Exam 1 Flashcards
What came about during the 1930s, mainly as a result of the Great Depression?
- Hospital Service Plans (evolved into Blue Cross)
2. Prepaid Group Practice Plans (evolved into Blue Shield and Managed Care)
What contributed to the early growth of health insurance in the 1940s and 1950s?
- Wage and Price Controls (imposed during WWII)
- Organized Labor
- Federal Tax Code
During the mid-1960s, what two government “health insurance” programs were introduced?
Medicare and Medicaid
The three general forms of managed care
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
- Point Of Service Plan (POS)
In 2010, what law was passed that made sweeping changes to the U.S. health insurance market?
- Patient Protection and Affordable Care Act (PPACA or ACA)
Briefly explain TWO advantages of Employer-Sponsored Coverage
- Tax Treatment
- Economies of Scale (i.e., cheaper)
- More Coverage Choices
- Richer Benefits Packages
Different Parts of Medicare
Part A
- Hospital, skilled nursing, and home health coverage
- Paid for by payroll taxes
Part B
- Physician services and durable medical equipment
- Paid for by general taxes and monthly premium
Part C
- Medicare Advantage (Medicare managed care)
- Covers approximately 25 percent of beneficiaries
Part D
- Voluntary prescription drug coverage
- Paid for by an additional monthly premium
Who does Medicaid cover?
- Adults (namely pregnant women)
- Children
- Elderly
- Disabled
What is “churning?”
Churning is what happens when people move between private coverage and Medicaid or else become uninsured
What is Adverse Selection?
Purchasers know more about their likely use of services and use this knowledge to select a health plan that is designed for people with lower expected claims experience.
What is the difference between the HMO effect and Favorable Selection?
- The HMO Effect is How to keep people out of hospitals
- Favorable Selection is How to attract people who do not use/need hospitals and encouraging them to buy them by offering things such as gym membership
Underwriting
- Creating a number of risk pools or risk classes
- Combats adverse selection
- It allows insurance companies to match new members to the appropriate risk pool
- Keys = Costs and Law
Community Rating
All covered lives are placed in a single risk pool
Experience Rating
Insurers seek to base premiums on the prior or current claims of individuals or groups
Manual Rating
Insurers seek to identify characteristics (and thus establish premiums) of individuals or groups that are associated with higher or lower claims experience.
- Characteristics such as: Age, Gender, Occupation, health status, and industry.
Self-Insure
An employer group bears the underwriting risk itself. It may use a third-party administrator
Which public insurance program implemented a risk adjustment model?
Medicare
Which measure is the best predictor of healthcare expenditures?
Prior Utilization
What is Medicaid?
- A joint federal and state program that helps with medical costs for some people with limited income and resources.
- It also offers benefits not normally covered by Medicare, like nursing home care and personal care services.
- Largest payer towards nursing homes
What is Katie Beckett?
Home Care for Certain Disabled Children also known as Katie Beckett is a Medicaid eligibility category that provides Idaho Medicaid coverage to children under age 19 who have long-term disabilities or complex medical needs and who live at home.
What is FreeMed?
- Designed for low income people with no prescription insurance through Pharmaceutical Company Patient Assistance Programs (PCPAP).
- Staffed by volunteers, receives no government funding, accepts donations
What is PAP?
- Patient Assistance Programs
2. Run by pharmaceutical companies to provide free medications to people who can’t afford them
Difficulties of trying to get free medications
- Hours of operation
- Waiting period
- Paperwork
- In person interviews and application
- Not publicly advertised
What was the primary cause of growth of health insurance during the middle of the 20th century?
- Tax-exempt status of employer-sponsored health insurance. (Main Thing)
- Wage and price controls during World War II
- The rise of labor unions
- The declaration of health insurance as a proper focus of collective bargaining
What is an HMO?
Health Maintenance Organization
- Network that you have to stay in and they are pretty narrow. If you go outside of the network, then insurance won’t pay anything
- There is a gatekeeper that is your primary care physician and they tell you if you can go and see a specialist
- They are insurance companies that combine the insurance function with the provision of care
PPO
Preferred Provider Organization
Not all PPO’s are insurance companies
- They may just handle the contracts
POS
Point of Service
- The least popular of the managed care types
- You can choose if you want to go in or out of network. Prices are generally a little better if you go in network
- Pay a little more to have this type of insurance
Employer Mandate
Pay or Play
Employers must provide health insurance to employees if:
1. You have to have more than 50 employees
2. That work 30 or more hours per week
Individual Mandate
You have to have insurance or else you have to pay PENALTIES that are increasing each year
Kentucky Insurance
- Kentucky is switching from the state to the Federal Exchange for individual plans
- They ran out of their government grant that was funding their state exchange, but it has ran out and they now have to get onto the Federal Exchange
- Source: New York Times
Which Insurer is threatening to pull out of the exchange?
- United Healthcare
- They are the largest provider in the nation but they are losing too much money to make it worth it
- Source: USA Today
What is an Insurance Commissioner?
- Each state has one that makes decisions about laws concerning insurance
- They are attempting to make it impossible for insurance companies to be able to charge people more if they receive services out of network.
Source: PR News Wire
What is Pure Premium?
The Expected Loss
What is the Loading Percentage?
The markup to cover objective risk, profit and costs of marketing, adjudicating and processing claims, coordinating benefits and providing access to networks.
Gross Premium Calculation
Gross Premium = Pure Premium / (1-Loading Percentage)
Medical Loss Ratio Calculation
= (Medical Claims + Quality Enhancing Efforts) / (Premiums-Taxes)
- ACA requires that there is an MLR of at least 80% for groups less than 100 and
- At least 85% for groups that are larger
- If these thresholds aren’t met, insurers must rebate premiums
Prospective Experience Rating
- Premium based on prior claims of the group
- Credibility factor
- Underwriting risk borne by the insurer
What does AAPCC stand for?
Adjusted Average Per Capita Costs
Examples of Demographic Measures
- Age
- Gender
- Location
Examples of Subjective Health Measures
- Physical health
- Mental health
- General health
- Disease control
Examples of Physiologic Health Status Measures
- Health records
2. Physical and Labs
Examples of Prior Utilization Measures
Outpatient and Inpatient Expense for the prior year
What does CMS-HCC stand for
Centers for Medicare and Medicaid Services Hierarchical Condition Categories
ACA uses of Risk Adjustment
- Use in adjusting risk across plans in state insurance exchanges
- Reduce payment to plans with disproportionately healthy enrollees
- Raise payment to those with less-healthy subscribers
ERISA
Employee Retirement Income Security Act
this makes it so that self insurers don’t have to fallow state insurance law
