Medicare reimbursements are the payments made to the hospital or physicians on behalf of the Medicare beneficiary for the services rendered (Britton 549). Although politicians argue that the United States leads in healthcare systems, various research on the matter contradicts this claim. Studies show that the US invests more in healthcare than the next 10 countries with the highest medical expenditure (Blackstone and Fuhr Jr 11). However, the quality of the system has been ranked 37th globally based on metrics like infant mortality and permanent handicaps from diseases. According to Ramsey et at., the current medical cost growth rate is both economically and politically unsustainable (1778). Hospitals, physicians, and insurance companies all have a hand in raising the expense of Medicare.
Errors in hospitals account to billions of unnecessary spending in healthcare. About 200, 000 Americans die annually from preventable illnesses and medical errors despite the fact that the country spends 17% of its GDP on health care (Fifer). A large percentage of this money is used up in mitigating avoidable medical errors. For instance, in 2008, the U.S spent $19.5 billion on health care errors (Andel et al. 39). In 2010, increased mortality cost the country $1.4 billion (Andel et al. 39). According to actuarial studies, the unnecessary healthcare issues causes a ripple effect in the economy resulting in loss of almost $1 trillion (Andel et al. 39). Therefore, preventable problems in the Medicare system add to an already growing medical expense.
Insurance companies also contribute to the problem. Although insurance is supposed to lower medical cost, at least in theory, the contrary has been happening over the past decade (Fifer). Using premiums to spread the cost across many people has led to lack of transparency in the actual costs involved in healthcare. In addition, insurance cover has resulted in unnecessary expenditure due to price sensitivity. This phenomenon occurs where patients opt for specific medical services because they are included on their insurance cover despite them not being required (Fifer). Attempts by insurance firms to regulate the price through shifting more fiscal responsibility to the patients have seen the price of out-of-pocket expenses sour through the roof. As per 2016, the average out-of-pocket expenses were north of $25, 000 (Fifer). Accordingly, insurance companies have played a significant part in the current health care economics.
Moreover, hospitals are constantly expanding to gain more leverage over the insurer. These two bodies are constantly at war over prices in which the patient becomes the primary casualty. The larger the geographical and population coverage a hospital has, the higher the pricing they can ask the insurance company (Fifer). For instance, it is legal for hospitals to purchase private practices and increase their profits through outpatient appointments and inpatient admissions from the same doctors. In addition, hospitals capitalize heavily on facility cost. If one visits a private practice for an electrocardiogram, for example, they would pay $375. However, when the same doctor offers the same services in the hospital, they charge $1,400 (Fifer). This notable difference does not mean that facility cost is not necessary; otherwise, how would hospitals maintain their institutions? However, the line between separating what is essential and what is too much is unclear. Therefore, hospitals add on to the economic weight of reimbursement.
Furthermore, about 50 million people in the United States do not have any form of medical insurance (Fifer). This population depends entirely on free clinics for their healthcare. Such facilities are rare. Without any immediate care, these people often wait until their conditions become life threatening. In such circumstances, hospitals cannot deny them treatment at the emergency room according to the Federal law. While at the emergency room, the cost of treatment dramatically increases due to factors like high overhead from 100% to 1000% more than what it would have cost at the physician’s office (Fifer). For instance, research indicates that uninsured patients with diabetes are likely to receive poor preventive treatment, which often results in expensive and dangerous complications (Brown and McBride 1). Additionally, 20% of Medicare patients have been reported on being readmitted within 30 days with the same diagnosis (Fifer). Normally, the expectation is that people should visit the hospital and leave free of their ailments. However, as the numbers suggest, first-time treatment on these patients is neither effective nor appropriate. Therefore, inadequate medical attention on the Medicare patients is counterproductive in terms of both cost and safety.
As of 2013, the cost of inflation had risen by 78% since 2000 (Fifer). On the other hand, salaries have decreased by 4%, accounting for inflation (Ramsey et at. 1777). Well, this dynamic affects everybody in the economy. From the doctor’s perspective, there is a basic drive to earn more through the fee for service model. The more procedures the physician bills, the more they are paid. This framework creates room for needless procedures that are only intended to increase the reimbursement. For instance, the end-of-life care accounts for 25% of the Medicare budget. This money caters only for the last two months of an individual’s life (Ramsey et at. 1777) . All this is because of the profit based model and the availability of technologies that keep people alive even when they are not. Thus, the model of practice has its own role in increasing the cost of reimbursement.
Indeed, hospitals, physicians, insurance companies and patients all play a role in raising the cost of Medicare in form of reimbursements. Moreover, the United States spends a substantial amount of its GDP on healthcare. However, the return on this investment is intensely low as the population’s health is worsening. This mismatch can be attributed to the unnecessary processes at each level of the system. Fixing this problem through a one-dimensional approach is not possible; for instance, spending more on the healthcare of the underinsured. Such efforts will only perpetuate the issue. Rather, it is important to connect the dots at every level and look for a collective solution that encompasses all the four players.