How Healthcare is Financed (chapter 2)

in 2013, prior to the implementation of the individual insurance mandate of the ACA, individual policies provided health insurance for what percentage of the US population?

7%

what percentage of people who have obtained insurance through the exchange have received a subsidy?

87%; a family of four with income at %150 of the federal poverty level receives an average subsidy of $11,000; at 300% of the federal poverty level, the subsidy is about $6,000.

Medicare part D

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

is experience rating more or less redistributive than community rating?

experience rating is less redistributive

what additional problem has been created by the attempt to make healthcare more affordable

if people no longer had to pay out of pocket for health care, they would use more health care; and if health care providers could charge insurers rather than patients, they could more easily raise prices. As private issuance became primarily experience rated and employment based, persons who had low incomes, were chronically ill, or were elderly found it increasingly difficult to afford private insurance

how is medicare part B financed

in part by general federal revenues (personal income and other federal taxes) and in part by part B premiums

for which group of patients is the coverage gap or "donut hole" a major problem for?

patients with chronic ilnesses; the ACA gradually decreases the amount beneficiaries must pay in the donut hole

in the first half of the 20th century, what was the most common method of healthcare payment?

out of pocket cash payment

while the out of pocket mode of payment is limited to a single financial transaction, private insurance requires how many transactions?

two; a premium pay from the individual to an insurance or health plan and a payment from the insurance plan to the provider

who is eligible for Medicare Part A?

-65 years old and paid 10 years of social security (automatically enrolled) -Disabled and receiving social security benefits for 2 years -End stage kidney disease (dialysis/transplant requirement) -ALS *people who are not eligible for SS, may enroll by paying a monthly premium

what are the two components of individual private insurance?

1. a financing component (premium) 2. a payment component

insurance plans offering their plans through the exchange off what 4 benefit categories?

1. bronze plans 2. silver plans 3. gold plans 4. platinum plans

what are the four basic modes of paying for healthcare?

1. out of pocket payment 2. individual private insurance 3. employment-based group insurance 4. government financing

what two major changes to the medicare program were made by the Medicare Modernization Act (MMA) of 2003?

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

for what three reasons has Medicare part D been criticized?

1. there are major gaps in coverage 2. coverage has been farmed out to private insurance companies rather than administered by the federal medicare program 3. the government is not allowed to negotiate with pharmaceutical companies for lower drug prices

community rating achieves redistribution in two ways

1. within each group, people who become ill receive benefits in excess of the premiums they pay, while the people who remain healthy 2. among the three groups, the bank managers, the bank managers, who use less healthcare than their premiums are worth, help pay for the miners, who use more healthcare than their premiums could buy

SCHIP 1997

a companion program to Medicaid; covers children in families with incomes at or below 200% of the federal poverty level, but above Medicaid income eligibility level; states legislating this program receive generous federal matching funds

Medicare part A

a hospital insurance plan for the elderly financed largely through social security taxes from employers and employees

Medicaid

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

what does the federal government view employer premium payments as?

a tax-deductible business expense; the government does not treat health insurance fringe benefit as a taxable income to the employee, even though the payment of premiums could be interpreted as a form of employee income

government health insurance for the poor and elderly added what new factor to the health care financing equation?

a taxpayer

what happens during the "coverage gap" of medicare part D?

after a $320 deductible is met and coinsurance for up to $2,960 total in drug costs, enrollees are responsible for a larger share of their total drug costs until their total out of pocket spending reaches 4700; thereafter, enrollees pay only a small percentage of drug costs

what can a beneficiary do under the Medicare Advantage program?

elect to enroll in a private health plan contracting with Medicare, with Medicare subsidizing the premium for that private health plan rather than paying hospitals, physicians, and other providers directly as under parts A and B

the rapid growth of employment based health insurance was spread by what?

an accident of history; During WW2, wage and price controls prevented companies from granting wage increases, but allowed the growth of fringe benefits. With a labor shortage, companies competing for workers began to offer health insurance to employees such as Rose Riveter as a fringe benefit. After the war, unions picked up on this trend and negotiated for health benefits; enrollment in group hospital plans grew enormously.

how did health insurance come into being?

because direct purchase of healthcare services became increasingly difficult for consumers and was not meeting the needs of hospitals and physicians to be reliably paid

how is the government basically subsidizing employer-sponsored health insurance?

because each premium dollar of employer-sponsored health insurance results in a reduction of taxes collected

why is the percentage of expenditures for private insurance so much lower than the percentage of population covered under private insurance?

because private insurance tends to cover healthier people

why are public insurance expenditures far higher per population?

because the elderly and disabled are concentrated in the public Medicare and Medicaid programs

how does the amount of a subsidy given to an individual/family vary?

by income

how did the federal government slow down the Medicaid expenditure growth?

ceded to states enhanced control over Medicaid programs through Medicaid waivers, which allows states to make alterations in the scope of covered services, require medicaid recipients to pay part of their costs, and obligate Medicaid recipients to enroll in managed care plans

silver plans

cover 70% of health care costs, with fewer out of pocket costs and higher premiums

gold plans

cover 80% of health care costs, with low out of pocket costs and high premiums

platinum plans

cover 90% of costs, with very low out of pocket costs and very high premiums

Medicare part B

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

until the enactment of the ACA, what additional requirements to poor must an individual meet to be eligible for medicare?

people also had to meet categorical criteria such as -young child -pregnant -elderly -disabled

who is eligible for medicare part B?

people eligible for part A that elect to pay a premium of $104.90 per month; some low income persons can receive financial assistance with the premium; higher income beneficiaries have higher premiums related to income

who is not required to purchase the insurance required under the individual mandate?

people with employer based and governmental health insurance

what happened along with the 1965 enactment of Medicare (for the elderly) and Medicaid (for the poor) in regards to public insurance?

public insurance payments for privately operated health services became a major feature of health care in the United States

bronze plans

represent minimum coverage, with the insurer paying for 60% of a persons healthcare costs, with high out of pocket costs but low premiums

what change did the ACA make to employer-based health insurance?

required that employers with 50 or more full time employees 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

most people who have obtained insurance through the exchange have picked which plans?

silver or bronze

in the late 1950s, what was the only program that could provide affordable care for the poor and the elderly?

tax financed government health insurance

what did the "individual mandate" provision of the ACA require?

that most US citizens and legal residents who do not have governmental or private insurance purchase a private healthcare policy through a federal or state health insurance exchange, with federal subsidies for individual and families with incomes between 100% and 400% of the federal poverty level

what impelled the development of private health insurance in the United States?

the increasing effectiveness and rising costs of hospital care; hospitals became places not only in which to die, but also in which to get well

in a major reform contained within the ACA, how are insurers severely limited in using experience rating to set premiums?

they can only vary premiums based on family size, geographical location age, and smoking status; the ACA also limits how much premiums can differ between older and younger individuals

what is a disadvantage for beneficiaries with the Medicare Advantage plan (part C)?

they sacrifice some freedom of choice of physician and hospital in return for lower out of pocket payments and are only allowed to receive care from health care providers who are connected with that plan

Employment-based private insurance

this includes private insurance obtained by federal, state, and local employees which is part purchased by tax funds

under the individual mandate, how is health insurance purchased?

through insurance marketplaces called health insurance exchanges; 17 states have elected to set up their own exchanges, and the remainder of the states are covered by the federal exchange, Healthcare.gov

how is Medicare part A financed?

through the SS system; employees and employers each pay to medicare 1.45% or wages and salaries. Self-employed people pay 2.9%; the ACA increases the employee rate for higher-income taxpayers (incomes greater than 200,000 individual or 250,000 couples) from 1.45% to 2.35%

who is eligible for Medicaid?

varies by state; all participating states now must make all individuals with incomes up to 138% of the federal poverty level eligible for coverage, with no categorical eligibility criteria. Undocumented immigrants are not eligible.

experience rating

within each group, those who become ill are subsidized by those who remain well, but among the different groups, healthier groups do not subsidize high risk groups. Thus the principle of health insurance, which is to distribute health care more in accordance with human need rather than exclusively on the ability to pay, is weakened.