Chapter 15 & 16: Health Insurance

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Last updated 1:16 AM on 10/28/24
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5 Terms

1
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Traditional Consumer Transaction 

  • Goods to Buyer

  • Money to Seller

2
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Healthcare Transaction

  • Consumer/Buyer pays premium or taxes to the Third-Party

  • Third-Party makes payment to Provider/Seller

  • Provider/Seller provides healthcare to Consumer/Buyer

3
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Effect of Three-Party Healthcare Transaction

  • Patient/Insured/Employee 

    • Lower "user price" of healthcare 

    • Less incentive to act as a traditional consumer

    • What does this increase?

  • Healthcare Providers  

    • Payment system based on fee-for-service (FFS)

    • For each service (x-ray, flu test, etc.), a separate fee is paid.   

4
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End Result of Healthcare Transaction 

Patients with Insurance + Providers paid by FFS = Overutilization of Healthcare 

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High Cost of Healthcare in U.S. 

  • U.S. national health expenditures 

    • Nearly $4500000000000 in 2022 

    • 16.6% of Gross Domestic Product (GDP) 

    • 1 out of every 6 dollars spent on healthcare! 

    • $12555 per capita 

  • Compared to other countries

    • Switzerland: $8049 per capita

    • Germany: $8011 per capita

    • Netherlands: $6729 per capita

    • Canada: $6319 per capita