The Convergence of Healthcare Financing and Economic Trends and Forces

Healthcare Financing and Funding Models

The employment-based financing and funding model is based on the payroll taxes. What is important, these taxes are obligatory, and national health insurance should be regulated and maintained within the healthcare framework that takes into consideration all the medical services provided and all the fees collected. The key aspect of this funding model consists in the fact that the individuals are not excluded from the program because of certain pre-existing circumstances (Paterson & Telyukov, 2014).

Similarly, even if the individual develops an illness, the employment-based healthcare insurance model restricts the healthcare providers from ignoring these individuals. The majority of the hospitals and health care specialists that function in compliance with this model are related to private health care. There are also extra amenities which can be purchased by the patients by means of their secondary insurance coverage. This model is often called a multi-payer system due to the fact that the majority of these healthcare facilities are connected to private insurance companies.

The government-based financing and funding model is solely based on taxes. On a bigger scale, the whole health care system is financed by the government, and no medical bills are provided for payment. This financing and funding model treats healthcare as a common public service (public education, fire department). The majority of the hospitals belong to the government (Paterson & Telyukov, 2014). Consequently, a big number of health care specialists working in those hospitals are also governmental employees. The definitive characteristic of this model is that the majority of these medics are private practitioners and the government rewards them with monetary extras if they keep their patients healthy. One of the most vivid examples of this financing and funding model is Veteran Administration.

The individual-based financing and funding model is mostly represented by private healthcare providers. It is also called a single-payer model due to the fact that the only payer within the framework of this model is the government. This model does not presuppose any deductibles (Paterson & Telyukov, 2014). In the United States, Medicare may be considered the perfect example of an individual-based financing and funding healthcare insurance model. The majority of the bills are paid by the government, and the healthcare is provided by private specialists in private clinics.

Key Economic Goals

There are five key economic goals of both private and public health insurance plans. First, the disparities in access to health care should be eliminated, and the access itself should be stable. Second, the overall quality of health care should be steadily improved. Third, the current health care system should be redesigned so as to minimize healthcare costs and reduce various payments (Obama, 2016). Fourth, the health care segment should take into consideration high-risk populations and coordinate health care in compliance with their critical needs. Fifth, the communities, families, and individuals should experience an all-inclusive improvement in their health and quality of the provided health care.

When it comes to the populations covered, private health insurance plans cover the major needs of every family. At the same time, public health insurance is mostly performant when applied to the families with average incomes. In terms of the services included in health care, private health insurance plans are based on the eminence of the provided services and some of those may be too expensive for the lower- and middle-classes (Obama, 2016).

In turn, public health insurance was created to cover the essential services that should be available to every US citizen. From time to time, some of the most expensive health care services are covered by the private health care sector. If one compares the financing arrangements, it will become evident that the payment arrangements led to numerous successful economic operations.

Nonetheless, the situation when private health care facilities are in conflict with public health insurance plans is rather common. The reimbursement strategies proposed by both health care camps are aimed at increasing the value of healthcare information technologies (HIT). The latter are effectively used in practice to solve the problems linked to reimbursements. Private health care facilities benefited from the use of the HIT the most (Obama, 2016). Nonetheless, both of the health care financing models are no strangers to the policies related to economic competition. On a bigger scale, the economic policies allowed to equalize the competition between the public and private sectors. Moreover, these policies help to implement only the best health care practices and severely punish nonpayers.

The Impact of Labor Market, Insurance Market, and Competitive Market Factors on Health Care Delivery Requirements

The healthcare labor market is contingent on two economic aspects – the demand for health care employees and their supply. These two aspects are outlined and regulated by the government. The demand for health care employees has always been the factor that received the most attention from the government, while health care employee supply was always in the state of crisis (Niles, 2016). The impact of the labor market can be characterized as the willingness to pay the employees the money they deserve. Nonetheless, there is a common mismatch between the financial resources and the employee demand.

The labor market imposed its strict dependency model on the healthcare organizations, too. Therefore, the influence of the labor market may be seen as the presence of a number of factors (social, political, economic, technological) that connect the healthcare services and healthcare employees (Niles, 2016).

When it comes to the insurance market, the US health care organization may be considered one of the most advanced industrial countries. Its keystone is the insurance coverage that is merely universal and functions across the country. The impact of the insurance market is similar for both public and private areas (Niles, 2016). The researchers characterize the impact of the insurance market as an ambivalent notion which relates to the social good and the employment benefit at the same time. Therefore, the individuals who are not employed are dependent on the governmental insurance.

The impact of the competitive market can be described as the application of a third-party payment system. Even though there are other obstacles, the core issue of the competitive healthcare market is a scarce trust policy (Niles, 2016). This leads to the situation when there are not enough players in the market who would compete for the patients by providing the best care at a minimal cost. Instead, the lack of competition results in monopoly and amplified healthcare costs.

The Changes That Must Be Considered in the Future

The key four premises that should be taken into account in the future are the directives of the:

Patient Protection and Affordable Care Act (PPACA), technological improvements (IT, digital, and network innovations), advanced analytical tools (high-speed sequencing, single cell analytics, and microbiomics), and the growing influence of the middle class on the worldwide healthcare services (lifestyle changes, health care services requirements, and various health care innovations) (Chandra & Skinner, 2012).

First, it is safe to say that the current state of the healthcare industry in the United States can be described as unstable and confusing. This claim is supported by the controversy that was generated by the legislation (PPACA). There is no doubt that the way in which the law was passed disorganized the administrative structure of the US healthcare services. Moreover, it is evident that the employment of PPACA into practice was inextricably linked to a number of problems (Chandra & Skinner, 2012). The two major aspects distressed by the implementation of PPACA were economics and the laws related to healthcare. Nevertheless, the government acknowledges the current need to maintain the changes and implement innovative approaches as smooth as possible because PPACA contains significant provisions and valuable directives. Therefore, we must consider the possibility of initiating political negotiations and making necessary administrative adjustments if we expect to transform the healthcare painlessly.

Second, the current state of affairs in the United States and its stagnant economy may adversely impact the technological progress (Chandra & Skinner, 2012). The number of job opportunities in the healthcare sector is insignificant, the incomes are almost unnoticeable, and the growth of the US GDP is unremarkable. From an economic point of view, the US healthcare industry is in need of serious capital investments. This will lead to macroeconomic changes and improve the healthcare funding practices across the nation.

Third, there is a necessity to consider the changes that may transpire in the US demographic trends. Moreover, it is crucial to take into account the epidemiological trends (Chandra & Skinner, 2012). When both demography and biology are combined, their impact on the US healthcare industry cannot be predicted. The government should pay close attention to the most troublesome inclinations. These include the growth of patients with chronic diseases and the problem of an increasing number of aging individuals and diminishing birthrates. In perspective, this will have a serious impact on the payment plans. This change may lead to the manifestation of self-tracking attitude in a rather big sample of the US citizens. These healthcare consumers will be motivated to improve their lifestyle and engage in various useful activities.

Fourth, the growing influence of the middle class cannot be overlooked due to the fact that it affects the profit shares (Chandra & Skinner, 2012). The all-inclusive impact of the middle class on the US healthcare industry can be described as the transformation of the investment priorities and the incentives of the health care providers. This will ultimately lead to the change in healthcare business models. The providers will be required to take into consideration the peculiarities of the local markets and adjust their services in compliance with the regional needs.

There is a number of national trends that currently affect competition and pricing initiatives. First, it is the opinion of the federal, state, and local officials. They establish the basic costs of the services and define the expenditure cap. Second, it is the impact of regulatory agencies that function together with advisory panels. Another national trend is an increased number of health care unions and lobbyists (Duston, 2016).

This triggered an upsurge in the prices of healthcare services. Fourth, the healthcare looks up to the third-party organizations so as to comply with several international health care standards (including the implementation of the healthcare financing and funding models). Fifth, an increased publicity is one of the most powerful influencers in terms of the current competition and pricing initiatives. Currently, a lot of things are contingent on the opinions of investigators, physicians, engineers, lawyers, and mass media (Duston, 2016). The connection between all these actors has a critical impact on the current state of affairs. Healthcare services became more expensive, and the influence of external actors and factors turned out to be ubiquitous.

The Main Quality Indicators That Typically Affect Health Insurance Pricing at the Local Level

A thorough research on the subject exposed the fact that the majority of the contemporary healthcare facilities have to take into consideration the technological advances. This means that the notions of patient safety and high costs of first-class care can be explained by the technological progress (Stabile et al., 2013). Therefore, the use of technology in healthcare may be considered to be one of the most impactful quality indicators.

At a local level, technological advances are critical due to the fact that they help the health care providers to detect serious issues ahead of the curve. All of the risk factors can also be taken into account, and the majority of the adverse patient outcomes can be foreseen (Stabile et al., 2013). The use of the HIT within the local healthcare facilities to communicate with each other is another quality indicator. It positively impacts patient outcomes, helps the practitioners to connect with each other, and increases the chances of diagnosing the illness correctly. On the other hand, this quality indicator affects the cost-effectiveness of the health care facility (Stabile et al., 2013). Therefore, the administration has to find a balance between the quality improvement opportunities and the price of health insurance.


Chandra, A., & Skinner, J. (2012). Technology growth and expenditure growth in health care. Journal of Economic Literature, 3(11), 645-680.

Duston, P. (2016). Analyzing form, function, and financing of the U.S. health care system. Boca Raton, FL: CRC Press.

Niles, N. (2016). Basics of the U.S. health care system. Burlington, MA: Jones & Bartlett Learning.

Obama, B. (2016). United States health care reform. Jama, 316(5), 525.

Paterson, M., & Telyukov, A. (2014). Healthcare finance and financial management: essentials for advanced practice nurses and interdisciplinary care teams. Lancaster, PA: DEStech Publications.

Stabile, M., Thomson, S., Allin, S., Boyle, S., Busse, R., Chevreul, K.,… Mossialos, E. (2013). Health care cost containment strategies used in four other high-income countries hold lessons for the United States. Health Affairs, 32(4), 643-652.

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