Health Policy and Healthcare Systems Vocabulary

Comprehensive vocabulary flashcards covering theoretical concepts, insurance structures, Medicare, Medicaid, and healthcare policy reform from the lecture series.

The Triple Aim

A paradigm of health system improvement that aims to optimize individual experiences of care, improve population health, and minimize per capita healthcare costs.

The Iron Triangle of Health Policy

A paradigm for evaluating health policy trade-offs stating that it is exceedingly difficult to simultaneously improve access, improve quality, and reduce cost.

Andersen's Behavioral Model of Health Care Utilization

A conceptual model that organizes the determinants of healthcare utilization into predisposing factors (e.g., demographics), enabling factors (e.g., insurance coverage), and need factors (e.g., objective and perceived health conditions).

5 A's of Access

A framework describing healthcare access dimensions: Affordability, Availability, Accessibility, Accommodation, and Acceptability.

Affordable Care Act (ACA)

A law passed in 2010 (with major provisions implemented in 2014) that expanded Medicaid, reformed the individual health insurance market, and provided financial assistance to increase health insurance coverage.

One Big Beautiful Bill Act (OBBB)

A law passed in 2025 that restricted Medicaid eligibility, instituted Medicaid work requirements starting in 2027, and altered health system rules to reduce federal health spending.

Arrow's Description of the Medical Care Market

An economic framework identifying unique features of medical markets: unsteady/unpredictable demand, expected provider altruism, asymmetric/uncertain quality information, artificial supply constraints, and poor price signaling.

Normal Good

A good or service for which demand increases as consumer income rises and decreases as income falls; health care is categorized as a normal good.

Donabedian's Model of Quality Measurement

A quality measurement paradigm categorizing healthcare measures into structure (physical/organizational settings), process (activities between providers and patients), and outcome (changes in health status attributable to care).

Administrative Burdens

Psychological (stigma), informational/learning, and compliance costs (time/complexity) associated with accessing public programs or healthcare services.

Conventional Theory for the Demand of Health Insurance

A theory stating consumers demand health insurance because they prefer a certain financial loss (the premium) over an uncertain loss of equal expected size (medical expenses).

New Theory for the Demand of Health Insurance (Nyman's Model)

A theory stating consumers demand insurance to obtain additional income via point-of-service price reductions when sick, enabling them to afford otherwise unaffordable care (the access motive).

Asymmetric Information

An imbalance in knowledge and expertise between the producer/provider of a service and the consumer, influencing market dynamics like adverse selection and supplier-induced demand.

Moral Hazard

Any change in behavior resulting from being insured; in health care, it primarily refers to additional medical care consumed because insurance reduces point-of-service prices.

Adverse Selection

The tendency for sicker individuals to be more likely to purchase health insurance and pay higher premiums than healthier individuals.

Death Spiral (Unraveling)

A continuous cycle where healthy individuals leave a risk pool as premiums rise, forcing premiums higher to cover the remaining sicker pool until the plan collapses.

Supplier Induced Demand (SID)

Additional medical care recommended by a provider that a patient would not choose for themselves if they possessed the same level of medical expertise as the provider.

Community Rating

A method of setting health insurance premiums based on the average medical spending of the entire risk pool rather than individual health histories.

Guaranteed Issue

A regulatory requirement mandating that insurers sell policies to any consumer willing to pay the premium, regardless of pre-existing health conditions.

Medical Underwriting

The practice of setting individual insurance premiums or determining eligibility based on an applicant's pre-existing health conditions and expected medical expenses.

Employer Sponsored Insurance (ESI)

Health insurance provided by employers to workers, typically financed through joint employer and employee premium contributions.

Tax Exclusion of ESI Premiums

The tax policy exempting employer and worker contributions to ESI premiums from federal income and payroll taxes, costing the federal government about $250 billion per year.

Compensating Wage Differential

The inverse economic relationship between employer contributions to ESI premiums and worker wages/salaries.

ERISA

The Employee Retirement Income Security Act; a federal law establishing minimum standards for health plans, exempting self-insured employer plans from state regulations and mandates.

Actuarial Value (AV)

The percentage of average medical expenses an insurance plan will cover for a standard population.

Medical Loss Ratio (MLR)

The percentage of premium revenue an insurer spends on clinical medical expenses and quality improvement rather than administration and profits.

Health Savings Account (HSA)

A tax-advantaged account coupled with high-deductible health plans that can be funded pre-tax by consumers and employers, rolled over annually, and invested.

Fee-for-Service (FFS)

A healthcare payment mechanism in which each medical service provided to a patient is billed and paid for separately.

Capitation

A provider payment mechanism where a provider is paid a fixed, predetermined amount per enrolled member per period, regardless of service volume.

Gatekeeping

A managed care technique requiring a patient to obtain a referral from a primary care provider before receiving care from a specialist.

Health Maintenance Organization (HMO)

A managed care organization type highly integrating insurance and care delivery, typically requiring primary care gatekeeping and restricting coverage to in-network providers.

Preferred Provider Organization (PPO)

A health plan contract featuring in-network and out-of-network provider coverage with lower cost-sharing for in-network care and usually no gatekeeper requirement.

Point of Service Plan (POS)

A managed care plan offering both in-network and out-of-network coverage that incorporates a primary care physician gatekeeper for specialist referrals.

Exclusive Provider Organization (EPO)

A managed care contract requiring patients to see in-network providers exclusively (except in emergencies), but without requiring a PCP gatekeeper referral.

Prior Authorization

A utilization management tool requiring providers and patients to obtain advance permission from an insurer before a service is delivered for it to be covered.

Centers for Medicare and Medicaid Services (CMS)

The federal agency within the Department of Health and Human Services responsible for administering Medicare, Medicaid, and CHIP.

Medicare Part A

The Medicare benefit component covering inpatient hospital stays, short-term skilled nursing facility stays, and post-acute home health care.

Medicare Part B

The Medicare benefit component covering outpatient physician care, hospital outpatient services, preventive care, and provider-administered medications.

Medicare Part D

The Medicare prescription drug coverage benefit administered by private plans across distinct standard benefit phases.

Medicare Advantage (MA)

Medicare Part C, allowing beneficiaries to enroll in private plans (HMOs/PPOs) that cover Part A and B services, usually Part D, and supplemental benefits.

Medigap

Supplemental private health insurance policies purchased by beneficiaries in traditional Medicare to cover cost-sharing requirements like copayments and deductibles.

Inpatient Prospective Payment System (IPPS)

The payment system for inpatient hospital stays in Medicare, paying hospitals a pre-determined standard rate per discharge adjusted for patient severity and geography.

Diagnosis-Related Group (DRG)

A patient classification system combining diagnoses and procedures that forms the basis of patient severity payment adjustments under Medicare's IPPS.

Resource Based Value Scale (RBRVS)

The payment system used to pay Medicare Part B providers based on a fee schedule assigning Relative Value Units to medical services.

Relative Value Unit (RVU)

A weighting factor assigned to medical services on the physician fee schedule reflecting clinician work, practice expense, and malpractice insurance resources.

Relative Value Scale Update Committee (RUC)

A committee of physicians organized by the American Medical Association that advises CMS on setting and updating RVU weights.

Merit-Based Incentive Payment System (MIPS)

A Medicare Quality Payment Program that applies positive or negative payment adjustments to physician Part B fees based on performance across selected quality metrics.

Site Neutral Payments

Policy proposals designed to equalize Medicare payment rates for identical services delivered in different care settings, such as hospital outpatient departments versus private doctor offices.

Accountable Care Organization (ACO)

A formal group of doctors, hospitals, and other healthcare providers who voluntarily unite to coordinate patient care and assume joint responsibility for quality and costs.

Medicaid

The joint federal-state health insurance program offering medical coverage to low-income individuals, families, and people with certain disabilities.

Federal Medical Assistance Percentage (FMAP)

The percentage share of state Medicaid expenditures paid by the federal government, calculated based on a state's per capita income (ranging between $50\%$ and $76\%$).

Children's Health Insurance Program (CHIP)

A companion public program to Medicaid providing health coverage to children in families earning too much to qualify for Medicaid but unable to afford private coverage.

Early and Periodic Screening, Diagnostic, and Treatment (EPSDT)

A mandatory Medicaid benefit rule requiring all state programs to provide comprehensive preventive, vision, dental, and medical services to enrolled children.

Modified Adjusted Gross Income (MAGI)

The income methodology used to determine financial eligibility for Medicaid and health insurance Marketplace tax credits.

ACA Medicaid Expansion

An ACA provision allowing states to expand Medicaid coverage to non-elderly adults aged 19–64 with incomes up to $138\%$ of the federal poverty level regardless of family structure.

Churn

The temporary loss and subsequent re-enrollment of individuals in health insurance (such as Medicaid) due to short-term income fluctuations or administrative friction.

Plan Tiers (Metal Levels)

Standardized health plan categories sold on ACA exchanges reflecting actuarial value: Bronze ($60\%$ AV), Silver ($70\%$ AV), Gold ($80\%$ AV), and Platinum ($90\%$ AV).

Premium Tax Credits

Sliding-scale financial subsidies established under the ACA that reduce monthly premium costs for eligible individuals purchasing Marketplace coverage.

Cost-Sharing Reduction (CSR) Program

An ACA financial assistance provision that lowers out-of-pocket costs for Marketplace enrollees below $250\%$ FPL who select Silver tier plans.

Silver Loading

The strategy where insurers and regulators concentrated premium increases exclusively on Silver tier plans after federal CSR payments were halted, increasing consumer tax credits.

Expenditures

The product of unit price and quantities. Represent the total amount spent on a set of goods or services.

Health Insurance

A contract between a consumer and a firm in which the consumer agrees to pay a fixed monthly fee (the premium) in exchange for the firm paying the consumer’s medical expenses. The benefits paid to the consumer typically appear as a reduction in the price the consumer pays at the point of service, when purchasing a medical service.

Benefit Design

The list of services and their cost-sharing amount that an insurance plan covers for its members

Premium

The fixed payment that an insured person makes to the insurance company each month, regardless of how much care they receive.

Risk Premium

The portion of the premium that represents the expected medical costs of the consumer

Administrative Premium

The portion of the premium that represents administrative services and insurer profits. Consumers are willing to pay the administrative premium because they value the risk-protection and/or access offered by the insurance.

Small and Large Group Markets

The group market is split into small groups (<50 workers) and large groups (more than 50)

Third Party Administrator (TPA)

A firm that manages the administrative tasks of a health insurance plan such as networking with providers and processing claims.

State mandates

State specific laws and regulations that set minimum standards for health insurance plans sold in a given state.

ACA Employer Mandate

The ACA requires that employers with 50 or more workers must provide health insurance to its workers at an affordable cost (no more than 9% of income) and of minimum value (at least 60% AV) or pay a penalty. It is formally called the Employer Shared Responsibility Provision.

Preventative Care Mandate

Under the ACA, health insurance plans must cover a set of preventative care services, graded A or B by the United States Preventative Care Task Force, with no cost sharing. These services include things like screenings, contraceptives, and 1 primary care visit per year.

Dependent Care Mandate

Under the ACA, health insurance plans covering dependents, must allow children up to the age 26 to enroll on their parents’ plan

Non-group insurance

Health insurance that is sold directly to consumers. Also called the individual market. Plans are sold on and off the exchange

The Health Insurance Marketplaces

Also called “exchanges”. These markets for individual and small group health insurance were created by the Affordable Care Act. Each state has an exchange and all plans sold on an exchange must be standardized. Consumers shop for plans on an online marketplace where they choose a plan and learn about financial assistance they are eligible for.

Essential Benefits

The ACA requires plans in the individual and small group market to cover 10 essential benefits that include outpatient services, hospitalization, pregnancy related care, emergency care, behavioral health, prescription drugs, rehab, labs, preventative care, and pediatric vision and dental.

State-based exchange (SBM)

A health insurance marketplace that is managed/operated by a state.

Federally facilitated marketplace (FFM)

A state may choose to have the federal government operate and manage the marketplace it its state.

The Individual Mandate

ACA required that all people obtain health insurance or pay a penalty

Cost-Sharing Reduction (CSR) Program

financial assistance established by the ACA that reduced the amount of cost-sharing a consumer was responsible for. People with a premium tax credit with incomes less than 250% of poverty are eligible. Benefits are only available to people choosing a silver plan.

Cost-sharing

The portion of the medical bill the consumer is expected to pay at the point of service.

Out-of-pocket expenses

Expenditures the patient is responsible for paying themselves (synonymous with cost-sharing).

Deductible

The amount of expenditures the patient is responsible for before the insurance company will pay any expenses

Co-pay

A fixed dollar amount that an insured must pay at the point of service, regardless of the total bill. Co-pays are often applied to doctor visits and medications.

Co-insurance

A percentage of the total bill the insured is responsible for at the point of service.

Out-of-pocket max

The total amount of out-of-pocket expenses an insured person must pay before insurance will pay all remaining costs.

High Deductible Health Plan (HDHP)

A plan that has an above average deductible. There is not a legislative or standard definition. However, the IRS requires that a consumer must face a deductible of at least $1,650 for single and $3,330 for families (the IRS updates the amount annually) to be eligible for a health savings account.

Health Savings Account

An account that can be contributed to by consumers and their employers, pre-tax, that can be used on qualifying medical expenses. HSA balances can be rolled over from one employer to another and from one year to another. Consumers can invest HSA balances in securities (i.e stocks) and withdraw HSA funds for non medical expenses at retirement, and pay no penalty.

Health Reimbursement Account

An employer funded account that workers can use to purchase qualified medical services/products. HRA funds are not counted as income for the purposes of taxes. HRA balances cannot be rolled over across employers or years.

Flexible Spending Account

An employee funded account that can be used on qualified medical expenses, but cannot be rolled over. FSA spending is not counted as income for tax purposes.

Managed Care

A set of practices used by insurance companies to contain costs and promote quality. aim to restrict patient access to ineffective services, to reduce medical prices by negotiating with providers, and reduce the oversupply of services by shifting some of the financial risk to medical providers.

Utilization Management

The set of tools used by managed care to restrain the utilization of services.

Concurrent review

A type of utilization management used in hospitalization and other facility based care in which services are reviewed and approved while the patient is at the facility.

Retroactive review

A type of utilization management in which a claim is adjudicated (i.e. the insurance company determines if it will pay the claim) after the service has been provided.

Provider networks

A managed care tool in which an insurance company negotiates price discounts with a set of providers. Patients who obtain care from those providers (called “in-network”) have lower cost-sharing than care received from providers that have not negotiated with the insurer (called “out-of-network”).

Medicare

The federal health insurance program for people 65 years old and older, people with certain disabilities (those qualifying for SSDI), people with End Stage Renal Disease, and people with ALS. The program is financed by payroll taxes, general revenues, premiums, and cost-sharing

Entitlement program

A program that guarantees that all who are eligible will receive the benefit, regardless of government costs.

Low Income Subsidy Program

A financial assistance program that reduces Part D costs

Critical Access Hospitals

Rural hospitals that qualify for this program receive enhanced payments from Medicare (110% of costs)

Disproportionate Share Hospitals

Hospitals that see large numbers of Medicaid and uninsured patients and are provided additional payments from CMS

Physician Fee Schedule

The list of services and their prices that Medicare pays Part B providers (physicians and other health professionals)