Welfare and Health System

Background of healthcare policy in the United States

Health care systems differ in respect to the role of government, how healthcare is delivered and financed.  Although public and private funding generally marks the United States health sector, it is however largely private. In this model, workers and their dependents health are mostly covered through private insurance bought through the employers. The government only provides public insurance to persons in certain groups such as the disabled, elderly, the poor, elderly, the veterans, and children. The main healthcare programs that that have existed in the government are Medicare and Medicaid and they were formed in 1965. Medicare is run by federal government and it aims at serving the elderly individuals who are older than 65 years, while the medic-aid program is jointly run by the federal government and respective states.

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Evolution of health care policy

The healthcare system policy in the United States has evolved over the years. The rise of the concept of insurance of one’s health began as early as 1694 and by 19th century it covered accidents only. The rise of medical expense insurance followed a period where individual’s payment for healthcare was carried out from the person’s pockets. Initially, the health insurance covered minimum health issues but by the mid of twentieth century the healthcare insurance evolved to the current form where individuals are insured for all manner of illnesses and for preventive, emergency and curative services. By 1920, hospital had also begun providing services to individuals on a pre-paid basis and finally leading to development of current Health maintenance organizations.   Dranove suggests that the rise of healthcare systems in most countries further necessitated the need for changes especially due to escalating healthcare costs resulting to the rise of managed care and use of global budgeting.

Strengths and weaknesses of the U.S. healthcare system

The United States healthcare system has various strengths and weaknesses. The private sector orientation firstly offers some advantages of increasing the levels of new medical solutions and innovations in healthcare. This is fostered by the strong protection of private investors in the healthcare system. However, a major disadvantage of the healthcare system has been its extremely high costs. The cost of the health care system has resulted to large amounts of taxes going to payment of healthcare while raising the risk of increasing the levels of government debts and deficits. Such funds that are used for healthcare could also be utilized in growing the economy and meeting other society needs.

Features of major government health care programs

Three main models of healthcare policies that exist today include largely private, public and hybrid system. Different governments adopt either of the models in their healthcare. Private healthcare programs involve individuals as the major financiers of the healthcare system with the government playing the role of ensuring that healthcare facilities maintain various standards. The costs of healthcare and provision of healthcare services are met by private individuals and organizations and government itself is not largely involved in either financing or providing healthcare to its citizens. United States aligns itself more closely with this system although some involvement is evident in form of financing through Medicaid and Medicare programs. In a public healthcare system, the government plays a significant role in both financing and providing healthcare services through use of salaried doctors and government run health facilities such as evident in countries like Italy, Sweden and Great Britain. Third model is a hybrid model which is financed through taxes but delivery f healthcare services is carried out by private hospitals and doctors with examples including Canada, France, Holland and Japan.

Issues surrounding rising health care costs

The United States healthcare is one of the most expensive systems in the world. Up to 5.7% of the GDP income from the tax payers is spent on healthcare and this is only 44.5% of the total expenditure on healthcare.   McKenzie asserts that the growth of the third-party paying system contributed to the increased cost of healthcare as patients enjoyed wider access to healthcare without incurring out-of pocket expenses. The issue of who benefits more from the increased healthcare costs is a major issue and critics have argued that insurance companies, private healthcare providers and not United States citizens are the major beneficiaries of the increased healthcare costs. GAO report indicate that the financial condition of United States is at greater risk of unsustainability with potential long term fiscal challenges emanating from the government financing of health care.

Environment of managed care

Dranove suggest that the rising costs of healthcare have necessitated for a shift towards managed care as a way of reducing the costs associated with healthcare provision. National Research Council posits that managed care environment involves practices that are aimed at reducing the costs of healthcare. Such practices include provider and healthcare networks that are designed to contain costs by use of negotiated reduced fees with providers that are enrolled in the system. Other practices include limiting the freedom of consumers in regard to the freedom of choice, increased monitoring of the behavior of providers and improving the care of patients through access to private physicians through Medicaid. Also, the environment involves providing incentives to providers to provide only the necessary and appropriate care on the basis of outcome, costs and quality.

Changing demographics of social security

Milligan and David posit that the demographic trends especially in many industrialized countries indicate that the population is aging rapidly and individuals are living longer than before. The Government Accountability Office (GAO) report indicates that in the coming years, a larger population of the baby boom generation will enter into retirement resulting to a strain on the social security. Chen identifies other demographic changes that may bear some effect on the social security including changes in familial relationships and family structure. The increased participation of women in the labor force has been accompanied by fewer marriages, increased divorce and less remarriages after divorce, cohabitation among other trend that pose a challenge on the structure of social security that recognizes dependents in auxiliary benefits.

Problems with social security

This has raised challenges on the sustainability of social security programs as it has led to the increased costs of not only healthcare programs but also of social security. The trends have increased the pressure pay-as-you-go social security system raising doubts over the on the financial viability of the system. The pressure on the social security system has further been compounded by the retirement of individuals at younger ages. Babu concludes that changing demographics signaled by a population that is aging and living longer has resulted to situations where individuals receiving social benefits are higher compared to individuals paying benefits and active in the labor force. GAO report indicate that with the baby boomers retiring, United States will face an unprecedented and daunting long term fiscal challenge resulting to a rise in federal deficits and debts.

Financing behind social security

A 2007 report by the United States Government Accountability Office (GAO) to the congressional committees highlighted the challenges that financing of social security was facing. Financing of social security has largely depended on contributions from the payroll tax contributions of employees and employers. A trust fund has been established and benefits are awarded based on the trust fund balances available. There are fears that these form of financing is not sustainable especially with the evident demographic trends where the working population is slowly thinning out as the older generations who form the majority of the population retire from active employment. This has resulted to suggestions for reforms in financing through use of options such as general revenues from the government.

Concept of welfare

Babu posits that while the chambers dictionary define welfare as a state that is characterized by well-being, prosperity and happiness, in a broader context it denotes the state of living of an individual or group of persons in a desirable relationship with the total environment, which consist of ecological, economic and social environment. The concept of welfare is however seen to defy a precise definition due to the dynamic nature of environments and individuals perceptions on what constitutes desirable relationships.  The concept is tied closely to the state both conceptually and operationally and is part of social welfare, which is defined as the part of formally organized and socially sponsored agencies, programs and institutions that function to improve or maintain the health, interpersonal competence, and economic conditions of part or a whole population. States are therefore are major actors in financing and operationalizing the concept. The United States welfare system recognizes the concept of welfare as espoused in the above definition.

 Welfare reform options

United States welfare system necessitates reforms if it is to continue existing. GAO argue that without reforms, the social security welfare system would likely collapse as the financing gaps increase to levels that make it impossible for  benefits payment to be made in full. One of the recent proposals for reform is increased reallocations of general revenue (GR) to maintain the solvency of the trust funds. Other reform measures that have been suggested include a shift from benefit guarantees, cutting down on benefits, and raising taxes to cater for the rising cost of the welfare programs. These suggested reforms however pose some challenges. For instance, critics of a shift towards financing through general revenues have raised issues regarding the viability of the option due to increased possibilities of undermining the fiscal discipline that accompanies limitations on benefits to outlay of trust fund balances thereby facilitating benefit expansion while raising fears that it may lead to a shift of welfare program from a universal program to a reduced, means-tested benefits program.


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