Health Insurance Flashcards
Health insurance market structure
i. Employer-sponsored – group plans (50% of U.S. population covered)
ii. Marketplace/individual – self-employed (15% of U.S. population covered)
iii. Government-sponsored (20% of U.S. population)
1. Medicare: (1) 65 and older, (2) end-stage renal disease
a. (1) Part A: hospital, (2) Part B: medical, (3) Part C: gap coverage/medical supplemental, (4) Part D: prescription
2. Medicaid: income-based and state-managed
Cost-sharing principles of health insurance
i. Premiums: membership price to the discount club
ii. Co-pay: per-visit cost (sometimes, no co-pay, so pay full visit amount until deductible)
iii. Deductible: total out-of-pocket spending before co-insurance kicks in
iv. Co-insurance: percentage that insurance will pay after meeting deductible
v. Out-of-pocket maximum: plan will pay full amount after reaching this maximum
Pre-2010 problems/issues with health insurance
(1) access, (2) cost, (3) quality of care, (4) uninsured used emergency care and then didn’t pay
Affordable Care Act main goals
(1) guarantee coverage, (2) reduce costs, (3) decrease gaps in coverage
Impacts of the Affordable Care Act
- Health insurance industry
a. Dependent care coverage age increased to 26
b. 80%-85% of premium payments require to be set aside for claims
c. Lifetime annual limits were prohibited
d. Preexisting condition exclusions were prohibited
e. Preventative care was made available at no cost
i. Supreme Court carved out exemption for contraceptives
f. Health Insurance Exchange – states could opt for their own or use federal - Health insurance mandate, subsidies, taxes, penalties
a. Subsidies were created to help with costs relative to income
b. Individuals and large employers paid a penalty/tax for no coverage
i. Tax Cuts and Jobs Act of 2017 reduced the penalty/tax to $0. - Public insurance reform
a. Medicaid expansion –repealed by U.S. Supreme Court as unconstitutional
i. Expanded coverage to 133% federal poverty line or below
ii. Many states still opt to offer it, Supreme Court decision merely made it so that states could opt out and not lose benefits
b. Medicare: change from fee for service (FFS) to fee for outcome (FFO)
McGann v. H & H Music Company
Plaintiff developed AIDS and communicated this to his employer, the defendant, to discuss his coverage under his employer-sponsored health plan. Defendant subsequently reduced the lifetime maximum for AIDS from $1 million to $5,000, and plaintiff sued, alleging discrimination under ERISA for (1) discriminating against exercising his right under the plan and (2) interfering with his attainment of his right under the plan.
An employer does not discriminate under ERISA by modifying a group health plan to limit the lifetime benefit for a specific illness after receiving information that an employee has been diagnosed with the illness. The employer may make changes in coverage or even discontinue coverage altogether, so long as it is not targeted.
Metropolitan Life Insurance Company v. Massachusetts
Massachusetts enacted a mandated-benefit statue that required insurers to include minimum mental-health-care benefits to its residents. The Massachusetts attorney general sued the plaintiff insurance company for violating the statute, but the plaintiff argued the ERISA and the National Labor Relations Act (NLRA) preempted the state law.
ERISA explicitly preserves state laws that “regulate insurance,” so clearly does not preempt the state law. NLRA does not preempt state or federal laws setting minimum employment standards consistent with its purposes. It only preempts state law that violate (1) the primary jurisdiction of the National Labor Relations Board (NLRB) or (2) policies inherent in NLRA’s structure to encourage collective bargaining.
Individual and Small Group Markets Before the ACA
- Health-Based Underwriting and Rating
a. Refused coverage or pay extraordinarily high premiums
b. HIPAA required coverage be offered to (1) small groups and (2) recently unemployed individuals, but didn’t regulate pricing - Preexisting Condition Exclusions
a. Could include prior symptoms
b. HIPAA prohibited group plans from excluding preexisting conditions after the insured was enrolled in the plan for a specified period
i. Also prohibited group and individual plans from imposing preexisting condition exclusions for short lapses in coverage - Recissions
a. Group plans not subject to recissions, since they were rarely underwritten
b. Insurers would frequently target costly individuals to find reasons to rescind coverage for material misrepresentations (post-claim underwriting)
The ACA’s Reforms of Individual and Small Group Markets
- The ACA’s Regulation of Insurers’ Pricing, Offering, and Renewal of Coverage
a. Guaranteed issue and renewal
b. Community price rating (age, tobacco use, geography, individual/family)
c. Prohibition of rescissions - The ACA’s Regulation of the Content of Coverage
a. Essential health benefits (hospital, ambulance, maternity, prescriptions)
i. Not applicable to large group and self-funding employers
b. Prohibition of preexisting condition exclusions - The ACA’s Reforms to Health Insurance Shopping
a. Insurance exchanges – must include essential health benefits
i. Categories – platinum, gold, silver, bronze
b. Subsidies: (1) sliding-scale tax credit, (2) cost-sharing, (3) small employers
c. Individual mandate – higher of $700 or 2.5% of household income
The Pros of Single-Payer Health Plans
Universal coverage, equity, affordability at point of service, access to care, broad-based implementation of cost-containment strategies, elimination of employer and state government administration, simplification of current system for consumers, administrative savings, elimination of provider networks, elimination of surprise billing, more equitable distribution of health care costs
The Cons of Single-Payer Health Plans
Large increase in taxes, possible unintended effects of a single national system of provider payments, development and administration of a sizable new government entity, significant challenges from eliminating all current coverage and moving to new government program, addressing potential undermangement of care in public insurance programs, elimination of consumer choice of insurer and other benefits of competition, continued struggles with health care spending growth and cost-containment strategies, likely persistent inequities in access
Health Maintenance Organizations (HMO)
managed care through contracted providers
Preferred Provider Organizations (PPO)
individuals free to choose providers
Linn v. BCBSM, Inc.
Plaintiff had cancer in the thoracic region of his spine, and a doctor recommended proton-beam radiation treatment (PBRT). The defendant insurer declined coverage because the policy said PBRT was experimental in that part of the spine due to lack of medical evidence, so was not medically necessary. The plaintiff requested an external review as required by state law and then underwent surgeries to remove the cancer. The review found PBRT medically necessary, and the defendant paid for the treatment. The plaintiff sued, claiming his surgeries would have been unnecessary had the defendant approved the treatment.
Health insurance policies may define medical necessity for coverage purposes more restrictively than a statutory definition used for external review.
ERISA
applies to employer-sponsored pensions and health plans
