Exam 1

Question 1

Industry Sickness Funds

Answer 1

Employees pay 1% of wages weekly to sickness funds that sick co-workers can draw up to 60% of wages when ill

Safeguards:

• age limits
• waiting periods
• coworkers visited sick to verify illness

Question 2

Employer’s (3) Defenses to Liability for Injuries in the Workplace

Answer 2

1. Worker assumed the risk as part of employment contract
2. It is the co-worker who caused the accident
3. Worker is also at fault

Question 3

Workers’ Compensation

Answer 3

Employers are liable for injuries that occur in the workplace if the employer is negligible

Question 4

States enact workers’ compensation insurance

Answer 4

Employers could buy coverage, accept full liability, and retain defenses only if they purchased insurance

Question 5

Why would employers want workers’ compensation insurance?

Answer 5

More predictable costs

Question 6

Compulsory Health Insurance Initiatives - American Association of Labor Legislation Proposal

Answer 6

Compulsory contributions from employer, employees, and state for all manual laborers with income

Question 7

American Association of Labor Legislation Proposal - Stakeholder Views

Answer 7

Employers - against b/c there was no offsetting reduction in costs
Organized Labor - mixed
AMA - initially supported, but then opposed b/c of interference b/w doctor-patient relationship and would decrease physician income

Question 8

Baylor University Hospital - Single Hospital Plan

Answer 8

Lead up: Baylor University sees revenues and occupancy drop and charity care increase

Enrolled public school teachers for $0.50/month for 21 days of care in hospital for hospital services

Question 9

All Hospital Plans

Answer 9

Sacramento, CA developed plan that included all community hospitals

Grew in populatrity from 1932-1933

Question 10

American Hospital Association Committee

Answer 10

Approved hospital plans in 1933 if they were (1) nonprofit, (2) improved public welfare, (3) dignified promotion, (4) cover hospital charges only, (5) free choice of physicians, and (6) no competition among plans (1937)

Question 11

Are hospital service plans insurance?

Answer 11

Initially: no, viewed as prepayment for hospital costs
1933: NY insurance comissioner says yes b/c hopsitals collect payments and promise care in te future –> hospital plans must comply with insurance laws

Question 12

Enabling Legislation for BC plans in NY

Answer 12

(1) Nonprofit
(2) exempt from reserve requirements and premium taxes
(3) rates reviewed by insurance comissioner

Question 13

Birth of Blue Shield Plans

Answer 13

Established first by California Physician’s Service

Free choice of physicians

Indemnity plan

Question 14

Previously, health was viewed to be uninsurable b/c:

Answer 14

(1) not definite

(2) not measurable

Question 15

Commerical Insurance

Answer 15

Began offering hopsital indemnity plans in 1934 and surgical indemnity coverage in 1938

Question 16

Prepaid Group Practice?

Answer 16

Pay prepaid amount to group and the group will take care of your enrollees

Question 17

Prepaid Group Practice - Ross-Loos Clinic (1929)

Answer 17

2,000 workers and families of LA Dept. of Water & Power

Contracted with clinic to provide comprehensive care

Question 18

Prepaid Group Practice - View of Physicians

Answer 18

Strongly opposed

Worried about losing income since wealthy patients would move into prepaid practice which would be cheaper, making it so that physicians would lose majority of their profits which came from the affluent market

Those in prepaid group practices were shunned from medical societies and hospital access

Led to prepaid group practice building and running their own hospitals

Question 19

Why did health insurance start to grow in the 1940s and 1950s?

Answer 19

(1) WWII led to wage and price controls, so in order for employers to compete for workerse, they offered health insurance as an incentive
(2) Taft-Hartley Act (1974), which made health insurance as a condition of employment and subject to collective bargaining

(3) Favorable taxes
- IRS ruled health insurance benefits are not subject to federal icnome tax
- Congress (1954) exempted employer sponsored heatlh insurance from federal income tax