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PAMM 2070: Health Insurance, Managed Care, check up - Coggle Diagram
PAMM 2070: Health Insurance
What does a private insurance company do in the US?
insurance pools together thousands of people and their premiums; uses premiums to pay for other's health
How are premiums determined?
Premium paid = pure premium + loading charge
pure premium- expected medical spending for a person with certain risk level
Loading charge = amount of money insurance charges to cover administrative costs
What are the 2 major benefits of health insurance?
Reducing risk
prrotects against financial risk
risk aversion
spreading risk- lossees shared by all enrollees since resources are shared
enable access
What are two methods Health Insurance Premiums are determined?
Experience Rating
premium based on previous medial costs and predicted costs
varies between levels of health
Community Rating
Premium is the same for everyone regardless of demographics
May lead to adverse selection?
What is adverse selection and how does community rating cause this?
People who are sicker than average enroll in the CR program
Premiums rise for everyone, and healthy people stop buying these plans
How is the US trying to reduce adverse selection?
ACA- people must pay for health insurance or pay small fine; health insurers cannot deny sick people on pre-existing condition
Expanded Coverage- Risk spread over broader population
"skimpy health plans"- ACA required all health plans to cover 10 essential services
Individual Mandate- Penalty of not having health insurance eliminated in 2019 because healthy people opt out
How premiums are set for most Americans?
Non-elderly recieved health insurance through employer
Employers are experience rated- sicker employees leads to more premiums
Health insurers community rate within a firm - each employee asked to pay same premium
Adverse selection- not a huge problem in larger firms
Managed Care
What is the most common way to reduce moral hazard?
patient cost-sharing
What is this done through?
Deductible
co payment
co insurance
out of pocket maximum
What is moral hazard?
medical is inexpensive once a person is insured; insurance increases demand for medical care; uses too much low-value medical care
What are two health organizations and how do they work?
Preferred Provider Organization
In network Providers- have cheaper deductibles for patients but paid less than out of network providers
Health Maintenance Organization
HMO have narrower provider networks; receive larger discounts from MD and hospitals compared to PPOs; charge lower premium
How many Health insurance eras are there?
4:
Claims Processing
Indemnity health insurance; enrollees could go to any physician; paid fee-for-service; controlled moral hazard through cost-sharing
Height of Managed Care
1(most important): received large discounts from physicians and hospitals through in-network providers; 2. ration expensive medical care through permissoin; 3. enncouraged primary care to ration
Providers sttrike back
self-managed care
What holds the largest share of health insurance market?
Managed care plan
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