Exam 2 Flashcards
(35 cards)
Why is the RAND Health Insurance experiment the “Gold Standard”?
- Random assignment of people to plans with differing amounts of cost sharing reduces the adverse selection concerns = Elegant design
- Consistent model applied across many health services
- Results continue to be confirmed by smaller-scale, more narrowly focused studies
Name three of the results from the RAND study
- DENTAL SERVICES
- Full coverage visits up 34%
- Large transitory first-year effect
- Preventive services about twice as price sensitive as basic care
- CHIROPRACTIC SERVICES
- Full coverage expenditures up 132% –and this is just between 0% and 25% coinsurance
- EMERGENCY DEPARTMENT VISITS
- Full coverage visits up 54%
- 90% increase in non-urgent
- 30% increase in urgent
What is Moral Hazard?
- It is the Law of Demand
- It assumes that individuals with a health insurance policy use more health services
- Insurers deal with the problem of Moral Hazard by increasing the demand for health services and pushing patients down the demand curve.
What is the Price Elasticity of Health services and what does it mean?
-.2
This means that a 1% increase in the price of health services will generally result in about a 2/10 reduction in use. In other words, a 10% increase in price reduces use by about 2%.
The RAND-Health Insurance Experiment included research in what areas?
- Hospital Services
- Mental Health Services
- Dental Services
- Deductibles
What are free standing ER’s, what services do they offer, and how do they bill?
- These are emergency rooms that aren’t connected to any other facility but are usually doctor owned
- Generally located in suburban areas
- Urgent care is mainly given but they by law must cover life threatening emergencies
- Bill exactly like an ED because they have a lot of overhead
What is Utilization Management?
Utilization management can be viewed as nonprice mechanisms to reduce moral hazard.
Does UM prevent/preclude patients from obtaining services?
No
It simply dictates that the insurer is not liable for the cost of the service if UM procedures are not followed.
What are the four Utilization Management Techniques?
- Preadmission Certification and Concurrent Review
- Disease Management
- Discharge Planning
- Gatekeeper - No change in admission
What was happening during the Golden Age?
- Competition for patients (and their doctors) based upon services, amenities, and quality, NOT price!
- This implies that greater competition can lead to higher, not lower, prices
What is Selective Contracting?
- Some get contracts and some don’t
- Purchasers able to exclude some providers from contracts
- Adds price to the services-amenities-quality competition for patients
- Implies that in the presence of selective contracting, more providers could result in lower prices
Where did Selective Contracting start?
California MediCal (Medicaid) is allowed to enter into contracts with a subset of hospitals based upon a competitive bidding process.
How effective is Selective Contracting?
- It is more effective when there are more hospitals in the local market
- It is more effective when the PPO has a large share of the hospital’s book of business
- It is used more effectively by HMO’s than PPO’s
Difference between Selective Contracting and Favorable Selection
Favorable Selection leads to lower utilization
Selective Contracting leads to lower price
Physicians and Managed Care Contracts
- 88% of physicians had one or more managed care contracts in 2008, nearly 70% had five or more contracts
- The more contracts that they have equals more patients that are directed towards them.
What theories have been advanced to explain the increase in insurance premiums since the mid 1990’s and what do they mean?
Managed Care Backlash: Physicians and patients complaining about the nature of the restrictions that managed care plans impose.
Provider Consolidation: Decreased competition among providers has reduced the negotiation ability of insurers
What’s the difference between a Monopoly and a Monopsony?
- Monopoly Power = Large Seller
- Controls price by controlling supply
- Large Providers have this power
- Monopsony Power = Large Buyer
- Controls price by controlling demand
- Large Health Insurers have this power
Difference between Rhetoric vs. Reality
zx
What is the Individual Mandate?
This requires everyone to have health insurance. It imposes a tax penalty for those who fail to get health insurance and subsidies for those with low income.
Explain Qualifying Health Plans
Each of the qualifying health plans must cover essential health services under one of the four levels of coverage (Bronze, Silver, Gold, and Platinum)
Explain what the Insurance Exchange is
- A place where you can go to purchase a health insurance plan. If you apply for the plan within the enrollment period or under special circumstances, then you can qualify for government subsidies.
- When the state sets up its exchange, the policies must be guaranteed to issue and guaranteed to renewal.
- Insurers may use age, geographic location, family composition, and tobacco use to set rates. In setting theses rates, the highest plan can’t be any more than three times the rate charged to those with the lowest rate.
What is the Pay or Play Mandate?
If an employer has more than 50 employees that work 30 hours or more each week, they are required by law to offer health insurance to them. If they don’t, then they will have a tax penalty to pay.
How will the expanded ACA Insurance plan be covered?
- It will be funded by pharmaceutical manufactures- they will pay 2.8 billion at first.
- Durable medical equipment manufacturers will pay 2.3% tax on sales
- Health insurance firms will pay 8 billion at the start in taxes
Admittance Process to Mental Health
- Treatment Evaluation
- Commit the Patient (state takes responsibility for patient)
- Transportation to facility
