Lecture 7: Historical Development of US Health Insurance

All major medical policies contain exclusions that typically include: 5

1 injuries from war/military conflict, 2 elective cosmetic surgery, 3 dental care (unless accident), 4 eye/hearing examinations, 5 pregnancy/childbirth, and others.`

These four issues were the key driving forces for the development and passage of the Affordable Care Act (ACA) legislation enacted by Congress in early-2010, and ruled by the U.S. Supreme Court to be constitutional in June, 2012.

1. increasing health care costs 2. large uninsured population 3. inefficiency 4. varying quality of med care

Nearly all developed countries spend above __% of GDP on healthcare, though the United States is an outlier, spending ___% more as a percentage of GDP than any other OECD country.

10 ; 60

ACA fact = "Just recently, the New England Journal of Medicine found that ___ million uninsured Americans have gotten covered since the start of Open Enrollment."

10.3

ACA fact = "In Louisiana alone, ___ individuals selected a Marketplace plan between October 1, 2013 and March 31, 2014 (including additional special enrollment period activity through April 19, 2014)."

101,778

As of 2015, HMOs enrolled about __% of covered workers in the U.S., down from its peak of __% in 1996, due to several factors including ongoing criticism (particularly in the media) in recent years that the quality of care was being compromised due to the heavy emphasis on cost control.

14 31

According to the U.S. Census Bureau, an estimated ___% of the population (48 million people) was without health insurance in 2012. Groups with large numbers of uninsured = ____, __ , ___, ____. States w high % of uninsured people =__ ,__, ___, ___, & Louisiana(approximately __%).

15.4 low income hispanics foreign-born yound adults--18-24 tx, new mex, CA, OK, LA 20

In 2010, spending on healthcare was over ___% of U.S. GDP, but the U.S. spent ___% more per capita on healthcare than any other country despite high numbers of uninsured citizens.

17, 60,

In ___, ___Insurance Company started offering benefits in the case of death or permanent disability, and in ___, ___ and ___offered benefits for temporary disability "occasioned by all diseases except tuberculosis, venereal disease, insanity, or disabilities due to alcohol or narcotics".

1863 Travlers 1899 Aetna and Travlers

In the 19__s, commercial insurance companies began to market hospital and surgical expense insurance. Unlike the Blue Cross approach, commercial insurers provided coverage on a __ ___, providing payment up to a specified __ ___ per day while the insured was confined to a hospital, or a specific limit of coverage for various surgical procedures.

1930s reimbursement basis dollar maximum

(In __, the first Blue Shield plan was organized by physicians in California to offer prepaid surgical expense coverage.)

1939

in ____, commercial insurers introduced a form of ____ medical expense insurance called major medical insurance, designed to pay sizable bills associated with serious illness both in and out of the hospital.

1949 catastrophe

Health care development in the U.S. was further improved in ___when the ___Code clarified the ___-___ status of an employer's contributions to health care premiums--employees are/aren't taxed on the value of the health insur. benefits paid by employers & corporation permitted to deduct health insurance payments as a business expense

1954 IRS tax exempt aren't

In ___, Congress amended the Social Security system by establishing the ___ ___ to provide medical expense insurance to persons over age ___. The same legislation created ____, a state-federal medical assistance program for low-income persons.

1965 Medicare Program 65 Medicaid

The United States spends $_____ on healthcare annually, the same as all other 19 OECD countries combined; Costs were largely _____, although Medicare set reimbursement levels and private insurers negotiated reimbursements with healthcare providers.

2.2 trillion unconstrained

In 2013 U.S. health care spending was $____ or $___ per person.

2.9 trillion 9255 per person

Nearly ___ of U.S. adults, or an estimated ____ people annually, struggle to pay medical bills, go without needed care because of cost, are uninsured for a time, or are underinsured.

2/3 116 mil

Nearly ___ of all personal bankruptcies linked to medical expenses. Of those who filed for bankruptcy, nearly ___ percent had health insurance coverage.

2/3 80

At the beginning of _____ the U.S. goal of providing high quality, affordable health care for all of its citizenry remained elusive despite the fact that U.S. health care was among the highest quality in the world.

2010

Three broadly different healthcare systems were developed in advanced industrialized countries over the course of the __ ___:

20th century

ACA fact = "In just one year (since the start of Open Enrollment), we've reduced the number of uninsured adults by __%."

26

ACA FACT = "if your plan covers children, you can now add or keep your children on your policy until they turn ___ years old. Thanks to this provision, over ____ young people who would otherwise have been uninsured have gained coverage nationwide, including____ young adults in Louisiana."

26, 3 mil, 53k

HMO modern history dates from 19__, when industrialist Henry Kaiser adopted the idea of prepaid group medical practice and capitation for his employees working on the Grand Coulee dam.

38

Lack of affordable health insurance made the U.S. an international anomaly and contributed to_____ Americans dying prematurely every year.

45k

in 2015, employers provided health coverage for approximately __% of Americans; Medicare and Medicaid, __%; other public (military, nonelderly Medicare), __%; other private (non-group policies), __%; and approximately __% of Americans were uninsured.

48 31 2 6 13

In 2008, about _____ Americans were in families that had problems paying medical bills, and nearly ___ had health insurance coverage.

57 mil 3/4

Varying medical care: A study by the National Committee for Quality Assurance (NCQA) cites quality gaps due to the physician, geographic location, or type of disease being treated which result in ____ deaths, ____ sick days, and $____ in lost productivity; Medical injuries to inpatients during their hospital stays result in ____ of patient deaths annually.

57K 41 mil 11 bil 1000s

Most Americans covered under group health insurance plans, but non-group coverages are also important, particularly for the individuals/families that purchased or are covered as a dependent by non-group insurance. Approximately ___% of Americans have non-group health insurance by direct purchase

6

Excess spending on health care primarily due to administrative costs for health insurance and additional outpatient services considered wasteful, added $_____ to the nation's health care bill in 2008 - or almost __ percent of all national health care expenditures.

650 bil 25%

major medical policies generally pay most hospital expenses in full or at __%. Deductibles might range from $___ to $__ per year per individual, or $___ per year per family. ( pays up to the deductible amount before health insurance coverage begins)

80 100-200 500

Under major medical insurance, coinsurance is often on an ____basis (insurer pays ___% of covered expenses, and insured pays the other __%) up to a certain dollar amount per calendar year, after which covered benefits are paid in full by the insurer and the insured pays no more co-insurance.

80-20 80 20

By the 19__s, HMOs grew from local healthcare cooperatives in the 19__s to large national corporations. HMOs were heavily criticized in the 19__s to the 2000s for failing to control ___, while physicians complained of ___ on patient visit times and rules that interfered with the quality of care.

80s 70s 90s costs restricitions

In 19__, __ percent of individual employees were covered under traditional fee-for-service plans offered; today, __% enrollment of covered workers in traditional fee-for-service plans, and with more than __% enrollment of covered workers in managed care plans (HMOs, PPOs, and other).

88 73 1 99

______ law was of historic significance since healthcare reform had previously failed under the administration of four U.S. Presidents: Franklin D. Roosevelt in 1934, Harry S. Truman in 1945, John F. Kennedy in 1962, and William J. Clinton in 1993.

ACA

______ = legislation enacted by Congress in early ___ and ruled by the U.S. Supreme Court to be constitutional in June ___

Affordable care act-2010 2012

The __ __ is considered to be the forerunner of the __ __ __, which were organized by a group of hospitals to permit and encourage prepayment of hospital expenses. They offered subscribers contracts that promised a semiprivate room in a participating hospital when the insured was hospitalized.

Baylor blue cross plans

In 1929, __ __ __ enrolled public school employees in Dallas, many of whom were women of child-bearing age, in a health plan that guaranteed 21 days of hospital care at Baylor for a premium of $6 a year ($85/yr. in 2013, inflation-adjusted). This marked the beginning of __ __ __ in the U.S.

Baylor University Hospital group health insurance

In , ___ ______insurance and delivery operate as self-governing associations independent of the state--government plays a coordinating role among insurers, physicians, and other major players; rising costs tempered by coordination among social partners and through price negotiations with hospitals and drug and device companies.

Germany and across much of continental Europe

____ often operate their own hospitals and clinics and employ or maintain contracts with physicians and other health care professionals that deliver health care services. The insurance element in the operation of ____ derives form the manner in which they charge for their services, which is called ___where subscribers pay an annual fee and in return receive comprehensive hc

HMO HMO capitation

COntributing factor to increaseing hc costs= __ __ ___: From 1998 to 2002, increased 4.6%/yr, and include items such as customer service, information technology, and medical management.

Higher administrative costs

__ __ Insur: Many older __ ___ medical expense plans still in force today; cover routine medical expenses and are not designed to cover catastrophic losses. Lifetime cumulative limits are relatively low ($___), as are maximum benefits for each illness ($___); Most cover hospital expenses (typically inpatient), surgical expenses (reasonable/ customary), and outpatient services (emergencies, diagnostic x-rays); limited presence today and are relatively unimportant.

Hospital-Surgical non-group 100k 20k

__ __ Insur: This product is designed to pay sizable bills associated with serious illness both in and out of the hospital;it is a __ __ policy has broad coverage high maximum coverage (lifetime limits of $__, $__ million, or higher), deductibles, and coinsurance (insured must pay a certain percentage of eligible medical expenses in excess of deductible).

Major Medical non-group 500k 1mil

The first group plan for employees, organized by __ __ in __, was intended to protect workers from loss of income due to illness.

Montgomery Ward 1910

under capitation, the subscriber is required to choose a ___ (also know as the ___), who is responsible for determining what care is received and when the individual is referred to specialists (in the HMO network) __ ___ __ are provided outside the network when there is a sudden onset of an illness or injury, which if not immediately treated, could jeopardize the subscriber's life or health.

PCP primary care physician gatekeeper emergency care services

As of 2015, _____ are the most popular U. S. health care plans, with enrollment of ___% of covered employees.

PPO 52

The ____ contracts with a network of health care providers for medical services to its members at reduced (discounted) rates.

Preferred Provider Organization PPO

The first plan was the __ ___ __ ___ in ____, which called for compulsory salary deductions to pay for hospitalization for the seamen.

US Marine Hospital Service 1798

During ____ and after, ___ controls prevented U.S. firms from offering higher ___ to attract employees; therefore they began to offer more generous benefits including health insurance through ____ /___ and other private insurers. I

WW2 wage wage blue cross/sheild

Inefficiencies include High ____ costs and excessive ____; unnecessary ___ and ___ by physicians, duplication of expensive ____ in hospitals, and ___or ___ by health care providers are often-cited inefficiencies that plague the U.S. health care system.

administrative paperwork test/procedures technology fraud/abuse

Although HMOs have been around for at least as long as the __ __/__ __ plans, it was not until the 19__s that public and government attention was focused on them, bringing them their current popularity

blue cross/sh 70s

The first health plans in the U.S. were designed to __ ___for loss of income when an accident or illness caused extended disability, rather than to ___ ___ for medical expenses because physicians' abilities to treat or cure illnesses were very limited before 1900.

compensate workers reimbirse workers`

__ __ ___ was included in the original Social Security Act in 1935, but was defeated by strong opposition from the __ ___ ___

cumpulsory health insurance american medical association

Consider __ ___ (To be discussed in the Provident Case): Many people lose substantial amounts of income each year due to sickness and injury which is not replaced by __ ___and sick leave benefits.

disability insurance disability

Group insurance premium costs are frequently lower than individual insurance bc of....

economies of scale in large groups make administration less expensive

From the subscriber's point of view, the ____system is replaced by a system of ___ In return for a __ __ __, the individual receives virtually all the medical care required during the year.

fee for service capitation fixed monthly fee

...or....plan form of health insurance = use any medical provider (doctor and hospital), and then send the bill to the In. Co. that paid all or part of it. Usually, a deductible was involved-- Once met, most paid a percentage of what they considered the "usual and customary" charge for covered services (generally 80%) insured paid the other 20%, which was known as ____

fee for service plan or indemnity plan coinsurance

The distinguishing characteristic of a health maintenance organization (HMO) is that the HMO not only provides for the ___ of health care, it also ___that care.

financing delivers

The nature of U.S. Health plans changed during the __ ___, when some hospitals failed because people could not pay their bills. As a result, several hospitals initiated __ ____ ___ to guarantee their revenues.

great depression prepayment health plans

__ __ __ __ is an employee benefit that pays the cost of hospital care, physicians' and surgeons' fees, and related medical expenses; financial security to employees and their families, and most Americans today (about half, at __%) receives coverage through an ___-based plan.

group health insurance coverage 48 employement

New types of insurers emerged that not only offered risk financing, but the delivery of health care as well. The prototype of this organization was the __ ___ ___ --direct relationship between the provision of health care and its financing,

health maintenance organization--HMO

3 major types of managed care plans

health maintenance organizations (HMOs), preferred provider organizations (PPOs), and other plans.

Contrary to a commonly held belief, patients in the United States find it surprisingly difficult to obtain same-day care and must to wait to see a physician at frequency levels _______ than in Germany or the United Kingdom.

higher

Contribution to increased HC cost: Increasing __ ___--Outpatient and inpatient services are key contributors, but __ ___ are the largest component of health care costs due to increased use of ____ , ___ shortages, and other factors.

hospital costs inpatient costs technology (expensive) nurse

Immediately following Medicare in 1965, the cost of health care (and of private health insurance) _____ and attention turned to the problems inherent in the _______system--incentive to over utilize health care; insured and provider had no incentive to reduce costs (provider gains the more services)

increased fee for service

Group insurance premium costs are frequently lower/higher than individual insurance?

lower

Group health insurance advantage = including __ ___since much of the cost may be borne by the ___(although the trend is toward sharing those costs with employees)--average annual premium for family coverage was $____, with the employer's contribution, $___(___%), and the worker's contribution, $____(__%).

lower cost employer 17545 12591 (72%) 4955 (28%)

__ ___ is a general term for medical care plans that provide services to its members in a cost-effective way. major types= health maintenance organizations (HMOs), preferred provider organizations (PPOs), and other plans.

managed care

Private enterprise discovered a way to address rising health care costs via the concept of __ ___, which represented a change not only in the ____ of health care, but in its ___ as well.

managed care financing delivery

Today, __ __ ___ have replaced the fee for service plans as the dominant force in U.S. health care--a number of variations of them are available to individuals and families.

managed care organizations

Two contributing factos to increasing HC costs: __ ___ __-- due to increased use and inflation/ ___ ____ -The government estimated that ___-___% of the growth in personal health care spending in the 1990s

perscrption drug costs new technology 10-40%

The HMO may be sponsored by a group of ____, a ___ or __ ___, an ___, __ ___, __ ___, ___ ___, or __ __/__ __.

phsycians, hospital, medical school employer, labor union, consumer group, insurance co, blue cross/blue shield

Contributing factor to increased HC costs--__ ___ __: Increases in numbers of specialists and patient use (especially older people) have occurred over time. Specialists charge an average of twice the amount of primary care

physician cost trends

Group health insurance is preferable for a number of reasons, including: variety of ___ , ___ __ ____ is usually larger that individual policies, employers usually pay a large part of the monthly premiums, and employees enjoy significant __ ____ (no tax on employer contributions, and before-tax dollars can be used by employee for his/her contributions)

plans breadth of coverage tax advantages

____plans and ____ plans, (including plans that come with health savings accounts or health reimbursement arrangements) enrolled about ___% (___% or first and ___% for second, of covered employees in U. S.

point of service hihg-deductible 34% 10% 24%

The key differences bt PPO/HMO are that with the PPO = 1) providers do not provide services on a __ ___, but instead are paid on a __ __ __ at the time service is delivered ( less than the provider's normal fee) 2) patients are or aren't required to use a preferred provider (deductibles/co-pay lower used) 3) do or do not use a gatekeeper physician? employees do not/ do have to get permission from him/her to see a specialist.

prepaid basis fee-for-service aren;t do not do not

The United States combined ___ ___ with ___ ___of Medicare and Medicaid, while the delivery of care was free from formal controls.

private insurance public finacing

Advantage of group insurance = that group selection of ___ is used, not ___ selection, therefore individuals are rarely required to provide evidence that they are insurable if they enroll when they first become eligible for coverage, and consequently, preexisting conditions will usually not preclude coverage.

risk indv

In , ___, ___, ___, ___ and ___ healthcare delivery is largely state-run, with funding provided through general taxation; Market forces were minimized.

the United Kingdom, Nordic countries, and Italy, Spain, and Canada

Perhaps the most important consideration of the ACA is that it requires most U.S. citizens, with few exemptions......

to have health insurance beginning in 2015 or pay a tax penalty to the IRS.

.... or ... plans allowed insureds a lot of freedom to select their own physicians and other health care providers, paid __ __ for covered services up to maximum limits, and __ __was not heavily emphasized. These older plans have diminished in importance--enrolled approximately ___% of covered workers in the U.S. in 1988, but they accounted for __% of them in 2015

traditional group indemnity plans or fee for service plans cash benefits cost control 73% in 1988 1% in 2015