Pubpol Prelim 2

How do ACA exchanges work?

1. gov subsidy

2. insurer competition

3. pool of potential customers

gov subsidy with exchanges

the gov subsidy is set on the 2nd least expensive silver plan

insurer competition with exchanges

insurers compete by trying to offer relatively low premiums as long as consumers pay part of the premium

competition reduces premiums and subsidies/taxes

pool of potential customers with exchanges

many health plans are available on the ACA exchanges because insurers want to sell to the 20 million people who have access to it

why are politicians reluctant to touch Medicare?

voters over 65 go out to the polls and have a lot of influence so politicans are incentivized to not make Medicare less generous

who is covered by Medicare?

elderly over 65 covered if they or spouse paid payroll taxes for at least 10 years

disabled under 65 are covered after a 2 year waiting period

ESRD patients under 65

what is the Medicare enrollment trend?

10,000 people become eligible for Medicare per day

significant increase in medicare enrollment every decade

what happened to the uninsured rate in the mid 1960s?

medicare and medicaid decreased the uninsured rate

how did decreasing the uninsurance rate affect health and economic outcomes?

reduced out of pocket medical spending

reduced poverty rate among elderly

increased male life expectancy by 1 yr

what are the 4 parts of medicare?

part a, b, c and d

what is part A?

covers hospital inpatient care, skilled nursing facility, home care

all enrollees

no monthly premium

deductible, co-insurance

what is part B?

covers physician, outpatient facility, infused drugs

almost everyone enrolls

high monthly premium

deductible, co-insurance

what is part C?

private managed care plans (medicare advantage)

covers dentures and dental care, eyeglasses, and hearing aids

what is part D?

covers prescription drugs

low monthly premium

86% people enroll

deductible, co-insurance

why do people purchase supplemental health insurance?

fill in the gaps in Medicare and cover some of a person’s cost sharing

reduce spending on medical care and financial uncertainty

how does Medicare Advantage (MA) part C reduce patient cost sharing and provide additional benefits?

enrollees pay the part c premium to a private health insurer to get the same set of traditional medicare and additional services covered

narrower provider network bc it’s a managed care plan

just be able to explain this image

what has been the trend in the past two decades of medicare beneficiaries who choose to be in a private MA part C plan?

consistent increase from 2008 to 2026

55% now enroll in an MA plan

why doesn’t everybody choose a medicare advntage (MA) plan?

likely to have a smaller network of providers and implementation of more aggressive utilization management techniques than traditional medicare e.g. prior authorization

what are the general benefits of joining a Medicare advntage plan?

likely to be offered prescription drug coverage, dental care, and vision care

24% of plans charge a part C premium

out of pocket max has a cap whereas traditional medicare doesn’t

lower patient cost sharing

how is medicare financed with part A (hospital care)?

pay as you go system, current workers pay for 65+ year olds and future workers pay for those workers when they are 65+

employers and employees split a medicare payroll tax

part A trust fund is expected to run out soon

how is medicare financed with parts B and D (physicians and drugs)?

federal tax revenues cover most of parts B and D costs, no taxes are specifically set to cover these costs

elderly pay premiums for the remaining portion of parts B and D

how has the proportion of medical spending on Medicare changed over time?

steady increase from 15% in 1980 to 22% in 2024 of US medical spending

how does the increasing number of retired baby boomers affect taxes?

more baby boomers are retiring so fewer workers will be paying taxes, increasing the taxes required per worker

why do the elderly love medicare so much?

their medical care is primarily financed by current workers and they pay a relatively small proportion in premiums

what will happen if medicare costs continue to grow at historic rates?

increasing pressures, tax increases, federal gov cutting programs, federal gov issuing more debt

what are the specific pressures that are related to medicare costs growing?

more people are retiring, elderly are living longer, medical costs are increasing steadily

what are tax increases that would be associated with medicare costs growing?

medicare payroll taxes must increase immediately

delaying tax increases now will force taxes to increase by a very high rate in 2030

other option is to cut spending in part A with hospitals

what happens if medicare taxes aren’t raised?

non health expenditures will need to be cut, most likely in social security

what could restructuring medicare look like?

increasing eligibility from age 65 to 67

increasing part B and D premiums so they cover more of the costs

raising payroll taxes

turning medicare into a premium support program so everybody shifts into part C

change cost sharing rules for medicare and restrict medigap

what does the federal gov decide in Medicaid?

who must be covered, what types of medical services must be offered, and restricting cost sharing

what do states decide in Medicaid?

who is eligible beyond the minimum set by the federal gov, how much to raise its share of the program’s cost, how much to pay healthcare providers (physicians, hospitals), and how to administer its own program

how have the stigma of public assistance and state discretion hampered medicaid?

medicare was popularly approved and recognized the dignity of social security, whereas medicaid was burdened by the stigma of public assistance

medicare had uniform national standards for eligibility and benefits, whereas medicaid allowed states to decide how extensive their programs should be

medicaid’s ultimate goal was to allow the poor to buy into mainstream medicine, but the fed gov and states were not willing to spend the money that would be needed

what were the eligibility rules/federal mandates of legacy medicaid (before the 2010 ACA)?

low income children, pregnant women, adults under 65 (depending on the state), blind/disabled people, low-income medicare beneficiaries

what are eligibility rules for medicaid like for documented immigrants?

must 5 years after entering US

how have the states differed in extending eligibility beyond the minimum federal requirement?

southern states have generally covered fewer people

1. adults without children are ineligible, regardless of income

2. parents are only eligible if their income is less than 50% of FPl

some states have both policies

northern states are generally more generous in coverage

e.g. expansive states cover all adults if their income is < 133% of FPL

what does the ACA encourage in the context of low-income people and medicaid?

ACA encourages states to offer medicaid to low income people who aren’t already eligible and to subsidize private health insurance for middle income people

what has the ACA been doing to make restrictive states more expansive?

ACA encourages restrictive states to be more expansive by picking up 90% of the costs for newly eligible people

how did medicaid expand in the ACA?

19 million more people were newly enrolled in Medicaid due to the ACA
income limit increased so many adults who were originally ineligible now qualified if their state expanded

government funded 100% of newly eligible enrollees for 2 years

supreme court made medicaid expansion optional so the federal gov couldn’t pull existing funding for states that didn’t opt to expand

how many states did not opt in to to the ACA enabled medicaid expansion?

10 states

does medicaid cover the entire low income population?

no there are many low income people in the south who are uninsured bc their state didn’t participate in the ACA medicaid expansion

what is the trend of medicaid enrollment since 1980?

enrollment has tripled since 1980, significant enrollment increase

what are the mandated benefits in medicaid coverage?

hospital care, outpatient and physician, long term nursing home care, home care, lab tests and other medical benefits

what are the optional benefits in medicaid coverage?

prescription drugs but all states choose to cover them

what is the trend of medicaid spending from 1980 to 2024?

medicaid spending has increased sharply especially within the last 20 years

what is the distribution of medicaid spending on the covered groups?

a lot of spending for disabled and elderly

relatively little for children and adults

what have studies revealed about children who became eligible for medicaid as a child?

very beneficial long term health and financial effects

pays for itself

what were some of the long term financial and health effects from these studies?

healthier from 25-54 years old

more likely to complete high school and complete college

work more and earn higher wages

receive fewer government payments

pay more in lifetime taxes

produce more than 10 million QALYs

how is pre-ACA, legacay Medicaid financed?

costs are shared between state and federal gov

federal gov’s share is based on state’s per capita income

the federal gov pays for about 60% of overall medicaid expenditures nationally, higher in low-income states

how do state governments spend on medicaid compared to higher education?

state gov spends twice as much on medicaid as higher education, a more politically popular program

how do state govs respond to unfunded federal mandates, high medical costs, and pressure to keep taxes low?

medicaid pays physicians and hospitals much less than private health insurers do

what is compensation like for medicaid and medicate to physicians and hospitals?

medicare pays physicians 25% less and hospitals 50% less

medicaid pays physicians and hospitals 50% less

in some states, medicaid pays high physician fees e.g. alaska

in other states reimbursement is low e.g. florida

what happens to new medicaid patients with physicians?

they aren’t accepted into the physician’s practice bc of low fees, resulting in fewer services and worse health for medicaid users

what is the hierachy like for the percentage of physicians accepting new patients by patient type?

medicaid 77%

medicare 88%

private insurance 96%

what would happen if medicaid paid physicians as generously as medicare?

medicaid patients would receive 20% more medical services and report very good or excellent health

what happens to the people who are in the 10 states that did not opt to expand medicaid but are less than 138% below the FPL?

not allowed to receive ACA exchange subsidies bc they are too rich for medicaid, but too poor to quality for an ACA exchange subsidy tax/credit

why are 10 states refusing to expand medicaid?

turning down money bc they’re unsure how long the benefits will last and how long the federal gov will be funding this expansion

if the states opt in and the federal gov cuts funding, states may not have enough money themselves to support these people

how have states expanded in creative ways?

states identify enough savings to offset their required cost of covering the newly eligible (MI)

hospitals pay the state’s 10% obligation (NC)

low and middle income people buy private plans on the ACA exchange (AK, IO, NH)

how has political popularity of the ACA prevented repbulicans from repealing it?

republicans almost repealed the ACA in 2017

too popular to repeal, but OBBA is gradually starting to chip away

what is the OBBA doing for medicaid spending?

reducing medicaid spending by 10% a year

restricting states’ ability to receive funding from the federal gov to pay for medicaid, with more severe impacts on the 40 states that expanded

work requirements in ACA expansion states, optional in 10 states

how could states respond to this OBBA change?

increasing state taxes (unlikely)

paying MDs and hospitals less (likely)

enforcing work requirements (likely)

how many people are going to become uninsured bc of the OBBA? main effects in 2027

10 million people

what are the medicaid work requirements introduced by the OBBA?

80 hours of work, education or community service per month

what proportion of medicaid beneficiaries are expected to satisfy the work requirements?

88% if they can provide evidence promptly

how many people are expected to lose medicaid coverage as a result of the OBBBA work requirements?

5 million people

states need to build systems that will track if someone fulfills the work requirement

what happened in arkansas when the state instituted medicaid work requirements in 2018?

eliminated 18,000 medicaid beneficiaries

did not increase the workforce

summary of medicare

mainly covers elderly, popular, financed by federal gov, pay as you go, high payment rates for healthcare providers

summary of medicaid

covers low-income families, disabled, and low income elderly, stigma of welfare, financed by state and federal gov, pay as you go (paid with general federal and state tax revenues), low payment rates for healthcare providers

what used to be the dominant model between physicians and hospitals?

physicians used to primarily work independently from hospitals

how do insurers compensate physicians?

capitation - more common in the 1990s

fee for service

what other practice arrangements exist?

specific specialties form an exclusive contract with a hospital

hospitals purchases an MD’s practice

insurer as employer

specific specialties form an exclusive contract with a hospital

form a physician group practice and each physician is paid a salary

hospitals purchases an MD’s practice

health system collects practice revenues, pays all practice expenses, and keeps any practice profit

health system tries to capture most of the physician’s hospital admission

insurer as employer

MD might only treat that insurer’s patients

insurer pays all practice expenses

how does medicare pay MDs with a FFS system called RBRVS (resource-based relative value scale)?

medicare sets the fees

no negotiation

what is the goal of RBRVS?

equalization between physicians - reduce income differences between specialists and pcp

limit spending growth - slow the growth rate of medicare part B spending

limit payments - limit out of pocket payments for elderly

which goals was RBRVS successful or not in completing?

failed in equalizing pay

succeeded in limting spending growth and payments

what is the overview of medicare’s RBRVS payment system?

1. patients categorized into one of 8000 codes for office visits, consultations, and surgery

2. each code is assigned 3 separate relative value units

3. congress sets payment for each RVU unit

4. product of the RVUs for the code and the payment per unit determines how much the MD is paid

5. medicare forbids MDs from balance billing, they must accept the RBRVS payment as final

6. MDs can decide whether or not to participate in Medicare, but most physicians do

what are the three components of RBRVS?

malpractice expense, practice expense RVU, work RVU

what is an example of practice expense RVU?

rent, salaries

what is an example of work RVU?

time, mental effort, technical skill

how are RVUs adjusted?

adjusted by a geographic practice cost index to reflect the relative costs of practice expenses in different areas

how does the RBRVS system pay specialists/non pcp vs pcp?

specialists/non pcp are paid much more per hours than pcp

e.g. colonoscopy has a higher RVU than an office visit

how does the medicare method become the benchmark for private health insurers?

RBRVS influences private insurer pay as they negotiate with physicians and adjust the entire medciare RBRVS schedule by mainting the relative payments btw CPT codes

private plans pay physicians more than medidcare RBRVS

how do private insurers’ physician fees compare to medicare and medicaid’s?

physician fees for private insurers are 47% higher than medicare’s and twice as high as medicaid’s

why do some physician practices and health systems receive much higher fees from private insurers than others?

private insurer negotiates with a provider regarding whether the provider wants to be in the network and how much they’ll be paid

providers with value command higher prices

insurers who are important will pay lower prices to the provider

what are the key takeaways about differences in physician practice/health system compensation with health insurers?

physicians and hospitals that are highly valued by patients will be paid more

larger and better physician practices/health systems will get more money from a private insurer

what is the current trend of MDs and forming physician groups?

larger groups have more negotiating power with private insurers

48% are in practices with 10 or fewer physicians

what has been the trend in the last decade for physicians empoyed by a hospital/health system?

majority of physicians are employed

steady increase over time

what are the incentives of a physician being employe by a health system/hospital?

receive higher private insurance fees

employed MDs tend to concentrate admissions to the employing hospital

why are physicians increasingly becoming hospital employees?

better negotiation of higher payment rates with payers

improved access to costly resources

better management of payers admin requirements

operating a physician practice is becoming more expensive, complicated and risky

health systems can negotiate higher fees for MD practices

private health insurers and medicare are shifting physicians and hospitals away from FFS

physicians and hospitals need to be united

MDs need to use expensive EMR and hospitals can help to pay these systems

what are some of the lifestyle choices that explain why physicians may work for a health system/hospital?

hospitals can help run the practice, allowing physicians to spend more time on patient care

what are the physicians at work issues?

physicians generate revenue for their practice by treating patients in their office and the hospital

physician practices are paid by health insurers regardless of whether or not a hospital owns the practice

practices can be paid according to a fee schedule or by capitation

medicare’s RBRVS fee schedule bases a physician’s payment on the time and effort of a task, as well as a physician’s practice and malpractice costs

private insurers usually pay MDs by adjusting the medicare fee schedule, larger and better physician practices negotiate and receive higher fees

physicians are increasingly giving up independence and becoming hospital employees

what is the ACA digression?

all health plans must cover 10 essential health benefits and cannot charge patients co pays for preventive services

how has the slow growth in the number of physicians contributed to a physician shortage in the US?

US population, specifically above 64 has grown a lot

the number of positions in med school hasn’t grown at a proportionate rate

what has been the trend of US physicians per capita since 1930?

number of physicians has doubled

initial slowdown because there were too many low quality physicians so med schools closed down

compared to OECD nations, where does the US fall?

the US has fewer physicians than most high income countries

how have appointment wait times highlighted the issue of physician shortages?

in large cities, the average time to schedule an MD appointment has been increasing over the years

shortage is worse in certain areeas and in non pcp specialties

US isn’t alone in physician shortage but worse than high income countries

how did the 1981 decision affect future physician supply?

incorrectly predicted a surplus of physicians by 2000

recommended cutting down enrollment and limiting the number of foreign trained doctors

congress responded by getting rid of med school subsidies