Public Health - Chapter 10: Health Insurance and Healthcare System
The number of underinsured has been dramatically reduced by requiring insurance to cover
Essential Health Benefits (EHB).
Deductible
The amount that an individual or family is responsible for paying before being eligible for insurance coverage.
Employment-based insurance grew in the 1950s and 1960s on the principle known as
community rating (cost of insurance remains the same regardless of the health status of a particular group of employees).
Social Security Income (SSI)
* Provides payments for disabled adults and children who meet income levels for eligibility regardless of their prior contributions to the social security system. * Applicants have shorter waiting periods before being eligible to receive benefits and are enrolled in Medicaid immediately upon a determination of disability.
In 1973, Federal Government promoted
Health maintenance organizations (HMOs) as an alternative to employment-based insurance
Other developed countries (Canada, the United Kingdom, France, etc.) spend
* 10% or less of their GDP * spend half as much per person compared to US
The United States spends approximately $3 trillion per year on health care
* 18% of the gross domestic product (GDP) * $9,000 per person per year
MEDICARE
* Began as a program for ≥65 years of age (enacted in 1965) * Expanded to disabled persons eligible for social security disability benefits and those with end-stage renal disease. * Today, nearly 50 million Americans are eligible (number expected to increase to over 60 million by 2020). * Federally funded program-eligibility and benefits are consistent throughout US. * Primarily funded by payroll tax of 1.45% (employees and employers). * Income from investment as well as employment is now taxed. * Has four parts.
Point of service plans (POSs) or HMO-POS plans
* Benefits are dependent upon whether the policyholder uses in-network or out-of-network health care providers * Out of network-will pay more out of pocket * Combination of PPO and HMO
Health maintenance organizations (HMOs)
* Charge patients a monthly fee designed to cover a comprehensive package of services * Clinicians or their organizations are paid based on the number of individuals enrolled in their practice * Compensation is based on capitation, or a fixed dollar amount per month to provide services to an enrolled number regardless of the number of services provided.
Medicare Part A (aka Hospital Insurance)
* Covers hospital care, skilled nursing care, and home health care after hospitalization, and hospice care * Paid primarily by payroll tax * Annual deductible required
Social Security Disability Insurance (SSDI)
* Designed for those who have paid into the social security system and their children. * Requires 12 months disability before applicants are eligible to apply and requires a complex disability determination process. * Medicare is provided two years after the individual is determined to be eligible for SSDI. * SSDI recipients receive payments comparable to other social security recipients, while SSI recipients receive lower payments often in the range of half of that received by SSDI recipients.
The Federal Medical Assistance Program (FMAP)
* Determines the federal share of cost of Medicaid in each state * Formula in the Federal Medicaid statute based on per capita income of the state * The lower the state's per capita income, the higher the state's FMAP or Federal Medicaid matching percentage.
Fee-for-service (1950s to 1990s)
* Employment-based insurance plan that provided payments to clinicians and hospitals for specific services provided. * As a payment system, it encourages the provision of as many services as possible. * Accused of increasing healthcare costs through overuse of services.
A variety of efforts have and continue to be made through: Cost control through reimbursement incentives
* Example: capitation * Special form of capitation known as Diagnostic Related Groups (DRGs) has been successfully used to reduce length of hospital stays.
MEDICAID
* Federal plus state program (enacted in 1965) * Largest federal health insurance system covering nearly 50% of births in the United States, nearly 40% of children, and well over half of all custodial nursing home care. * Basic program-federal government pays a variable amount of the cost ranging from 50% to 83%, depending on the per capita income of the state. * These funds are designed to match the funds provided by a state based on the state's Medicaid formula. * To receive federal matching funding, states must provide basic services such as most inpatient and outpatient services, including preventive services. * All states have chosen to be part of the basic program and therefore must provide benefits for such groups as the disabled, children, and pregnant women based on the federal poverty level. * The federal poverty level for a family of four is currently approximately $25,000 per year. * States may choose to offer other services, such as drugs, eyeglasses, and transportation services and the federal government will provide matching funds. * Coverage under Medicaid is quite comprehensive * However, reimbursement rates to clinicians are often low• Many clinicians will choose not to participate
Beginning in the 1990s
* Fee for service evolved into Preferred Provider Organizations (PPOs) * "Staff model" HMOs developed into point of service (POSs) plans
Preferred provide organizations (PPOs)
* Fee-for-service insurance system that work with a limited number of clinicians "preferred providers." * Clinicians agree to a set of conditions that includes reduced payments. * Patients may seek out of network care but will pay more out of pocket.
Reason for Increased Healthcare Cost In Developed Nations: Expansions of Technological Innovations
* Have dramatic impacts on longevity and quality of life. * Some produce very modest improvements with increased costs.
The uninsured can be classified into the following quite different groups
* Healthy, often young, individuals who choose not to purchase insurance through their employer * Poor or near poor individuals who do not qualify for Medicaid * Self-employed persons or employees of small companies that despite substantial incomes decide not to purchase insurance
A variety of efforts have and continue to be made through: Cost sharing
* Individuals will spend less when costs are coming out of their pocket * Methods such as deductibles, co-payments, and caps are all intended to reduce costs by shifting them to individual patients.
Employment-Based Health Insurance
* Largest single category of insurance coverage in the United States. * Approximately 50% of all Americans have the option to purchase some form of this type of insurance.
Medicare Part C (Medicare Advantage Plans)
* Offered by private companies that contracts with Medicare to provide all part A and part B benefits. * Advantage plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-For-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. * Most Advantage plans offer prescription drug coverage.
A variety of efforts have and continue to be made through: Regulation
* Placing limits on how much care can be provided or how much compensation can be provided. * Medicare and Medicaid are targeted for these regulations.
March 2010
* President Obama signed The Patient Protection and Affordable Care Act (ACA), referred to as Affordable Care Act or Obamacare. * In 2010-15% of all Americans did not have any form of health insurance, and half of that number, or another 7.5%, were considered underinsured. * After the passage of ACA, uninsured was reduced to slightly less than 10%.
State Child Health Insurance Program (CHIP)
* Program began in 1990s * Funds provided by the states to enhance the health care of children * 2018: 9.6 million children were enrolled in CHIP * In 2009-Congress expanded the program to make it more flexible, utilizing funds from an increase in tax for cigarettes
Medicare Part D (Prescription drug plan)
* Relatively new prescription drug coverage plan * Requires monthly premiums and an annual deductible * Exact terms depend on contracts through private plans * Once an enrolled individual reaches a "catastrophic level" of total annual drug costs of about $5,000, Medicare pays 95% of the additional cost of drugs.
Worker's Compensation and Federal Programs for Workers
* State programs in the majority of the states * Has existed since early in the 20th century when industrial era jobs became increasingly dangerous. * Short-term assistance for traumatic injuries is covered by all workers compensation programs, but coverage of other conditions, long-term disability coverage, and coverage of off the job injuries varies from state to state. * Congress has also added disability assistance to cover specific populations and specific conditions.
Reason for Increased Healthcare Cost In Developed Nations: Aging population
* The population is living longer with the success of public health and healthcare efforts. * Longer life is associated with many chronic illnesses.
Excess Costs Of Healthcare In The United States
* Together, all these excess cost add up to $750 billion per year (25% of the money spent on healthcare). * Efforts to reduce these costs provide great opportunities for controlling healthcare costs without jeopardizing quality of access.
A variety of efforts have and continue to be made through: Restrictions on malpractice
* US malpractice system encourages clinicians to practice "defensive medicine" (perform unnecessary tests to protect themselves) * Efforts are being made to reduce the number of lawsuits and to restrict the amount of compensation that can be awarded
Medicare Part B (aka Medical Insurance)
* Voluntary supplemental insurance * Covers a wide range of diagnostic and therapeutic services (physicians, emergency departments, and outpatient services) * For most people, 75% of cost is funded by tax revenues and 25% by a monthly premium. * Premium starts at a little over $100/month; higher premium for higher income individuals * Still responsible copayment of 20% for most services * Medigap (insurance policy provided by some insurance companies) can cover all or most of the 20% copayment. * Deductible-$150 per year.
National Scorecard on the U.S. Health System
* developed by The Commonwealth Fund's Commission on a High Performance System * Standardized measurements to try to objectively measure performance in 19 developed countries * Criteria: Healthy lives, Quality, Access, Efficiency, and Equity * Highest score possible for each category is 100
Health Insurance Exchange
* mechanism to obtain health insurance for those who are not eligible for other forms of comprehensive health insurance (government or employer-based). * Provides an online marketplace - a service available in every state that helps individuals, families, and small businesses shop for and enroll in health insurance. * Provides access to health insurance, at times subsidized by the federal government, for citizens and legal residents of the United States. * The aim is to create a competitive marketplace to help increase access and control the costs of health insurance.
EHB are health-care services including the following 10 categories of health services
1. Ambulatory patient services (outpatient services) 2. Emergency services 3. Hospitalization 4. Maternity and newborn care 5. Mental health and substance use disorder services, including behavioral health treatment 6. Prescription drugs 7. Rehabilitative and habilitative services (those that help patients acquire, maintain, or improve skills necessary for daily functioning) and devices 8. Laboratory services 9. Preventive and wellness services and chronic disease management 10. Pediatric services, including oral and vision care
The Institute of Medicine has identified six categories of excess costs of healthcare.
1. Unnecessary services and overuse ($210 billion) 2. Inefficiently delivered services ($130 billion) 3. Excess administrative costs ($190 billion) 4. Prices that are too high ($105 billion) 5. Missed preventive opportunities ($55 billion) 6. Fraud ($75 billion)
The ACA helped with the uninsured using different approaches:
1. Young individuals were allowed to stay on their parents' insurance until age 26 and were allowed to purchase lower levels of coverage until age 30. 2. The states were provided an option to expand eligibility for Medicaid. 3. Self-employed individuals and those who worked for companies that did not provide comprehensive health insurance were permitted to purchase insurance through the health insurance exchanges. 4. Under the ACA, all individuals were required to purchase health insurance that included the Essential Health Benefits or pay a substantial fine.
Social Security Disability Insurance (SSDI) and Social Security Income (SSI)
Designed to assist those with long-term disabilities preventing them from working.
Reason for Increased Healthcare Cost In Developed Nations: Raised expectations of patients due to the success of medical care
Greater expectations for access to technology, preventive interventions, individualized care, rapid access to care etc. are possible but are often quite expensive.
Majority of remaining funds are spent to fill in the holes in insurance coverage (out of pocket expenses) through
direct payment.
Community rating has been replaced by
experience rating or medical underwriting (employers and employees pay based on their groups' use of services in the previous years)
Much of money spent on health care (by individuals, businesses, or government) pays for
insurance coverage.