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Healthcare History

Updated November 1, 2018
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.. ned since 1980.

This combination of reduced admissions and shorter length of stay per visit resulted in few people in hospitals at any given time. These trends present special problems for smaller, rural hospitals which have more difficulty gathering resources, staying technologically current, and maintaining financial strength. As a result, more and more smaller hospitals are closing, especially in these rural areas. The high level of unemployment in the early 1980’s along with stricter eligibility requirements for Medicaid led to a rise in the number of uninsured individuals in the U.S.(see diagram 2). Market segmentation beginning in the early 80’s also contributed to the number of uninsured as those with pre-existing conditions or high-risk jobs were denied coverage. Because of the highly competitive hospital market created by payment changes, the incentive to treat the uninsured is lost and these people are increasingly marginalized.

No longer may hospitals subsidize the treatment of the uninsured by over-charging employers or insurance companies. Many cuts have proposed by the Republicans in Congress that aim to trim down the cost of health care. Medicare is at the root of many of these proposed policy changes. Among them are increases in co-payments made by beneficiaries, caps on payments to beneficiaries, a reduction in the amount paid to beneficiaries per episode of illness, a holding of the rates of increase for hospitals and doctors so that if services increase, payments decrease, and letting the market naturally move people into HMOs. These proposed policy changes are likely to effect hospitals in many ways, some of which are already being seen. It is likely that hospital admissions will continue to decline as hospitals have no incentive to admit.

Payments are the same to hospitals whether the treat outpatient or they admit the patient, so to save money the natural tendency is to treat with ambulatory or outpatient care. Even more incentive is present for hospitals not to admit a patient as the amount paid to them will decrease as they increase services. Incentive to not treat is what it may be called. For those that are admitted to hospitals, we will continue to see a reduction in the number of days each patient stays in the hospital. The motivation for the hospital to release the patient persists because of the payment schemes in place.

For the patient who is paying a higher co- payment, the incentive is also to leave the hospital as soon as they feel well enough..and sometimes before! What we are likely to see are increasing numbers of rural hospital closures as they are unable to survive the drop in hospital visits and stays. Empty beds mean administrative costs for the hospital that need to be defrayed by treating people. If there is nobody to treat, the hospital must inevitably shut down. As people continue to move into HMO’s to receive some sort of coverage, hospitals will perhaps see an increase in the number of visitors at hospitals but they will be required to receive prior approval for most procedures and the amount paid to the hospitals will remain the same regardless of the number of procedures so the incentive to treat more is lost. As Medicare cuts continue to prevail, it is likely that more and more beneficiaries of Medicare will be drawn into HMO’s.

Just as this has led to increased market segmentation in the private-insurance community so would it lead to the same dynamic in the Medicare community. Those hospitals or physicians that sign contracts with HMO’s will be securing their patient-base while the HMO will be cornering more of the hospital/physician market. For those who are not enrolled in HMO’s, their costs will not be controlled. Higher fees will be the likely result. Since the Medicare reform proposals pay less per episode of illness, the patient will be responsible for more of this increased amount. The amount of Medigap payments for Medicare beneficiaries is also likely to go up as a result of the current Medicare reform proposals.

Medicare will pay less per episode of illness. If we assume that the charge per episode of illness will not come down, then the amount that must come out of the pocket of the beneficiary must increase. This increase will be a direct result of the cuts to the Medicare program. Long-term care in the United States has received much attention in recent years as the baby-boomers soon will be the population requiring this type of care.

For those seeking long-term care there are several options available with different payments sources for each. They are briefly outlined here: Nursing Homes: nursing home care may be provided in different settings with differing payment options for each. They are consumer payment-this type of care may include anything qualifying as daily care for an elderly or mentally-ill patient requiring long-term care. There is generally a daily charge rate for the custodial care. Mediacaid covers custodial and general care once personal funds are depleted. Medicare covers skilled nursing and skilled therapies following hospitalization This coverage is limited to 100 days maximum per episode.

Home/Community-Based Care: this type of care consists of skilled nursing care and therapies, homemaker/home health aid care, high technology home therapy, and durable medical equipment. Consumer bought care may include personal care, including the aforementioned home health aids and homemakers and chore services. Also, any RN time spent beyond that authorized would be covered by the patient. Medicaid covers personal care and assistance for eligible frail elderly or disabled individuals. Medicare covers skilled nursing, physical or speech therapy. Housing/Retirement Community: this is an enhanced service package and often includes more supportive or custodial care.

A combination of both Medicare and Medicaid may be used to pay for this type of service. One organized method to do just this is the Program of All-Inclusive Care for the Elderly(PACE). The idea is that for qualified individuals, PACE merges Medicaid and Medicare funding into an integrated system that enables a care-manager to allocate resources by need. PACE must be seen for what it is, care for acute and chronic conditions within a long-term care package. Diagram 1 Diagram 2 Source: U.S. Bureau of the Census, Unpublished Current Population Survey Data, Health Insurance Coverage Status by State, Table Hi-4.

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Healthcare History. (2018, Nov 04). Retrieved from