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Health care Delivery System Analysis Related to COVID-19

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Health care Delivery System Analysis Related to COVID-19

The economic support mechanism of the Roemer model in healthcare delivery systems

points out critical economic outcomes in the healthcare system during the COVID-19 period.

The economic support mechanism selected for this analysis identifies the rate of healthcare costs,

reimbursements from insurance companies, healthcare revenues, and government grants as key

economic elements that impacted healthcare delivery systems in the U.S. during the COVID-19

period.

Due to COVID-19, hospitals received high acuity inpatients, which prompted longer

lengths of stay in the hospital than in pre-pandemic 2019. Even though such cases meant high

revenues for hospitals, the higher cost of care offset the gains as patients with more severe

sicknesses extended their stay in hospitals. Since the pandemic kicked in, expenses for hospitals

started rising exponentially. Increasing costs for labor, personal protective equipment (PPE),

drugs, services, and critical medical supplies for treating acuity patients increased expenses

(Metzl, Maybank, & De Maio, 2020). Hospitals were overwhelmed by the increased number of

inpatients while the number of outpatients dropped drastically. Outpatients have lower expenses

and higher margins, but these statistics started falling after 2019. By mid-2020, hospitals

experienced a record drop by 60% of office-based visits leading to a cumulative loss of over

$323 billion (Metzl, Maybank, & De Maio, 2020). After the nationwide shutdown, it was

difficult for patients to visit hospitals for minor checkups, which lowered Healthcare revenues.

The economic support mechanism for healthcare includes the revenue generated from

households, businesses, and external funding. The impacts of COVID-19 on Healthcare

financing were detrimental, and most facilities were highly impacted. During the pandemic, it

became difficult for Healthcare providers to achieve sufficiency and sustainability in revenue
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collection inefficient and equitable design to offer basic healthcare packages and essential

services. In the first quarter of 2020, 20 million Americans were recorded as jobless

(Blumenthal, D., Fowler, Abrams, & Collins, 2020). A survey conducted by the Commonwealth

Fund showed that 40% of the Americans who lost their jobs had their insurance cover linked to

their jobs (Blumenthal, D., Fowler, Abrams, & Collins, 2020).

Due to such unexpected dilapidation of the economy, it was unpredictable and

catastrophic to optimize quality of care due to financial losses. Social insurance was also

destabilized as many employers closed their companies, which led to the discontinuation of

contributions made to insurance funds directed toward nonprofit organizations with public and

private ownership. This meant that there was underpayment for insurance reimbursements by

such insurance entities. Private insurance was also largely impacted by COVID-19 as millions of

employees lost their jobs. Individual purchases and regular subscriptions of private Healthcare

insurance dropped drastically, which means the rate of reimbursements for Healthcare providers

dropped as well. Even though the federal government cushioned Americans by giving grants, it

was not enough to cater for personal use and pay for insurance covers, especially for those who

had lost their jobs. With such massive change in insurance reimbursements, revenue streams for

Healthcare providers were destabilized.

Recommendations for overcoming the economic support mechanism challenges

witnessed during the COVID-19 pandemic are based on financial operations. The first

recommendation is to ensure financial protection. Under this point, the government should

ensure that no household has to utilize the larger portion of its domestic income on health. This

implies that the government must maximize prepayment for all insurable health risks. The other

recommendation is to establish the largest possible pooling of health risks in every given
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population, ensuring redistribution among individuals of high and low risks. After 2019, the

government should also promote equity in healthcare by enforcing prepayment mechanisms that

enable redistribution of costs from low to high-income earners. How the healthcare system

arranges and achieves the health financing functions is key to achieving the recommendations.

Healthcare providers and insurance companies need to practice risk pooling to help them

ensure collection and management of healthcare revenues can cover large and unpredictable risks

that all pool members can face. Insurance companies should embrace prepayment options to

enable equitable financing of risks across high and low-income earners of the pool. The two

methods of risk pooling and prepayment functions are key to creating cross-subsidized resources

between high and low risk and rich and poor citizens. Large pools are efficient in mitigating risks

and accurate in predicting average and total costs.

The future predictions for health care delivery systems call for massive improvements,

especially in the insurance policy. It is proposed that there should be an expanded coverage

whereby people will have multiple options to choose from. The government-financed single-

payer system could be the best option since the law will guard the rights of beneficiaries not to

lose their insurance coverage due to late payments over genuine justifications such as job loss

during national or global calamities such as the COVID-19 pandemic. If such change is

actualized, there might be a significant drop in employer-sponsored insurance in the future.

Another future prediction is that there could be a financing system that would cushion

essential services in case of market disruption. COVID-19 exposed some hospitals and health

professionals as highly vulnerable, and the failure of such essential healthcare providers could

leave the country highly exposed due to insufficient provision of critical healthcare services.
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References

Blumenthal, D., Fowler, E. J., Abrams, M., & Collins, S. R. (2020). Covid-19—implications for

the health care system.

Metzl, J. M., Maybank, A., & De Maio, F. (2020). Responding to the COVID-19 pandemic: the

need for a structurally competent health care system. Jama, 324(3), 231-232.