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Introduction to Healthcare and Public Health in the US: Financing Healthcare
(Part1)
Audio Transcript
Slide 1
Welcome to Introduction to Healthcare and Public Health in the US: Financing
Healthcare (Part1). This is Lecture (b).
The component, Introduction to Healthcare and Public Health in the US, is a survey
of how healthcare and public health are organized and services delivered in the US.
Slide 2
The objectives for Financing Healthcare (Part 1) are:
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Understand the importance of the healthcare industry in the US economy and the
role of financial management in healthcare.
Describe models of health care financing in the US and in selected other
countries.
Describe the history and role of the health insurance industry in financing
healthcare in the United States, and Federal laws that have influenced the
development of the industry.
Understand the differences among various types of private health insurance and
describe the organization and structure of network-based managed care health
insurance programs.
Understand the various roles played by government as policy maker, payer,
provider, and regulator of healthcare.
Slide 3
This lecture describes the role that healthcare plays in the US economy including
healthcare expenditures and methods of financing.
A healthcare system provides services for the prevention and treatment of illness and
the maintenance of the health of a population. The model for a country’s healthcare
system may be public, private, or mixed, and varies from country to country.
The US healthcare system is a mixed model of private healthcare organizations (HCOs)
and government operated systems such as the Military Health System, the Veterans
Administration, and the Indian Health Service, among others.
No matter how an organization structures the delivery of healthcare services, the
challenge of paying for the services it provides is a complex and taxing problem. It is
important that the collection and disbursement of funds is appropriately managed to
ensure the continued delivery of healthcare services.
Health IT Workforce Curriculum
Version 3.0 / Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 1)
Lecture b
This material (Comp1_Unit4b) was developed by Oregon Health and Science University funded by the Department of Health and
Human Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC000015.
.
1
Slide 4
This slide defines what is meant by healthcare financing and healthcare spending.
Healthcare financing is the collection and pooling of funds used to pay the cost of
healthcare services provided by a healthcare system to individuals and populations. It
also involves a method for the distribution of payments for the services provided.
Healthcare expenditures, or spending, represent the total value of the services delivered
during a time period, usually one year. Various methods can be used to examine
spending including category of service, contributor, and payer.
For this discussion and using the Centers for Medicare & Medicaid Services (CMS)
actuarial categories, healthcare services include hospital, nursing, and home
healthcare; physician, dental, and ancillary services; prescription medications; and
equipment, public health activities, research, administration, and infrastructure.
Contributor and payer may appear to be the same, but there is a distinction to be made
between the two. Contributors represent the various governmental and private entities
that provide money into the pool or fund used to pay for services. Payers represent the
fund or pool that pays for healthcare services.
Slide 5
The healthcare industry is one of the largest industries in the US. According to the
latest Bureau of Labor Statistics information from 2008, the healthcare industry employs
approximately 14.3 million people. It has 10 of the 20 fastest growing occupations, and
will generate an additional 3.2 million jobs by 2018.
With this in mind, the next slide will look at the economic impact of the healthcare
industry and healthcare spending on the US economy and the gross domestic product,
or GDP.
Slide 6
The GDP is a measure of the US economy that reflects the market value of all goods
and services produced in a given period of time. It indicates how fast or slow the
economy is growing year to year, and allows comparison of the US economy to those of
other countries.
In 2009, the US GDP was just over fourteen trillion dollars. Approximately two point
five trillion dollars, or seventeen point six percent of GDP was spent on healthcare, the
highest worldwide. This translates into a per capita value of more than eight thousand
dollars and represents one out of every six dollars spent in the US during 2009. It is
projected that by 2019, spending will approach nineteen point six percent of GDP, or
one out of five dollars spent in the US economy.
Slide 7
This slide shows a chart prepared by the Kaiser Family Foundation, that illustrates the
increase in total national healthcare spending in billions of dollars for select years from
Health IT Workforce Curriculum
Version 3.0 / Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 1)
Lecture b
This material (Comp1_Unit4b) was developed by Oregon Health and Science University funded by the Department of Health and
Human Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC000015.
.
2
1960 until 2009 adjusted to 2009 dollars, and as a percentage of GDP. Healthcare
spending as a percentage of GDP expanded by 3.8% during the last ten years
compared to an average of 2.15% for the previous four decades.
Slide 8
In every year since 1960, the average cost of healthcare per person has risen. Total
national healthcare expenditures per capita in 2009 reached almost $8100. Healthcare
expenditures continue to outpace the consumer price index in every year.
Slide 9
When comparing per capita healthcare expenditures in the US to other countries, the
US spends fifty percent more than the next closest industrialized country, Norway, and
almost twice the average expenditure of other industrialized countries.
With all the money being spent in the US, one must ask:
Where is the money being spent? What is the source of the funds to pay for all these
healthcare expenditures? How is the money distributed to the various organizations
and participants?
One may look at spending in a number of different ways - by category of service, by
contributors to spending, and by type of payer.
Slide 10
This table groups national health care spending into nine categories. The four largest
categories, hospital care, physician services, nursing and residential services, and
prescription drugs, account for approximately three quarters of the nearly two point five
trillion dollars spent in 2009.
Healthcare spending is growing faster than most other sectors of the economy, and
faster than the economy as a whole. This rapid increase in spending, coupled with the
recession and rising federal deficit, places great strains on companies and individuals.
Since 1999, family premiums for employer-sponsored health coverage have increased
by 131 percent.
Slide 11
This chart illustrates the data from the previous slide as a percentage of total spending.
As seen on the right side of the slide, hospital care and physician services represent
slightly more than one half of total spending.
Slide 12
Another method of classifying healthcare spending examines the contributors to the
funds used to pay for services.
This chart, prepared by the California HealthCare Foundation using CMS Office of the
Actuary data, illustrates the percentage of healthcare spending from different
Health IT Workforce Curriculum
Version 3.0 / Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 1)
Lecture b
This material (Comp1_Unit4b) was developed by Oregon Health and Science University funded by the Department of Health and
Human Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC000015.
.
3
contributors. As seen on the chart, Federal and state and local contributions represent
twenty-seven and sixteen percent respectively or forty-three percent of the all spending,
while private sector contributions represent the remaining fifty-seven percent.
Federal, state and local government contributions to funding include general tax
revenues used to fund healthcare systems such as the Federal government’s Indian
Health Service or a state or county health department. It also includes any payroll tax
and the cost of purchasing private health insurance for government employees.
Households in this slide represent individual and family contributions and include the
employee portion of health insurance premiums, payroll taxes, and out-of-pocket costs
other than premiums which includes deductibles, co-payments/co-insurance, and noncovered services.
Private business contributions include the employer portion of premiums for workers’
health insurance, and payroll taxes.
The remaining 7% of healthcare financing funds come from the philanthropic activity of
private organizations.
Slide 13
This table shows national healthcare expenditures by payer for the year 2009 and the
percentage for each.
Slide 14
This slide presents a graphical representation of the information contained in the
previous slide. Due to rounding, the totals equal 99%.
Investment refers to research and infrastructure expenditures, and other payers include
Department of Defense/Veterans Administration (OD/VA) (3.2%) and other Federal and
state funded programs (7.9%) such as the Children’s Health Insurance Program (CHIP),
Indian Health Service, Workers' Compensation, the Substance Abuse and Mental
Health Services Administration (SAMHSA) and School Health, among others.
Slide 15
This concludes Lecture (b) of Financing Healthcare (Part 1).
In summary, the US has the highest healthcare costs in the world and spends close to
one fifth of its gross domestic product on healthcare. The good news is that the
healthcare job market is consistently strong, and growth rates are often double those of
other economic sectors. National healthcare expenditures can be examined by category
of spending, contributor, and payer. Health insurance is an important factor in
healthcare spending in the US.
Health IT Workforce Curriculum
Version 3.0 / Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 1)
Lecture b
This material (Comp1_Unit4b) was developed by Oregon Health and Science University funded by the Department of Health and
Human Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC000015.
.
4
Slide 16
References slide. No audio.
Slide 17
References slide. No audio.
Slide 18
References slide. No audio.
Health IT Workforce Curriculum
Version 3.0 / Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 1)
Lecture b
This material (Comp1_Unit4b) was developed by Oregon Health and Science University funded by the Department of Health and
Human Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC000015.
.
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