Health Care Financing Flashcards
Before insurance was introduced during WW2 what percentage of Americans were insured? What percent were after WW2 (by 1952)?
9%
50%
Why is insurance needed?
To mitigate (reduce) the financial risk of the insured
What are the 2 ways in which insurance can be paid for?
private or public
Who pays for premiums for a private insurance?
Employers pay 75% of the premiums or individual in which 100% is paid by the patient
Who pays for premiums for a public insurance?
taxes
Who is typically the 3rd party?
insurance company
What tends to occur when 3rd party payors are involved?
prices tend to increase
Describe the moral “hazard”
When someone else (employer) is paying for a product/service the demand for that service tends to increase. The employer is also paying for the majority of the private insurance premiums. This results in patient being insulated from both the cost of the insurance AND the cost of care
What does this moral hazard tend to result in?
Health care leaders making decisions to go with options that pay better (surgery, MRI, etc.) and less of what pays less (PT)
What happen in 1964 that allowed PT services to be included in most insurance benefit plans?
The APTA secured coverage for physical therapy services under Medicare as the bill was being written
What determines a premium?
the actuarial assessment of risk
What are 2 methods used to rate risk?
- Experience Rating
- Community Rating
Describe experience risk rating
It is based on a group’s own medical claims experience. In which premiums differ from group to group because different groups have different risks.
What is the main issue with experience rating?
It makes premiums unaffordable for high-risk populations
Describe community risk rating
It spreads the risk among members of a larger population. Premiums are based on the utilization experience of the entire population covered by the same type of health insurance. The same rate applies to everyone regardless of age, gender, occupation, or health risk.
