Lec 4: Traditional Insurance Concepts Flashcards
Most individuals over age 65 are covered by
Government (Medicare)
Of the remaining not covered by Medicare, people are covered by _____, _____, or ______.
Medicaid
Uninsured
Private insurance
Private insurance can be…
Group or individual
Who are the 4 key players in insurance?
Patients/consumers
Providers
Insurance companies
Employers
What is a premium?
Monthly payment
If not paid, insurance can get cancelled
Does Medicaid have a premium?
No, the taxpayers are paying for it
How do employer sponsored premiums work?
You pay part, employer pays other part
What is a copay?
Pay something at the time of visit
Are copay for PCP vs. specialist different?
Yes
What is a coinsurance?
It is a percentage of the bill
Example: 80/20 split in Medicare
What is a deductible?
How much comes out of your pocket before insurance starts paying
What is the out of pocket maximum?
Most you will ever have to pay in any year for the benefits that your plan covers; insurer will pay 100% of maximum for the rest of the year
What is a provider network?
List of doctors and hospitals that are connected to your plan
In network: discount
Out of network: full price
Difference between HMO/EMO and PPO?
HMO/EMO will pay nothing, but PPO: insurance will pay
The possibility of a substantial financial loss from an event of which the probability of occurrence is relatively small is what?
Risk
Who assumes risk?
Insurer
Risk spreading: in any given year: ___% of the population accounts for almost 1/4 of all health care spending in the US
1
Risk spreading: The sickest __% of people account for half of total spending
5
Risk spreading: The healthiest ___% of the population accounts for about 3% of total health care spending, in any given year
50%
What is the purpose of health insurance?
To pool many people together to spread (or share) the costs generated by a small number of people
What are the 4 fundamental principles of insurance?
- Risk UNPREDICTABLE to individual insured
- Risk can be PREDICTED with REASONABLE ACCURACY within a group/population
- Risk transferred from INDIVIDUAL TO GROUP by pooling of resources
- ALL MEMBERS OF INSURED GROUP share actual losses on some equitable basis
What are the 3 risk options for insurance?
Guaranteed issue
Experience rating
Community rating
What is guaranteed issue?
Requirement that insurance be sold WITHOUT regard to health status
What is experience rating?
Premiums determined by group’s own medical claims experience
What is community rating?
Risk spread among members, premiums set without regard to health status, determined by utilization experience of larger community
What is ADVERSE SELECTION?
People with a higher than average risk of needing health care are most likely than healthier people to seek health insurance.
Adverse selection results when…
These less healthy people disproportionately enroll in a risk pool
4 ways how insurers traditionally managed adverse selection?
Medical underwriting
Pre-existing condition exclusions
Risk-based rating
Benefit design
What is medical underwriting?
Process insurers use to evaluate the risk of applicants
What is risk-based rating?
Charging premiums based on an individual’s likely health care needs
What is benefit design?
Coverage exclusions, high cost sharing
“Cherry picking”
Health conditions that were traditionally ALWAYS DENIED?
Cancer HIV/AIDS Diabetes MS Pregnancy Stroke
Health conditions that were traditionally OFTEN DENIED
Overweight
High BP
Cancer Hx
Asthma
Health conditions that were traditionally SOMETIMES DENIED?
Acne
Hay Fever
T/F: Health insurance is static?
FALSE! IT IS NOT STATIC
Coverage options can change with these 5 things:
Loss/change of job Change in family status (divorce/death of spouse) Bday Move Change in health status
What does PRIVATE health insurance cover? (5 things)
Covered benefits
Cost sharing
Terms of coverage
Condition exclusions
ESI typically (not always) more comprehensive [individual insurance typically (not always) less so
What does PRIVATE health insurance cover?: What are the covered benefits?
ACA: essential benefits required
Mandated benefits
Benefit limits (annual, lifetime, service and cost limits)
What does PRIVATE health insurance cover? Cost sharing?
Deductibles, co-pays, co insurance
OOP cost sharing maximums, balance billing
What does PRIVATE health insurance cover? Terms of coverage?
Provider networks
Care authorization/Utilization review
What is the definition of balance billing?
Providers ability to bill the patient for the difference between what insurance covers and what their charges are
In order to receive care authorization, PT needs to be…
Medically necessary
What does health insurance cost depend on?
WHO is covered WHAT is covered Insurer profits, administration Subsidies Underlying health care costs, inflation
Before Obama Care, most expensive plans had the most benefits and least expensive plans had the least benefits, true or false?
True
COBRA applies to job-based plans sponsored by employers with _____ employees
Greater than or equal to 20 employees
Under COBRA, you will have temporary continuation of coverage after qualifying event such as?
Loss of employment: 18 months
Change in family/dependent status: 36 months
Disability: 29 months
Under COBRA, employer premium contribution is….
NOT REQUIRED
COBRA can be very ______ for individuals
Costly
