Chapter 5 - Healthcare

Question 1

Definition of primary care

Answer 1

The work of health professionals who act as a first point of consultation for all patients within the HC system.

Cost is relatively cheap. For example a general practitioner treating an illness

Question 2

Definition of secondary care

Answer 2

It refers to the healthcare services provided by medical specialists or other health professionals who do not generally have first contact with patients.

Relatively expensive, because it is privided over extended period while person is an in-patient. And the resources used are also often expensive

Question 3

Definition of tertiary care

Answer 3

It is specialised consultative HC, usually for in-patients and on referral from primary or secondary health professionals

Eg treatment in specialist neurological unit

Such care is usually relatively expensive becauae the resources used are expensive such as scanners

Question 4

Funders of HC (6)

Answer 4

1. Government
2. Non-governement organisations and donors
3. Out of pocket expenditure by users themselves
4. Trade related employer groups
5. Commercial insurance products
6. Employers

Question 5

Some reasons for cost increases in HC: (4)

Answer 5

1. Misalignent of incentives between provider and payer
2. Medical technology advancements combined with user expectation resulting in high coat treatment
3. Cost increases resulting from fairly static population
4. Fraud

Question 6

Risks in managed care that can be transferred between the funder and the provider are: (5)

Answer 6

1. Price risk
2. Intensity risk
3. Severity risk
4. Frequency risk
5. Actuarial and marketing risk

Question 7

Areas of concern around managed care: (4)

Answer 7

1. Provider networks may restrict access to care
2. Providers may resent external parties imposing clinical protocols on them and influencing the way in which they practice medicine
3. It may compromise the quality of care provided to patients by encouraging under servicing of patients by providers
4. The use of formularies and other fianncial base managed care initiatives may result in the additional cost being transferred from the scheme to the member, with no overall cost reduction

Question 8

How to limit indemnity in a LTCI product providing indemnity benefits: (4)

Answer 8

1. Have deferred period during which no benefits are provided, then provide care for say 3 years and nothing after
2. Introduce reviewable premiums
3. Have a maximum total care benefit
4. Impose index linked monetary amount on the maximum amount of benefits that will be paid

Question 9

Define new business strain

Answer 9

New business strain occurs when the initial asset share (premiums received less initial expenses) is less than the sum of the supervisory reserves and the solvency capital requirement

Any such strain has to be made good from the company’s free assets (those assets not earmarked for any particular purpose)