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date: 26 April 2017

Abstract and Keywords

This chapter examines the sociopolitical aspects and the mechanisms of payment for healthcare in the United States. It begins with a historical background on the fragmented structure of insurance and payment, using Medicare as an example. It then describes the two most important prospective payment systems used by Medicare, one for inpatient care and the other for physician services, and argues that both systems are responsible for the continued increase in expenditures because they are not nearly as prospective as designed. The chapter also discusses the technical aspects of the two systems and the rising expenditures within the overall social and political context. Finally, it explains how payment is tied to disaggregation at three levels—payer, unit of payment, entity paid—and contends that the mechanisms it uses account for the uncontrolled increase in healthcare expenditures.

Keywords: payment, healthcare, United States, insurance, Medicare, inpatient care, physician services, healthcare expenditures, payer, unit of payment

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