Public Policy and the U.S. Health Insurance Market: Direct and Indirect Provision of Insurance

In this paper I examine the twin challenges of providing coverage for the uninsured and addressing the issues of high and rising costs. I focus particularly on the role of government intervention in the marketplace both directly, through the provision of health insurance itself, and indirectly via the subsidization of private expenditures. My goal is to describe the basic structure of government involvement in private health insurance, as well as the Medicare and Medicaid programs, and to provide a guide to the issues surrounding these forms of coverage. Throughout the paper I pay particular attention to the role of public policy in affecting the prevalence of health insurance coverage and the cost of care. The following section describes the current health insurance system in the United States. It presents a number of statistics on insurance coverage and health care costs. The third section examines the private health insurance market and the government’s role in its development while the fourth section turns to a discussion of public programs. This study of public programs is divided into two parts focusing in turn on Medicare and Medicaid. I also briefly discuss the new State Children’s Health Insurance Program (SCHIP). A final section summarizes the current status of the health care system and highlights the challenges facing the nation.