Third-Party Payment System in Healthcare

The healthcare sector has experienced a growing number of third-party payers, which has benefited and caused challenges to healthcare delivery. A third-party payer is any entity paying care costs other than the patient. Understanding their role and contribution to healthcare is critical.

The knowledge will create awareness on suitable insurance policy options and advocacy.  The sector has three parties, including patients, care providers, and third-party payers, forming a triangular association. 

Healthcare service users are integral and the key variable in the triangle. The government and third-party payers focus on enrolling as many clients as possible through various packages.

However, other potential and deserving clients miss enrolling under the government initiatives and the private payers due to high costs and poverty. The sector should develop initiatives to maximize enrollment and emphasize policies on quality assurance.

Moreover, incentivizing the system through a quality-based care plan would improve enrollment. Consumer satisfaction should take preeminence in the sector, especially during end-of-life treatment when costs are high, and clients want quality care. 

Who Are Third-party Payers

Third-party payers are the government and healthcare insurance companies. Their payment methods differ. The government pays through taxes deducted from current workers. The impact of these deductions and high government expenditure on future workers should come under review.

Notably, the plan could increase the cost of living as the taxes are deducted on future employees. On the contrary, insurance payers pay from premiums, which depends on the users’ financial capabilities.  The rates private payers’ charges determine the number of people enrolling.

Eligible users could fail to enroll due to unnecessary barriers, some of which come from service providers’ expensive services. The federal government remains the largest single-payer of healthcare costs.

Governments could pay as much as a quarter of the healthcare costs, such as the United States Government. Each payer affects the healthcare sector proportionate to their contribution as a third-party payer. The Federal government has the greatest impact on healthcare policies.

Their policy approach could hurt or improve patient care needs. Notably, they could be more beneficial than private payers. Families and friends have benefited from the services, especially people of color with pre-existing conditions and low-income status. 

The government has impacted numerous policies and the health sector. For instance, the government has developed and recommended businesses to adopt payment tests it has developed.  Medicare policy makes it possible for care providers to receive reimbursement for services.

The Affordable Care Act (ACA) has become a model for the private sector to model its system. Other impacts include the establishment of care standards, advocate for innovation adoption, and facilitated insurance mergers. 

Third-party payers from the Private sector play a fundamental role, and the government should not overrule their contributions. Notably, governments should use the private sector to enhance optimum resource use, healthcare sustainability, and availability of options.

Monopolizing the sector will have detrimental effects on policy formulations and care options. Notably, the private sector pays based on premiums, and clients could use its services to obtain a wide range of care. On the contrary, government payments are fixed by policies, limiting the care recipient’s age, condition, and status. 

Moreover, the health sector encounters several limitations that could cause market failures. Having multiple players creates competition and lowers the risk of a market failure.  Besides, this structure encourages government lobbying by private sectors to ensure policies are current and focused on fairness and equity.

Additionally, OECD countries integrate the private sector in the healthcare improvement plans through price schedules to regulate healthcare costs. Others purchase services from private sectors, thereby promoting and ensuring their existence. Further, the government offers a benchmark for private sectors to learn and improve care access. 

The health sector has experienced a decline in health care quality as costs rose from third party payers’ contributions. Approximately 31-34% of government expenditure on healthcare is wasted. The wastes result from high costs and administrative budgets.

Notably, healthcare professionals only contribute 39% of the wastes. Their waste is low, indicating that administration and high healthcare costs limit patient access to quality care. Importantly, the policies have not achieved desired outcomes in some matrices. For instance, the number of beds has declined while the number of employees has grown. 

The limitations of the third-party payers create a logistical dilemma. There is no need for the government to continue payment if there are fewer patients receiving care. Notably, the growing number of employees and declining number of beds indicates that institutions spend more on managing the human resource than obtaining resources to provide care.

Nevertheless, human resources are critical assets in delivering health care. Nevertheless, they should balance the number of employees and beds. Besides, their focus should be on nurses offering direct care to patients as their critical asset. The sector must determine whether to abolish the third payer option or retain the system and improve its payment methods.

Eliminating the third party payment system would cause a rise in care costs as patients will have to pay for previously reimbursed services.  The existing system fails to manage deductibles that have no impact on cost management.

The government could adopt strategies like a voucher system (the patient pays directly to the service provider) and the tax preference strategy to equalize payment obligation between payers and the government. Such approaches require monitoring developments in the health system, and eliminating the third payer system will cause disruption in the healthcare sector and potential monopoly by a few players.

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