Exam 2 Flashcards
What is the function on insurance?
Method to guard against the financial risks in life
Pay small defined amount to avoid paying much larger amount in event of major loss
How US population insured
53% private
32% public
15% uninsured
4 principles of insurance
Risk is unpredictable
For large populations, risk can be predicted with some accuracy
Insurance transfer risk from individual to group through pooling of resources
Losses are shared by all members
3 types of private insurance
Group
Self-insurance
Individual private health insurance
Group insurance explain
Through employer Union or other professional organization
Large number in group so cost and risk distributed equally
State licensed
Explain self insurance
Ex is large employer
Diversified enough such that can predict medical expenses
Assume the risk but don’t pay insurers a dividend
Explain private health insurance
For about 7-12% of population
Costs $10000 to $25000 for individual per year
Cost can vary widely
Define beneficiary
The “insured” covered under a health insurance plan
Deductible
Fixed amount of money to be paid by the insured under a contact before benefits become available
Premiums
Amount charged by insurer to insure against risk
Two types
- Experience rating - based on groups medical claims experience; different from group to group based on risks
- Community rating - risk spread among larger community; premium based in utilization; rate same regardless of age and gender; cost shifted from poor to healthy
Trend in health insurance costs
From 2000 to 2010, costs for family insurance doubled
Increased financial burden on worker
Worker contribution saw greater overall increase
Premiums increase much faster than inflation and workers earnings
Worker contributes 20-30% of premium ( individual pays about $1000; family about $4000)
Percent of covered workers enrolled in a plan with $1000 or more deductible
22-50%
All firms 31%
Methods used to compensate during economic downturn
Reduced scope of benefits
Increased cost sharing
Increased workers share of premium
Percentage of firms offering health insurance
Between 45 and 70%
Retiree health benefits
Less and less firms offering this benefit over time
From 66% in 1988 to 26% in 2011
Insurance and risk
Manage uncertainty about future utilization
Loss rate (claims paid to providers) - both number of losses and timing of losses
Must forecast - info to classify risk and to set premiums
Define underwriting
Process of identifying and classifying the potential degree of risk represented by individual or group
Goal - determine group loss rate compared to the typical rate
Factors - size, composition, level of participation, level of benefits, occupational hazard, geographic location
Anti-selection in underwriting
Aka adverse selection
Those with higher than average risk are more likely to need or seek insurance
Indemnity plan
Reimburse insured without regard to the expense incurred
Fixed amount paid to beneficiary per procedure/day
Insured is responsible for paying provider
Service insurance plan
Provides services to the insured
Pays hospital, physician directly except for deductible snd copay
Regulation of health insurers
1. State Financial standards Market conduct Premiums Renew ability Hmo MCO and network arrangements Complaints remedies and appeals
- Federal
ERISA provisions
ERISA provisions
Written document Disclosure requirements Fiduciary requirements Claims for benefits Remedies and enforcement Continuation coverage
HIPAA Provisions for insurance
Pre- existing conditions
- if requiring treatment during previous 3 months
- wait limited to no longer than 12 months
- as long as no extended gap in health coverage when transitioning employment
Requires insurers to make all of their small group products available to any qualifying small employer regardless of claims experience or the health status of employees
Insurers must guarantee that coverage can be continued at end of the period of coverage
HIPAA
Health insurance portability and accountability act
ERISA
Employee retirement income security act
1974
Protect workers from loss of benefits provided thru the workplace
Applies to most private employer benefit plans established or maintained by employer
Preempts state insurance laws
Health reform law - changes
- high risk pools
- assessment and reporting premium increase
- 80/20 rule - no more than 20% on admin costs
- end to lifetime coverage limits
- cannot rescind coverage based on health status
- eligible under parents plan until 26
- zero copay for certain preventative benefits
Health reform law initiatives
Create state insurance exchanges (two types - individual and small business)
Guarantee issue and renew ability
Modified community rating (geography, age and tobacco use)
Collaboration between HHS, states and insurers
Competition in exchanges
CMS what is it?
Centers for Medicare and Medicaid services
Part of HHS
Formerly health care financing administration
Spends $1 trillion a year (60:40 Medicare:Medicaid)
What does CMS do?
Assures Medicare and Medicaid run properly by states
Established policies for paying providers
Conducts research on effectiveness of treatments and financing and health care management
Assesses quality of health care facilities and services
Medicaid
Funded jointly by state and federal
Established 1965 part of social security act
Fed contributes 50-83%
States determine payment rates to providers
Who is eligible for Medicaid?
Based on monthly income and financial resources
Categorically needy -welfare status
Low income aged blind disabled
Medically needy - monthly income exceeds allowable maximum
Mandatory Medicaid groups
Low income with children
Supplemental security income recipients
Infants born to Medicaid women
Some Medicare beneficiaries
Children under 6 and pregnant women with income below 133% of federal poverty limit
Recipients of adoption assistance and foster care
Optional Medicaid individuals
Low income children
Low income women with breast or cervical cancers
TB-infected individuals with income at SSI
Institutionalized individuals with low income
Some blind aged disabled adults
Medicaid benefits
Federally mandated
Prenatal care Vaccines for kids Family planning services Nurse-midwife services Rural health clinic services Pediatric and family nurse services
Each state can determine other benefits like vision and dental
Medicaid always payer of last resort
Medicaid Rx benefits
Provided by all states
High utilization population
States limited in ability to manage Rx utilization
May request nominal copayment but cannot deny
Medicare part d overrides this
Medicaid reimbursement
Providers must accept Medicaid payment as full payment
States can add nominal deductible copay or coinsurance
Cannot require copay for emergency or family planning services
Medicaid in 1990s
Rising costs 25% per year
Managed care attractive solution (fixed rates, capitation)
Waive some federal requirements
- mandatory enrollment in MCO
- matching federal funds for additional expenditures
CHIP
Children’s health insurance program
Health insurance to uninsured low income children
Under age 18
Not currently eligible for Medicaid
Income below 200% of federal poverty limit
Must meet benchmark coverage (bc/bs option, state employees, Hmo)
What is PACE?
Program of all inclusive care for the elderly
Comprehensive prepaid healthcare devices
Waives certain requirements for long term care nursing facility
Medicare
1965 social security act
Hospital expense and medical expense to elderly and disabled
Must be 65
Chronic physical or mental disability
End-stage renal disease - need dialysis
Medicare part A
Covers hospital, nursing facility, hospice and some home health care
Funded mainly by payroll tax on employers and workers
Patients do have deductibles and co-insurance
