Exam 3

Question 1

FSA

Answer 1

Flexible Spending Account

1. Must be established by an employer through a cafeteria benefit plan
2. Balances unspent at year-end are lost – “Use It or Lose It!”
3. Entire annual designation may be spent at anytime

Question 2

HRA

Answer 2

Health Reimbursement Account

Question 3

MSA

Answer 3

Medical Savings Account

Question 4

HSA

Answer 4

Health Savings Account

1. A tax-sheltered financial account into which individuals and employers may contribute funds and from which individuals may withdraw money to pay for qualified health services
2. Contributions from an employer or employee are made pre-tax
3. Funds may be withdrawn tax free to pay for qualified medical expenses, except health insurance premiums

Question 5

CDHP

Answer 5

Consumer Directed Health Plan

Combines a High Deductible Health Insurance Plan (HDHP) and a Health Savings Account

Question 6

Rationale behind CDHP

Answer 6

1. Consumers are responsible for much of the price of initial medical care expenditures.
2. As a result, they have incentives to shop more carefully for health services, both in finding providers who offer the preferred set of services and in negotiating with providers for lower prices.

Question 7

The Small Group Market is typically defined as what

Answer 7

1. A firm with fewer than 50 employees
2. They aren’t subject to the pay or play mandate
   
   • They DON’T have to offer insurance coverage or pay a $2000 fine per worker

Question 8

What are HSA’s typically combined with?

Answer 8

High Deductible Insurance Plan

Question 9

Why don’t Small Employers offer Health Insurance?

Answer 9

1. Business can’t afford it
2. Revenue too uncertain
3. Employees have coverage elsewhere
4. Employees prefer wages

Question 10

Why do Small Employers offer Health Insurance?

Answer 10

1. Right thing to do
2. Helps recruitment
3. Owner coverage
4. Decreases turnover

Question 11

What is Medicaid and who does it cover?

Answer 11

A joint federal and state funded needs based program designed to provide health insurance coverage to:

1. Pregnant Women
2. Children
3. Elderly
4. Disabled

Question 12

Who is eligible for Medicaid Coverage?

Answer 12

1. Categorically needy
   
   • General eligibility determined by being a member of a “covered group/category” (Low Income, Blind, SSI recipient)
2. Medically needy
   
   • Incomes adjusted for medical spending
3. Special groups
   
   • Dual eligibles

Question 13

Who comprises the majority of the Medicaid Enrollees and Expenditures?

Answer 13

Enrollees: Children and Adults
Expenditures: Disabled and Elderly

Question 14

Who tends to use capitation more aggressively?

Answer 14

Medicaid managed care tends to use capitation more aggressively than private sector

Question 15

Who funds Medicaid and who dictates what is covered?

Answer 15

1. Federal government matches state Medicaid spending based on the ratio of state to federal per capita income
2. The state decides the majority of the services that are covered

Question 16

Future of Medicaid under ACA?

Answer 16

1. The ACA required the states to expand their Medicaid programs or incur the complete loss of federal matching of their existing Medicaid program.
2. This matching percentage will slowly decrease from 100% every year.
3. 17 million people would gain Medicaid coverage if every state were to expand their program.

Question 17

What’s CHIP?

Answer 17

Children’s Health Insurance Program
- CHIP provides federal matching funds for the provision of health insurance to lower-income CHILDREN up to 350% of the FPL, at the state’s discretion.

Question 18

Who funds CHIP?

Answer 18

Average federal match is 15 points higher than Medicaid

Question 19

How do the qualifications of CHIP differ from Medicaid?

Answer 19

Medicaid/CHIP covers 1 in 3 kids in the US

CHIP covers Children up to 350% of the FPL

Question 20

What is Crowd Out?

Answer 20

Crowd-out exists when a public program such as Medicaid causes people to drop private coverage and shift to the public program.

Question 21

What is Long Term Care Insurance?

Answer 21

It covers:

1. Nursing home care
2. Assisted living
3. Home health services

Question 22

Why don’t more people have Long Term Care Insurance?

Answer 22

Demand side factors:
1. Misinformed Public
2. Availability of Informal Care
Real Reason:
1. Most people already have coverage known as Medicaid

Question 23

Four Parts of Medicare

Answer 23

Part A - Inpatient services (hospital, SNF, home health)
Part B - Physician/ambulatory services, DME
Part C - Managed care (Medicare Advantage)
Part D - Prescription drug

Question 24

How is each Part of Medicare funded?

Answer 24

Part A - Hospital Insurance Trust Fund, which gets it’s funding from the payroll taxes (FICA Tax)
Parts B and D- Supplementary Medical Insurance Trust Fund which is funded by 25% from premiums 75% from general federal taxes
Part C - Funded through HI and SMI Trust Funds

Question 25

Who’s eligible for Medicare?

Answer 25

1. 65+
2. Disable
3. End Stage Renal Dialysis

Question 26

What does the future of Medicare look like?

Answer 26

Due to the retirement of the Baby Boomers there will be fewer people paying FICA and more people drawing from the trust funds
Other things that will decrease the amount of money in the funds:
1. Increasing healthcare prices
2. Increasing healthcare utilization
3. Expanding healthcare technology