Health Care Financing Flashcards
Why was WWII a spring board for insurance?
Wage freeze
Created incentive to increase fringe benefits in order to bargain with unions
Medical insurance quickly became a primary benefit that the employer paid for
Pre WW2 insurance?
9% of population
After WW2 (by 1952) insurance?
> 50% of the population had insurance
Why is insurance needed?
Mitigate (reduce) the financial risk of the insured (lost income)
Pay premiums now so if large sum is needed later the insurer pays most of it, thereby protecting the insured’s income
Premiums paid by the many reduce the financial risk of the few who need it
Way to pay for insurance:
private
public
Who is paying for private insurance?
Employers who pay for 75+% of premiums
Individual where insured pays 100% of premiums
Who is paying for public insurance?
government sponsored insurance
Taxes pay for all or most of the premiums
What happens to prices when third parties are involved?
increase
Moral hazard and provider behavior:
Moral hazard will also drive decisions health care leaders make
More of that which pays better
Less of that which pays less
When did APTA secure coverage for PT services?
under Medicare as the bill was being worked in Congress in 1964
Secondary effect of PT being covered under Medicare?
effect of PT being included in most insurance benefit plans
What determines who has access to health care services?
insurance or lack thereof
What is a moral hazard?
Demand for a product/service goes up when it is paid for by another
Community Rating
everyone in that insurance plan pays the same premium
Experience Rating
businesses pay different premium amounts based on the health (or healthcare utilization) of their employees
In which rating does the employer pay less in premiums in they have healthy people?
experience rating
Health Care Expenditures =
Payment X Quantity/Utilization
Payers can influence health care expenditures by manipulating:
Amount actually paid (not what providers charge) = Allowable
Utilization
Is rationing implicit or explicit?
implicit
How is rationing implicit?
by manipulating PRICE (payment)
utilization
knowledge
Utilization
PCP gatekeeper
Insurer utilization review and determination of “medically necessary” services: subjective and arbitrary
Knowledge
Hidden insurance restrictions
One page summary when signing up, then 50+ page manual with details about what is covered and what is not covered
What is a favorite method to pay less for a given service?
discounted fee-for-service (DFFS)
How to reduce cost?
- Less equipment
- Fewer supplies
- Reduce public relations and marketing activities
- Outsourcing
- Type (cost) of staff
a. Professional versus mid-level versus technician/aide - Quantity of staff
a. Productivity = ratio of output (e.g., units billed) to input (hours paid) - Change goals
a. Move to next level of care as soon as possible instead of aiming for complete independence in current setting - Flattened administrative/management structures
How is cost transferred to the patients?
deductible
copay
coinsurance
Deductible
amount insured must pay up front before insurance pays for anything
Copay
predetermined amount payable to the provider that is due at the time service is rendered
Coinsurance
percentage paid by the patient after the service is complete and the insurer determines, via the Explanation of Benefits (EOB), what the patient owes toward the allowable
