
The U.S. has developed a unique model for publicly-funded, privately-operated health insurance that originated with the administration of Medicare and Medicaid and has extended to the new insurance exchanges. The government, in many cases, assumes the risk for the cost of medical care while large insurance carriers leverage the scalability of their existing operations. The use of periodic renewals and requests for proposals is intended to keep the insurance companies contractors competitive when they are not carrying the insurance risk.
Nicholas Newsad is the author of "The Medical Bill Survival Guide" and founder of MedicalBillExchange.com.
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While broad-sweeping reform was unlikely, the Patient Protection and Affordable Care Act did make two incremental changes that will tip the scales of the U.S. healthcare system to be predominantly funded by the government. These changes include (1) the expansion of Medicaid eligibility from 100 percent of Federal Poverty Level to 133 percent of FPL and (2) the creation of government-subsidies for individual health insurance coverage that take effect in 2014.
The key take away from this is that "government-funded" does not necessarily mean "government-operated." Most government-funded health insurance enrollees are in plans that are underwritten by the government and managed by major commercial health insurance companies. For example:
- Medicare competitively "bids out" all claims administration to 15 Medicare Administrative Contractors (formerly called "fiscal intermediaries"). These contracts expire and are subject to re-bidding every several years.
- Medicaid HMOs manage large populations of Medicaid patients on behalf of state governments. Some states even make enrollment in Medicaid HMOs mandatory for beneficiaries.
- The individual insurance exchanges will facilitate the sale of government-subsidized health plans that are operated by major commercial insurance companies. The premiums will paid partially or wholly by the government based on the enrollees' eligibility on a sliding income scale.
- State and federal employees are typically covered under "self-funded" commercial insurance plans. Major insurance companies perform claims administration for these plans, but states and the federal government still fund the plans' expenses.
National health expenditures projections
While the exact date is unknown, there's a high likelihood that the majority of enrollees will be government-sponsored by between 2015 and 2018. CMS's report does not identify within "employer-sponsored" health plans as to how many government employees are in self-funded plans. According to various sources, the number of full-time government employees is about 8 million. This includes:
- Federal civilian employees: 2.6 million
- Military personnel: 1.6 million
- State government employees: 3.8 million
Taking this into account, the total number of enrollees in Medicare, Medicaid, CHIP, the exchanges and full-time government employees is projected to be 162 million in 2015 and over 180 million by 2020. Based on the Census Bureau's U.S. population projections, this will could represent 50 percent of the U.S. populations as soon as 2015 and as late as 2018.
Conclusion
The U.S. has developed a unique model for publicly-funded, privately-operated health insurance that originated with the administration of Medicare and Medicaid and has extended to the new insurance exchanges. The government, in many cases, assumes the risk for the cost of medical care while large insurance carriers leverage the scalability of their existing operations. The use of periodic renewals and requests for proposals is intended to keep the insurance companies contractors competitive when they are not carrying the insurance risk.
Nicholas Newsad is the author of "The Medical Bill Survival Guide" and founder of MedicalBillExchange.com.
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How the Supreme Court's Decision Will Impact Healthcare Delivery: Q&A With Dr. Jeffrey Lobosky of UCSF