Health Care Systems: Public and Private

Question 1

Principal-agent relationship

Answer 1

The agent is formally tasked with doing something in the best interest of the principal

Question 2

Occupation vs profession

Answer 2

Occupation: Regulated field
Profession: Self-regulated occupation

Question 3

Informal vs formal healthcare

Answer 3

Informal: Care provided through a predetermined relationship (e.g. parents taking care of their children when sick)
Formal: Includes a contract that states that the agent will work in the best interest of the principal

Question 4

Health care system

Answer 4

Rules that determine the functions and processes behind the patient-agent relationship

Question 5

What are the universal aspects of health care?

Answer 5

Licensing, insurance, contracts and funding

Question 6

Licensing

Answer 6

Providing formalized, official credentials to professionals that are qualified to practice medical care

Question 7

3rd payer relationship

Answer 7

When a 3rd party pays for health care on behalf of the principal

Question 8

Premium

Answer 8

The charge for health insurance over a given time

Question 9

Contractor (3 functions)

Answer 9

• An insurer or separate organization tasked with organizing a patient’s care
• Receives money from insurance companies and pays individual healthcare providers
• Monitors the quality of providers’ work through statistics

Question 10

Explain the aspects of healthcare that make up the healthcare system

Answer 10

• Functions: Financing, funding, regulating
• Rules: Licensure, authorization, insurance contributions
• Institutions: occupations, professions, insurers

Question 11

Actuarially fair premium

Answer 11

Contribution to health insurance based on individual’s average cost of health care

Question 12

Factors that influence health insurance

Answer 12

Age, ZIP code, insurance history, risk, type and amount

Question 13

What is the moral hazard problem

Answer 13

Situation in which insured patient uses an excessive amount of resources, which increases the cost of treatment for all people, making insurance more expensive

Question 14

What is the most common solution to the moral hazard problem?

Answer 14

Co-payments: The patient must pay for a portion of the service while insurance pays the rest

Question 15

How could providers contribute to the moral hazard problem?

Answer 15

Providers might encourage patients to get more treatments that are unnecessary so that they are paid more

Question 16

When to use co-payments and when to use full insurance coverage

Answer 16

Co-payments are for predictable health issues that are more or less controlled by the patient
Full insurance coverage are for illnesses that are unpredictable and require high tech

Question 17

Universal/public coverage

Answer 17

When an entire demographic/population is covered by health insurance
- Mandatory and a monopoloy

Question 18

Monopoly

Answer 18

Full control with no competition

Question 19

Voluntary/private coverage

Answer 19

Insurance that’s organized through private companies
- Can opt. out
- Voluntary and competitive

Question 20

What are the problems with voluntary coverage?

Answer 20

1) Patients will look for the best plan, which means insurance companies can’t establish a fixed long-term rate (or else patients will move to a different company). People that need long-term care will end up paying more than those that only have short-term healthcare needs

2) People tend to put their insurance money into pools with people like themselves. This means that healthy people’s pools are often restricted for healthy people because an unhealthy person would make costs go up. This forces unhealthy people to pool with other unhealthy people, making their insurance more expensive

Question 21

Beveridge model

Answer 21

Universal care but typically limited through rations

Question 22

Bismarck model

Answer 22

Builds on social funds that already exist through occupational trades that each have their own pool and rules

Question 23

American model

Answer 23

Decentralized in the sense that hospitals tend to make sure patients can afford care in their hospital specifically (e.g. hospitals promoting insurance to employers so that the employees of that company will go to their hospital for medical care)

Question 24

Switzerland healthcare model

Answer 24

Everyone in the same age and demographic pay the same amount for healthcare

Question 25

German healthcare model

Answer 25

Economic sectors have their own pool

Question 26

Summarize how the Canadian Health Care system came to be

Answer 26

• Started as informal schemes that attempted to raise enough money to pay for medical treatments
• Tommy Douglas introduced the Hospital and Physician plan in Saskatchewan in 1947. Intention was to pay for hospital services
• Federal government agreed to contribute to paying for hospital fees
• In 1962, plan shifted to cover physician fees
• Canadian Health Care system created in 1984 and provided full coverage
• System also prevented medical practitioners from billing too much

Question 27

Evidence-Based Medicine (EBM)

Answer 27

Using to statistics to evaluate the effectiveness of medical practices

Question 28

Payment schemes

Answer 28

Providers are rewarded for good quality care and punished for doing poorly

Question 29

Retrospective payment

Answer 29

Providers are paid after the service

Question 30

Capitation

Answer 30

Typically an annually provided payment that pays providers a specific amount per patient that they see

Question 31

Pay-for-Performance (P4P)

Answer 31

Increased pay when provider reaches a certain goal

Question 32

Professional dominance

Answer 32

When a particular occupation dominates the field, allowing them to get reimbursed for their services

Question 33

Public vs private hospitals

Answer 33

Public = paid by global budget
Private = paid retrospectively

Question 34

Not-for-profit

Answer 34

Only charge what’s needed to provide better services

Question 35

For-profit

Answer 35

Markets services in order to pay investors and distribute funds

Question 36

Proprietary clinics

Answer 36

Provides highly specialized services by a group of doctors that are experts in the field

Question 37

Single-payer model

Answer 37

Government directly pays for patient’s health care

Question 38

Primary care

Answer 38

General practice (e.g. community pharmacy, dental, optometry)

Question 39

Secondary care

Answer 39

Planned/elective care; urgent care; mental health (somewhat specialized)

Question 40

Tertiary care

Answer 40

Highly specialized treatments (e.g. neurosurgery, transplants and plastic surgery)

Question 41

What services aren’t covered by the Canadian Health Care System

Answer 41

Prescription drugs, long-term care, dental care, optometry

Question 42

In Canada, how is insurance paid?

Answer 42

Government revenues through taxes
Rich pay more than the poor

Question 43

Public insurance vs private insurance debate

Answer 43

Public: More equal, a greater number of the population will have access to care, more encouraged to get checked up by a doctor
Private: Efficient and quicker, and not limited to priority list, and rather who can pay first/more