Chapter 6 Terms & Questions (p217-232, 247-254, 259-263)

What is a third party? What are the other two parties?

-The third-party payer is usually the insurance provider such as MCO 's, Blue Cross/Blue Shield, the government. -The other two parties are the patient and the provider.

Discuss the trends over time in utilization costs (also called cost sharing) in private insurance.

Deductibles 2011-2016: · average annual deductible rose by ~50% ($991 to $1,478) for individual plans. · Lowest deductible for PPOs rose by 52% ($1,028 by 2016) for individual plans and 41% ($2,147 by 2016) for family plans. Copays/Coinsurance: not required for primary care visits by only 7% of employer-sponsored plans in 2016. · Average copayment was $24 for primary care and $38 for specialty care office visits.

charge

Is a fee set by the provider which is akin to price in general commerce.

case mix

Is an aggregate of the severity of conditions requiring clinical intervention. These categories are usually mutually exclusive and differentiate patients according to the extent of resource use

rate

It's a price set by a third-party payer.

The vast majority of health insurance takes the form of __________.

Managed Care Organizations

Describe the economic theory that describes the relationship between demand for healthcare and health insurance.

Moral hazard-consumer behavior that leads to a higher utilization of healthcare services when the services are covered by insurance.

Relative value units

Based on the time, skill, and intensity (physician work) It takes to provide a service. They reflect resource inputs such as time, time effort, expertise to deliver a service.

medical loss ratio

the percentage of premium revenue spent on medical expenses

What is the central role for health services financing in the United States?

Pay health insurance premiums

Insurance

The mechanism for protection against risk

What is the primary reason that businesses may not offer health insurance to their employees

Cost

Premium

The amount charged by the insurer to ensure against specific risks. Premiums are usually paid once a month. This is the cost to have that specific plan.

Outlier

cases that involve extremely long hospital stays or are extremely expensive

fee schedule

index of charges listing individual fees for each type of service

Name and describe three different methods that have been used to determine premiums.

-Experience rating: based on the groups out of medical claims experience. Under this method premiums differ from group to group. For example, people working in various industries are exposed to various levels and types of hazards. -Community rating: spread the risk among members of a larger population. Premiums are based on the utilization experience of the entire population covered by the same type of health insurance. Everyone in that group has the same rating. -adjusted community rating: is the middle of the road approach that overcomes the main drawbacks of experience reading in pure community rating. Price differences take into account demographic factors such as age, gender, geography, family composition while ignoring other risks.

Discuss the trends in private health insurance in general and in employment-based health insurance specifically.

-Private health insurance overall: -private health insurance has steadily been declining for several years -75% in 2000 to 61.7% in 2010 Employer based health insurance: -Almost 93% of all employers in the US employ fewer than 50 FTE -Mandate called for employers to provide health insurance to 50+ employees -Only 1.6% of employers had 200+ FTE -Premiums remain too high despite coverage offered by employers -The price of insurance is rising faster than increases in wages

How are some states protecting the viability of their state exchange/marketplace plans now that the federal individual mandate is no longer in effect? Which states have or will be implementing these protections? - Carley Some states have put mandates in place for

-Some states have put mandates in place for health insurance coverage, and will put penalties on tax returns if the person is not insured (California, Washington DC, Massachusetts, New Jersey, Rhode Island, Vermont)

What is fee for service?

-This is the oldest method of reimbursement. -It is based on the assumption of health care is provided in a set of identifiable an individual distinct units of services such as exam x-rays labs etc. -For surgery such individual services may include admission cakes, numerous medical supplies, surgeons fees. -Each of the services is separately itemized on one bill in there can be more than one bill.

How do short-term health insurance plans compare to ACA-compliant plans in terms of premiums, coverage, and rules/regulations?

-Typically have lower premiums than ACA -Excludes people with preexisting conditions -Cover healthier people which leads to lower claim costs which means lower premiums -Offer very limited benefits (ACA required to cover prescription drugs, maternity care, mental health, substance abuse while short terms are not) -ACA has caps on out of pockets while short terms do not -ACA prohibits higher premium charges based on gender, short term does not -Short term plans are not required to have an 80% medical loss ratio

In what ways is the purchase of private insurance different from that of many other purchases? Why do these differences make it challenging to consumers and what are the consequences to consumers?

-can be very expensive when compared to other purchases. -consumers don't know in advance when they will buy insurance, what services they might need, or how much care will cost (unpredictable expenditure) -this can be challenging because it can be a costly investment that you may not even need. Some of the consequences may be but a large portion of your paycheck goes towards protecting yourself from something that may not even happen but the consequences of not having it could bankrupt you.

What are the two main features of managed care?

-integration of financing, insurance, delivery and payment functions within one organizational setting. -Formal control over utilization

Give me the choice between a private group insurance plan in a private individual insurance plan that covers the exact same services which is someone most likely to choose and why?

-more likely to choose the private group insurance plan because the risk of spread across the room wow private individual insurance takes into account risk that is indicated by an individual's health status and demographic.

How do most MCOs Deliver care?

-through efficient management of services needed by the members and negotiation of prices or payment with providers -ideally MCO's would operate their own hospitals with outpatient clinics -Some large MCO's employee there on physicians -Most MCO's arrange the delivery of medical services through contracts with physicians, clinics and hospitals that operate independently.

What spurred/encouraged the movement towards self-insurance by large employers (both in general and specifically)? What about the ACA might make these plans more appealing to employers than employee plans obtained through an insurance company?

.-Self-insured employers are exempt from a premium tax that insurance companies have to pay -The Employee Retirement Income Security Act (ERISA) exempts self-insured plans from certain mandatory benefits that regular insurance plans are required to provide in many states -Self-insured plans also avoid other types of state insurance regulations -Remained immune from changed under ACA

What was the impact of the ACA on preventive care utilization or other key utilization metrics in young adults?

ACA did not increase the preventive care utilization in young adults even if it increased the proportion with insurance. This is because they are on average more healthy

Why are premiums for group insurance generally lower than premiums in the individual insurance market?

Because the risk is spread out among the many insured individuals.

What are the benefits and the drawbacks of HDHPs? Describe the debate around these plans.

Benefits: · -Can reduce unnecessary services but also necessary ones -Made preventative services free to encourage use -Decreases healthcare spending Drawbacks: -Not great for low income -not good for people with chronic diseases

When a consumer purchase as a private insurance plan, who might be covered?

Covered individuals can include just the consumer (self-only coverage), the consumer and spouse(self plus one) or the consumer and the family (self plus dependents).

What is a self-insured plan? Are they common or uncommon in the realm of private coverage? For what reasons would an employer choose to self-insure rather than obtaining insurance for employees through an insurance company?

Definition: In a self-insured plan, the employer acts as its own insurer instead of obtaining insurance through an insurance company -In 2016, 61% of private and public organizations were enrolled in self-insured plans -Reasons for employer's choosing self-insurance rather than through a company: -Gives employers a greater degree of control -Costs are contained through a slower rise in premiums during periods of rapid inflation

consumer directed health plans

Hydro for health plans that include a savings option to pay for routine healthcare expenses.

Which of these main provisions of the ACA disregards insurance underwriting principles? Given what you learned about rate-setting and risk pools in prior weeks, what are the potential consequences of this provision?

Illegal for higher charge of premium/no coverage for those with preexisting conditions -Leads to higher premiums and the cost being subsidized by the healthier individuals (which leads to the cost of insurance becoming more unaffordable for those individuals)

What is a third-party payer?

Insurance companies, MCO 's, Blue Cross/Blue Shield in the government are referred to as third-party payers with the other two parties being a patient and the provider.

Third party payers

Insurance companies, MCO's, Blue Cross Blue Shield, and the government are referred to as third party players.

What is one of the biggest disadvantages to consumers when it comes to purchasing insurance through an employer?

Insurance purchased through an employer does not have "portability". "Portability" means that consumers can stick with the same insurer, the same benefits, and the same coverage even if they move and change jobs. Due to insurance being limited to certain geographic areas, consumers have to purchase new insurance when they change jobs or move.

Medigap

Private insurance purchased only by those in rolled in the original Medicare program, a program that has high out-of-pocket costs. Medigap covers all or a portion of Medicare deductible's in copayment/coinsurance.

Describe the issues around employment/job changes and insurance, and discuss the various existing policies which have addressed these issues and how they were addressed.

Issues: -No coverage between leaving one job and acquiring insurance at another - No coverage if retiring early or jobless -Waiting period of 90 days at new job · COBRA: -Consolidated Omnibus Budget Reconciliation Act -Allows workers to keep group coverage for 18 months after leaving a job -Must pay 102% of group rate to continue benefits - Not feasible due to no employer subsidy --> raises cost of premiums · HIPAA -Health Insurance Portability and Accountability Act -Allows for continued coverage past COBRA provisions -Up to 29 months if the insured/family member is determined to be disabled by SSA during the first 60 days of COBRA coverage -Up to 36 months to the spouse and dependents if former employee dies, enrolls in Medicare, or gets divorced/legally separated

9. According to Shi & Singh, why is health insurance today an anomaly to the fundamental concept behind insurance?

It is an anomoly because it started out in the 1950s as designed to cover catostrophic situations that could lead to financial hardship. Since, health plans have become comprehensive in coverage, completely changing the purpose if having health insurance and changing the fundamental concept behind health insurance

Adverse Selection

Occurs when a high risk individuals, people who are likely to use more healthcare services than others because of their poor health status, enroll in health insurance plans in greater numbers compared to the people who are healthy.

Discuss the availability of employer-sponsored insurance for people employed at small companies versus large companies. Why does this availability differ? Also discuss trends in the percentage of covered workers over time and by employer size. What structural changes within American industry might be at play?

Small Companies: -comprise about 93% of employers -Does not fall under ACA mandate to offer insurance to FT workers -Coverage was fairly low in 2005 -Coverage increased in 2010, but decreased in 2015 and has continued to Large Companies: -1.6% of employers had 200+ workers -Falls under ACA mandate -Offering coverage has remained mostly stable with a slight decline in 2015 Structural Changes: -Large businesses moving manufacturing operation out of US -Employment has shifted to lower paying jobs in service industries

Plan

Specifies, among other details, information pertaining to costs, coverage services and ways to obtain healthcare when needed.

Reinsurance

Stop-loss coverage that self-insured employers purchase to protect themselves against any potential risk of high losses.

In what ways does tax policy provide incentives for employees to obtain health insurance as a benefit from employers? Does this benefit all employees equally and if not which employees benefit more or less?

Tax policies make the contribution obtain from the employers towards health coverage of higher value then contribution toward income because the health coverage is not taxed but the income would be. This does not benefit all employees equally because low income employees are still paying higher percentages of their income to insurers in terms of cost sharing, compared to the high income employees who are paying lower percentages. This is because employer-based coverage does not provide subsidies to lower income employees. Basically lower income employees are more affected because they're paying the same amount as higher paid employees.

Deductible

The amount the insured must first pay each year before any benefits are payable by the insurance plan.

What does the RAND health insurance experiment tell us about the beneficial in detrimental effects of cost sharing? Why is it important to consider that this experiment was conducted in the 1970s? What does research tell us about cost sharing and education interventions?

The beneficial side of this experiment showed that -cost sharing reduce the spending of healthcare services, -the participated made fewer medical visits and were admitted less frequently to hospitals -costs of care we're not affected. It had no detrimental effects on participants health except for the sickest and poorest. -certain illnesses/conditions worsened for the poorest and sickest patients which suggests that costs sharing should be minimal or nonexistent for the poor or those with chronic illnesses. -in the 1970s, there was a national debate about whether the benefits of free, universal healthcare would justify the costs. -The experiment had a great impact. Its findings were published in many reports and articles which led to an increase in cost sharing insurance plans and it's the largest evidence-based health policy study in the US.

What is the difference between a copayment and coinsurance?

The copayment is a fee collected at the time of service. Coinsurance is the percentage of the health care costs the patient is responsible for after the deductible has been met.

Who pays for the cost of premiums in different types of private health insurance plans?

The employees/enrollee and the employer (self insurance)

Self Insurance Plans

The employer ask his own insurer instead of obtaining insurance through an insurance company. People bear the rescue in assume the risk by budgeting a certain amount each month to pay for medical claims. Often times, reinsurance is purchased to protect against any potential risk of High losses.

Capitation

The provider is paid set monthly fee per in Raleigh, which is sometimes referred to as a per member per month rate. This removes the incentive for providers to increase the volume of services to generate additional revenues.

Cost Plus Reimbursement

The traditional method used by Medicare and Medicaid to establish Per diem rates. Based on the total cost incurred an operating the institution. Formulas are developed designating certain costs as non-allowable in place in costs ceilings. The formulas are used to calculate per diem reimbursement rates.

Salary combined with productivity

When a physician is paid a yearly salary but get productivity bonuses for quality.

What is insurance overlap?

When the party has multiple insurance policies with the same coverage for the same risk. Example, when someone covered by Medicare that qualifies for Medicaid or has private insurance to pay for expenses not covered by Medicare.

categorical programs

public health care programs designed to benefit only a certain category of people

preexisting condition

An illness or disorder of a beneficiary that existed before the effective date of insurance coverage.

Insurer

The insurance agency that assumes risk

Risk rating

This is the actual assessment of risk in which premiums are determined.

Third Party Administrator (TPA)

An organization that processes in pays claims typically for self-insured employers

Which of these main provisions of the ACA was discontinued in January 2019 as a result of the tax bill passed in December 2017? What are the potential consequences of this policy change -- for individuals, for risk pools, and on a health system level?

- Individual mandate was done away with by the tax cut and jobs act in 2017 and put into effect in 2019 Could lead to: -Increased premium costs -State penalties -Denial of coverage for pre existing conditions -GOP now wants to get rid of the requirement for employer provided health insurance

When can people with employer-based health insurance and tame, Renu, or change health plans? Why are there limitations placed on when people can enter plans?

- they can renew or change health insurance policies during the open season of enrollment; outside of the open season they cannot change their plan unless they experience a qualifying life event (marriage, moving to a new state, divorce, childbirth) -Limitations: Limitations and went to enroll reduce the occurrence of adverse selection. For example, if healthy people decide to wait until they have an illness to sign up that would mean only sick people are signing up for plans. To reduce that they restrict the times of when you can sign up.

How many people gained health insurance under the various provisions of the ACA (based on analyses published in 2016)? What percentage of these people gained private health insurance, and what types of plans were these?

-20 million gained health insurance (7.3% of nonelderly population) -44% Medicaid (public) -23% exchange based (private) -8.8% other privately purchased insurance (private)

On average for persons employed in private (non-governmental) jobs, what percentage of total compensation is provided in health insurance benefits? How has this trend changed over time, and how has that varied by employer size?

-7.6%, peaked at 7.9% in March of 2014. -6% if <50workers -7% if 50-99 workers -8.5% if 100-499 workers -9% if >500 workers

What is a health insurance premium? What are the components that make up the cost of the premium? Who is responsible for paying insurance premiums? What are the three general ways health insurance companies use premiums?

-A Health insurance premium is the monthly amount charged by the insurer to the insuree against specified risk. -The components include administrative expenses associated with running the plan, expected costs of claims for health care use in a year, And profit margin. -The individual enrolled in a program pays the premium. -premiums are used to make payments for medical claims, administrative costs, profit margin

Explain the mechanism that providers may use to make up for revenue shortfalls when the amount of reimbursement from some payers becomes in adequate or when uncompensated services are rendered.

-Cost Shifting: this is when the providers charge extra to payers who do not exercise strict cost controls. -example: In less competitive markets, hospitals who experience shortfalls due to Medicare increase the prices for private insurers

Discuss different types of cost sharing mechanisms. What is the rationale behind cost sharing?

-Deductible: The amount the insured must first pay each year before any benefits are payable by at the plan. We have a $2500 deductible. -copayment: A flat amount and the insured must pay each tile health services are received. Example, $20 must be paid at the GPs office. -coinsurance: Set proportion of medical cost of the insured must pay out-of-pocket. Example, the insurer pays 80% of costs in the insured pays the remaining 20%. -The rationale behind cost sharing is to control utilization of health services. It limits the idea of moral hazard.

Discuss the underwriting issues associated with high-risk individuals and the ACA provisions related to these issues.

-For underwriting purposes, the risk indicated by each individual's health status and demographics are taken into account and consequently high-risk individuals are unable to obtain insurance -This was eliminated by the ACA which required health insurers to cover anyone regardless of pre-existing medical conditions

What new way of purchasing private health insurance was created by the ACA, and how did theACA segment the individual health insurance market?

-Government-established exchanges (marketplaces). -Insurance was segmented into two groups: 1. Those who purchased insurance through the government-established exchanges and qualified for premium subsidies. 2. Those who did not qualify for premium subsidies and purchased insurance outside the exchanges

Are HDHPs becoming more or less common? Approximately what percent of employees are enrolled in HDHPs, and what percent of enrollees in exchange/marketplace plans are enrolled in HDHPs?

-More common -Approximately 29% of all workers are covered by HDHP's.

What are some examples of groups of people that tend to rely on individual private health insurance, and how common is individual private health insurance in the US?

-In 2015 7% of the population had nongroup (individual) private insurance -Examples include: Family farmers, Early retirees, Self-employed persons, People who are employed by a business that does not offer health insurance

How does the (actual) affordability of healthcare vary by income among people with employer coverage? Legally, when/by what standard is ESI coverage considered affordable, and when/by what standard is it considered comprehensive? What is the "family glitch?"

-Low income pay 14% of income -200-400% above poverty pay 8% 400%+ pay 5% -Coverage is considered affordable if the contribution is less than 9.86% of family income - Family glitch: when employers choose a contribution that would be affordable at that income for a single person, but not affordable for a family

Who can and who cannot purchase a Medigap plan, and what do these plans cover?

-Medigap plans can be purchased only by those enrolled in the original Medicare program. -It is illegal for an insurance company to sell a Medigap plan to someone who is covered by Medicaid or Medicare Advantage. -Medigap plans cover all or a portion of Medicare deductibles and copayments/coinsurance.

Compare and contrast the different types of private insurance.

1. Group insurance: anticipate that a substantial number of people in the group will purchase insurance through its sponsor. -Risk is spread out among many insured which means lower costs -Not subject to income tax -Designed to cover catastrophic situations. 2. Self insurance: employer acts as its own ensure instead of obtaining insurance through an insurance company -usually a large business, this employer assumes the risk by budgeting a certain amount to pay medical claims from employees -employers protect themselves from the risk of high losses through reinsurance -avoid insurance regulations and was not affected by the ACA. 3. Individual private health insurance -about 7% of pop -usually this is the people who are not offered insurance through work -tailored to individuals risk but since the ACA was passed denial because of pre-existing conditions is prohibited 4. Managed Care Plans -hMOs and PPOs -used to be less expensive than traditional insurance but now these are the main types of insurance plans. -The vast majority of Americans are covered by MCPs 5. High deductible health plans and savings options -high adoptable, but lower premiums. -up from 4% to 29% in employment based plans -allows for individual to have more control over health funds -Two Types (HRA, HSA) HRA: established and funded by employer HSA: Established and funded by individual 6. Short term stop-gap coverage -usually for people in between jobs so they remain covered -COBRA: allowed workers to keep group coverage for 18 months -HIPAA: extended coverage of up to 29 months is available if the insured or a family member is determined by SSA to be disabled. Or it extends to 36 months to the spouse independent children if a former employee dies, and roles in Medicare, divorced 7. Medigap: can you purchase buy those enrolled in Medicare but not covered by Medicaid. Covers Medicare deductibles and copayments/coinsurance.

What are the four fundamental principles to insurance?

1. Risk is unpredictable for the individual insured 2. Risk can be predicted with a reasonable degree of accuracy for a large group or population. 3.Insurance provides a mechanism for transferring or shifting risk from the individual to the group through the pooling of resources. 4. All members of the insured group share actual losses on some equitable basis.

What are the two main facets of the payment function?

1. The determination of the methods and amounts of reimbursement for the delivery of services. 2.The actual payment after services have been rendered.

Describe each of the six main provisions of the ACA that are important in the context of private coverage and costs.

1. Young adults up to 26 on parents' plan -Lead to an increase in premiums (which consequently led to an increase in cost sharing) -No significant increase in utilization of preventive care (understandably so because this group is considered generally healthy) 2. Illegal to charge more/refuse coverage for individuals with preexisting conditions -Led to an increase in premiums (resulted in healthy people subsidized the cost for unhealthy) 3. Health plans had to include essential health benefits -Had to include preventive and wellness care -Full coverage of contraceptive (no cost sharing) -Coverage of abortion was varied and complex due to states' indivudal jurisidiction 4. Fee imposed on insurers for privilege of selling plans through the exchange 5. Required minimum medical loss ratio of 85% for large group insurance plans and 80% for individual/small group plans to pay medical claims -If plans did not meet this, they were required to give rebates to members but this rebate was insignificant in comparison to cost of premium (so negligible savings on consumer side) 6. Individual mandate .All legal residents had to have insurance or pay penalty - Penalty not severe enough so some individuals remained uninsured

What are the three main payment arrangements that MCOs have with providers? Define and explain the differences and compare with the fee for services. With each arrangement who bears the risk?

1.Capitation: refers to the payment of a fixed monthly fee per member to a healthcare provider. -Difference: all healthcare services are included in one site fee versus FFS which is not fixed -Risk: risk is on the provider not MCO versus FFS risk is on insurance company. 2. Discounted fees: modified form of fee for service. Provider can bill the MCO for each service separately but is paid according to a pre-negotiated fee schedule. -Difference: Provider bills and MCO for each service performed in this paid on a fee schedule his pre-negotiated this is the biggest difference from a FFS -Risk: Majority of risk is on the MCO bc bill could be higher than if services were bundled, Risk is only on the provider if the cost of care is greater than the payment. 3. Salaried: provider is an employee of the MCON gets paid fix salaries but at the end of the year any money left over is distributed among physicians in the form of bonuses. -Difference: difference from FFS is that physicians get paid more for quality of service and efficiency -Risk: risk shifts from the MCO to the physician versus FFS risk is on insurer.

Discuss the trends over time in worker contributions to premiums for employer-sponsored insurance over time, in total and by employer size (i.e., small versus large companies). How do these trends compare to inflation in general and workers' earnings?

2011-2016: -Employer premiums rose by 18.5% for individual plans and 20% for family plans -Employee share premiums rose by 22% for individual and 28% for family -Inflation rose by 6% Workers earnings grew 11% Percentage of covered workers by employee size: · 3-24 workers → 41% in 2005, 44% in 2010, 35 % in 2015, 36% in 2016. · 25-49 workers → 55% in 2005, 59% in 2010, 49% in 2015, 47% in 2016. · ≥200 workers → 66% in 2005, 63% in 2010, 63% in 2015, 61% in 2016.

claim

A demand for payment of covered medical expenses sent to an insurance company

prospective reimbursement

A method of payment in which certain preestablished criteria are used to determine in advance the amount of reimbursement. Based on DRGs and APC. Each DRG groups together principal diagnosis that are expected to require similar amounts of hospital resources. DRG base rates are adjusted for geographic locations.

Medicare Physician Fee Schedule (MPFS)

A price list for physician services, based on which individual payments are made when physicians file their claims

retrospective reimbursement

A reimbursement methodology in which rates are set on the basis of costs already incurred.

Underwriting

A systematic technique for evaluating, selecting/rejecting, classifying, and reading risks. For example, medical underwriting takes into account the health status of people to be insured.

Insured/beneficiary

Anyone who is covered by health insurance

balance bill

Asking the patients to pay the difference between the actual charges in the payments received from third-party payers

Group Insurance

Can be obtained through an employer, union, professional organization. Group insurance anticipates that a substantial number of people in the group will purchase insurance through sponsor. A dollar of health insurance received from an employer is worth more then wages because they are not subject to income tax.

Define in contrast a charge versus a rate.

Charges are set by the providers while rates are set by the third-party payers.

High deductible health plans

Combine a savings option with a health insurance plan that carries a high deductible. Premiums are generally lower than other health plans. But the deductibles are high.

Moral Hazard

Consumer behavior that leads to a higher utilization of healthcare services and services are covered by insurance

Explain consumers and insurers approach to the management of insurance risk from both perspectives. What is the common goal?

Consumer: Insurance is purchased to protect them from financial loss is due to future use of medical care. Insurer: They want to have a profitable business, so they use different message to manage risk of giving coverage to consumers. The common goal is to reduce risk in an uncertain future.

What does the formula E= P x Q mean? Using this formula, how can rising health care costs be controlled.

Formula reads Healthcare expenditures = Price x Utilization (quantity). This means direct factors that affect P and Q influence E or the total expenditures of healthcare. E is influenced by: -financing for healthcare -cost of health insurance -Changes in reimbursements -reduce utilization of expensive technology P is influenced by: -supply or availability of health services Q is influenced by: -insurance and supply of health services together determine access in ultimately utilization of services. Other influencers: -Insurance coverage as insurance companies along with the government try to exert limits on utilization by specifying which services are not covered. -changes in the sizes and demographic composition of the population.

Risk

Refers to the possibility of substantial financial loss from event of which the probability of occurrence is relatively small.

play or pay mandate

Required employers with 50 or more full-time workers, to either provide their employees with health insurance "play" Or pay a penalty for not doing so.

Give at least two examples of how healthcare financing exerts influence on supply side factors. In what ways are healthcare financing and cost control intertwined?

Restricting financing for health insurance eventually controls total healthcare expenses. Conversely extension of health insurance to uninsured increases total health expenses. 1. Reducing reimbursement for providers has a direct influence on expenditures (E) as well as an indirect influence through shrinkage in supply. 2. Reducing the supply and diffusion of technology results in direct savings. Limiting the number of specialists has an indirect savings as well as spending less on research development.

What is a risk pool and how does it work.

Risk pool: A group of individuals whose medical costs are combined to calculate premiums. -pooling risk together allows the higher costs of the less healthy to be offset by the relatively low costs of the healthy. The larger the risk pool, the more predictable and stable to premiums can be.

What is risk rating? Compare and contrast the three different risk rating methods. Which method is used by the ACA.

Risk rating how premiums are determined, the actuarial assessment of risk. Experience rating: based on a groups own medical claims experience. Premiums vary from group to group, high-risk individuals pay higher premiums due to the expectation they will utilize medical services at a higher rate. Community rating: This spreads the risk among members of a population by having everyone pay the same rate. The insurer ignores any differences in expected costs. Low risk individuals end up subsidizing the insurance cost for high-risk individuals in this ultimately makes insurance less affordable for the low risk individuals. Adjusted community rating: Price differences take into account demographic factors such as age, gender, geography, family composition. -The ACA uses adjusted community rating.

cost shifting

Shifting of costs from one entity to another as a way of making up losses in one area by charging more in other areas. For example, when care is provided to the uninsured, the provider compensates for the costs for those services by charging more to the insured.

Preferred provider approach

Similar to a fee for service but the main distinction is that there are preferred providers which use negotiated discounts off the charges to establish fee schedules

What is the Omnibus Budget Reconciliation Act?

This allows workers to keep their employers group coverage for 18 months after leaving a job. Individuals are required to pay 102% of the group rate but because the employer subsidy is no longer available the high cost of premium prevents money from keeping their health insurance during employment gaps.

Rank the types of insurance and uninsurance in terms of approximate percentage of population covered.

Total Private- 56% (employer= 49% and individual private= 7%) Total public= 36% (Medicaid= 20%, Medicare= 14% other public= 2%) Uninsured= 9%