SPEA-H 124 1st EditionExam # 4 Study GuideChapter 8: Financing Health CarePrivate funds: account for ½ of payments in USCan include:- Working American’s employer insurance- Individual insurance Public Funds: ½ of payment in US but represents a minority of usage of health insurance (aka costs a lot but doesn’t coverage many people) Can include: - Medicare (65+)- Medicaid for low-income individuals- Affordable Care Act subsidies (make too much for Medicaid but too little to afford insurance provided without help) Influences on Health Care Finance- Providers, employers (purchases), consumers, policy makers - Who is responsible for paying for healthcare? o Government: US is working toward health care as a right; congress thinks health care is done because of the ACA..takes time to see if it will work o Employers: current postponed mandate requiring companies with 50+ employees to provide insurance o Consumerso Providers o The marker: way of thinking that government should not be involved and that the market should work itself out Health Care Expenditures- 18% of GDP (on average, accounting for some people spending much more on health care and some much less)/$8,233 per person or 1/6th of the economy - Top three expenses: o 1. Hospital careo 2. Physician serviceso 3. Prescription drugs: fastest rising aspect - Health care expenditures have leveled off since 2013- Government finances 48% of expenditures - 3% of government spending is on public health; shows that there is too much emphasis on treatment and not prevention - 1970-2005: US largest increase in percent of GDP devoted to health care in 29 countries o US spends twice as much on health care but has lower rankings on health outcomes : life expectancy should be 83 in relation to spending but is roughly 76 o We have shorter hospital stays and less physician visits but still spend more Health Care Wastes - 30-40% of health care spending is waste because of: o Defensive medicine: ordering test in case of getting sued o Economic incentives for providers and suppliers o Fraud and abuse: especially with Medicaid system (“Medicaid Mills” = doctors saying they treated a certain number of Medicaid patients but actually just turning in information about them for a refund) o 3-10% of health expenditures said to be fraud  HIPAA used for privacy but also for enforcement of research of false claims  Companies need a compliance officer to keep themselves accountable Major reasons for increases in health Expenditures - New diagnostic and treatment technology: also more high tech items per capita than needed; no government control because of the free market - Growth in older populations: older populations utilize more health care; issues around what procedures are worth it economically versus ethical involvement - Medical specialization: primary care physicians seen as “gatekeepers” before seeing specialist; Americans want specialists; specialists make money off surgeries could prescribe surgeries more often - Uninsured or underinsured: 16% of Americans; late stage diagnosis that costs more; low wage jobs where insurance may be provided but isn’t affordable- Labor intensity: health care requires highly skilled professionals that make on average more than the rest of the community - Reimbursement system incentives: driven primarily by physicians and hospitals; “fee for service,” versus the up and coming “pay for performance” - Advances in therapy: cost problem - Patented knowledge= market charges and monopoly  cost problems to unethical extremeDefinitions: Premium: the cost of buying insurance, not the services Deductible: accumulated money to paying for care Copayment: what is required to be paid from pocket at each visit; doesn’t go toward deductible Out-of-Pocket: deductible + copayment; doesn’t include actual cost of health insurance premium Reimbursement: the money paid to the doctor by the insurance companyPrivate health insurance-evolution- 1800s movement to insure workers against lost wages due to work injuries; later coverage added for serious illness- 1930s: health insurance payments to medical care providers o Baylor University teachers’ contract; pre-paid hospitalization; used during depression so medical providers would still make some money o BlueShield made my physicians o Started as not-for-profit but not anymore - Insurance evolved to pay for routine and catastrophic events - Indemnity health insurance coverage protected all from cost of care; 100% reimbursement to patient; stayed until 1930s when managed care evolved o Proved inflationary; there are more financial consequences going to doctor now for patient; makes them more cost-sensitive Insurance Transformed Health Care - Put hospitals as the medical care center and within easy reach of working population- Higher premiums to less healthy individual- People became entrepreneurs in health insurance  more than just BlueCross/BlueShield HMO Act of 1973- Came about because of rapidly increasing Medicare expenses, quality concerns by government and business insurance purchasers- Indemnity wasn’t a good system because employers had to pay too much - Shifted financial burden from employers to insurance companies; became “managed care” and kept people from using too much medical care- The Act mandated employers with >25 employees to offer an HMO insurance optionProblems with the HMO Act - Prepaid healthcare coverage was the main problem - Providers got a fixed payment (called capitation)  incentivized physician to do less and see the patient lesso Patients thought HMOs were low quality because physicians often didn’t do enough diagnostic tests to save money - Long waits, hard to see a specialist ;HMO Models Staff Model: MD employees provided primary care in HMO owned facilities; salaried doctors Independent Practice association (IPA): community based MDs serve HMO members on pre-paid, fee-for service; group practice of employers In both cases, doctors do not earn more by doing more can be a reason why HMO doctors were said to be lower quality Self-Funded Insurance Plans - Used by companies with more than 300 employees as a way of saving money; don’t have to pay insurance companies the high rates when they can be their own providers - Third Party Administrator (TPA): administers benefits, pays claims and utilizes and collects data; typically an insurance company because they know how to handle datao Doesn’t take risk,