Third Party Payment in Healthcare

ThirdParty Payment in Healthcare


ThirdParty Payment in Healthcare

Healthcaresystems require robust financing strategies to enhance accessibilityand affordability of all. The government, employers, and householdshave invested heavily in health. Medical insurance programs likeMedicare and Medicaid are designed to pay for the health ofindividuals. Besides, there has been a growth of third-party programsthat pay for healthcare (Ra, 2015). Third party payments are healthinsurance policies purchased by small business owners for theiremployees. The third parties have had a significant impact on thehealthcare market. This paper discusses how third party paymentsdistort the healthcare market.

Thirdparty payments reduce the financial barriers for some populationsegments. However, they increase the overall cost of healthcare inthe country (Nickitas, Middaugh, &amp Aries, 2010). Third partypayment makes providers and consumers of healthcare less sensitive toprice increases the demand. As a result, patients tend to overusemedical resources since they seem to be free to them. Medicalequipment producers create expensive equipment with marginal benefitsbecause the third parties guarantee a market (Roy, 2010). Also,physicians and healthcare providers increase the cost of providingtheir services. As a result, the overall cost of healthcare riseswithout the concurrent increase in quality.

However,wealthy countries insist on using third party intermediaries onpurchasing healthcare because they are useful in distributinghealthcare insurance to the working population (Roy, 2010). They actas intermediaries between the consumers and providers of healthcare,thus facilitate a cashless service in hospitals. Third party payersoffer advice, information and engage in negotiations on the sale ofinsurance to the population. They promote accessibility through thepooling of risks (Nickitas, Middaugh, &amp Aries, 2010). The thirdparty payers can comfortably handle the increased demand forhealthcare.

Eldercitizens have a separate payment program because of their greaterfinancial vulnerability. Most of the elderly are retired makinghealth care financing by third parties such as employers impossible(Mataconis, 2011). Aging also predisposes someone to various uniquelong-term conditions that require specialized care and follow up.Such conditions are expensive to manage for the aged population owingto their low income. As a result, a separate payment program isdeveloped to cater to the needs of the elderly.

Inconclusion, third party payments have distorted the healthcaresystem. They have increased the demand for health care servicesleading to increased costs. The increased cost is not concurrent withquality due to price insensitivity. However, wealthy countries stillprefer third party intermediaries to distribute insurance programs.The elderly, on the other, hand need a unique payment method due totheir low income.


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Nickitas,D., Middaugh, D. &amp Aries, N. (2010).&nbspPolicyand politics for nurses and other health professionals: advocacy andaction.Burlington, Massachusetts: Jones &amp Bartlett Learning.

RA,Z. (2015). Consequencesof increased third-party payments for health care services. – PubMed- 17 November 2015, from

Roy,A. (2010). HealthCare and the Profit Motive &gt Publications &gt National 17 November 2015, from