Economics Exam 1- Us Healthcare System

Front 1

other sources of insurance besides employer based (2)

Back 1

include medicaid/other state programs (CHIP) and uninsured.

Front 2

experience rating model

Back 2

A person’s premium is based on their own expected claims, i.e. people in poor health or with more health risk factors pay higher premiums than healthier people.

Front 3

issues with experience rating model (2)

Back 3

discriminatory, very hard for people at higher health risk to afford it, -insurance co. does a lot of underwriting- i.e. needs to accurately know what your health risk is, which adds more cost to system

Front 4

community rating model

Back 4

A person’s premium is based on the average expected claims in their geographic area. Sicker people pay the same premiums as healthier people

Front 5

example of pure community rating model

Back 5

medicare part D

Front 6

issues with pure community rating model (3)

Back 6

-people will drop out of the insurance system/move away

-insurance co. will cherry pick who is in their plan to make more money- discourage sick people to stay out of market

-paired with regulations e.g. no pre-existing condition, etc.

Front 7

modified community rating model

Back 7

Allow premium variation on selected characteristics (e.g. age, smoking status), but restrict premium variation based explicitly on health status.

Front 8

modified community rating model issues (3)

Back 8

still some of the same problems from other

some really healthy people still paying too much but not as big an issue as other systems

older people paying more per month

Front 9

-almost all employers offer health insurance as a benefit. Why? (3)

Back 9

-huge tax subsidy on health insurance
-employers want healthy employees
-it's just an expectation now

Front 10

choice of insurance plan that employers have (2)

Back 10

employers have a choice to purchase from insurance company

or they may become the insurance company themselves (pay all healthcare costs themselves); but still pay some insurance company to process claims

Front 11

benefit of self insuring for employers

makes sense for which type of company? why?

Back 11

-self insuring allows employers to avoid state insurance regulation only federal

-makes sense for big companies; big risk pool and enough human resources to run it

Front 12

pricing model in employer based insurance WITHIN an employer


why does this work?

Back 12

Within an employer, community rating since by law employers must not charge sicker employees more for their insurance than healthier employees

this works (as in people are getting the fuck out) because employer pays a large chunk of premium

Front 13

across large employers, what kind of pricing model

Back 13

Across large employers (like when wellmark is offering pricing across a bunch of employers), experience rating where employers with sicker employees (on average) pay more than employers with healthier employees

Front 14

across small employers, what kind of pricing model

Back 14

Across small employers, could be experience rating, modified community rating, or community rating depending on the state

Front 15

Average annual premiums for single/family coverage through an employer trend

Back 15

-increasing annually (the cost for healthcare)

Front 16

employer tax subsidies for insurance/why do they get this

Back 16

receive a tax subsidy for employer based insurance since neither the employer or the employee pays taxes on the premium.

Front 17

pros of employer based insurance (4)
3 for employers, 1 for employees

Back 17

For large employers, it is a good size risk pool.
Since heavily subsidized by employers and tax exemption, very little adverse selection even though healthy people and sick people pay the same amount.
Saves employees the trouble of insurance shopping.
Employer may have more bargaining power to negotiate with insurers

Front 18

4 cons to employer based insurance

Back 18

When lose job, lose insurance. (Serious illnesses often interfere with ability to work.)
When change jobs, may have to change insurance.
Limited choice since many employers only offer 1 plan which may not meet all employees’ needs.
Job lock = if you have a family member or you have a chronic disease- you have to stay at that job-concern that this may dampen desire to start new businesses, etc
Market does not function as well for small employers.

Front 19

individual health insurance- what is it

cost

Back 19

often only option for those whose employers do not offer insurance or who are self employed

-higher loading fees- surcharge for administrative costs/profit- higher because of a lot more underwriting and other work done

Front 20

individual health insurance pricing model

Back 20

Pricing models used vary, but in many states, experience rating is used

Front 21

major issues with individual health insurance (2)

Back 21

Policies sold often have limited coverage (don't want to attract too many sick people) (e.g. no maternity coverage) and high patient cost-sharing

Huge variation in premiums across states and insurer

Front 22

individual health insurance pros (3)

Back 22

May be able to keep insurance when you change jobs.
Don’t lose your insurance when you lose your job.
Have choice of insurers and plans.

Front 23

4 cons of individual health insurance

Back 23

Often unavailable or unaffordable, especially for people in poor health and older individuals.
Hard for people to navigate the search process.
Limited coverage.
Extensive underwriting increases costs

Front 24

why is individual health insurance so difficult for people to get? (2)

Back 24

- even a minor disease can cause them to deny you
-once denied- then subsequent insurance companies that you app to will ask you if you've been denied before

Front 25

individual insurance coverage in iowa

Back 25

Iowa- more farmers and shit who are self employed- so our individual insurance coverage is better

Front 26

regulation in US Health Insurance market and tend to be more state or fed?

Back 26

-HEAVILY regulated by fed and state gov't
-fed and state regulate but trend is toward more fed regulation

Front 27

loading fee

Back 27

surcharge for administrative costs/profit

Front 28

Federal regulation of health insurance trend

Back 28

increasing

Front 29

4 selected types of govt regulation of health insurance

Back 29

guaranteed issue
guaranteed renewal
mandated benefit law
premium regulation

Front 30

guaranteed issue

Back 30

Insurance companies must insure all who apply, regardless of their health status

Front 31

guaranteed renewal

Back 31

Insurance companies must continue to renew an existing policyholder, regardless of their health care utilization

Front 32

mandated benefit law

Back 32

Requires health plans to cover a specified service, provider or category of people (e.g. autism).

Front 33

premium regulation

Back 33

Laws may impose a pricing model or regulate premiums in other ways- make sure they don't get too bad or impose a pricing model

Front 34

example of fed regulation (2)

Back 34

COBRA
HIPAA

Front 35

what is COBRA? (3) like what does it do exactly

Back 35

Allows people who lose a job to continue to participate in their former employer’s health plan for a limited time.
Former employee must pay full cost of premium plus 2% administrative fee ($$$$$)
Former employees generally can stay in the plan for up to 18 months (few cases where it is longer).

Front 36

what's COBRA stand for

Back 36

Consolidated Omnibus Budget Reconciliation Act (COBRA)of 1990

Front 37

COBRA cost for employers
why

Back 37

VERY EXPENSIVE FOR EMPLOYERS too since it's always the sicker people who sign up for cobra (federal)

Front 38

HIPAA was primarily made to do what?

Back 38

-main part was designed to make health insurance from employers more portable

Front 39

HIPAA- how did it change/fix certain aspects of insurance? (4)

Back 39

-limits exclusions for pre-existing conditions if you are moving from one plan to another plan (like switching jobs)
-no discrimination based on health status
-within employer it is community rating (everyone pays same premium except for health behavior variation)
HIPAA amendments that mandate coverage of some benefits (e.g. 48 hour maternity stay).

Front 40

HIPAA effects on small employer market- and why it's not that helpful

Back 40

guaranteed issue/renewal - if this is without premium regulation this is pointless though so this isn't helpful. Some states do regulate premium though for small businesses.

Front 41

HIPAA effects on individual market

Back 41

Individual market: guaranteed renewal for all plans and guaranteed issue in some cases

Front 42

example of huge variation of state regulations (3)

Back 42

Some states have community rating or modified community rating for individual and/or small employer markets.
Some states have guaranteed issue in the individual market.
All states have varying numbers of benefit mandates (e.g. autism services, chiropractors). (IPA lobbying for pharmacist service mandates wooo)

Front 43

% of healthcare costs originates from what % of population

Back 43

50% of healthcare costs come from the 5% population of sickest people- this is the 5-50 problem

Front 44

Problems with the Private U.S. Health Insurance market (5)

Back 44

Costs are high and concentrated.
The market is very complex.
Individual and small business health insurance markets do not function very well.
Health insurance is often unavailable or unaffordable.
Insurance coverage may not provide sufficient protection in the event of a serious illness.