Chapter 24

Health Savings Account (HSA)

a tax-free savings account—funded by employees, employer, or both—to spend on routine medical costs. Usually combined with a high-deductible policy to pay for catastrophic care

Health maintenance organizations (HMOs)

provide total health care services to a specific group of enrollees in exchange for a set annual fee per enrollee.

In recent decades, the US health care System has suffered from two highly publicized problems:

1. The cost of healthcare has risen rapidly in response to higher prices and an increase in the quantity of services provided 2. Some 30 million Americans in 2015 did not have health insurance coverage and, as a result, had significantly reduced access to quality health care.

Tax subsidy

A grant in the form of reduced taxes through favorable tax treatment. For example, employer-paid health insurance is exempt from federal income taxes and payroll taxes.

Most experts attribute the relative rise in healthcare spending to:

Advances in medical technology, combined with the medical ethic of providing the best treatment available, private and public health insurance, and fee-for-service physicians' payments by health insurance firms.

The most visible economic affects of rising health care costs

Higher health insurance premiums to employers and higher out-of-pocket costs to workers.

Preferred provider organization's (PPOs)

Require that hospitals and physicians except discounted prices for their services as a condition for being included in the insurance plan

What are the three main affects of surging health care costs on labor markets?

Slower wage growth, Use of part time and temporary workers, outsourcing (and offshoring)

Managed-care organizations

Those in which medical services are controlled or coordinated by insurance companies or healthcare organizations to reduce healthcare expenditures