Chapter 6: Health Services Financing

What determines access, utilization, and cost?

Health Financing

What sector of government created multitude of tax-financed programs, each serves defined category of citizens meeting established qualifications, where insurance overlap may occur?

US Public Sector

What sector finances for health insurance shared between employer and employee with large employers providing the bulk of financing; patients pay portion of costs directly, bulk of cost paid through insurance plans?

US Private Sector

How do self-employed people purchase health insurance?

through the open market

How do the unemployed, underemployed, and those who lost private insurance due to the formulation of ACA purchase insurance?

the government attempted to facilitate purchases starting 2014

What is the process of actually obtaining health care?

Access

What term refers to the consumer behavior that leads to a higher use of healthcare services when the services are covered by insurance?

Moral Hazard

What is the mechanism for protection against risk?

Insurance

What is the possibility of a substantial financial loss from an event whose probability of occurrence is relatively small?

Risk

What is the insuring agency that assumes risk?

Insurer (underwriter)

What is the systematic technique for evaluating, selecting or rejecting, classifying, and rating risk?

Underwriting

What type of underwriting takes into account the health status of people to be insured?

Medical Underwriting

Why is medical underwriting no longer applicable to health insurance in the US?

mainly because the ACA has made it illegal to charge more or to refuse coverage for people who have preexisting conditions

Preexisting Conditions

diabetes, cancer, heart disease, and HIV/AIDS

What are the fundamental principles that underlie the concept of insurance?

1. risk is unpredictable for the individual insured

2. risk can be predicted with a reasonable degree of accuracy for a large group or a population

3. insurance provides a mechanism for transferring or shifting risk from the individual to the group through the pooling of resources

4. all members of the insured group share actual losses on some equitable basis

What is a plan regarding private health insurance?

specifies information pertaining to costs, covered services, and ways to obtain health care when needed

What do you call anyone covered by health insurance?

insured or beneficiary

What are the two types of employer sponsored plans?

single payer and family coverage plans

Which type of employer sponsored plan cover the spouse and dependent children of the working employee?

Family Coverage Plans

Risk Pooling

combining a large group of people together so that the financial risk of illness is shared among everyone instead of falling on just one person

What is the amount charged by the insurer to insure against specified risks?

Premium

What are the services covered by an insurance plan called?

Benefits

What is the amount the insured must first pay each year before any benefits are payable by the plan

Deductible

What is the flat amount that the insured must pay each time health services are received?

Copayment

What is a set proportion of the medical costs that the insured must pay out of pocket called?

Coinsurance

What is it called when insured individuals pay a portion of the actual cost of medical services out of their own pockets in addition to paying a share of the cost of premiums through pay-roll deductions?

Cost-Sharing

What are the essential health benefits under ACA?

ambulatory patient, emergent, hospitalization, mental health and substance-use disorder, prescription medicine, rehabilitative and habilitative services and devices, laboratory, preventive and wellness, chronic disease management, pediatric

Types of Private Insurance

group, self, individual, managed care, Medigap

What type of insurance provides the advantage of lower costs than if the same type of coverage was purchased in the individual insurance market by anticipating that a substantial number of people in the group will purchase insurance through its sponsor?

Group Insurance

What type of insurance does the employer act as its own insurer, instead of obtaining insurance through an insurance company and paying insurers a dividend to bear the risk?

Self-Insurance

How do employers self-insure themselves?

assuming the risk by budgeting a certain amount to pay the medical claims incurred by their employees

What do self-insured employers purchase to protect themselves against any potential risk of high losses?

Stop-Loss Provision / Reinsurance

What has been a relatively small but important source of coverage for some Americans?

Individual Insurance

What types of people tend to rely on individual health insurance?

family farmer, early retiree, self-employed, employee of businesses that do not offer health insurance

In the past, when the risk indicated by each individual’s health status and demographics was taken into account, what was the consequence of high risk individuals?

unable to obtain privately purchased health insurance; a barrier eliminated by provisions in the ACA

What type of insurance is taken by majority of health insurance and was initially less expensive than traditional insurance company plans?

Managed Care Insurance

What plan combines a savings option with a health insurance plan that carries a high deductible?

High-Deductible Health Plans (HDHPs)

Since HDHPs have saving options, they give consumers greater control over how to use the funds, which is why these plans are also referred to as ________________?

Consumer-Directed Health Plans

What are the two main types of HDHPs?

Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs)

What is private insurance that can be purchased only by those enrolled in the original Medicare program called?

Medigap / Medicare Supplement Insurance

What do Medigap plans cover?

all or a portion of Medicare deductibles and copayments/coinsurance; each plan is legally mandated to contain a standard of benefits to help consumers decide which best suits their needs

What is the act that allows for a temporary continuation of employer coverage, addressing short-term coverage gaps when an individual changes jobs or faces temporary unemployment?

Consolidated Omnibus Budget Reconciliation Act (COBRA)

What part of Medicare covers inpatient services / hospital visits?

Part A

Why is Medicare A considered a true entitlement program?

throughout people’s working lives, they contribute to Medicare through special payroll hence they are entitled to Part A benefits regardless of amount of income and assets they may have at age 65

What part of Medicare is the supplementary voluntary program and covers outpatient services?

Part B

What part of Medicare provides additional choices of health plans, with the objective of channeling a greater number of beneficiaries into managed care?

Part C

What part of Medicare includes a prescription drug program requiring a payment of a monthly premium to Medicare in addition to the premium paid for Part N?

Part D

What program covers individuals with low income, including children up to age 19 in low-income households?

CHIP and Medcaid

Who does CHIP cover?

children up to age 19; eligibility typically 170-400% FPL

Cost Control Approaches

demand-side and supply-side rationing

What type of cost control approach is for individuals facing barriers to obtaining healthcare due to insufficient income to pay for services or insurance?

Demand-Side Rationing

What type of cost control approach refers to government efforts to limit the availability of healthcare services?

Supply-Side Rationing

What refers to the total annual health spending which continues to outpace growth in GDP due to population growth & aging, service utilization, and prices for products & services?

National Health Expenditure