Healthcare Ch. 2 Paying for Health Care

Medicare Part B Who is eligible for Medicare Part B? People who are eligible for Medicare Part A who elect to pay the Medicare Part B premium of $_____ per month.

$104.90 Also, some low-income persons can receive financial assistance with the premium. Higher-income beneficiaries (over $85,000 for individual, $170,000 for couple) have higher premiums related to income.

In 2013, Medicare and Medicaid expenditures totaled $_____ and $______ billion

$586 and $450 billion

Principal source of coverage / Percentage of population, 2013 Uninsured ---> 13% Individual private insurance ---> 7% Employment-based private insurance ---> 47% Government financing ---> 33%

*important to know*

Type of Payment / Percentage of National Health Expenditures, 2013 Out-of-pocket payment ---> 12% Individual private insurance ---> 3% Employment-based private insurance ---> 30% Government financing ---> 47%

*important to know*

Medicaid (continued): From 1965 through 2014, to be eligible for Medicaid you had to be... 1) 2) 3) 4) 5)

1) A young child 2) Parent 3) Pregnant 4) Elderly 5) Disabled Unfortunately, leaving out nonpregnant adults without dependent children.

Insurers can only vary premiums based on what four things? 1) 2) 3) 4)

1) Family size 2) Geographic location 3) Age 4) Smoking Status

Different methods of financing health care place different burdens on the various income levels of society. Payments are classified as either: 1) 2) 3)

1) Progressive 2) Regressive 3) Proportional

What were the 2 changes the Medicare Modernization Act (MMA) made? 1) 2)

1) The expansion of the role of private health plans (the Medicare Advantage program, Part C) 2) The establishment of a prescription drug benefit (Part D)

The four basic modes of paying for health care are: 1. 2. 3. 4.

1. Out-of-pocket payment 2. Individual private insurance 3. Employment-based group private insurance 4. Government financing

Medicare Part A: Who is eligible? (continued) A person who has paid into the Social Security system for ___ years and that person's spouse are eligible for Social Security.

10

What percentage of the population is uninsured?

13%

Medicaid (continued): Participating states must make all individuals with incomes up to ____% of the federal poverty level eligible for coverage, with no categorical eligibility criteria.

138%

Enrollment in group hospital insurance grew from 12 million in 1940 to ___ million in 1988

142 million

Government Financing (continued): But only with the _______ enactment of Medicare (for the elderly) and Medicaid (for the poor) did public insurance payments for privately operated health services become a major feature of health care in the United States.

1965

The Medicare Modernization Act (MMA) of 2003 made ____ major changes in the Medicare program.

2

The enactment of the Patient Protection and Affordable Care Act, commonly referred to as the Affordable Care Act, ACA, or "Obamacare," created major changes in the financing of health care in the United States was made in what year?

2010

Individual private insurance payments are what percentage of national health expenditures?

3%

Employment-based private insurance are what percentage of national health expenditures?

30%

What percentage of the population had government financing?

33%

Government financing are what percentage of national health expenditures?

47%

What percentage of the population had employment-based private insurance?

47%

The ACA made a change in employer-based health insurance, requiring employers with ____ or more full-time employees to offer coverage or pay a fee to the government; the fee is meant to discourage employers from dropping employee health insurance, which they might be tempted to do since their employees could buy individual insurance through the health insurance exchanges

50

Medicare Part A (continued): People under the age of ____ years who are totally and permanently _________ may enroll in Medicare Part A after they have been receiving Social Security disability benefits for ___ months.

65 Years Disabled 24 months

"Blue Cross insures the same three groups and needs the same $500 per member per month to cover health care plus administrative costs for these groups. Blue Cross sets its premiums by the principle of community rating. For a given health insurance policy, all subscribers in a community pay the same premium. The bank managers, truck drivers, and mine workers all pay $500 per month." This is an example of _________ rating?

Community Rating

What is "community rating"?

Community rating is a concept usually associated with health insurance, which requires health insurance providers to offer health insurance policies within a given territory at the same price to all persons without medical underwriting, regardless of their health status.

Medicare is for the....

Elderly

"Healthy Insurance Company insures three groups of people—a young healthy group of bank managers, an older healthy group of truck drivers, and an older group of coal miners with a high rate of chronic illness. Under experience rating, Healthy sets its premiums according to the experience of each group in using health services. Because the bank managers rarely use health care, each pays a premium of $300 per month. Because the truck drivers are older, their risk of illness is higher, and their premium is $500 per month. The miners, who have high rates of black lung disease, are charged a premium of $700 per month. The average premium income to Healthy is $500 per member per month." This is an example of ___________ rating.

Experience Rating

Commercial insurers such as Healthy Insurance Company could offer cheaper premiums to low-risk groups such as bank managers, who would naturally choose a Healthy commercial plan at $300 over a Blue Cross plan at $500.

Experience rating helped commercial insurers overtake the Blues in the private health insurance market. While in 1945 commercial insurers had only 10 million enrollees, compared with 19 million for the Blues, by 1955 the score was commercials 54 million and the Blues 51 million.

Medicare Part B (continued): How is it financed?

Financing is in part by general federal revenues (personal income and other federal taxes) and in part by Part B monthly premiums.

___________ is a program run by the states that is funded by federal and state taxes, which pays for the care of millions of low-income people

Medicaid

___________ _____ __ is a hospital insurance plan for the elderly financed largely through social security taxes from employers and employees.

Medicare Part A

___________ _____ __ insures the elderly for physician services and is paid for by federal taxes and monthly premiums from the beneficiaries.

Medicare Part B

___________ _____ __ enacted in 2003, offers prescription drug coverage and is paid for by federal taxes and monthly premiums from beneficiaries.

Medicare Part D

Out-of-Pocket Payments Example: Fred Farmer broke his leg in 1913. His son ran 4 miles to get the doctor, who came to the farm to splint the leg. Fred gave the doctor a couple of chickens to pay for the visit. His great-grandson, Ted, who is uninsured, broke his leg in 2013. He was driven to the emergency room, where the physician ordered an x-ray and called in an orthopedist who placed a cast on the leg. The cost was $2,800.

One hundred years ago, people like Fred Farmer paid physicians and other health care practitioners in cash or through barter. In the first half of the twentieth century, out-of-pocket cash payment was the most common method of payment. This is the simplest mode of financing—direct purchase by the consumer of goods and services

Medicaid is for the....

Poor

A ____________ tax is a type of tax that takes a larger percentage of income from taxpayers as their income rises.

Progressive

A _____________ tax is if the ratio of payment to income is the same for all income classes

Proportional

A ____________ tax, has higher-income taxpayers pay a smaller percentage of their income than lower-income taxpayers

Regressive

Medicare Part A (continued): How is it financed? Financing is through the _______ ________ system.

Social Security System

What is "experience rating"?

The experience rating approach uses an individual's or group's historic data as a proxy for future risk, and insurers adjust and set insurance premiums and plans accordingly.

In a major reform contained within the ACA, insurers are SEVERELY limited in using experience rating to set premiums. (True/False)?

True

Medicaid (continued): For the states not participating in the expansion, the provisions summarized for the 1965 to 2014 period still apply.

True

Medicaid (continued): Undocumented immigrants are not eligible for Medicaid (true or false)

True

To survive the competition from the commercial insurers, Blue Cross had no choice but to seek younger, healthier groups by abandoning community rating and reducing the premiums for those groups. (True/False) ?

True In this way, many Blue Cross and Blue Shield plans switched to experience rating. Without community rating, older and sicker groups became less and less able to afford health insurance.

Government Financing Example: In 1984 at age 74 Rose Riveter developed colon cancer. She was now covered by Medicare, which had been enacted in 1965. Even so, her Medicare premium, hospital deductible expenses, physician copayments, short nursing home stay, and uncovered prescriptions cost her $2,700 the year she became ill with cancer.

Two groups in the population received little or no benefit: the poor and the elderly. The poor were usually unemployed or employed in jobs without the fringe benefit of health insurance; they could not afford insurance premiums. The elderly, who needed health care the most and whose premiums had been partially subsidized by community rating, were hard hit by the trend toward experience rating.

Medicare Part A: Who is eligible?

Upon reaching the age of 65 years, people who are eligible for Social Security are automatically enrolled in Medicare Part A whether or not they are retired. People who are NOT eligible for Social Security can enroll in Medicare Part A by paying a MONTHLY premium.

Individual Private Insurance Example: In 2012, Bud Carpenter was self-employed. To pay the $500 monthly premium for his individual health insurance policy, he had to work extra jobs on weekends, and the $5,000 deductible meant he would still have to pay quite a bit of his family's medical costs out of pocket.

With private health insurance, a third party, the insurer is added to the patient and the health care provider, who are the two basic parties of the health care transaction. While the out-of-pocket mode of payment is limited to a single financial transaction, private insurance requires two transactions—a premium payment from the individual to an insurance plan (also called a health plan), and a payment from the insurance plan to the provider

In the early years, Blue Cross plans set insurance premiums by the principle of _________ rating

community

Medicaid (continued): From 2015 and on, Medicaid under the ACA varies widely between states participating in the Medicaid __________ and those not participating.

expansion

Whereas commercial insurers used ________ rating as a "weapon" to compete with the Blues

experience

Medicaid Medicaid is a _________ program administered by the states.

federal program

Medicare Part D: Was enacted in 2003, and offers ____________ _____ coverage and is paid for by federal taxes and monthly premiums.

prescription drug coverage

Medicaid (continued): States can be granted _______ by the federal government to make changes in which services they provide to Medicaid recipients and whether recipients are required to receive the services through managed care plans.

waivers

What percentage of the population has individual private insurance?

7%

Out-of-pocket payments are what percentage of national health expenditures?

12%