Lecture 3: Health Insurance Flashcards
What is the primary means of healthcare financing in the US?
Employment-based health insurance (World War II)
What was the 1st insurance plan to cover physician services?
Blue Shield Plan
What things planted the idea that health insurance is needed in 1900s?
- Advancements in medical treatments and hospital care costs are rising and it become difficult for people to preduct future needs and costs for health care
- Great Depression led to economic instability of hospitals; patients lost income if sick and accumulated health care debt
When there were no programs for elderly, poor and unemployed person. What public health insurance programs were created in 1965?
- Medicare
- Medicaid
What is the primary way that people in the United States receive healthcare insurance?
Employer
Differentiate between private and public health insurance. What are examples of each?
- Private health insurance: primarily employer based, self-insured via an individual health insurance policy
- Public Health Insurance: recieve goverment funding (examples include Medicare, Medicaid, SCHIP, VA/TRICARE)
Define the 4 principles of insurance (why do we have insure companies? what are there characteristics?
- Difficult to predict risk for individuals
- Easier to look at patterns and trends for groups of people and predict risk more accurately
- Insurance helps to shift risk from an individual to a group as resources are pooled
- The insured group shares in any losses
Define moral hazard
Consumer behavior
refer to people with medical insurance getting more medical care, aside from whether they need it or not
If you have insurance, you are more likely to use healthcare good and services than if you had to pay price out-of-pocket
Define provider induced demand
- healthcare provider (physician) has the ability to create demand for healthcare goods and services
- More prominent in Fee-for-Serice reimbursement models
Define adverse selection
People in poor health are more likely to enroll in insurance and use healthcare services; if people are very sick, more likely to get health insurance
What do moral hazard and provider-induced demand result in?
- Inefficient and inappropriate use of healthcare goods and services
- Wasted healthcare resources
- Increased healthcare expenditures (increasing NHE because patients are using more resources and that increases the demand for those resources)
***both have effects on healthcare services utilization and cost
How can having patient cost sharing (e.g., premiums, deductible, copay, etc.,) impact moral
hazard?
- patient cost sharing decreases moral hazard
What is cost sharing?
A term used to describe the practice of dividing the cost of health care services between the patient and the insurance plan. For example, if a plan pays 80% of the cost of a service, then the patient pays the remaining 20% of the cost.
**patients need skin in the game: insurance premiums, deductible, co-insurance, and copays
What does cost-sharing depend on?
- plan type
- type of service
- in-network vs. out of network care
Does it usually cost the patient more or less if they get care outside of a provider network?
Costs more
*Patients have lower cost sharing if receive services in “preferred provider network”= get discounts
How does Affordable Care Act (ACA) relate to cost-sharing?
provides preventative care without cost sharing (for most plans)
Define premium
The dollar amount a person pays for health insurance from an insurance plan
Define deductible
The dollar amount a person pays before their insurance company begins to make payments
Define Copay/Coinsurance
A portion of healthcare charges that a person must pay that is determined by the insurance policy
Copay: specific dollar amount
Coinsurance: percentage
Define formulary
list of prescription drugs covered by a health insurance plan
Define Out-Of-Pocket Maximum
The dollar amount a person must pay before their insurer pays 100% of the person’s healthcare costs. Out-of-Pocket maximum is set for a calendar year
* only applies for covered services
* includes deductibles, copays and coinsurance
* Out-of-network costs DONT apply to out-of-pocket maximum
Define provider networks and give examples
- List of healthcare providers covered by a health insurance plan
- Patients typically have lower out-of-pocket costs “in network”
- Networks include physicians, pharmacies, hospitals, clinics, etc.
Define Fee-for-Service provider reimbursement. How is this related to provider induced
demand?
Fee for service (FFS) is the most traditional payment model of healthcare. In this model, the healthcare providers and physicians are reimbursed based on the number of services they provide or their procedures. (doesn’t include quality of care)
The fee-for-service (FFS) physician incentive structure makes it easier for SID (Supplier Induced Demand) to occur since it rewards the physician for increasing the quantity of services delivered rather than for the actual quality of the services; this could induce the physician to offer a higher number of services than would be the optimal amount for the patient in order to increase revenue.
What are some healthcare reimbursement models?
- Traditional “Fee-for-Service”
- Managed Healthcare (HMOs, PPOs)
- Consumer Driven Health Plans (CDHPs)
How does a Flexible Spending Account (FSA) work?
An arrangement through your employer(private insurance) that lets you pay for many out-of-pocket medical expenses with tax-free dollars. Allowed expenses include insurance copayments and deductibles, qualified prescription drugs, insulin, and medical devices. You decide how much to put in an FSA, up to a limit set by your employer.
How does FSA benefit patients?
- lowers taxable income
- easy to use because it’s money on a card
What
types of things are usually reimbursed by an FSA?
You can spend FSA funds to pay deductibles and copayments, but not for insurance premiums. You can spend FSA funds on prescription medications, as well as over-the-counter medicines with a doctor’s prescription. Reimbursements for insulin are allowed without a prescription.
How long do patients have to spend the
money in their FSA account?
Funds must be spend in the calendar year-careful planning is key
