Introduction Flashcards
What are the key features of health care?
- uncertainty and asymmetric info
- positive and negative externalities
- market power
- innovations
- payment models and incentive structures
- public and private policies
- intended and unintended consequences
What is the iron triangle?
Access, cost, and quality
What percent of Americans receive insurance through their employer?
More than half
Why is getting insurance from your employer beneficial?
Employer paid premiums are tax exempt
What part of the ACA combatted asymmetric information?
Individual mandate (RIP)
What does insurance do in terms of risk?
Spreads risk of adverse outcomes across groups of high and low risk individuals
Where does uncertainty arise in healthcare?
Random nature of health and illness creates a financial risk
What are the most common types of asymmetric information in health care?
- adverse selection
- ex ante and ex post moral hazard
- principal agent problem
- price transparency
What is adverse selection?
Unhealthy individuals are the most likely to demand insurance (worst line up first)
What is selection in the context of a market?
Buyers or sellers are non-randomly entering the market
What is an adverse selection death spiral?
Premiums increasing to the point that healthy individuals drop out of the market which increases premiums even further
What is moral hazard?
Individuals alter their behavior after they become insured
What is ex ante moral hazard?
Risky behavior that can create an adverse outcome
What is ex post moral hazard?
A response to an adverse outcome
What is a deductible?
Specified amount the insured must pay before the insurer provides financial protection
