Policies that enhance access

1
Policies that enhance access

• Social Insurance

2
Social Insurance Programs
3
National Health Care Expenditures
Source Health, United States, 2007,
http//www.cdc.gov/nchs/hus.htm, Table 121,
4
Personal Health Care Expenditures(in billions of
dollars)
Source Health, United States, 2007,
http//www.cdc.gov/nchs/hus.htm, Table 125,
5
Private Health Insurance Coverage (under age 65,
numbered in millions)
Employer-based.
Source Health, United States, 2007,
http//www.cdc.gov/nchs/hus.htm, Table 137 and
139.
6
Medicare

• Objective improve access to medical care for
  elderly
• and
  disabled persons

The elderly
12.6 of US population 19 of
personal health care spending
31 of hospital spending
20 of physician spending
44 million voters
7
Percent of U.S. population age 65
23
actual
projected
20
17
Percent of population
14
11
8
5
2030
2040
2050
1950
1960
1970
1980
1990
2000
2010
2020
Source U.S. Census Bureau, 2004, "U.S. Interim
Projections by Age, Sex, Race, and Hispanic
Origin," Table 2a. w/usinterimproj/
8
Medicare

• Objective improve access to medical care for
  elderly
• and
  disabled persons
• Institutional Features
• Part AHospital insurance (compulsory)
• Part BSupplementary insurance (voluntary)
• Part CMedicare Advantage (voluntary PPO or HMO)
• Part DOutpatient prescription drugs (voluntary)

The elderly
12.6 of US population 19 of
personal health care spending
31 of hospital spending
20 of physician spending
44 million voters
431 billion in 2007
9
Medicare Spending
Source http//www.cms.hhs.gov/ReportsTrustFunds/d
ownloads/tr2008.pdf
10
Medicare Part A Hospital Insurance

• Plan
• Day 1-60 Deductible 1 day _at_ hospital
• Day 61-90 daily coinsurance 25 of deductible
• Day 91-150 daily coinsurance 50 of deductible
• Day 151-? nothing
• Financed by 2.9 payroll tax

Inpatient hospital care Skilled nursing facility
care Home health agency care Hospice care
1,024
256
512
Lifetime reserve
Medicare is not designed to provide protection
against catastrophic illnesses
11
Medicare Tax Rates and Bases (selected years)
Source http//www.cms.hhs.gov/ReportsTrustFunds/d
ownloads/tr2008.pdf
12
Medicare Part B Supplementary Insurance

• Plan
• Annual deductible monthly premium 20
  coinsurance
• Financed by general tax revenues and premiums

Physicians services Outpatient hospital
services ER services Laboratory
services Outpatient physical therapy Durable
medical equipment
135
96
13
Medicare Part C Medicare Advantage

• Optional program that allows elderly to receive
  Medicare benefits (Parts A and B) through private
  health insurance plans

14
Part D Prescription Drug Benefit

• Plan (coverage is not standardized)
• Medicare Part A private stand-alone drug plan
• Medicare Advantage plan
• Annual deductible monthly premium 25
  coinsurance
• Financed by general revenues and premiums

37
250
15
Part D Doughnut Hole
100
Percentage of Drug Expenditures Paid
by Beneficiary
Deductible
Catastrophic Coverage
Doughnut Hole
25
46
30
14
10
5
250
2,250
5,100
Kaiser FF (2004) 29
million Out-of-pocket expenses expected to drop
from 1495 to 1081 in 2006
Total Drug Expenditures
16
Medicare Payment Allocations, 2006
Source Health Care Financing Review Medicare
and Medicaid Statistical Supplement, 2007, Table
3.6.
80-20 Rule 20 of
beneficiaries account for 80 of spending
17
Medicare Reimbursement Payments

• Part A Services (Hospitals)
• Prospective payment system (PPS) based on
  diagnosis-related group (DRG)
• Part B Services (Doctors)
• Fee schedule based on resource-based relative
  value scale (RBRVS)

Upcoding doctor makes more severe diagnosis to
hedge against accidental costs
RVUGAFCF payment
1.391.1338 59.69
18
(No Transcript)
19
Medicaid

• Objective
• Improve medical access for low income individuals
• Institutional features
• Federal cost-sharing
• Mandated coverage and services
• State administered
• Eligibility standards
• Determine type, amount, duration, and scope of
  services
• Set rate of payment for services

60 federal share on average
20
Medicaid Spending
Source Health Care Financing Review, 2007,
Table3 13.4 and 13.10.
21
Medicaid Spending by Eligibility Categories, 2004
Source Health Care Financing Review Medicare
and Medicaid Statistical Supplement, 2007.

• Rising costs
• expanding enrollments
• rising medical care costs
• increased reimbursement rates

22
MedicaidLarge State Spending, 2004
Source Health Care Financing Review Medicare
and Medicaid Statistical Supplement, 2007.
23
Economic Impacts

• Health outcomes
• Currie and Gruber (1996)
• 10 increase in eligibility for children resulted
  in 3.4 decrease in child mortality rates
• 10 increase in eligibility for pregnant women
  resulted in 2.8 decrease in infant mortality
  rates
• Baker and Royalty (2000)
• 10 increase in Medicaid fees resulted in 2.4
  increase in office-based physician visits for
  poor patients
• Enrollment in private insurance
• crowding-out effect
• Family structure
• Medicaid lowers the cost of childbearing and
  favors single-parent families
• Savings
• Medicaid reduces incentive to save and encourages
  asset transfers

24
Summary and Conclusions

• Fulfilled stated goalsimproving medical care
  access for poor, elderly, and disabledbut costs
  are rising
• Medicares structural deficiencypoor coverage
  for catastrophic illness

25
Possibly, the most serious flaw in the Medicare
system is the fact that

• the deductible is too high for most elders to
  afford.
• it provides no real protection against
  catastrophic losses resulting from unusually long
  hospital stays.
• the definition of an episode of illness can lead
  to patients paying the deductible more than once
  during the calendar year.
• elders are required to pay monthly premiums to
  participate in Part B

26
The most important source of funding for Medicare
is

• the federal income tax.
• premiums paid by elders and deducted from their
  monthly Social Security checks.
• a 2.9 percent payroll tax paid by all workers,
  regardless of their age.
• a tax on the health insurance premiums pay by all
  group plans.