PUBPOL 2350: Prelim #2 ~ Master Set

What are the four parts of Medicare?

Part A covers inpatient hospital and some skilled nursing/home care; Part B covers physician and outpatient care; Part C is Medicare Advantage through private insurers; Part D covers prescription drugs through private plans.

What is the history of Medicare?

Johnson signed Medicare legislation in 1965 and coverage began in 1966. Truman received the first Medicare card. Bush signed the Medicare Modernization Act in 2003, with its drug benefit beginning in 2006.

Who is eligible for Medicare?

Generally, adults 65+ who meet work-history requirements; people under 65 with qualifying disabilities, usually after a two-year wait; and people with ESRD, covered beginning in 1973.

What is the "Swiss cheese" problem in Medicare?

Medicare has deductibles, coinsurance, and coverage gaps. Traditional Medicare generally excludes long-term nursing-home care, routine dental care, dentures, eyeglasses, and hearing aids.

What are the implications of Medicare's coverage gaps?

Beneficiaries may face large out-of-pocket expenses. In 2024, average beneficiary medical spending was about $6,150, around 26% of Social Security income.

What are Medicare Part A and Part B cost-sharing examples from the notes?

The notes list a $1,700 annual Part A hospital deductible and 20% Part B coinsurance. Part B's listed monthly premium is $203.

What supplemental coverage do Medicare beneficiaries use?

Medigap, Medicaid, or Medicare Advantage. In 2021, 94% of beneficiaries had some form of supplemental coverage.

How does Traditional Medicare differ from Medicare Advantage?

Traditional Medicare generally uses fee-for-service and offers broad provider choice. Medicare Advantage uses private plans, often with narrower networks and prior authorization, and may add benefits.

What are the implications of Medicare Advantage's extra benefits and restrictions?

Plans may include drug, dental, and vision benefits and cap out-of-pocket spending, but networks and prior authorization can limit access. About 55% of beneficiaries were in Medicare Advantage in 2025.

How is Medicare Part A financed?

Primarily through a 2.90% payroll tax split between employers and employees, plus an additional 0.90% tax on high-income earners.

How are Medicare Parts B and D financed?

General federal revenues cover about 76% of their costs, with beneficiary premiums covering the remainder. Higher-income beneficiaries pay higher premiums.

What were Medicare's main financing sources in 2024?

General taxes 44%, payroll taxes 35%, beneficiary premiums 15%, and other sources 6%.

Why does Medicare face long-term financing pressure?

The population is aging, people live longer, medical costs rise, and fewer workers support each beneficiary.

How has the worker-to-Medicare-beneficiary ratio changed?

It fell from 3.7 workers per beneficiary in 1970 to 2.8 in 2023; the notes project 2.5 by 2029.

What are the implications of the declining worker-to-beneficiary ratio?

Fewer workers support each beneficiary, putting pressure on payroll taxes, premiums, benefits, other federal spending, and borrowing.

How has Medicare spending grown?

Spending rose from $37 billion in 1980 to $1,118 billion in 2024. Medicare's share of U.S. medical spending rose from 15% to 22%.

What are the projected implications of Medicare growth?

The notes project about 69 million people covered in 2025 and 76.8 million by 2030, increasing pressure on federal financing.

What are the options for financing Part A through 2048?

Raise the payroll tax immediately from 2.9% to 3.4%; delay action until 2030 and raise it to 11%; or make an estimated 11% cut in Part A spending if taxes do not rise.

What Medicare policy changes have estimated 10-year savings?

Raising eligibility age to 67: $100 billion; increasing B/D premiums to cover 35% of costs: $418 billion; adding one percentage point to payroll tax: $651 billion; premium support requiring Part C: $275 billion; changing cost-sharing/restricting Medigap: $116 billion.

Why is Medicare reform politically difficult?

Older adults are a powerful voting group, and Medicare is popular and associated with dignity and Social Security.

What share of the 2025 federal budget went to Medicare and Medicaid together?

About 27%, according to the lecture notes.

What is the site-of-care billing loophole?

When a hospital acquires a physician office, services performed there may be billed at higher hospital-outpatient rates rather than office rates.

What are the implications of the site-of-care billing loophole?

The same service can cost Medicare much more without necessarily changing the care received. The notes cite a $73 office visit versus $154 hospital outpatient visit in 2016 and an estimated $1.6 billion in annual extra spending.

What services does Medicaid generally cover?

Hospital and outpatient care, physician services, labs, long-term nursing-home and home care, and other medical benefits. Although prescription drugs are technically optional, every state covers them.

How does Medicaid cost-sharing generally compare with private coverage?

Medicaid has low cost-sharing, and federal rules establish minimum benefits while allowing states to provide more.

Why are there 51 different Medicaid programs?

Each state and the District of Columbia operate programs under federal minimum rules, with variation in eligibility, financing, provider rates, and administration.

Who qualified under legacy Medicaid rules in the lecture notes?

Examples include children under six below 133% of the federal poverty level, children ages 6-19 below 100%, pregnant women below 133%, people who are blind or disabled with little income, and low-income Medicare beneficiaries.

How did legacy Medicaid treat low-income adults under 65?

Coverage depended heavily on state rules. Some states did not cover childless adults, and parents could face income limits below 50% of the federal poverty level.

What is the federal poverty level example from the notes?

About $31,000 annually for a family of four.

What did the ACA Medicaid expansion do?

It offered coverage to eligible adults with incomes up to about 138% of the federal poverty level. The expansion became optional for states after the Supreme Court ruling.

How is ACA expansion financed?

The federal government paid 100% of expansion costs from 2014-2016, then phased down to a 90% federal share, leaving states responsible for 10%.

What are the implications of Medicaid expansion for coverage?

The notes attribute about 19 million new enrollees to expansion, which increased coverage for low-income adults in participating states.

What is the ACA Medicaid coverage gap?

In non-expansion states, some adults have incomes too low for exchange subsidies but do not qualify for Medicaid under state rules.

What are the implications of the coverage gap?

Some of the poorest adults remain uninsured. The lecture notes estimate about two million people in the gap.

Why do some states decline Medicaid expansion?

Political opposition, concerns about future state costs, and disagreements over government's role, even though states forgo substantial federal funding.

What financial trade-offs do non-expansion states face?

They forgo federal dollars and leave more residents uninsured, while local providers may receive less funding. Residents still pay federal taxes supporting expansion elsewhere.

How does Medicaid's federal matching rate vary by state?

It is tied to state per-capita income. The notes cite about 77% federal funding in Mississippi, or $3.34 federal per state dollar, compared with roughly 50% in high-income states such as New York, New Jersey, and Connecticut.

What is Medicaid's approximate national federal funding share?

About 60% nationally for the legacy program, according to the notes.

How has Medicaid spending grown?

Spending rose from $23.3 billion in 1980 to $932 billion in 2024; its share of U.S. medical spending increased from 9% to 19%.

How has Medicaid enrollment changed?

The notes list 20.4 million enrollees in 1980, 44.5 million in 2000, 62.5 million in 2014, 72.2 million in 2017, and more than 80 million during COVID.

Which Medicaid groups have the highest spending per enrollee?

In 2023, the notes list $3,292 for adults, $4,353 for children, $15,811 for elderly enrollees, and $19,401 for disabled enrollees.

What are the long-term implications of childhood Medicaid coverage?

Research in the notes associates childhood coverage with better adult health, more high-school and college completion, higher employment and wages, fewer transfer payments, and higher lifetime tax contributions.

What fiscal return did the notes attribute to childhood Medicaid?

One cited estimate suggests government recoups about $2 for every $1 invested in childhood Medicaid, alongside substantial gains in quality-adjusted life years.

How do Medicare and Medicaid differ in their target populations and funding?

Medicare mainly covers older adults and certain disabled people and is federally administered. Medicaid serves eligible low-income groups and is jointly funded and administered by federal and state governments.

How do Medicare and Medicaid differ in provider access?

Medicare generally pays providers more generously and has broader participation. Medicaid's lower payment rates can contribute to fewer participating physicians and longer waits.

How do provider payments under Medicaid compare with private insurance?

The notes estimate Medicaid physician and hospital payments average about 50% below private payments; Medicare physician payments are about 25% lower and hospital payments about 50% lower.

What did the 2017 new-patient acceptance figures show?

Physicians accepted new patients at rates of 77% for Medicaid, 88% for Medicare, and 96% for private insurance.

What are the implications of low Medicaid provider payments?

Lower reimbursement may reduce physician participation and access. One estimate suggests Medicaid patients would receive 20% more services and report better health if physician payments matched Medicare's generosity.

What is the One Big Beautiful Bill Act (OBBBA)?

The 2025 federal law, HR1, that the lecture notes project will reduce Medicaid spending and coverage through funding restrictions, provider-tax changes, and work requirements.

What Medicaid effects did the notes project for OBBBA?

About $90 billion less Medicaid spending per year, roughly a 10% reduction, and around 10 million more uninsured people; major impacts were expected to begin in 2027.

How could OBBBA's Medicaid funding restrictions affect states?

States may cut provider payments, reduce benefits or other spending, or raise taxes. The lecture notes suggest provider-payment cuts are more likely than tax increases.

What Medicaid work requirements did OBBBA introduce in the notes?

Certain non-disabled adults ages 18-64 in expansion Medicaid must complete 80 hours per month of work, education, or community service if they do not have a dependent under age 14.

What are the implications of Medicaid work requirements?

People who fail to document qualifying activity may lose coverage even if they are working or eligible for an exemption. Reporting systems are costly and can create administrative barriers.

What did Arkansas's 2018 Medicaid work requirement experience show?

The notes report no increase in employment and about 18,000 people losing coverage.

What did research find about people targeted by work requirements?

The notes say more than 95% already met the activity requirements or should have qualified for exemptions; many were unaware of the rules or confused by reporting.

Why might OBBBA affect expansion states substantially?

Expansion states rely on federal expansion funding, so new funding restrictions and work requirements may require costly administrative changes or cuts.

What was the purpose of Arkansas, Iowa, and New Hampshire's expansion approach described in the notes?

They used expansion funding to purchase private exchange plans rather than relying only on traditional Medicaid arrangements.

What is the public-perception difference between Medicare and Medicaid?

Medicare is popular and associated with earned benefits and dignity; Medicaid carries more stigma because it is associated with public assistance.

How do ACA exchange subsidies work?

Subsidies are based on income and benchmark premiums, generally using the second-lowest-cost silver plan. The subsidy helps cover the premium above the required income contribution.

What determines how much an eligible household pays for an exchange plan?

Household income, family size, the benchmark silver premium, and the selected plan's price relative to that benchmark.

What are the implications of ACA exchange subsidies?

They make coverage more affordable for eligible households, but premiums and subsidy amounts vary by location, age, income, and plan choice.

Why might a bronze plan cost less than a silver or gold plan after subsidies?

Benchmark subsidies are tied to the second-lowest-cost silver plan. A cheaper bronze plan may have a lower premium and can sometimes cost very little after subsidies.

Why do some people remain uninsured despite coverage programs?

Coverage may be unaffordable; Medicaid eligibility varies by state; some small employers do not offer insurance; some people decline employer plans; and some eligible people do not enroll.

What is the ACA preventive-care requirement in the notes?

Plans must cover ten essential health benefits, and covered preventive services cannot have patient copays.

How do private insurers and physicians negotiate payment?

They negotiate network participation and payment rates. A physician's perceived quality, access, market share, and importance to enrollees affect bargaining power.

What gives a physician practice greater negotiating power with private insurers?

Larger size, higher perceived quality, market share, and the insurer's dependence on the practice or limited alternatives.

What is fee-for-service (FFS)?

Payment for each service provided. More visits or procedures generally generate more revenue.

What are the implications of fee-for-service?

It can reward volume and more billable services, potentially encouraging more care even when additional services are not always necessary.

What is capitation?

A fixed payment per enrolled member per month, regardless of how many visits or services that person uses.

What are the implications of capitation?

It can reward prevention and cost control but may also create incentives to limit services. It was more common in the 1990s and is relatively uncommon today, according to the notes.

What is Medicare's Resource-Based Relative Value Scale (RBRVS)?

A physician-payment system introduced in 1992 that assigns relative values to services using work, practice expense, and malpractice expense.

What are the three components of RBRVS?

Physician work, practice expense such as rent and staff, and malpractice expense.

How is an RBRVS payment calculated?

Relative value units are adjusted by a geographic practice-cost index and multiplied by a conversion factor. The notes list conversion factors of $34.89 in 2021 and $33.60 in 2026.

What are the implications of Medicare's RBRVS payment system?

It standardizes payment and adjusts for geographic costs, but may not fully value primary-care work. The notes say it slowed Part B spending growth and limited elderly out-of-pocket costs, but did not eliminate specialist-primary care income differences.

What does it mean for a physician to accept Medicare assignment?

The physician accepts Medicare's approved payment as final, apart from applicable patient cost-sharing, rather than balance-billing above the permitted amount.

How many physicians participate in Medicare?

The notes say about 97% participate.

How do private physician payments compare with Medicare?

About 74% of private insurers use negotiated adjustments to the RBRVS framework. Private insurers paid an average of about 47% more than Medicare in 2024.

What are the implications of private insurers using Medicare's fee schedule as a benchmark?

Relative payment differences between services are often preserved, but negotiated increases mean actual private payment levels can be much higher.

What payment differences exist between primary care and specialties?

The notes give average hourly pay of $114 for primary-care physicians and $244 for specialists; procedures may be reimbursed more than time-intensive conversations.

What examples show different Medicare physician payments?

The notes list $94.20 for a complex established office visit, $96.30 for an intermediate new-patient visit, $670.10 for a colonoscopy, and $202.80 for cataract surgery.

What are the implications of paying more for procedures than for primary-care time?

Payment incentives may favor procedures and specialties over primary care, potentially contributing to income gaps and shortages in less lucrative fields.

How does an independent medical practice operate financially?

It receives service revenue and pays rent, staff, malpractice insurance, and other expenses; remaining profit goes to the physician owners.

What changes when a hospital employs a physician?

The physician receives a salary, while the hospital retains the practice's profit or absorbs its losses and separately bills for covered services and facility fees where applicable.

Why might hospital-employed physicians direct admissions to their employer's hospital?

The hospital has a financial interest in receiving admissions and related services, although physicians may also admit patients elsewhere.

How has physician employment changed?

The share employed by hospitals or health systems rose from 26% in 2012 to 47% in 2019, 53% in 2022, and 55% in 2024.

What share of physicians worked in practices of ten or fewer in 2024?

About 48%, according to the AMA figure in the notes.

Why are more physicians becoming hospital employees?

Independent practice is costly and complex; hospitals can negotiate stronger private rates, manage expensive electronic records, and support coordination and population-health payment models.

What are the potential implications of hospital ownership of physician practices?

It may improve coordination and administrative support but can increase consolidation, reduce competition, and increase spending through facility fees.

What are the incentives described for physicians working in underserved areas?

The notes mention federal graduate loans at lower rates, 10% higher Medicare payments in underserved areas, and potential remaining federal loan forgiveness after ten years of government or nonprofit employment.

How has the number of U.S. physicians per capita changed?

It rose from roughly 140 physicians per 100,000 people in 1930 to 267 in 2022, although the U.S. still has fewer physicians per capita than many high-income countries.

How does U.S. physician supply compare internationally?

The notes list 2.8 physicians per 1,000 people in the U.S. versus an OECD average of 3.8; Germany and France are listed at 4.5, Italy at 4.3, Canada at 3.4, and the U.K. at 3.2.

What are the implications of slower U.S. physician-supply growth?

The U.S. may face worsening access and longer waits if demand grows faster than physician supply, particularly in certain regions and specialties.

How have population growth and physician training capacity changed?

From 1980 to 2025, the U.S. population grew about 50%, the population over 64 grew about 140%, and first-year positions at traditional U.S. MD schools grew about 34%.

What is the physician training pipeline?

Four years of medical school, followed by three to five or more years of residency, then a career that can last over 30 years.

Why can't simply opening more medical schools solve physician shortages quickly?

Students still need residency positions, which largely determine the number of new physicians entering practice. Training takes years.

What is the residency bottleneck?

Medical-school applicants and graduates compete for a limited number of residency positions. Federal funding for residency positions was essentially frozen in 1998, although positions have grown without equivalent federal funding.

What are the implications of a residency bottleneck?

More medical-school graduates do not automatically translate into more practicing physicians; residency capacity and immigration policy also affect supply.

How has the number of U.S. allopathic medical schools changed?

The notes list 85 schools in 2002 and 160 in 2025. There were no new U.S. allopathic schools from 1980 to 2002.

What did the 1981 GMENAC forecast predict?

It predicted a surplus of 145,000 physicians by 2000 and recommended restricting U.S. medical-school enrollment and foreign-trained physician immigration.

How did physician-shortage forecasts later change?

In 2005, COGME predicted a shortage of 85,000 by 2020 and recommended a 30% enrollment increase. The notes say AAMC later projected a shortage of 124,000 by 2034.