Private Provision of Healthcare Flashcards
Health insurance
shifting the possible risk of high costs off of yourself and onto the insurance companies
Employer Sponsored Insurance
private health insurance that is offered through an employer to an employee where each party pays a certain amount to cover the cost
Premium
amount paid every month in order to have health insurance
COBRA coverage
short term health insurance (less than a year) which is more expensive and is an option if you lose your job
Experience rated insurance
premiums are determined by risk; NOT how premiums are determined for health insurance
Community rated insurance
premiums are the same for everyone in a community (would be equitable, but healthy may not purchase insurance)
Adjusted community rated insurance
per ACA, adjusted only for age, location, smoking status, individual/family enrollment, and plan type
Reimbursement
payment to provider/hospital for providing medical services
Fee-for-service (FFS)
pay a fee for each visit/service after the event
Challenges with FFS model
physicians have incentive to offer patients a lot of services, and since patients are not bearing full cost they see no harm
Capitation
one payment made for each patient’s treatment during a period for a set of services, common among HMOs
Episode of fixed price/illness
one fee for all services delivered during one illness, used by Medicaid
How do people access private health insurance?
ESI, individual companies, ACA individual marketplace
Job lock
people are less likely to leave jobs because they don’t want to lose health insurance
Copayment
amount paid to go to a visit (not a payment for the services provided)
Deductible
an amount that must be paid out of pocket before insurance kicks in (high deductible = low premium, low deductible = high premium)
Cost sharing
the insured individual bears some of the cost of the medical services
Coinsurance
required to pay a specific amount of total cost (up to the deductible)
Annual medical out of pocket limit
the insurance will share a cost with consumer until a certain amount then it will cover 100% of cost
Potential issues with private insurance
asymmetric information, job lock, losses of employment = loss of insurance
Moral hazard
individuals or firms (that are protected from some kind of loss) act with less caution than they otherwise would have, “hidden actions”
Adverse selection
high risk individuals are more likely to purchase insurance than low risk individuals, “hidden type”, individual mandate was created to address this problem
Fee for service with utilization review
insurer has power to authorize or deny payment, same fee for service model
Preferred provider organizations (PPOs)
insurer contracted with limited number of physicians and hospitals and negotiates lower prices (still FFS)
Health maintenance organization (HMO)
patients required to receive care from providers within HMO, not paid FFS
Point of service (POS)
patients required to receive care from HMO with option to use outside provider network at a higher cost
