http://www.medicalalgorithms.com/mayo-risk-score-in-primary-biliary-cirrhosis
Different methods of financing health care place different burdens on the various income levels of society. Payments are classified as progressive if they take a rising percentage of income as income increases, regressive if they take a falling percentage of income as income increases, and proportional if the ratio of payment to income is the same for all income classes (Pechman, 1985).
What principle should underlie the choice of revenue source for health care? A central purpose of the health care system is to maintain and improve the health of the nation’s population.
Rita Blue earns $10,000 per year for her family of 4. She develops pneumonia, and her out-of-pocket health costs come to $1,000, 10% of her family income.
Cathy White earns $100,000 per year for her family of 4. She develops pneumonia, and her out-of-pocket health costs come to $1,000, 1% of her family income.
Out-of-pocket payments are a regressive mode of financing. According to the 1987 National Medical Care Expenditure Survey, out-of-pocket payments took 12% of the income of families in the nation’s lowest-income quintile, compared with 1.2% for families in the wealthiest 5% of the population (Bodenheimer & Sullivan, 1997). This pattern is confirmed by the 2000 Medical Expenditure Panel Survey (MEPS, 2003). Many economists and health policy experts would consider this regressive burden of payment as unfair. Aggravating the regressivity of out-of-pocket payments is the fact that lower-income people tend to be sicker and thus have more out-of-pocket payments than the wealthier and healthier.
Jim Hale is a young, healthy, self-employed accountant whose monthly income is $6,000, with a health insurance premium of $200, or 3% of his income.
Jack Hurt is a disabled mine worker with black lung disease. His income is $1,800 per month, of which $400 (22%) goes for his health insurance.
Experience-rated private health insurance is a regressive method of financing health care because increased risk of illness tends to correlate with reduced income. If Jim Hale and Jack Hurt were enrolled in a community-rated plan, each with a premium of $300, they would respectively pay 5% and 17% of their incomes for health insurance. With community rating, the burden of payment is regressive, but less so than with experience rating. Most private insurance is not individually purchased but rather obtained through employment. How is the burden of employment-linked health insurance premiums distributed?
Jill is an assistant hospital administrator. To attract her to the job, the hospital offered her a package of salary plus health insurance of $6,500 per month. She chose to take $6,200 in salary, leaving the hospital to pay $300 for her health insurance.
Bill is a nurse’s aide, whose union negotiated with the hospital for a total package of $2,800 per month; of this amount $2,500 is salary and $300 pays his health insurance premium.
Do Jill and Bill pay nothing for their health insurance? Not exactly. Employers generally agree on a total package of wages and fringe benefits; if Jill and Bill did not receive health insurance, their pay would probably go up by nearly $300 per month. That is why employer-paid health insurance premiums are generally considered deductions from wages or salary, and thus paid by the employee (Blumberg et al., 2007). For Jill, health insurance amounts to only 5% of her income, but for Bill it is 12%. The MEPS corroborates the regressivity of employment-based health insurance; in 2001 to 2003, premiums took an average of 10.9% of the income of families in between 100% and 200% of the Federal Poverty Line compared with 2.3% for those above 500% of poverty (Blumberg et al., 2007). In 2012, employer-sponsored health insurance premiums represented 58% of family income for the bottom 40% of American families compared with 4% for the top 5% (Blumenthal & Squires, 2014).
Larry Lowe earns $10,000 and pays $410 in federal and state income taxes, or 4.1% of his income.
Harold High earns $100,000 and pays $12,900 in income taxes, or 12.9% of his income.
The progressive income tax is the largest tax providing money for government-financed health care. Most other taxes are regressive (e.g., sales and property taxes), and the combined burden of all taxes that finance health care is roughly proportional (Pechman, 1985).
In 2009, 46% of health care expenditures were financed through out-of-pocket payments and premiums, which are regressive, while 47% was funded through government revenues (Martin et al., 2011), which are proportional. The sum total of health care financing is regressive. In 1999, the poorest quintile of households spent 18% of income on health care, while the highest-income quintile spent only 3% (Cowan et al., 2002). Overall, the US health care system is financed in a manner that is unhealthy.
Health care in the US is technologically advanced but expensive, costing about $3.0 trillion dollars in 2014, which was 17.5% of gross domestic product (GDP).1. For decades, health care spending in the US has increased more than the rate of growth for the overall economy. The percentage of GDP spent on health care in the US is significantly higher than that in any other nation. According to the Organization for Economic Cooperation and Development (OECD), in 2013 the US spent 16.4% of GDP on health care compared to around 11% for the next highest countries, including the Netherlands, Switzerland, Sweden, Germany, and France.
Also, the amount of money spent per capita on health care is higher in the US than that in other countries. In 2013, the US spent more than $8700 per capita, which was 2 1/2 times more than the OECD average health expenditure per person and twice as much as that of relatively wealthy countries such as France and Canada ( 3). The absolute amount and the rate of increase in the US are widely regarded as unsustainable. Consequently, US health care is currently in flux, as the government attempts to find ways to provide universal health care and reduce its costs.
Consequences of increased US spending on health care include the following:
Increased government spending (resulting in higher national debt, decreased funding for other programs, or both)
Slowed growth or a real decline in workers’ earnings due to higher payments for health insurance premiums
Increased costs to employers (resulting in increased product cost and movement of jobs to countries with lower health care costs)
Even though US health care spending per capita is the highest in the world, many people in the US do not have health insurance, whereas other developed countries, despite lower per capita expenditures, ensure universal access to health care. Furthermore, the high spending may not lead to correspondingly superior outcomes; according to the OECD report, in 2013 the US ranked below the OECD average on many health care outcome measures, such as infant mortality and life expectancy at birth.
http://www.medicalalgorithms.com/mayo-risk-score-in-primary-biliary-cirrhosis