Session 3 Hour 1&2

Question 1

Private Insurance

Answer 1

• 67%

Employer-sponsored insurance

• Most common form of insurance
• Through employment
• Since ACA, firms with 50+ employees are required to offer health insurance

Question 2

Direct purchase insurance

Answer 2

Insurance bought for an individual directly in the market

Includes:

• Insurance bought though exchanges created by Affordable Care Act
• ACA-compliant plans purchased outside of the exchanges
• Dental and insurance plans
• Disease-specific plans
• 9-10 million with traditional Medicare coverage who purchase supplemental coverage (Medigap)

Question 3

Government-run insurance programs: Medicare

Answer 3

~ 55 million
- Provides coverage for 65+, disabled, and end-stage kidney disease

3 parts:

• Part A covers inpatient services and is funded by payroll taxes
• Part B covers physician services, funded by premiums + general federal taxes
• Part D covers prescription drugs, funded by premiums + general federal taxes
• Part C= Medicare managed care=Medicare Advantage

Question 4

Government-run insurance programs: Medicaid / CHIP

Answer 4

(~ 72 million)

• Provides coverage for low-income, children, pregnant women & disabled
• Administered by state programs
• High variability in enrollment criteria and coverage since ACA

Question 5

Government-run insurance programs: Military coverage

Answer 5

• Military retirees and dependents

- Active duty military covered by Department of Defense

Question 6

Employer Sponsored Insurance Trends

Answer 6

Full-time employees:

• Affordable Care Act included an employer mandate: firms with 50+ full-time employees are required to offer insurance to full-time workers (or face a tax penalty)
• Still, before ACA, 93% firms with 50+employees offered health benefits

Part-time employees:
- Employers are not required to offer health insurance, but may opt to do so

Trends:

• Premiums have increased a lot –22% over the last five years and 55% over the last ten years
• So have deductibles

Question 7

Why do employers choose to offer health insurance?

Answer 7

• Employers value healthy workers (and healthy families)
• Employees value health insurance: compensating differentials (more on this in a few slides)
• Employer-sponsored insurance is cheaper because it is heavily subsidized by taxes

Question 8

• Tax Treatment of Employer Sponsored Insurance

Answer 8

• Under current law, fringe benefits including health insurance do not count as taxable income and thus are not subject to income tax