In this segment of the lecture, we will review the second of the World Health Organization building blocks, that is finance. The finance building block can be defined in the following way. A good financing system rises adequate funds for health, in ways that ensure that people can use needed services, and are protected from financial catastrophe or impoverishment associated with having to pay for them. There are three key functions to any financing system in healthcare. The first is the collection of revenues needed to support the system, the second is the pooling of funds to cover particular populations, the third is the system of payment by which providers are paid. The first important thing to notice about the US health care system, again, is that it is a marvel. It rises around $3.5 trillion or $10,000 per capita. It rises these funds and distributes them to provide his insurers in a relatively effective manner. Not withstanding it's very significant expenditure and the efficiency with which those revenues are collected, it's important to remember that there are around 10 percent of the population who are uninsured, that are not covered by the system. The uninsured do not have access to a safety net of healthcare, particularly, the Emergency Medical Treatment and Active Labor Act. This is funded in complex ways and provides a limited range of services to stabilize a patient's condition rather than to provide medically appropriate care. In addition, hospitals that provide care under these act are entitled to claim the cost of care provided from the patients who receive the care. The Affordable Care Act did have the important outcome of reducing the number of uninsured people from around 44 million to around the current figure of 27 million or 10 percent of the population. The following two slides provide a representation of the sources of spending in the US health system. So you can see that the entirety of the system insurance amounts to roughly $2.6 trillion, of which private insurance accounts for 1.2 trillion. Expenditure by the private insurance system makes up around 34 percent of total spending. Medicaid spending makes up around 17 percent of total spending, Medicare around 20 percent. Finally, out-of-pocket payments, which are direct payments by patients to providers make up around 10 percent. This slide provides dollar figures for that amount. So the total amount of health insurance is around $2.6 trillion. Private health insurance, which covers 34 percent of the population, is around 1.2 trillion. Medicare is around 705 billion, Medicaid is around 590 billion. Out-of-pocket payments are around 365 billion. The important question arises to what services are available to those who have access to insurance. Then each system of insurance has rules covering access to services. For the Affordable Care Act policies sold on the health exchanges, they need to cover essential health benefits. For private insurance and for Medicaid, there are particular rules governing the access to services. On the whole, patients are entitled to those services which are defined as medically appropriate, and this will be determined predominantly by doctors who determine what is a medically appropriate subject to some review by insurers, and some review by courts. There is a separate system of payment for pharmaceuticals, and there are separate systems of rules in each of these systems of insurance. The system for the payment of pharmaceuticals is one of the most complex parts of the US healthcare system. There are, in addition, complex rules governing co-payments and deductibles, and it is this co-payments and deductibles and payment for pharmaceuticals which make up the bulk of out-of-pocket spending in the United States. One of the many important features of any health system is the extent of its coverage. So if noted that the US healthcare system is very large, $10,000 per capita or $3.5 trillion. However, there are important exclusion from services that are covered. In particular, there is limited coverage for dental services, and we'll see that this is in contrast to healthcare systems in the United Kingdom and Germany. But dental services, as important as they are, are not one of the biggest challenges facing the healthcare system in the United sites. One of the biggest challenges facing all systems is coverage for long-term care for the aged, and in this respect, the United States faces huge challenges. This graph shows the proportion of spending attributed to long-term care in different countries. You'll note that the US health care system contributes only around five percent of its spending to long-term care. Germany around 16 percent, the United Kingdom around 19 percent, and Sweden around 26 percent. What this indicates is that there's going to be a very significant demand for coverage for long-term care in the United States, and this will have an upward pressure on levels of health spending. It's important to note here that it's not simply a question of increased demand for long-term care as a result of aging populations. In the United States, it's the current low level of expenditure on long-term care spending which will make spending on long-term care very susceptible to increased demand for long-term care.
