health care facilities sources of funding


Health care is provided by various distinct organizations in the United States. Most of the facilities are privately owned and largely operated as businesses. They are privately owned and operated health facilities, which provide own employment. In terms of health insurance covering all health sectors, employees are mainly made available by the government. About two-thirds of all healthcare provisions, funding, and spending are obtained from health programs that include Medicaid, Medicare, TRICARE, Children Health Insurance programs, as well as from the Veterans Health Administration. A significant percentage of all people under the age of 65 is insured by their employers or is provided by their family member. Sometimes people are expected to buy their own health insurance covers. Much of the funding to the health care services in the US is provided by health care insurances (National Conference of State Legislatures, 2013). The government employs economic policies that ensure efficiency in the health sector such as a reduction in the level of infant mortality in the country. The efficiency being ensured makes the country is ranked among the top of the countries having low infant mortality rate.

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The United States spends more on the country’s health per capita as well as in healthcare all that account for over 15 % of its GDP. The health care services are costly as compared to other developed countries. Insurance companies also help the government in providing the required heath funds in the sectors especially from those people who have health insurance. Unlike some other industrialized countries that offer guarantee to health care access, the United States hardly provides the same guarantee. All countries that are within the Organization for Economic Cooperation and Development (OECD) guarantee their population to health care access apart from the United States, Turkey, and Mexico. Over 98 percent of the US population is insured to have insurance cover that serves to ensure guaranteed access to health care facilities and services (National Conference of State Legislatures, 2013). In General, funds are obtained through mobilization, allocation to specific regions or population groups as well as funds for some specific health care types.

Answer to Question 2: Where the Funds goes

On the other hand, the health sector generates significant amount of funds through the gained profits from the services. Due to the increasing demand for health care services, people are demanding high quality services. Consequently, the costs of healthcare are getting higher each time leading to various adjustments in the US health care policy agendas (National Conference of State Legislatures, 2013). While the money comes from health insurance cover by people, through mobilization, and government funding, the profits goes back to the sector to finance various projects including researches on various medical issues. The money obtained through medical payments is used to improve the healthcare facilities. They are also used to fund innovative programs in the health sector. Sometimes the government requires its share, which is provided through taxation. The governments gains from the sector although the amount spend by the government in funding health care facilities and services is more than the amount it gains from the sector.

The government is responsible for providing employment in the public sector in health care. This means that the necessary compensations have to be done although the government obtains its funds from all sectors in the country and then spreads the funds to its various sectors including the healthcare sector. In health care, funds are said to go to the provision of payments for all the services in healthcare. This payment is done to specific care episode rather than providing payments to individual procedures or services (National Conference of State Legislatures, 2013). The funds are directed to a number of activities that a grouped to single healthcare episode, which include the various costs, test procedures, hospitalization, and some employee payments.

Answer to Question 3: Market Imperfections

The effect of market imperfections spreads to every transaction in the health sector. This happens in some way, which would lead to interference with the sector’s economic activities and trades that are made by rational individuals. Market imperfections within the health sector create imbalances between the cost of health care services and the quality in the healthcare provided by the healthcare facilities. The United States is said to be among the top countries in the amount allocated for health care sector but said to have a deteriorating trend in its health care quality. The US healthcare spending is said to have reached $2.8 trillion in 2012 by estimates (National Conference of State Legislatures, 2013). The overall growth in the health care sector is however said to be low but not in accordance with the budgeted amount. Only imperfections can lead to the fall in the size of the sector, a stagnating growth, or a slight growth as seen in the estimated growth of 3.9 percent in from 2010 to 2011 and only 0.1 percent growth from 2009 to 2010.

The health coverage in the US healthcare sector is hardly meant to insure individuals from health risks but rather, people make plans through health insurance in order to cover most of their healthcare bills, whether large or small. Individuals are therefore prevented from paying for these bills and other costs. While real insurance is characterized by low premiums, large claims, and infrequent claims, this aspect is not portrayed by the American health insurance. Families and individuals are paid their claims severally each year. These payments are done in small amounts. The health insurance has high premiums that increase the cost of insulating individuals from healthcare bills and other expenses. The direction of insurance funds to individuals rather than using them for medical cover creates situation market imperfections in the US healthcare. The extent of the imperfections could be seen whereby patient (consumers) give in to doctors’ recommendations and deals without any concern on the costs given that the insurance covers their entire healthcare costs (Kane, 2012).

Answer to Question 4: Market Failures in the US health care

Market failure constitutes a situation whereby resources are not allocated efficiently. The same situation is evident in the United States healthcare sector whereby inefficient allocation of healthcare resources has resulted to a constant situation of raising health care costs. A typical situation of market failure is brought about by one party having enough power to prevent efficient transaction from happening. The health insurance has generated some cases of market failure whereby people have adequate confidence about its compensations that they hardly negotiate on the high American costs in healthcare (Gratzer, 2007 ). Doctors and healthcare organization have also taken advantage of insurance provisions that they have elevated the costs of treatments to a socially undesirable level.

The NCSL and its 2011 State Budget update shows that six states had an over budgeted Medicaid or over budgeting in other programs in healthcare (National Conference of State Legislatures, 2013). Actions were being initiated with an aim of correcting the imbalances. The government controls the healthcare sector and market leading to market failures in various ways including high costs in health care. The high costs are caused by the existence of health insurance cover in the US health care sector as initiated by the government withdrawal from providing guaranteed access to health care. The costs ought to be felts by those individuals having insurance cover but are spread o all people demanding access to healthcare irrespective of whether they are in the health insurance program or not. This situation results to market failures in the sector, which brings about the elevated costs of accessing healthcare services and programs.












Gratzer, D. (2007 ). What’s Wrong With American Health Care? Retrieved March 30, 2013,          from

Kane, J. (2012, October 22). Health Costs: How the U.S. Compares With Other Countries.            Retrieved March 30, 2013, from     other-countries.html

National Conference of State Legislatures. (2013, March). The Forum for America’s Ideas.           Retrieved March 30, 2013, from research/health/health-finance-issues.aspx



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