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79 Cards in this Set
- Front
- Back
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National Health Expenditure
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•US National Health Expenditure: 16% of GDP, $7,026 per person
•NHE has consistently grown at a faster rate than GDP •Who writes the checks? Mainly private insurance (35%) •Source of funds: households, government, business |
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Why have medical expenditures risen so rapidly?
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• Depend on prices, quantities, and quality
• High incomes and aging population • New and expensive technology • Growth in numbers of non-paying patients • Reimbursement based heavily on cost plus reimbursements |
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Fueled increase in spending
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•Medicare
oLowered medical care prices for aged, triggered rise in demand oIncrease in price, need to attract more personnel •Tax advantage oCheaper to receive health insurance than higher wages oIncreases demand and reduces concern over prices •Fee-for service payment oReduced incentives for efficiency or cost control •Technology |
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Government response
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• 1970s: raised taxes to pay for higher costs, pay hospitals and physicians less
• 1980s: encouraged expansion of HMOs, new Medicare hospital payment system which created incentives for hospitals to reduce costs |
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Managed Care Features
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o Control of utilization
o Limited access to hospitals and physicians o Lower out-of-pocket payments in exchange for using less expensive providers o Emphasis on outcomes and appropriateness of care |
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Managed Care in the 1990s
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o Hospital use reduced
o Hospitals and physicians gave large price discounts o Reduced choice became controversial |
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Consumer sovereignty
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• Consumers decide how much to purchase based on values
• Best achieved with competitive markets: enough sellers, informed buyers, absence of externalities |
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Economic efficiency
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• Inefficiency when care is provided for which the full cost exceeds the expected benefit
• Occurs when people do not have to bear the full costs of their choices • Efficient when you can’t make someone else better off without making someone worse |
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Safety Net Issues
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• Willingness to pay is related to ability to pay
• Possible motives: self-interest, altruism, concepts of justice |
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Why is US spending so high?
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• GDP per capita (ability to pay)
• Distribution of market power and prices o Americans pay higher prices for some equivalent health services o Highly trained professionals o Health care is labor intensive o Financing of health care is fragmented, giving providers more market power • Capacity of health system o Other countries have greater health care capacity, greater supply increases competition and drives prices down • Administrative complexity and costs • Unwillingness to ration health care o Ration: government determines what will be spent. If demand is more, doesn’t change. |
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US vs. other countries
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• US has better system for acute care, not chronic
• US has lower waiting times for surgery • Problems with coordination and access to care |
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Demand for Medical Care
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• Age, sex, and genetics
• Severity of illness • Income • Beliefs • Price • Insurance coverage |
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Health
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• Health: return to being without illness or disease after a spell of illness
• Illness: identified by a person’s perception and evaluation of how he or she is feeling. Diminished capacity to perform tasks and roles • Disease: based on professional evaluation, caused by more than one factor |
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Biomedical Model
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• Governs concept of health and health care
o Existence of illness or disease, seek and use care, find relief of symptoms, diagnosis of illness and treatment, once relief is obtained the person is considered well |
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Biomedical Model Issues
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• Focuses on acute rather than chronic disease
• Many factors influence health outcomes • Ignores prevention |
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• Focuses on acute rather than chronic disease
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o Acute: relatively severe, episodic. Heart attacks.
o Chronic: less severe, but long and continuous. Can be controlled, but can become serious. Asthma. |
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• Many factors influence health outcomes
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o Access to and quality of medical care
o Environment o Genetics o Education level o Lifestyle behaviors |
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• Ignores prevention
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o Efforts to remove risk factors for disease
o Agents: smoking, poor diet. Hosts: genetic make up, fitness. Environment: poor sanitation o Prevention through behavioral modification and environmental health |
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Public Health
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• A health related service to minimize risk factors to prevent, control, and contain disease, prolong life, promote optimum health for society
• Medicine vs. public health o Medicine: focuses on individual, biological causes, treat disease and recover health o Public health: focuses on population. Identifies environmental, social, behavioral factors. Spreads info |
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Health status
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• Indicator of health and well-being
• Morbidity-disease or disability • Mortality- death rate o Has declined due to public health improvements o Decrease in deaths from coronary heart disease, infant mortality improvements, and other initiatives • Longevity- life expectancy |
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What is health insurance?
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• Medical expense insurance: employer-sponsored, individual, workers’ compensation
• Health related: disability insurance, long-term care insurance, life insurance |
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Demand for insurance
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• Individuals are generally risk averse
• Diminishing marginal utility of wealth • Preference for certainty, willing to pay more than expected loss to purchase insurance |
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Supply of Insurance
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• Insurer holds capital as a buffer, assets > expected claims
• Insurer diversification reduces volatility • Price must cover expected claim costs, expenses, profit |
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Corporate Demand
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• When stock holders can diversify, incentives for firms to reduce volatility declines
• Risk management can: improve terms with other stakeholders, reduce expected costs of financial distress, preserves profitable future investment |
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Factors that limit Insurability
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• Expense/profit loadings in premiums: premiums>expected claim costs
• Correlated losses: reduces ability to diversify risk • Parameter uncertainty • Moral hazard: reduced loss control when insured o Reduced by: partial coverage, experience rating, premium credits for loss control, claims monitoring, criminal prosecution • Adverse selection: asymmetric information o Reduced by: insurers’ classification, limits on choice and coverage |
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What’s distinctive about health insurance
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• Employer-sponsored
• Tax subsidies • Limited risk ratings • Moral hazard • Other peoples’ money: Medicare and Medicaid, free care, bankruptcy protection |
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Employer-sponsored model
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• Employers transfer part of risk to insurer
• Large firms are generally self-insured • Employers/insurers bear short-run deviations, employees bear long-run changes |
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Health coverage features and terms
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• Limitations on types of expenditures, choice of providers
• Cost-sharing: deductibles, co-pays, coinsurance, stop-loss, limits • Risk selection issues |
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Guaranteed renewability
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• Rate can only be increased at renewal for a rating group, not based on changes in individual health status
• Lack of commitment and bail-out of those who remain healthy • Maintaining: switch costs, front-loading of premiums, state and federal requirements |
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Tax subsidy to employment based health insurance
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• Benefits the rich
• Causes people to insure near sure things • Lowers your taxes, raises everybody else’s • People respond by using more, moral hazard • Removal world o Improve efficiency: lower total spending, future growth o Improve equity: benefit now goes to higher income people |
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Why households don’t buy insurance
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• If loading is higher
• Not risk averse, think illness is unlikely, think you will have to pay little out of pocket if you do get sick |
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Uninsured
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• More likely to not work for a big firm, young immortals, lower income, like to take risk
• More likely to be unemployed, young, poor • Most are not poor or near poor • Most are in families with full time worker • Fewer MD visits, high tech procedures, more problems with access to care |
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Alternatives for Universal Coverage
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• Mandated employer coverage/pay or play
• Full tax financed NHS • Expand Medicaid/CHIP • Tax credits • Individual mandate |
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Broad approaches to cost control
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• Decrease quantity of services
o Demand side: deductibles, co-payments, co-insurance, tax incentives o Supply side: employment, capitation, bonus/penalities, review • Decrease price of services o Selective contracting, choose people who will discount • Restrict intensity or type of utilization o Restrict adoption of new technology, emphasis on outpatient services |
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Fee-for Service (Indemnity)
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• Pay premium to insurance company
• When sick, visit any provider • Insurance pays provider and cost-plus markup • Choice: enrollees may choose any physician and hospital, pay physicians FFS • Cost: deductible, co-insurance rate on top of annual premium, insurance pay hospitals about 90% of charges • Most choice, not much UR, higher fees, higher premiums |
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Staff Model HMO
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• HMO contracts with hospitals
• HMO employs its own physicians: salary + performance • Enrollee pays $5 per visit to providers • HMO pays salary or capitated or FFS to physicians, hospitals paid per day or case rates of capitated • Less choice, utilization review, lower fees, capitation/salary, lower premiums |
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Group model HMO
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• HMO contracts with hospitals
• HMO contracts with large multi-specialty group |
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Network Model HMO
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• HMO contracts with hospitals
• HMO contracts with many smaller medical groups |
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IPA (Independent Practice Association)
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• HMO contracts with hospitals
• HMO pays IPA capitation • IPA contracts with providers |
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Preferred Provider Organization
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• Employer contracts with third party administration or insurer
• Cost advantage if beneficiary receives care within network • Restriction on choice: need to go to PPO or pay • Bargaining power of plan by offering volume • Enrollee pays $10 per visit in network, high deductible and co-insurance out of network • Insurer pays 80% of MDs in network, hospitals $1200 day in network, more outside |
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Point of Service Plan
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• Hybrid of HMO and PPO
• Contract with a network of hospitals and physicians • Enrollee has the option of going out of network, pays more • Enrollee pays $5 per visit in network, high deductible and co-pay out of network |
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Managed Care Cost-Saving Features
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• Financial incentives
o Providers: salary, capitation and DRG/care rates, per diem rates o Patients: penalty for going out of network • Selective contracting • PCP Gatekeeper model o Specialist referrals controlled by primary care physician • Utilization review o Prior authorization, concurrent review, retrospective review |
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Managed Care results
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• Lower use, fees
• Cream-skimming issues: attracted younger people • Backlash o Choice over cost-savings to attract employees o Provider consolidation increase bargaining power o New technology • One time vs. continual cost savings o One time: decreased LOS, less costly services, lower prices o Continual: need to innovate in management of care for aced, reduce rate of new technology |
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Consumer-Driven Health Care
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• Place more financial responsibility on consumers through greater cost-sharing
• Increases incentives for consumers to seek lower prices and use less • Greater cost-sharing: increases deductibles • Lower premiums with more limits on choice and greater cost sharing • Positive o Incentive-based utilization, lower cost and improved quality • Negative o Destabilize risk pools, redistribution of health care services, favor the affluent |
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Health Savings Account
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• Person purchases a high-deductible health plan and then annually contributes a specified tax-free amount into the HAS
• Maximum amount that can be contributed for individuals and families • Maximum out-of-pocket expenses set • Funds can be invested and grow tax free |
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• Pros
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o Reduces monthly insurance premium
o provides individuals with a financial incentive to be concerned with prices they pay for medical services o think about which services they really need |
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• Cons
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o Any savings would be relatively small because once out-of-pocket maximum is reached, patient has no incentive to spend less
o Adoption and availability of new technology determine expenditure increases, not spending for outpatient services o HAS would split risk pools • Low risk would choose HSAs, high risk would remain in more comprehensive plans o Government subsidies would be needed to enable those with low incomes to establish HSAs |
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• High risk coverage
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o Regulate insurance prices and guarantee issue
o Base on location, age, sex, limit increase for bad health |
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Guaranteed renewability
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• Rates can only increase for a rating group, not based on individual health
• Problem: lack of commitment and bailout, destabilizing guaranteed rates • Solutions: switch costs, front-loading of premiums, state and federal rate |
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HIPAA
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• Plan cannot charge rates based on individual’s status
• Individual policies must be guaranteed renewable • Blended rate for the group can reflect the group’s risk |
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Market-based reform
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• Reduce mandates, rate restrictions, and other regulations
• Allow basic coverage policies |
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Medicare History
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• 1965: Medicare bill signed. Elderly over 65, disabled under 65
• 1980s-mid 1990s: payment reforms. Hospitals: DRGs, physicians: RBRV • 1997: balanced budget act: cut provider payments by limiting growth, part C • 2003: Part D, prescription drug benefit |
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Part A: Hospital Insurance
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• Pay as you go, current employees payroll tax
• Covers: inpatient hospital care, skilled nursing facility, home health agency, hospice care • Patient cost sharing: no premium, deductible and copayment varies |
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Part B: Supplemental Medical Insurance
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• Covers: physician visit, ER, outpatient care, laboratory tests, physical therapy
• Cost sharing: premium each month, deductible each year, coinsurance rate after deductible. 75% paid for by federal government • Payments o Hospitals: DRGs, form of prospective payment o Physicians: RBRVs, based on resources used • Not covered: long-term care (nursing home) denture, eyeglasses, hearing aids |
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Part C: Medicare Advantage
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• Medicare HMO encouraged as alternative to Medicare FFS
• More generous coverage than basic package • Required to provide all Medicare part A and B services |
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Part D: Prescription Drug Coverage
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• Premium paid each month, yearly deductible
• Co-insurance rate until $2,250, gap until $5,100 and then co-insurance • Offered through stand-alone plans or Medicare Advantage plans |
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Challenges in Medicare
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• Current implementation/revision/assistance of new prescription drug benefit
• Aging baby-boom generation • Declining number of workers per beneficiary • Continued rise in national health care spending |
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Medicaid Eligibility
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• Mandatory: certain pregnant women, children, parents with dependent children, disabled and elderly receiving SSI, children in foster care
• Optional: disabled, high health care expenses, nursing homes, cancer |
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Coverage
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• Mandatory: physician services, laboratory and x-ray services, everything for children
• Optional: prescription drugs, clinic services, dental services, dentures, physical therapy |
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Section 1115 Waivers
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• Allows for broad changes in eligibility, benefits or cost-sharing
• Many stated used waivers to require managed care coverage of Medicaid enrollees in 1990s • BBA 1997 allowed states to require managed care without a waiver |
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HIFA Waiver
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• Encouraged states to seek waivers to expand coverage
• Allowed flexibility in benefit limitations and cost-sharing to achieve cost-savings required for budget neutrality |
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Deficit Reduction Act: Cost-Sharing provisions
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• Before states could charge nominal cost sharing to certain Medicaid beneficiaries, but not premiums. Cost sharing had to be uniform
• Now states may impose a higher or new cost sharing and premiums • Allows variation in cost sharing, can be enforceable • Allows states to use benchmark plans for certain groups |
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Long-term Care
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• Growing portion of Medicaid is going to LTC
• Services and supports for chronic illness, disability, aging • Benefits received by a small proportion of population |
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Medicaid and low-income children
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• SCHIP expands Medicaid for children’s coverage
• Reauthorization stalled by two presidential vetoes |
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Nursing aides
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• Perform routine tasks under the supervision of nursing and medical staff
• Do not need diploma or previous work experience |
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Licensed practical nurse
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• Can administer medication, assess vital signs
• Program for 1 year |
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Professional nursing (registered nursing)
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• Promote health, prevent disease, educate patients
• Direct patient care, develop care plans • Aging population, few males • 4 levels of education: BSN, AD, Hospital diploma, graduate-level post bacc |
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Nursing demand
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• Patient acuity levels and care needs
• Agency hiring practices/staffing patterns • Demographic trends-aging |
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Nursing supply
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• Entry into profession
• Aging and retirement • Attrition from jobs and profession • Aging workforce, declining entrants, workforce participation, geographic distribution, salary and benefits |
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Nursing education
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• Faculty are aging, high average PhD age, few doctorally prepared
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Nursing Migration
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• Many come from Philippines, Canada
• Issues of active vs. passive recruitment • Clinical and cultural competence |
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Demand issues
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• Aging population, more people on Medicare
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Possible solutions
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• Allow market for RNs services to operate in a competitive health system and heave that market dictate roles, responsibilities, and salaries
• Subsidies for nursing education |
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Nurse Surveys
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• Nurses with the worst staffing were more likely to report job dissatisfaction, high emotional exhaustion, fair or poor quality of care on their units
• Increase in workload increased risk of death, burn out rate, dissatisfaction • Nurse education decreased patient mortality rates • Low levels of nurse staffing associated with increased rates of poor patient outcomes |
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Reasons for lack of association between staffing and outcomes
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• No significant effect of staffing
• Appropriate levels in place • Variables not reliable • Level of measurement issues |
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Costs of not investing in staffing
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• Patient satisfaction issues
• Staff satisfaction issues- turnover, labor costs • Regulatory difficulties-quality of care or staffiend regs • Medicolegal liability • Financial risks in labor cost overruns, system costs, litigation |
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Policy options
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• Carrots-inducements to do the right thing
• Sticks-penalties for not complying • Sermons- providing info to parties and letting the market function |
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Advanced practice nursing
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• Roles than draw upon specialized education
• Issues: physician oversight, prescriptive authority, reimbursement |
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Challenges for American Nursing
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• Reinventing nursing workplaces
• Marketing nursing and its work to a new generation • Career paths and mobility issues • Learning how to capitalize on public trust and use political voice meaningfully • Renewing the leadership of the profession |
