exam 1 321

• Healthcare System


  A whole composed of several interdependent parts that have differentiated roles, are interconnected by 3 processes (input, throughput, output), to create one overall unified & designed purpose
• Health


  According to WHO, a state of complete physical, mental, & social wellbeing, and not merely the absence of disease and infirmity
• Care

  Efforts made to maintain or restore physical, mental, or emotional wellbeing, by trained and licensed professionals
• Subcategories of care


  • Primary
  • Secondary
  • Tertiary
• A free market is one where voluntary exchange, and the laws of supply & demand are the basis for the economic system
• A free market is defined by the absence of government control
• Healthcare differs from other industries in the US

  • Low degree of consumerism
  • Third parties usually separate buyer & seller
  • Government regulation
  • Power of professionals
  • Nonprofits dominate the provider landscape
  • Lack of price transparency
  • Lack of info technology data flows
  • Asymmetric information
  • Local markets: "all healthcare is local"
  • Totally different language

  
• Players in the healthcare system

  • Payers: Consumer or their agent, insurance plans, government, employers
  • Providers: Pharmacists, Doctors, Nurses
  • Producers: Pharma companies, IT, Medical device manufacturers
  • Consumer: The direct patient that is provided health care for
• 4 Basic Modes of Paying for Healthcare

  • Out-of-pocket payment
  • Individual private insurance
  • Employment-based group private insurance
  • Government financing

  
• Out-of-Pocket Payment

  Payment is made directly from patient to provider

  
• Individual Private Insurance

  A third party, the insurance plan (health plan), is added, dividing payment into a financing component & a payment component

  
• The ACA added an additional coverage mandate for those not otherwise insured & federal subsidy to help individuals pay the insurance premium
• Employment-Based Private Insurance


  Employers pay a portion of the premium that purchases health insurance for the employees

  
• Benefits to Employers of Employment-Based Private Insurance

  • The federal government views employer premium payments as a tax-deductible business expense
  • A more healthy and therefore engaged and productive workforce
  • Ability to attract and retain employees

  
• Government Financing

  The enactment in 1965 of Medicare (for older adults and for some people with disabilities) and Medicaid (for people in low-income brackets) public insurance payments for privately operated health services became a major feature of healthcare in the United States
• Under the social insurance model (e.g. Medicare Part A), only individuals paying taxes into the public plan are eligible for benefits

  
• In other models (e.g. Medicaid), an individual's eligibility for benefits may not be directly linked to payment of taxes into the plan
• Some public plans (ex. Medicare Advantage), pay a private insurance intermediary that in turn pays providers

  
• Each of the four modes of financing health care developed historically as a solution to the inadequacy of the previous modes
• Private insurance provided protection to patients against the unpredictable costs of medical care, as well as protection to providers of care against the unpredictable ability of patients to pay

  
• The private insurance solution created three new, interrelated problems: the opportunity for health care providers to increase fees to insurers caused health services to become increasingly unaffordable for those with inadequate insurance or no insurance; the employment-based nature of group insurance placed people who were unemployed, or unable to work at a disadvantage for the purchase of insurance; competition inherent in a deregulated private insurance market gave rise to insurance premiums unaffordable for many older adults and other medically needy groups

  
• To solve these problems, government financing was required, but government financing fueled an even greater inflation in health care costs
• As each "solution" was introduced, health care financing improved for a time
• The problems of each financing mode and the problems created by each successive solution have accumulated into a complex crisis characterized by inadequate access for some and high costs for everyone
• In most countries, most of the medical care is financed or delivered (or both) in the public sector
• In the United States, most people both pay for and receive their care through private institutions
• Universal Health Coverage (UHC)


  All people have access to the full range of quality health services they need, when and where they need them, without financial hardship
• Delivering UHC


  Countries need to have strong, efficient and equitable health systems that are rooted in the communities they serve; Primary health care (PHC) is the most effective and cost-efficient way to get there
• Canada's healthcare system


  The Canadian federal government passed universal medical insurance in 1966; Canada has a tax-financed, public, single-payer health care system; Regardless of income bracket, employment status, or age, every Canadian receives the same health insurance; Mix of payment of fee for services and capitated; Canada also regulates pharmaceutical prices and provincial plans maintain formularies of drugs approved for coverage
• The difference in cost between the US & Canada are primarily accounted for by administrative costs, increased use of expensive high-tech services in the US, highest cost per patient day in hospitals, and physician fees & pharmaceutical prices, which are much higher in the US
• The UK's healthcare system

  In 1948, the NHS began; The great majority of NHS funding comes from taxes; The UK keeps its health care costs relatively low through the power of the governmental single payer to limit budgets and the way they pay physicians

  
• Insurance


  A contract in which an individual or entity pays an insurance company in exchange for financial protection or reimbursement of losses resulting from a covered event
• What does a health insurer do?

  Insulate their enrollees against the unexpected burden of medical care cost; Insurance is a mechanism to protect people from risk
• Insurance coverage enables enrollees to access & use the healthcare system & to develop a regular source of care
• Insurance policy


  A contract in which a policyholder receives financial protection/reimbursement against losses from an insurance company
• Insurance company


  Pools clients' risks to make payments more affordable for the insured
• Core components of insurance policies

  • Premium
  • Deductible
  • Policy limits

  
• Health insurer


  Insulates their enrollees against the unexpected burden of medical care cost
• Risk


  The possibility of substantial financial loss from an event whose probability of occurrence is relatively small in the case of a specific individual
• Health insurance premium


  Set to pay projected claims to providers, as well as insurers' administrative expenses, taxes, and profit