govt ins Flashcards
Reasons for govt participation in insurance FCC(ES)
- Fill unmet need
- Compulsory
- Convenience - set up program quickly
- Efficiency - no agents + no advertising→ lower prices
- Social purpose - profit doesn’t matter
Criteria for evaluating effectiveness of govt insurance programs W/I-SEAN
- Welfare vs Insurance
- Social purpose?
- Efficient?
- Accepted by public?
- Needed?
Unemployment insurance
- Provide by govt (not private at all)
- Elongates unemployment
govt participation in Crop insurance is at what level?
who are the parties?
partnership
- private insurer
- Federal Risk Managment Agency (RMA)
Crop insurance (coverages) (2)
- Low yields (due to drought/flood)
- Low prices
Crop insurance is partnership between private insurers, federal risk managment agency (RMA), and fed govt
what does each do?
private insurer: market, write, service policies to anyFarmer that applies for coverage
federal risk managment agency (RMA): set rates, reinsurer, subsidize premium
fed govt: reimburse private insurers for expenses
Crop insurance advantages
- Availiability
- Affordability – govt subsidized
- Stabilize farming industry (mitigate cat risk)
Crop insurance disadvantages & solutions (3)
- Govt losing $ (solution: shift cost to private market)
- Encourages farming in high risk areas
- Encourages over production
adv (2) & disadv of crop insurance subsidies
adv: famers buy more coverage
adv: everyone has coverage–>everyone is elgible for disaster relief program (crop insurance is required for disaster relief)
disadv increased costs for taxpayers
Fed employee compensation act
what kind of program is it?
who does it cover?
how was it effective?
program: federal workers compensation program
covers employment related peronsal injury of civilian govt employees
effective: fewer law suits→costs down
Long shore & harbor WC act
what kind of program is it?
who does it cover?
how was it effective?
why created?
program: federal workers compensation
covers: injured non-seamen
effective : fills coverage gap not provided by state
Created bc: not sure which state WC program applies at harbor
Black lung benefits Act
what kind of program is it?
who does it cover?
how is it funded?
why created?
program: federal workers compensation
covers: wages & medical bills (of totally disabled coal miners)
funded: federal tax on coal companies + borrow $ from fed govt
created bc: inadequate state WC compensation
State workers compensation markets(4) (WC is compulsory like PP auto)
- Identify*
- Describe*
- Partnership - state defines benefits but private insurer provides benefits & sells policy
- Exclusive state funds – employer must use state fund or self-insure
- Competitive state funds – state govt & private insurers compete (state fund might be a residual market)
- Residual market - last resort, subsidized by private market, state fund
Workers compensation insurance mechanisms (4)
- Private Market
- State Govt Program
- Self Insure
- State Residual market (last resort) (set up b/c state has no state fund or state fund is not used in last resort)
Residual markets lose $ - how are losses made up
- Low risks (private market) subsidize high risk (residual market)
WC Residual market mechanisms (3)
Identify
Describe
- Assigned risk plan – state assigns applicant to insurer based on WC market share (insurer services policies like normal voluntary policy)
- Joint UW association – profit and loss shared by insurers in proportion to WC market share
- Reinsurance facility – profit and loss shared by insurers in proportion to WC market share
WC Competitive State Funds advantages vs disadv
adv 1 vs disadv 1
adv 2
adv: Fill unmet need→WC is compulsory
vs disadv might be unnecessary + private market competition can keep P↓
adv: Efficiency →No advertising nor agent commission→P↓
WC exclusive state funds advantages vs disadv
adv 1 vs disadv 1
adv 2
adv: Fill unmet need → WC is compulsory
vs disadv: might be unnecessary + lack of competition → P ↑
adv: Efficiency → No advertising nor agent commission → P ↓
WC partnership advantages vs disadv
adv 1 vs disadv 1
adv: Fill unmet need→ WC is compulsory + share resources
vs disadv might be unnecessary
Describe the interaction between workers comp and medicare
who is primary
who is secondary
Workers comp is primary
medicare is secondary (only pays after WC benefits are exhausted)
describe Medicare conditional payment
- If medical cost happen BEFORE WC (primary) coverage begins THEN Medicare (secondary) pays but is reimbursed by WC
Medicare set-aside allowance (MSA)
describe
funding by
who pays
relevance
purpose
Portion of (WC) settlement set aside for future medical costs due to injury
Agreed to & funded by all parties in settlement
WC pays via MSA & Medicare pays after MSA is exhausted
Relevance: when WC coverage begins prior to Medicare eligibility but WC continues after Medicare Elgibility
Purpose: Minimize Medicare payments
Medicare Set-aside Allowance (MSA)
problem (1)
solution (3)
- Medicare didn’t know if injured party was collecting WC so Medicare made payments when they shouldn’t have
- Solution: MSA must be approved
- Solution: injured workers must make pmts w/ interest bearing account
- Solution: injured workers must report pmts
Medicare and Medicaid SCHIP extension requirements
- WC insurers must report claims to CMS (centers for medicare services)
Medicare and Medicaid SCHIP extension act actuarial implications
- MSA now has lengthy approval process→slowdown of claims→–> select lower LDFs–>lower ultimate losses –> underestimate rsvs
- MSA fully funded→WC rsvs up
