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
