(Hello; I posed this same question on a different forum. The following is a reply from another person. i copied the response here with permission.)
Medicare and Medicaid spending represent close to half of all federal outlays. The topic covers a lot of ground. I'll attempt to explain what's happening in NC.
The medical system in the US is a for-profit system. While there are non-profit segments, it's predominantly for-profit, private-provider driven.
People in the US are some of the unhealthiest on the planet. A casual stroll through your local WalMart will prove that.
Some patients receive coverage through their employer. For most, while their policies cover many costs, there are deductibles, lifetime caps and procedures not covered.
Other patients work, but their employer provides no coverage. Personal private plans are very expensive. Many might not be eligible for Medicaid expansion (Obamacare), if their state even offers it.
Some are on Medicare.
Others still are on Medicaid.
The patient population is generating a certain amount of costs. Will put these costs at $1. Insurers, state and federal agencies, through the various programs and reimbursement rates (all of which are different), cover let's say .90. At this moment, the medical provider is operating in the red.
Patients paying down their debt, charging more for some procedures while refusing Medicaid and Medicare recipients in some offices can bring that provider closer to being made whole. It's a clawback.
After recovering as much as possible, the provider (which ultimately includes Medicare, Medicaid, state and GOV offices) is still left with a certain amount of debt which, odds are, will not be paid. Providers then turn this unresolved debt over to collection agencies.
Collection agencies might buy the debt from the provider for pennies on the dollar. Let's say, $1M of accounts receivable for $100K. The agency then attempts to recover the full amount from the patients. The provider writes down the $900K loss. The collector makes a profit on anything recovered over the $100K cost. Agencies can also work on a commission schedule. If the collector receives X, they gift a percentage to the provider, pocketing the rest. It depends.
To the debtor, the debt is now on their credit history as a default, acting as a drag on their credit score, reflecting poorly on such things as interest rates, securing a mortgage, car loan, employment or renting an apartment.
Some, over the course of what could be years, pay down the debt. Others, don't have an income that affords them to pay it down. Through no fault of their own, they've encountered now a permanent drag on all things involving their credit history and credit score. "Debt collector" and "default" are the key words people notice, not that they had an unforeseen medical event they couldn't pay for.
Medial debt has become a huge issue for people throughout the country. In 2023, the state of NC passed the Healthcare Access and Stabilization Program (HASP). The position of the state of NC is this: "We know you have X% of medical debt on your books today, debt you'll most likely never recover. Instead of compensating you X% for Medicare and Medicaid recipients , we'll pay you X+X% (a certain percentage more) to erase that debt, if you agree to some conditions."
To clarify on debt and the paragraph above, it's patient debt. Private, Medicare and Medicaid. The HASP legislation is not program specific on the patient debt paid down, although it will be skewed towards Medicare and Medicaid patients.
HASP is funded by state, Medicare and Medicaid monies. The state taxes the people that live there and pays X for Medicaid and Medicare, with the GOV kicking in its percentage. There is no limit on the amounts. If a state taxes and receives $10T for its healthcare systems, technically, the GOV has to match what the state then spends.
Long-term, NC is paying their providers more for the coverage given. To the provider, there is expected to be less unrecoverable debt over time. To the beneficiaries, the burden of carrying that medical debt and its affects is lessened, if not removed entirely.
Each person will need to study their state and their provider systems. While private, Medicare and Medicaid coverage is common, not all states have expanded their systems (Obamacare). No state provides the same reimbursement rates. The Medicaid and Medicare monies being spent is a form of debt-sharing, both the state and the GOV paying their percentages. If the state pays less, the GOV pays less. If the state pays more, so does the GOV.
At one extreme, some in the US would like to return to a pre-LBJ War on Poverty system: no Medicare or Medicaid. At the other, some welcome a single-payer, non-profit system. Today, we're somewhere in-between, with 50 different systems under two national programs.
To the topic of healthcare and medical systems, these issues are not unique to us. The UK's system has been a train wreck of underfunding for decades. France has seen one PM after another exit as it tries to reform (raising taxes, while reducing benefits) it's programs. Due to its low birthrate and aging population, Japan will experience huge funding shortfalls. China's One-child policies have set it up for the same. India will be dealing with its own issues in 30 years time.
Each of the countries listed above, while having their own, unique characteristics, are seeing now or will experience the same:
- An aging population
- Fewer people paying in
- An increase in liabilities
