Test 2 Health Insurance Principles Flashcards
Why is health insurance a significant national problem?
- a lot of people uninsured
- health ins. cost is rising
- lack of understanding of core principles of insurance
Demographics of uninsured people in America
- working poor
- low paying job w/o benefits
- unaffordable premiums
What is the #1 reason why people declare bankruptcy?
- catastrophic medical bills; even people with insurance
- consisted of 62% of bankruptcy in 2007
- most common groups: cancer, long term expensive illnesses, single head of households
What is a significant problem in health insurance?
- we expect health insurance to cover all our expenses
- most do not understand the concept of insurance
What makes an event insurable?
to cover / mitigate unanticipated risk
Why do we buy insurance?
to minimize unanticipated risk
pure risk
facing chances of possible loss but no gain
speculative risk
chances of losing and gaining are equal
conditions of pure risk
- population probability can be determined
- irregular event on individual basis
- accidental loss
- lead to substantial loss
- loss can be measurable
- must have insurable personal interest
Moral hazard with insurance
- Overconsumption of health care
- Patient only pay a portion out of pocket
- Encourages patients to overuse health services
Risk management strategies
- employer based plans
- elimination period
- pre-existing conditions
- coverage limits
What did early insurance cover?
- income loss
- known as disability insurance
insurance firms first offered health insurance to which type of population?
- California gold rush workers
- Railroad workers
Baylor University
- created an insurance like plan
- offered teachers a $6 plan to go to their hospital
American Hospital Association
- Blue Cross hospital insurance
- reimburses patient
- purpose: increase demand for service
LA California physician group
- created Blue Shield
- reimburse patient
How did employers start providing health insurance?
- WWII a lot of our men were troops
- employers started providing benefits as an incentive for people to work for them
1950’s
insurance shifted from protecting providers to protecting consumers by catastrophic illness / injury
indemnity insurance
patient pays all their bills, keep their receipts, and submits it to their insurance to gets reimbursed
service benefits plans
- as healthcare got more expensive, this developed
- insurance billed directly
- pt pay their part
- pt receives EOB
When did insurance started getting involved in pharmacy?
- 1970’s
- PBM created
Prescription drugs: violation of criteria for insurable events
- not a substantial loss
- chronic disease: damages are predictable
- high administrative costs
Fee-for-Service
fee paid to provider for each service provided
Managed Health Care
patient and claims serves as control database to improve quality of care
