US Health Care System Prelim #2 Review

What were two factors that indicate that the ACA was worth it? What were two factors that indicate that the ACA was NOT worth it?

(1) Access to health care and (2) insurance coverage both increased under the ACA. (1) Quality and (2) cost of health care did not really improve much under the ACA. Other things that did not improve were the self-reported health, provider capacity, positive health outcomes, state economy, etc.

Describe five main differences between Medicare and Medicaid.

(1) BENEFICIARIES: Medicare covers elderly, while Medicaid covers low-income families, disabled, and low-income elderly. (2) POPULARITY: Everyone is going to use Medicare one day; people do not want to have to use Medicaid. (3) GOVERNMENT FINANCING:Medicare is financed entirely by the federal government, while Medicaid costs are shared between state and federal governments. (4) WHERE THE MONEY COMES FROM: Medicare is primarily funded by a wealth transfer from the younger working class to the elderly, while Medicaid is primarily funded by general state and federal tax revenues. (5) PAYMENT RATES FOR PROVIDERS: Medicare has relatively high payment rates for physicians, so Medicaid patients are more likely to be turned away by physicians than Medicare patients.

What are four groups that are federally mandated to be covered by Medicaid?

(1) Children in low-income households (younger than 6 whose family income is less than 133% if federal poverty line (FPL) and between 6-19 whose family income is less than 100% of FPL). (2) Pregnant women whose family income is less than 133% if FPL. (3) Blind or disabled persons who have little to no income. (4) Low-income Medicare beneficiaries.

Which groups get the majority of Medicaid spending?

(1) Disabled and (2) elderly

What are five ways in which Medicare can be restructured to account for rising costs?

(1) Eligibility age could be increased to 67 from 65. (2) Increase Part B and D premiums so that they cover 35% of costs. (3) Raise the payroll tax by 1%. (4) Turn Medicare into a premium support program (make everyone get Part C and just have Medicare be the program that helps them pay the premiums). (5) Change cost sharing rules for Medicare and restrict Medigap.

What are the three parts of the "Iron Triangle" of health care?

(1) High quality (2) Broad access (3) Low cost

What are five mandated benefits of Medicaid?

(1) Hospital care, (2) outpatient care, (3) long-term nursing home care, (4) home care, (5) lab tests and other medical benefits.

Give five reasons why so many Americans are uninsured.

(1) It is optional to buy health insurance in America. There is no government-supported mandate, and there is no real penalty for not having it. (2) Some people don't earn enough for health insurance. (3) Medicaid does not cover all low-income Americans, and (4) low-income individuals who do not get employer sponsored health insurance are faced with high premiums in the individual market. (5) Many small employers don't even offer health insurance, and (6) with community-rated premiums, employer sponsored health insurance isn't even a good deal for some people.

Name five things that will probably happen if Medicare costs continue to rise at historic rates.

(1) Medicare benefits would have to be reduced or the elderly would have to pay higher premiums. (2) Medicare payroll taxes (for Part A) would have to increase or Part A spending would have to be cut by 18%. (3) General taxes will have to rise to cover Part B and D spending. (4) Federal government can cut non-health expenditures. (5) Federal government can issue more debt.

Rank the following in terms of how much they pay physicians ((1) pays the highest and (3) pays the lowest): Medicare, private insurers, Medicaid

(1) Private insurers (2) Medicare (3) Medicaid

What are two ways in which restrictive states limit the number of low income adults that are eligible for Medicaid?

(1) Some restrictive states decide that adults without children are not eligible, regardless of how poor they are. (2) Other restrictive states decide that adults are over eligible if their income is less than 50% of the federal poverty line.

What are two main differences between the health care system in the United States and the system in other high income countries?

(1) The United States government does not provide us all with health insurance (i.e. collecting tax money to pay for insurance). (2) The United States government does not make it mandatory to buy insurance (the ACA had an incomplete "mandate" that made people pay a fine if they didn't choose to get insurance, but this fine was later rescinded anyway).

What are the four components of Medicare?

(A) inpatient hospital care, primarily (B) physician and outpatient care (C) managed care plans (Medicare Advantage) (D) prescription drug health plans

When is the trust fund for Part A of Medicare expected to run out?

2024

How are Parts B and D of Medicare financed?

72% of the cost of Parts B and D of Medicare are financed with general tax revenues. Elderly pay premiums for the remaining portions. Parts B and D are subsidized, pay-as-you-go systems.

How is Medicaid financed?

Costs are shared by the state and federal government. The amount that the federal government pays is based on the state's income.

What is Dr. Nicholson's prediction about the expansion of Medicaid in the more restrictive states?

Dr. Nicholson predicts that once citizens in the more restrictive states realize that they are just paying for other states to expand Medicaid (with their tax money), they will put pressure on local and state legislators to accept the federal money.

What is an ACA exchange?

Each state runs an ACA exchange, which is essentially a website where private health insurers offer plans that are grouped according to generosity (platinum, gold, silver, etc.).

Who is covered by Medicare?

Elderly (65+) if they/spouse paid payroll taxes for at least 10 years, people with disabilities under age 65, end-stage renal disease patients (kidney dialysis) patients

Why do some high income people remain uninsured?

Employers have community-rated premiums that are the same for all employees. Thus, the health insurance that is provided from the employer might not be worth it for everyone.

True/False: Eyeglasses and dental care are covered by traditional Medicare.

False.

True/False: Hearing aids and nursing home care are covered by traditional Medicare.

False.

True/False: Medicaid, Medicare, and private insurers pay physicians about the same amount of money.

False.

True/False: The trust fund for Part A of Medicare is expected to run out by 2028.

False. 2024.

True/False: States spend relatively little on Medicaid, especially low income states.

False. A substantial amount of the state's total spending goes towards Medicaid.

True/False: The federal government dictates Medicaid eligibility for low-income adults.

False. Individual states dictate eligibility for low-income adults based on how "generous" their plan is.

True/False: Legal immigrants are eligible for Medicaid as soon as their immigration is processed.

False. Legal immigrants must wait 5 years after entering the U.S. in order to receive Medicaid.

True/False: Medicaid involves significant patient cost-sharing.

False. MediCARE involves significant patient cost-sharing. MedicAID is meant to help poor people, so it is federally mandated for it to not include a lot of patient cost sharing.

True/False: Medicare and Medicaid increased the poverty rate among the elderly.

False. Medicare and Medicaid have dramatically decreased the poverty rate among the elderly.

True/False: The elderly "prepay" for their Medicare benefits when they are young and paying payroll taxes.

False. Medicare does not involve you paying tax money that later goes to you; on the other hand, Medicare transfers money from young to old people.

True/False: Children and the elderly get the most Medicaid spending.

False. Most Medicaid spending is directed towards the elderly and disabled.

True/False: 72% of Parts B and D of Medicare are financed by federal tax revenues specifically allocated for them.

False. Most of Parts B and D of Medicare are financed by general tax revenues.

True/False: The Affordable Care Act has had the largest positive impact on the quality of medical care.

False. On the other hand, the Affordable Care Act has had the largest positive impact on the access to medical care.

True/False: Part A of Medicare is subsidized.

False. Part A of Medicare is paid for by employers and current and future employees. Parts B and D are the parts of Medicare that are subsidized.

True/False: States are mandated to cover prescription drugs under Medicaid.

False. Prescription drug coverage by Medicaid is optional, but all states cover it.

True/False: Recent studies show that, though Medicaid sounds good on paper, it does not have good long term effects.

False. Recent studies actually show that Medicaid has very positive long-term effects.

True/False: The ACA really impacted employer-sponsored health plans.

False. The ACA did not change employer sponsored health plans much.

True/False: Premiums on the ACA exchange vary by health status.

False. The ACA exchange has modified community-rated premiums that can only be impacted by age and smoking status, not health status.

True/False: The ACA encouraged more children and disabled to be covered by Medicaid.

False. The ACA primarily helped moderately high-income and relatively healthy adults have access to Medicaid. Children and disabled people were usually already covered.

True/False: The ACA mandates states to offer Medicaid to low-income people.

False. The ACA simply encourages states to offer Medicaid to low-income people who are not already eligible.

True/False: The ACA went against an employer-oriented health insurance system.

False. The ACA was actually built on top of an employer-oriented health insurance system and incentivized employers to provide health insurance to their employees.

True/False: The federal government pays the same percent of Medicaid for each state.

False. The amount that the federal government pays is based on the state's per capita income. Higher income states pay a greater percentage of Medicaid in their state.

True/False: Medicaid is universal across every state due to federal regulations.

False. The federal government does put out some general requirements for the Medicaid program (i.e. who must be covered, what types of services have to be offered, very little cost sharing is involved). However, the states individually decide whether to make certain types of people eligible beyond federal requirements, how much to pay providers, and how to administer their own individual program.

True/False: The states that did increase access to Medicaid did it by redirecting money that went towards other aspects of the budget.

False. The increase in Medicaid spending usually came from increased federal funding.

True/False: Under the ACA, individuals are fined for not having health insurance.

False. This fine has been eliminated.

True/False: The Affordable Care Act that we have right now is really different from what Obama originally campaigned.

False. Today's ACA is actually quite similar to what Obama campaigned.

True/False: Under the ACA, all employers used to be fined for not offering insurance. This fine has now been repealed.

False. Under the ACA, employers are still fined for not offering insurance to their workers. Small employers are exempt.

Why did the ACA include fines to encourage everyone to get health insurance?

Health insurance can maintain the lowest premiums when all individuals are included.

Which racial/ethnic group is most likely to be uninsured?

Hispanic

What is Part A of traditional Medicare?

Hospital/inpatient care

Why is adverse selection worse in the individual market?

In the individual market, sick people are overrepresented in the population of insured people. Thus, premiums have to go up because of the fact that sick people use more expensive medical services. On the other hand, employees are typically a good representation of the general population. Thus, the number of healthy people and sick people covered under an insurer typically balance out and premiums can stay moderate.

What is the difference between a Medicare Advantage plan and traditional Medicare?

In traditional Medicare, the federal government (through the Center for Medicare and Medicaid Services (CMS)) pays physicians and hospitals fee-for-service and funds traditional Medicare, which pays for Part B (physician and outpatient care) and Part D (prescription drugs) and Medigap premiums. In Medicare Advantage, the government pays most of the premium for a private Medicare Advantage plan, which will pay Part B (physician and outpatient care) and Part C (Medicare Advantage) premiums. This plan often covers more benefits than traditional Medicare.

When pitching the Affordable Care Act, Obama said that everyone would get to keep their current insurance plan. Why did this statement end up being controversial/hypocritical?

Many of the plans that were in the individual market were too "skimpy" to be allowed by the ACA, so a lot of people had to trade their affordable and "skimpy" plan for a more comprehensive (and expensive) plan.

What has been the trend in Medicaid enrollment?

Medicaid enrollment has increased sharply (basically quadrupled since 1980).

How do states deal with the fact that they do not get enough funding from the federal government to pay physicians a lot of money for Medicaid?

Medicaid pays physicians around 50% less than private insurers do.

What has been the trend in Medicaid spending?

Medicaid spending has increased sharply.

(Medicare/Medicaid) is based on wealth transfer from the young to the elderly.

Medicare

What is Part C of traditional Medicare?

Medicare Advantage (which not everyone opts into)

What has been the trend in Medicare Advantage plan enrollment?

Medicare Advantage plan enrollment has been increasing.

What was a positive outcome of the institution of Medicare/Medicaid?

Medicare and Medicaid decreased the uninsured rate substantially in the mid-1960s.

What has been the trend in Medicare spending? Why is this such a problem?

Medicare spending has been steadily increasing. As baby boomers retire, there are fewer workers to pay for each Medicare beneficiary.

Why do the elderly love Medicare so much?

Most of the funding comes from general taxes (that are paid by all taxpayers) and current workers (Part A payroll taxes). The beneficiaries themselves only pay close to 18% of Medicare-related costs.

Does Medicaid cover the entire low-income population?

No.

What kind of care accounts for the majority of Medicaid spending on the disabled and elderly?

Nursing home care accounts for the majority of Medicaid spending on the disabled and elderly.

Does Medicaid really provide good access to high quality medical care? Give one way in which it does and one way in which it does not.

One way in which Medicaid provides good access to medical care is the way it helps low-income children, elderly, and disabled people access health care. However, Medicaid patients are also more likely to be turned down by physicians because Medicaid pays physicians less than private insurers.

How is Part A of Medicare financed?

Part A of Medicare (inpatient hospital care) is financed as a "pay-as-you-go" system in which current workers pay for current retirees, future workers pay for current workers. Employers and their employees pay a 2.9% Medicare payroll tax on wages (slightly higher for high-income workers).

What is the Medicaid "coverage gap"?

People who are eligible for expanded Medicaid cannot receive a subsidy on ACA exchanges if their state decides not to expand Medicaid.

What is Part B of traditional Medicare?

Physician/outpatient care

Briefly summarize the historic economic relationship between physicians and hospitals.

Physicians usually have group practices and are paid by insurance and patients based on the number of office visits and services that they provide. Then, they give away some of this money to the hospital, staff, and malpractice insurance. What remains is the group practice profit that is split by the physicians in the group.

Premiums in the individual market tend to be (higher/lower) than premiums in the employer market. Why is this?

Premiums in the individual market tend to be higher than those in the employer market. This is because there are (1) higher loading charges in the individual market and (2) more adverse selection in the individual market.

What is Part D of traditional Medicare?

Prescription drugs

Why are private health plans on the ACA exchange not as good as people hoped?

Private insurers were losing money on the ACA exchange because the enrollees' medical costs exceeded the total, so premiums and deductibles increased. This led to adverse selection.

What is the long term impact of the removal of the ACA fine for not having health insurance?

Removing the fine is projected to greatly increase the number of uninsured in the future.

How does the Medicaid coverage gap arise?

Some states choose not to expand Medicaid eligibility. Thus, some people have incomes that are too high for Medicaid and too low for government premium subsidies on the ACA exchange.

What is the difference between Medicaid in Southern states and Medicaid in Northern states?

Southern states have generally chosen to cover fewer people, which results in a greater low income and uninsured population.

Why are there more uninsured low-income people in the South?

Southern states tend to be more restrictive when it comes to the eligibility of low income adults.

What factors can impact a person's premium on the ACA exchange?

The ACA exchange has modified community rated premiums. The only way in which premiums on the ACA exchange vary is based on age and smoking status.

How has the Affordable Care Act impacted the three parts of the Iron Triangle of health care?

The ACA has marginally improved quality and slightly decreased the cost of medical care. However, the ACA has had the greatest positive impact on access to health care.

Describe the block system proposed by Romney, Ryan, and Trump.

The block grant system would replace the state-federal cost-sharing that is currently used in Medicaid. Under the block grant system, the federal government would provide a fixed amount of money to each state based on a formula, and then the state would decide who to cover and what services to cover. The block grant would only account for the rate of inflation and population growth.

Why is it so risky to increase premiums paid by the elderly in order to mitigate increasing Medicare costs?

The elderly vote and thus would not support a bill that increases the amount of money that they have to pay.

How are premium subsidies awarded for customers looking for health insurance on the ACA exchange?

The government awards subsidies (that cover part of the premium) to people based on their income. Lower income people are allocated subsidies that cover a greater percentage of their premiums on the exchanges.

True/False: Hearing aids, eyeglasses, dental care, and long-term/nursing home care are not covered by Medicare.

True.

True/False: Many employer-sponsored health plans covered the 10 essential benefits that were outlined in the Affordable Care Act.

True.

True/False: Medicare beneficiaries have to deal with substantial patient cost sharing.

True.

True/False: Medicare involves the transfer of money from the young/working to the elderly.

True.

True/False: The ACA made preventative care more accessible.

True.

True/False: The majority of people with health insurance have private insurance that is usually sponsored by their employer.

True.

True/False: Under the ACA, families with incomes below $100,000 were offered subsidies for private health insurance.

True.

True/False: Under the ACA, someone cannot be denied coverage because of a pre-existing condition and children under 26 can remain on their parents' health plan.

True.

True/False: Medicaid eligibility for children has beneficial long term effects.

True. Recent studies show that children who were given access to Medicaid at a young age turned out to be more successful and earned higher wages.

True/False. Enrollment on the ACA exchanges has been bad for middle income people.

True. The government subsidies on the ACA exchanges are typically reserved for low-income people.

What are TWO disadvantages to Medicare? What are TWO ways in which these disadvantages can be overcome?

Two disadvantages include the fact that (1) Medicare does not cover benefits such as dental care, long term/nursing home care, eyeglasses, and hearing aids and that (2) Medicare beneficiaries face substantial patient cost-sharing, which can be expensive. Two ways in which these disadvantages can be overcome is with (1) getting a supplemental private or Medigap health insurance plan or (2) joining a private Medicare advantage health plan.

What are two upsides and two downsides to the block grant system for Medicaid that was campaigned by Romney and Ryan?

Two upsides: (1) Giving states more autonomy would save a lot of money for the federal government. (2) Block grants also allow states to allocate money away from medical costs and towards social determinants of health, which have been proven to be very influential. Two downsides: (1) The block grant system would have resulted in less people being covered by Medicaid. (2) Giving states more autonomy to decide which services to cover might also result in Medicaid covering less benefits in many states (because the state would be trying to ration the money provided in the block grant).

What was the primary way in which the ACA encouraged more restrictive states to expand Medicaid eligibility?

Under the ACA, the government picks up 90% of the incremental cost that comes from expanding Medicaid. In other words, states will only have to pay 10% of the increase in cost that will come from expanding Medicaid eligibility for their population.

The ACA barred "skimpy" plans by making sure that all plans cover 10 essential health benefits. How did this ameliorate adverse selection?

Young, relatively healthy people were drawn towards these skimpy plans and away from the plans that covered more benefits (and were thus more appealing for older, sicker people). This made premiums go up for the plans with more benefits. When the ACA's mandate got rid of skimpy plans, the pool of people insured by the "better" plans was broadened and premiums were moderated.

How are plans grouped as bronze, silver, gold, etc. on ACA exchanges?

generosity

The trend in Medicare enrollment has been (increasing/decreasing).

increasing

Medicaid patients are (more/less) likely to get turned away by a physician because of low payment rates than a Medicare patient.

more

The range of services provided by a Medicare Advantage plan is (more/less) than the range of services provided by traditional Medicare.

more

The provider network in a Medicare Advantage plan is (broader/narrower) than the provider network covered by traditional medicare.

narrower (because Medicare Advantage is a managed care plan)