AHS330_F10_unit05_PDF - Insurance, Financing, and the...

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1 Insurance, Financing, and the Uninsured in the U.S. Health Care Ss t em System Unit 5: Chapter 6 (pp. 109-134, 149- 173) and Chapter 7, PLB 9/21/10 AHS 330 - Fall 2010 - Unit 5 1 HEALTH INSURANCE 9/21/10 AHS 330 - Fall 2010 - Unit 5 2 Insurance • A mechanism to protect against unpredictable loss • Transfers risk from individual to insurer • Insurer assesses risk – Through underwriting – likelihood of event occurring – Experience rating – prior claims experience to predict future utilization and claims 9/21/10 AHS 330 - Fall 2010 - Unit 5 3 CLASSICAL PRINCIPLES OF INSURANCE 1. Risk is significant 2. Risk is definable 3. Infrequent incidence 4. Service is unwanted 5. Event beyond control of individual 9/21/10 AHS 330 - Fall 2010 - Unit 5 4 Traditional Financing System Premium is paid by employer or individual to insurance company Patient seek medical care as “needed” Gatekeeper Provider bills the insurance company Insurance company pays the bill minus the coinsurance (after the deductible is paid) Incr. in share pd. by pt. Change in prov. reimb. 9/21/10 5 AHS 330 - Fall 2010 - Unit 5 Health Insurance in the U.S. • Traditionally linked to employment • No nationalized health insurance or universal coverage • Initially, health insurance just paid for hospitalizations 9/21/10 AHS 330 - Fall 2010 - Unit 5 6
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2 Direct Risk Assessment/Adjustment • Insurer assesses risk based on population covered or individual (medical underwriting) • Medical screenings • Exclusion of preexisting conditions • Redlining – excludes high risk individuals • Indemnity plans – only pay a certain amount • Premium rating – Community rating: Everyone in the group (or community) is charged the same premium no matter what their health risks are. – Experience rating (also differential or risk rating): Each individual is charged a different premium based on their risk factors and expected use of health care. 9/21/10 AHS 330 - Fall 2010 - Unit 5 7 Indirect Risk Adjustment: Limiting Risk Deductible - the portion of s subscriber’s health care expense that must be paid out-of- pocket before any coverage applies ($500) Co-payment – that portion of a claim or medical expense that a member must pay medical expense that a member must pay out-of-pocket at the time of treatment ($10) Co-insurance – the percentage that the patient pays (80/20) Exclusion of cosmetic surgery other than to repair damage from an injury/illness Waiting periods 9/21/10 AHS 330 - Fall 2010 - Unit 5 8 Moral Hazard • Dishonesty in an individual that increases the frequency or severity of loss • For example, faking an accident to collect from an insure from an insurer • Carelessness or indifference to a loss because of the existence of insurance • For example, leaving your car unlocked, going to the MD for a cold, cosmetic surgery 9/21/10 9 AHS 330 - Fall 2010 - Unit 5 Limiting Moral Hazard 1. Add or increase deductibles 2. Increase copayments 3. Increase coinsurance rates 4. Exclude elective services and procedures (e.g., cosmetic surgery other than to repair damage from an injury/illness)
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AHS330_F10_unit05_PDF - Insurance, Financing, and the...

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