Private Provision of Healthcare

Question 1

Health insurance

Answer 1

shifting the possible risk of high costs off of yourself and onto the insurance companies

Question 2

Employer Sponsored Insurance

Answer 2

private health insurance that is offered through an employer to an employee where each party pays a certain amount to cover the cost

Question 3

Premium

Answer 3

amount paid every month in order to have health insurance

Question 4

COBRA coverage

Answer 4

short term health insurance (less than a year) which is more expensive and is an option if you lose your job

Question 5

Experience rated insurance

Answer 5

premiums are determined by risk; NOT how premiums are determined for health insurance

Question 6

Community rated insurance

Answer 6

premiums are the same for everyone in a community (would be equitable, but healthy may not purchase insurance)

Question 7

Adjusted community rated insurance

Answer 7

per ACA, adjusted only for age, location, smoking status, individual/family enrollment, and plan type

Question 8

Reimbursement

Answer 8

payment to provider/hospital for providing medical services

Question 9

Fee-for-service (FFS)

Answer 9

pay a fee for each visit/service after the event

Question 10

Challenges with FFS model

Answer 10

physicians have incentive to offer patients a lot of services, and since patients are not bearing full cost they see no harm

Question 11

Capitation

Answer 11

one payment made for each patient’s treatment during a period for a set of services, common among HMOs

Question 12

Episode of fixed price/illness

Answer 12

one fee for all services delivered during one illness, used by Medicaid

Question 13

How do people access private health insurance?

Answer 13

ESI, individual companies, ACA individual marketplace

Question 14

Job lock

Answer 14

people are less likely to leave jobs because they don’t want to lose health insurance

Question 15

Copayment

Answer 15

amount paid to go to a visit (not a payment for the services provided)

Question 16

Deductible

Answer 16

an amount that must be paid out of pocket before insurance kicks in (high deductible = low premium, low deductible = high premium)

Question 17

Cost sharing

Answer 17

the insured individual bears some of the cost of the medical services

Question 18

Coinsurance

Answer 18

required to pay a specific amount of total cost (up to the deductible)

Question 19

Annual medical out of pocket limit

Answer 19

the insurance will share a cost with consumer until a certain amount then it will cover 100% of cost

Question 20

Potential issues with private insurance

Answer 20

asymmetric information, job lock, losses of employment = loss of insurance

Question 21

Moral hazard

Answer 21

individuals or firms (that are protected from some kind of loss) act with less caution than they otherwise would have, “hidden actions”

Question 22

Adverse selection

Answer 22

high risk individuals are more likely to purchase insurance than low risk individuals, “hidden type”, individual mandate was created to address this problem

Question 23

Fee for service with utilization review

Answer 23

insurer has power to authorize or deny payment, same fee for service model

Question 24

Preferred provider organizations (PPOs)

Answer 24

insurer contracted with limited number of physicians and hospitals and negotiates lower prices (still FFS)

Question 25

Health maintenance organization (HMO)

Answer 25

patients required to receive care from providers within HMO, not paid FFS

Question 26

Point of service (POS)

Answer 26

patients required to receive care from HMO with option to use outside provider network at a higher cost