Sources of Income for Healthcare Finance

The health care industry faces a number of dire financial challenges. First, the retirement of the Baby Boomer generation, according to CNBC, "[is] making unsustainable demands on federal entitlement programs -- Medicare and Medicaid." Second, health care costs continue to rise as the industry makes medical and technological advances. Third, the rise in the average lifespan over the past industry has placed a greater burden on the health care industry in general. Meeting these fiscal liabilities will require cutting costs, increasing the total revenue of the industry, and diversifying its sources of income.

Taxpayers

• The largest pool of financial resources available for health care finance is that owned by the taxpayers at-large. Taxpayers fund America's two largest public health programs, Medicare and Medicaid, and keeping those programs fiscally solvent will likely depend on a mix of cutting costs in the future, decreasing the benefits of those programs, and almost certainly, raising taxes to account for the associated costs. According to the Congressional Budget Office, if policy does not substantially change those programs, then "total spending for Medicare is projected to increase to 8 percent of GDP by 2035 and to 15 percent by 2080. Total spending for Medicaid is projected to increase to 5 percent of GDP by 2035 and to 7 percent by 2080."

Private Spenders

• Since America does not have a public, single-payer health care system like Canada or Western Europe, the second-most substantial source of income for health care finance is private spenders. Private spenders in the U.S. purchase insurance and other non-insured health care consumables such as extra medicines, body scans, and visits to specialists and fitness consultants. According to health care and insurance scholar Jacob Hacker, America spends more than other developed countries on health care despite receiving care that is of less quality. A major cause of the disparity, according to Hacker, is that private spenders raise the overall cost of spending by incentivizing doctors paid by the public trust to increase their costs to private sector levels.

Patients with Chronic Illnesses

• The existence of chronic diseases that require constant treatment like arthritis, cancer, diabetes, and the like also creates a constant stream of funding for health care finance. According to the Kaiser Foundation, "it is estimated that health care costs for chronic disease treatment account for over 75 percent of national health expenditures." The increase in the average lifespan and advances in medicine and medical technologies have made chronic diseases treatable over the long-term, creating an entire demographic of the population that contributes that vast majority of total income to health care finance.