Aspects of Financing Health Care

Topic: Administration
Words: 980 Pages: 3


State, federal, and local governments, although to a lesser extent, finance various health care services in the United States. Initially, federal funding was concerned with providing health care to particular groups of the population, such as people serving the government. Currently, the primary public health programs are Medicare and Medicaid (Call et al., 2021). These programs contribute almost forty percent of the total expenditures on national care. As a source of payment for care services, the finance system primarily operates on a vendor-purchaser relationship with the government contracting with providers of health care instead of directly providing services. Prime examples are the Medicaid and Medicare programs whereby the federal government buys the hospital, physician, nursing home, home health, and other medical-related services under contract with suppliers. Even though Medicaid and Medicare seem similar, there is different governmental input which impacts the quality of services.

Managed Care Organizations

In the US, managed care organisations (MCOs) refer to the integrated health care entities that aim to reduce health care costs and provide health care insurance. These organisations shape the delivery of health care in the US by providing finances, preventative medical techniques, and treatment guidelines. Initially, these organisations did not provide home-based support to people in need of long-term services until the emergence of Affordable Care Act (ACA). MCOs stress the responsibilities of physicians in controlling patient access to expensive hospitalization as ”gatekeeping” (Freeman et al., 2021). Some of these institutions suggest that ‘gatekeeping” is not ethical since it introduces financial factors into the decisions of treatment.


Medicare in the US is a federal health insurance program for people with disabilities, 65 years and older, and people suffering from a final-stage renal illness that requires transplant or dialysis. Based on ACA guidellines, higher Medicare fees are deducted from people with higher income. Medicare has three main parts: hospital insurance, medical insurance, and prescription drug coverage (Meyers & Rahman, 2021). Firstly, hospital insurance covers inpatient hospital stays and care provision in a skilled nursing facility (Sultz & Young, 2017). Secondly, medical insurance covers particular services from doctors, medical supplies, preventive services, and outpatient care. Lastly, prescription drug coverage helps cover the cost of vaccines and prescription drugs. However, while other Medicare advantage plans provide better care and long-term savings, some minimize provider options and lead to additional charges (Meyers & Rahman, 2021). Managed care organizations and Medicare are similar since private corporations provide the managed care plans in Medicare in agreement with Medicare. These plans also qualify as alternatives for the original Medicare coverage of an individual.


In the United States, Medicaid is a state and federal program that assists with the costs of healthcare for people with low income and limited resources. The Affordable Care Act (2010) states that for all countries participating in Medicaid expansion, anyone up to 133% Federal Poor Level (FPL) is eligible for coverage. Additionally, Medicaid offers some benefits not provided by Medicare, such as personal care and nursing home care services. One disadvantage of Medicaid is that it contributes to revenue reduction and decreased reimbursements. All medical practices aim to make a profit to remain in business. However, if a medical practice has a large base of Medicaid patients, it tends to make minimal profits. Another monetary issue concerning Medicaid is that medical procedures do not impose fees if Medicaid patients miss their appointments. There are several differences between Medicare and Medicaid, as shown in Table 1. While Medicare grounds eligibility on disability and age, Medicaid looks at income. In addition, Medicaid does not issue coverage services given by a household member, adult diapers, and bandages.

Since Medicaid does not provide full coverage, there are various alternatives, especially for long-term care. An example is extended-term care insurance that helps insurance eligible people who can afford the premiums. This coverage depends on plan actions and the insurance company of the benefactor (Crable et al., 2022). Individuals begin planning as early as possible since insurance companies reject applicants as they grow old. The applicants should review their plans annually to make sure they still meet their needs. Lastly, the applicants should never stop paying their premiums to prevent their insurance from lapsing.

There is a great similarity between managed care and Medicaid under the mode of Free-for-Service (FFS). The US directly pays providers for every service that a Medicaid beneficiary receives. Similarly, the country spends a fee on a managed care plan for every individual registered in the plan under managed care. Additionally, a combination of Medicaid and Medicare provides health coverage to individuals and minimizes cost.

Table 1: Comparison Between Medicare, Medicaid, and Managed Care Organisations

Population served ACA change Source of control
Medicare People of 65 years and older, disabled & dialysis patients (Meyers & Rahman, 2021). Increased charges from salaries and bonuses for those with higher incomes (Meyers & Rahman, 2021). Federal government
Medicaid Low-income people of any age Anyone up to 133% FPL is eligible for coverage for states participating in Medicaid expansion (Crable et al., 2022). State government with federal guidelines
Managed Care Organisations Serves each person enrolled in the plan Provision of home-based services for people who need long-term services (Freeman et al., 2021). State and federal government
They all are insurance programs, they ensure citizens achieve affordable and quality health care services, and they all provide health care services at lowered costs (Meyers & Rahman, 2021).

In conclusion, through Medicaid and Medicare programs, uninsured individuals in the US have a right to access treatment and care. Moreover, a reduction in the percentage of Americans who are not insured is due to these programs. Therefore, Medicare and Medicaid are standard-bearers for innovation and quality of health care in America. The US government supports each of these programs with their specific characteristics. Overall, Medicaid and Medicare are similar because they are funded by the government to assist individuals in need.


Call, K. T., Fertig, A. R., & Pascale, J. (2021). Factors associated with accurate reporting of public and private health insurance type. Health Services Research. Web.

Crable, E. L., Benintendi, A., Jones, D. K., Walley, A. Y., Hicks, J. M., & Drainoni, M. (2022). Translating Medicaid policy into practice: Policy implementation strategies from three US states’ experiences enhancing substance use disorder treatment. Implementation Science, 17(1). Web.

Freeman, M., Robinson, S., & Scholtes, S. (2021). Gatekeeping, fast and slow: An empirical study of referral errors in the emergency department. Management Science, 67(7), 4209-4232. Web.

Meyers, D. J., & Rahman, M. (2021). Medicare Advantage star ratings: The authors’ reply. Health Affairs, 40(6), 1014-1014. Web.

Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119 (2010). Web.

Sultz, H. A., & Young, K. A. (2017). Health care USA: Understanding its organization and delivery (9th ed.). Jones & Bartlett.

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