government and the market for health care chapter 10
TRANSCRIPT
GOVERNMENT AND THE MARKET FOR HEALTH CARE
Chapter 10
Uses of Health Care Funds in the U.S. (2010)
Source: Centers for Medicare and Medicaid Services [2012c].
10-2
Sources of Health Care Funds in the U.S. (2010)
10-3
Source: Centers for Medicare and Medicaid Services [2012c].
Private Health Insurance
• The Implicit Subsidy for Employer-Provided Insurance– World War II era price controls– Federal tax subsidy
10-4
The Advantages of Employer-Provided Health Insurance
• Increase the risk pool• Reduce adverse selection• Lower administrative costs
10-5
Employer-Provided Health Insurance and Job Lock
• Job lock• Health Insurance Policy Portability and
Accountability Act of 1996 (Kennedy-Kassenbaum Act)
10-6
Cost Control and Private Insurance
• Cost-based reimbursement (fee-for-service)• Managed care
– Capitation-based reimbursement– Health Maintenance Organizations (HMOs)– Preferred Provider Organizations (PPOs)– Point-of-service (POS)
10-7
Medicare Expenditures(1966-2010)
Expenditures on Medicare as a Share of GDP
Real expenditures on Medicare
Source: Centers for Medicare and Medicaid Services [2012c].10-8
How Medicare Works
• Benefits– Part A – Hospital insurance (HI)– Part B – Supplementary Medical Insurance (SMI)
• Financing– Payroll tax funds HI– General revenues fund SMI
10-9
Prescription Drug Benefit
• Part C – Medicare Advantage • Part D – Prescription Drug Benefit
– Monthly premium– Low deductible– Donut hole– Generous coverage for high costs
10-10
Cost Control Under Medicare
• Medicare’s retrospective payment system• Medicare’s prospective payment system
– Diagnosis related groups– Resource-based relative value scale system
• Medicare Managed Care
10-11
Medicare: Impacts on Spending and Health
• Expenditures on health care for the elderly• Health outcomes
10-12
Medicaid: Overview
• Medicaid• State Children’s Health Insurance Program
10-13
Medicaid Expenditures (1966-2010)
Source: Centers for Medicare and Medicaid Services [2012c].
10-14
Financing and Administration
• Joint Federal-State financing• State administration
10-15
Benefits
• States obligated to offer minimum package of benefits
• States may offer more generous benefits• State administrative flexibility
10-16
Medicaid: Impacts on Health
• Take-up rate• Crowding out• Empirical evidence: Are Medicaid expansions
effective? Crowding out and taking up
10-17
Does Public Insurance Crowd Out Private Insurance?
Health insurance Health insurance Health insurance
Qua
ntity
of a
ll ot
her g
oods
Qua
ntity
of a
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Qua
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of a
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oods
A A AF F
F
B B B
M M M0 0 0
Amount of publiclyprovided insurance
Amount of publiclyprovided insurance
Amount of publiclyprovided insurance
C C C
10-18
E
A. Person who places relatively high value on private insurance
B. Person who places relatively low value on private insurance
C. Person who is uninsured before public insurance
Health Care Reform
• Individual mandates– The Massachusetts Plan
• Health savings accounts– Catastrophic insurance policy
• Single payer– International experiences
• Canada • United Kingdom
10-19
Health Care Costs and Health Outcomes:U.S., Canada, United Kingdom
10-20
Final Thoughts
• Security vs. efficiency• No free lunch• Connection between health care expenditures
and health
10-21