community rating
- A health plan sets the same premium rate for anyone in a given geographical area
- The insurer ignores any differences in expected costs among insured groups or people (previous illness, existence of a chronic condition, risky lifestyles, etc.)
- Achieves redistribution of health care more in accordance with human need from healthy to sick and from rich to poor
- Erosion of community rating has led higher cost groups (and individuals) to be charged higher premiums, some employers may not hire people with chronically ill-dependents for fear that it will increase their healthcare premiums
- This is one reason why proposals to reform health insurance often suggest a return to community ration or some other type of premium subsidy from the chronically-well to the chronically-ill
experience rating
- Experience-rating
People pay different premiums based on differences in their demographics, past health care utilization, medical status, and other factors - This type of “experience or actuarial rating” is used to minimize risks associated with policyholders who have high-risk related conditions
redlining
Refusing coverage to certain individuals or groups on the basis of geographical location, belonging to certain business groups that were considered as high-risk or on the basis of presumed high-risk lifestyles or history of excessive claims
managed care
- Any system that controls costs through closely monitoring and controlling the decisions of healthcare providers
- Most well known type of managed care plan is HMO
- Key feature: provision of care to a defined number of enrollees as a capitation (fixed) rate per member per month. As a result, cost centers such as hospitals, physician groups, clinics, etc. must be managed under a fixed budget
Why might people not like it?
- Managed care restricts autonomy of physicians
- Controls patient access and utilization of services requiring prior approval of services and referrals
- It rations services, physicians are expected to provide only medically necessary procedures
- Primary care physicians often serve as a gatekeeper to limit further or expensive services
HMO
- Health Maintenance Organization
- HMO act of 1973, President Nixon
- Aim to save costs within the private insurance sector by regulating employers
- The government gave employers the choice between a cheaper HMO plan and a more expensive option, so that more people would be covered by the HMO
- Required by law that any employer with over 25 employees would have to have some type of HMO
- HMO insurance plans represent a major shift from typical insurance policies (indemnity insurance, consumers free choice of provider)
- Insurance companies decide care providers, and may be limited with coverage area or available doctors. Limited number of specialists and typical limited care options
PPO
- You determine care providers, typically national coverage. Options for any specialist, options for best available care
- Likely involve more out-of-pocket costs like higher copayments or deductibles, but it allows you to go out of network if you agree to pay more
gate-keeping
- Patient has to see a provider before seeing a specialist
- Controlled access to providers with referrals and network system
premium
- Payments made by the insured on a monthly or annual basis to cover the specific set of losses indicated in the insurance policy
out of pocket maximum
- Came from Affordable Care Act, fundamental concept in making insurance affordable
- The most that you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits
- OOPM doesn’t include: monthly premiums, anything you spend for services your plan doesn’t cover, out of network care and services, costs above the allowed amount for oa service that a provider may charge)
deductible
The amount you must cover for medical expenses before your insurance policy starts paying, usually made on annual basis
insurance marketplace/exchange
- All states have this as of 2014
- An online market where you (as an uninsured individual), look for a plan among plans offered by various private insurance companies
- Can everyone go to the insurance marketplace? No. only people whose employer does not provide insurance
– Or, if their employer provides insurance but it doesn’t meet a certain standard (needs to be affordable, meet minimum value standard, annual out of pocket limit, provide substantial coverage for hospitalization and physician care) - State-based marketplace: states running a state-based marketplace are responsible for performing all marketplace functions. Consumers in these states apply for and enroll in coverage through marketplace websites established and maintained by the states
- Federally-facilitated marketplace: HHS performs all marketplace functions, consumers apply for and enroll in coverage through healthcare.gov
Bronze, silver, gold, platinum plans
- Five levels of coverage available in the marketplace
Bronze 60% of actuarial value (the percentage of total average costs for covered benefits that a plan will pay)
- Most people are required to have insurance that is at least bronze level 60% or have to pay a federal tax penalty
Silver 70%
- If you don’t expect to use regular medical services and don’t take regular prescriptions, you may want silver, bronze or catastrophic. These plans cost less per month but will pay less of your costs when you need care
- If you qualify to save on out of pocket costs, silver may over best value, you might qualify based on household size and income. - You can only get out of pocket savings if enrolled in a silver plan
Gold 80%
- If you expect a lot of doctor visits or need regular prescriptions, you should look at gold or platinum.
- Generally have higher monthly premiums but pay more of your costs when you need care
Platinum 90%
(Catastrophic less than 60%)
- Under 30 or have a hardship exemption and want low monthly premiums
guaranteed issue
Beginning in 2014 insurers required to issue or renew a policy to anybody, regardless of any preexisting conditions
Insurance companies not allowed to refuse renewal because someone became sick
- The ACA requires insurers in the individual market to cover anyone who wishes to enroll
- ACA restricts how insurers can vary premiums based on enrollee characteristics, can’t vary at all based on health status or gender, they can minimally vary based on age
individual mandate
- Means everybody needs to buy health insurance
- Ensures that healthy and young Americans who may not use health care frequently will buy insurance plans so that the insurance companies have a broader risk pool to pay for the guaranteed issue
Premium tax credits, Cost-sharing reductions (CSRs)
- Federal tax credits that help families pay for insurance (a tax subsidy. People too much income to qualify for more but still not rich)
- Available to all US citizens, residents and immigrants with work visas with income between 138-400% of the federal poverty line
- Available on a sliding scale if they choose to purchase insurance via a marketplace
- American Rescue Plan Act ARPA expanded and enhanced marketplace premium subsidies, recently placed Inflation Reduction Act IRA ensures ARPA’s subsidies continue until 2025
employer mandate
ACA mandates that all employers with at least 50 employees to provide a health insurance plan for 95% of their full time workers (and their dependents) or pay a tax penalty
medicaid
- Medicare and medicaid, largest federal programs so far approved in 1965
- Both programs originally designed to function much like private insurance, with a cost-based reimbursement system that paid physicians and hospitals on the basis of reasonable and necessary expenses
- Provides grants to states for insurance selected lower-income individuals and some groups who qualify
Funding:
Funded through combo of state and federal taxes, operated by the states with matching federal dollars
Federal government contributes 50% of costs to wealthier states and more to poorer states
- Medicaid waivers (for states): increase or decrease amount of people on Medicaid, reduce or expand coverage, ask for co-payments, oblige them to enroll in Medicaid HMO plans
- States establish and administer their own Medicaid programs and determine type, amount, duration, scope of services. Certain mandatory benefits, other optional benefits
Eligibility:
Resident that is 65+, blind, or disabled
People receiving Supplemental Security Income benefits
Problems with Medicaid:
- Limited coverage, low payments to physicians (limited number of physicians that will accept Medicaid patients), gaps in access to certain providers like specialists
CHIP
- State Children’s Health Insurance program, established 1997
- Uninsured children in families with incomes at or below 200% of federal poverty line, but above the Medicaid eligibility level
- Receives matching funds from the federal government
- Eligibility based on children’s status not the parents, all children under 19 in families with incomes at or below federal poverty level are covered
medicare
- Covers all older and some disabled citizens
- Traditionally consisted of two parts:
Hospital insurance (A)
Medical insurance (B)
*Medicare and choice C - Have to pay into social security for 10 years to become eligible for Medicare.
Makes it primarily funded through federal social security taxes, essentially working adults pay into a trust fund that pays the healthcare bills of the elderly - Majority of recipients are spending more than 20% of their income on health care
ACA changes:
No change in coverage
New initiatives to increase coordination among providers
Closed donut hole
medicare part a
inpatient hospital insurance
- Generally provided automatically for people above 65 who are entitled to social security. Or people that have received disability benefits for 24 months
- People with chronic renal disease or ALS get part A coverage regardless of age
- No monthly premiums if you paid social security while working
- Inpatient deductible, coinsurance per in hospital day
- Inpatient hospital coverage, SNF care, home health care, hospice
medicare part B
outpatient insurance
- Optional and requires payment of a monthly premium, deductible
- physician services, ER and outpatient, labs and diagnostics, medical equipment, mental health services
medicare part C
medicare advantage plans
- Alternative to traditional medicare, means you need to choose between A+B or C
- Administered by private insurance companies
- Additional premium, copayments, deductibles
- Usually have a full network system where certain doctors and hospitals are covered in full (managed care)
- Covers inpatient care (A), outpatient care (B), and prescription drugs, maybe dental and vision care etc.
PRO: more choice among private plans and additional benefits
CON: costs the federal government more than traditional medicare plans and relies on a network system
How can C plans provide more for the same price? - They’re private insurance plans, they get funding from 2 different sources, they get payments from customers and from federal government
can’t combine part C with anything else
medicare part D
prescription drug coverage
- Voluntary program providing partial prescription drug coverage
- Most medicare drug plans have a list of covered drugs, called a formulary which must include at least 2 drugs in the most commonly prescribed categories and classes
CONS: gaps in coverage, formularies change every year and medication may no longer be covered, insurance companies can administer it rather than a federal government, medicare doesn’t negotiate lower prices for beneficiaries, too many different plans that cover different medications
medigap
- Plans cover out of pocket expenses like deductibles and copayments, they don’t cover dental, vision, long-term care, or hearing aids
- Most people have to have supplementary coverage to keep cost to a minimums
- To get Medigap you have to have A and B. not C
- You pay a monthly premium to an insurance company who sells you the medigap policy
