Biology Reference
In-Depth Information
no insurance and patients were taken care of through the generosity of NGOs like Sweden's
foreign aid (SIDA), other sources, and government subsidies. When the government took over,
a crisis developed when many NGO doctors and NGOs left the hospitals that became
government hospitals. The South African government then had to scramble to staff them, first
by forcing military recruits just out of internship to work at the hospitals and later by importing
Cuban doctors without the same commitment and passion for their work, both resulting in
inferior care. Indeed, a recent article in a Foreign Policy magazine reported that in Tanzania
doctors spend only 29 minutes a day on average taking care of patients. In the USA there are
several insurance systems such as: private business based insurance; Medicare for the elderly
and certain disabilities like dialysis dependence; Medicaid provided by States for the poor
and disabled less than 65 years of age; military active duty or retired soldier coverage
(Veteran Administration); and federal insurance plans for government employees. Increasingly
large businesses like Lowes and Wal-Mart are directly contracting with hospitals. In a course I
took at Harvard Kennedy School of Government on Healthcare, they taught us there are two
essential things to know about insurance companies to understand how they function. Firstly,
they want to avoid “adverse selection”, namely allowing those that have disorders that will
cost them a lot of money into their pool of patients. Secondly, they want to avoid patients
overusing the system “moral hazard” because they do not pay the full cost of care, and thus use
co-payments to reduce this risk. Thus, insurance companies have been very careful,
particularly in insuring patients with pre-existing conditions. To get insurance companies to
buy into the new ACA, the Obama administration offered insurance companies a greater pool
of young healthy patients by making sure patients were covered either by CMS (Medicare and
Medicaid) or by insurance pools, forced to be covered by businesses, and in addition setting
up a mechanisms for the government covering patients with pre-existing conditions, thus taking
away the risk of adverse selection from insurance companies. However, if these promises do
not hold up, like the government taking on high risk pools and ensuring everybody buys into the
program, the insurance companies may become at risk to provide care for patients without
ability to exclude patients (guaranteed issue of insurance) at a fixed cost irrespective of co-
morbidity (community rating of risk), with coverage mandates for risk factors they do not wish
to cover (like say liver transplants). If young patients are also able to opt out that will also
undermine the ACA. Whether deliberate or not, and this will certainly be debated, the creation
of government (Federal or State) insurance pools meant that people could be enrolled in
government sponsored insurance plans at a low cost to their employer. Furthermore, the
penalty for businesses for failing to provide insurance for their employees is a fraction of the
cost of providing full insurance for their employees, and order of magnitude of about ten to
fifteen times. The net effect, including financial failure of insurance companies from
inadequate payment of premiums for the degree of coverage mandated, will probably be that in
the next ten years three quarters or more of patients will be covered by a government
sponsored insurance programs, such as Medicare or Medicaid or federal insurance pools. In
1980 it was one quarter and 2010 45%. While Medicare mostly covers hospital expenses,
Medicaid has usually not been as good at covering either hospital or physician reimbursement,
and as a result many physicians or hospitals may restrict access to them for these patients. This
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