2: Paying for Healthcare

Question 1

Why was there growth in employment based insurance after WWII?

Answer 1

Attracted commercial for profit insurance companies (Aetna or United) to the healthcare field.

Question 2

Who created BCBS, when and why? Method to set premiums?

Answer 2

BC: Initiated in New Jersey by American Hospital Association as an experiment
BS: two years later by the AMA to protect doctors
The Blues: created in all states and merged into a single organization offering coverage for hospital and physician expenditure
Offered community rating

Question 3

What does Bloche mean when he discusses the “soul of BCBS”? What is the identity of BCBS in the early periods?

Answer 3

…

Question 4

Why did doctors oppose BCBS plans? What changed their minds?

Answer 4

…

Question 5

Basic characteristics of insurance system in the U.S.? Does the ACA change these features?

Answer 5

• Direct risk adjustment: medical underwriting and redlining
• Indirect risk adjustment: limiting the benefit package by excluding certain services or drugs from coverage or placing caps on the level of services
  ACA banned direct risk adjustment

Question 6

What factors explain the rapid growth of employment based insurance in the aftermath of the WWII?

Answer 6

The government allowed health insurance to be tax exempt if sponsored by employers, employers offered health insurance as a fringe benefit to attract good workers, advantages of group insurance over individual insurance. Companies competed for workers began to offer health insurance (Great Depression, no wage increases)

Question 7

What is the basic function of insurance according to B&G? Are Americans protected against finical loss due to illness?

Answer 7

A mechanism to protect against unpredictable loss

Question 8

How did insurance companies calculate risk of a patient before the ACA?

Answer 8

Direct risk adjustment: pre-existing conditions, job, hobbies,

Question 9

Community rating

Answer 9

Health plans with a flat rate (premium) for everyone in a given geographic area

Question 10

Redlining

Answer 10

Refusing coverage to certain people on the basis of geographical location, involvement in high risk groups/lifestyles or history of excessive claims

Question 11

Experienced rating

Answer 11

Different premiums paid based on differences on demographics, past utilization, medical status

Question 12

Out of pocket payments

Answer 12

Direct payment you have to pay until a you hit a limit before insurance kicks in. Resets every year

Question 13

Managed Care

Answer 13

An organized system of healthcare that attempted to reduce services that deemed ineffective/unnecessary
health services buildings managed under a fixed budget
Managed care restricts the autonomy of physicians

Question 14

Actuarial Value

Answer 14

the percentage of total average costs for covered benefits that will be paid by a health insurance plan
(Bronze plans, for example, pay on average 60% of the medical costs of covered benefits. Silver plans pay 70 percent, Gold plans pay 80 percent and Platinum plans pay 90 percent.)

Question 15

Preauthorization

Answer 15

Health insurer decides if what you need is necessary, or gives you permission to use services when you ask

Question 16

Utilization Review

Answer 16

Systems that monitor provider prices and quality of healthcare by enrollees

Question 17

Premium

Answer 17

an amount paid periodically to the insurer by the insured for covering his risk.

Question 18

Out of Pocket Maximum

Answer 18

The most you have to pay for covered services in a plan year

Question 19

Deductible

Answer 19

is the amount paid out of pocket by the policy holder before an insurance provider will pay any expense

Question 20

Co Payment

Answer 20

a fixed amount for a covered service, paid by a patient to the provider of service before receiving the service.

Question 21

Cream Skimming/Cherry picking

Answer 21

The insurer seeks to insure the populations who are healthier and thus present fewer claims

Question 22

HMO

Answer 22

NIXON PRESIDENCY: Strict, low premiums, and limited network, insurance company determines care provider

Question 23

PPO

Answer 23

Flexible, high premiums and loose network, you determine care provider

Question 24

Non group market

Answer 24

Plans sold outside of the exchange but are a part of the same risk pool within the exchange, subsides are only available through the exchange

Question 25

Insurance Marketplace/Exchange

Answer 25

The buying and selling of insurance, an entity providing a marketplace for insurance coverage that is generally unavailable elsewhere,

Question 26

Guaranteed Issue

Answer 26

A company must offer an insurance plan to everyone who wishes to be covered. Cannot turn people down due to pre-exsiting conditions.

Question 27

Individual Mandate

Answer 27

Solution to adverse selection (buying insurance only when you need it). Make it a requirement to purchase health insurance or must face a tax penalty.

Question 28

Tax Subsides

Answer 28

financial assistance that helps you pay for something.

Question 29

CSR

Answer 29

Cost Sharing Reductions,A discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance.

Question 30

Tax Penalty

Answer 30

A tax when you do not purchase a health insurance plan, it increases every year you opt out until it becomes a % of your income

Question 31

Association Health Plans

Answer 31

are group health plans that employer groups and associations offer to provide health coverage for employees.

Question 32

SHOP Insurance

Answer 32

for small employers who want to provide health and/or dental insurance to their employees — affordably, flexibly, and conveniently. To purchase SHOP insurance, your business or non-profit organization generally must have 1 to 50 employees.

Question 33

Medicare Parts A, B, C,

Answer 33

A: impatient hospital stays paid via SS tax
B: physician services via federal taxes
C: Medicare Advantage Program enroll in HMO/PPO
D: prescription drugs, and outpatient services

Question 34

Medigap/supplemental plans

Answer 34

covers 30% of people

Question 35

Why should we be concerned about the insured, what groups went without insurance before the ACA?

Answer 35

THE EMPLOYED UNINSURED & UNEMPLOYED UNINSURED
The poor went insured due to high costs, and most private insurance being linked to employment ( didn’t work if they didn’t have a job).

Question 36

Has managed care accomplished its purposes? Why was it invented? A&D?

Answer 36

Yes because it lowered the cost of healthcare, and promoted more efficiency within the system.
A: Limit individual incentives to overuse services, monitor the quality of care
D: PCP used at Gatekeepers to control access to care, possible barriers for individuals with disabilities

Question 37

4 modes of paying for healthcare?

Answer 37

Out of pocket payments, individual private insurance, employment based insurance, and government financing

Question 38

Healthcare is not a commodity because

Answer 38

1. Unpredictability: need for healthcare is urgent & necessary
2. Barriers of Entry: Constraint on the supply of physicians and medical services
3. Importance of trust - Patient must trust Doc knows best
4. Asymmetrical of information: Patients are vulnerable to exploitation bc they aren’t doctors, must rely on docs
5. Idiosyncrasis of payment: Lack of ability to shop around and compare services
6. A right to live, a right to life

Question 39

How is access to healthcare measured?

Answer 39

By the number of times a person uses healthcare services

Question 40

Adverse selection?

Answer 40

Not buying a plan when healthy but instead when sick. That’s also why there are certain periods you can buy health insurance.

Question 41

Underwriting process

Answer 41

Assessing the likelihood of event in a certain population

Question 42

Components of the ACA?

Answer 42

Individual mandate, employer mandate, medicaid eligibility expansion, insurance market regulation (no redlining, stay on plan till 2, limits experience rating to a 3;1 ratio between highest and lowest premium.)

Question 43

Employer Mandate

Answer 43

Employers with 50 or more employees face a financial penalty if employees are not enrolled in employer sponsored health plans or employees apply for federal subsides for individual insurance.

Question 44

Medicaid Eligibility

Answer 44

All legal residents 138% below (less than 16,500) the federal poverty level

Question 45

Relationship between guaranteed issue and individual mandate?

Answer 45

If you are required to have insurance than insurance companies must be required to sell you an insurance plan. Cant take away the individual mandate because the healthy people are needed in the pool to pay for the sick people bc insurance companies are require to insure everyone.

Question 46

Pro and Cons of Short Term Plans?

Answer 46

Intent: to fill short gaps during transitions between coverage
Con: Can discriminate against pre-exisiting conditions, higher out of pocket costs
Pro: Beneficial to those with minimal health service use

Question 47

Medicare Advantage Plan?

Answer 47

Can enroll in private health insurance plan contracting with Medicare and Medicare subsides the premiums (Limited network)

Question 48

Intergenerational redistribution?

Answer 48

Working people taxes go towards paying for Medicare for old people

Question 49

Dual Eligiblity?

Answer 49

refers to those qualifying for both Medicare and Medicaid benefits.

Question 50

Goal of the ACA?

Answer 50

expand access to health insurance, protect patients against arbitrary actions by insurance companies, and reduce costs.

Question 51

U.S market approach to medical care

Answer 51

Healthcare is distributed on the basis of the ability to pay for services

Question 52

Importance of Medicare and Medicaid

Answer 52

Helped the poor and the elderly