Healthcare

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Healthcare
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US Health Care System

• Dominated by Private-Sector, For Profit
  Organizations, with some not-for profits
• fee-for-service
• health care professionals receive payment for
  services provides
• managed care
• large groups of health care professionals
  negotiate a fixed rate of payment to care for a
  known population of patients

Rahm 2004
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US Health Care System

• HMOs
• Health Maintenance Organizations
• PPOs
• Preferred Provider Organizations
• Both try to minimize costs by requiring patients
  to see only those physicians who have agreed to
  provide services for fixed or reduced prices

Rahm 2004
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US Health Care System

• Health Maintenance Organizations (HMOs)
• health care professionals receive fixed salaries
  and get bonuses if they keep costs low

Rahm 2004
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INDEPENDENT PRACTICE ASSOCIATION (IPA)

• Employer hires an HMO (insurer), which in turn
  pays an IPA a per patient fee (capitation).
• The IPA then contracts with primary care M.D.s
• on a capitated basis, while paying specialists on
  a discounted FFS basis.
• IPAs also often pay bonuses to those providers
  who meet quality and output standards.
• Participating physicians remain independent
  and may retain private practices and contract w/
  other HMOs.

CAPITATION
FFS
INS. CONTRACT
FIXED FEE

• Source Katz MSU

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• IPAs fastest growing type of HMOs by 1996 they
  already had 26m members, and continue to grow
  rapidly.
• They are popular w/ physicians because they allow
  them to contract w/ several HMO simultaneously
  and to maintain their private practices.

• Source Katz MSU

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US Health Care System

• Preferred Provider Organizations (PPOs)
• health care professionals agree to serve at a
  specified reduced rate based on the average
  market rate charged by all physicians

Rahm 2004
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PREFERRED PROVIDER ORGANIZATION (PPO)

• Employer hires PPO (insurer), which in turn pays
  all contracted providers on a discounted
  fee-for-service basis.
• In return providers benefit from increased
  patient volume.
• While some PPOs have HMO-style gatekeepers,
• most allow patients to directly consult
  specialists.
• Patients can also go outside the PPO network,
• but must absorb a higher co-pay for doing so.
• PPOs use utilization reviews and other practices
• designed to assure quality and limit cost.

SPECIALISTS
DISCOUNTED FFS
X
X
INS. CONTRACT
DISCOUNTED FFS
PURCHASER
EMPLOYER
PPO
PRIMARY CARE

• Source Katz MSU

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• PPOs now enroll around 90m people they tripled
  their
• enrollments between 1990 and 1996. PPOs also are
  popular
• with employers and with physicians, for whom
  increased
• patient traffic usually compensates for
  discounted fees.

• Source Katz MSU

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US Health Care System

• Medicare
• helps pay for health care for the elderly
• Medicaid
• initially a program to maintain the incomes of
  deserving elderly faced with large medical
  bills
• later expanded to include many low-income
  families unable to pay for health care in the
  dominant for-profit system

Rahm 2004
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US Health Care System

• Original Medicare
• Part A hospital stays
• Part B care not requiring hospital stay
• 1997 New Law created MedicareChoice
• gives the right to select additional health care
  options to be covered under Medicare
• Medigap Insurance
• Insurance purchased by many to supplement what
  Medicare does not pay for

Rahm 2004
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US Health Care System

• Medicare
• funded by both tax dollars and private
  contributions
• 2 trust funds
• Federal Hospital Insurance (HI) pays for Part A
• Supplementary Medical Insurance (SMI) pays for
  Part B

Rahm 2004
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US Health Care System

• Medicare Medical Savings Account Plan (MSA)
• health insurance plan with high annual
  deductible. Medicare deposits money into it.
• If money left over at end of year, participant
  can keep it for future care.

Rahm 2004
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US Health Care System

• S-Chip
• State Childrens Health Insurance Program
• Established with the Balanced Budget Act of 1997,
  required all states to provide health insurance
  coverage by 2000 for children in families with
  incomes lower than 200 percent of the federal
  poverty level.
• Goal cover those with income too high for
  Medicaid yet too low to afford private health
  insurance.

Rahm 2004
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Funding Health Care

• Medicare Funded mostly by Fed Gvt.
• Payroll Deduction
• Medicare Funded
• 50 Fed
• 25 State
• 25 Local
• Means Tested
• So Notice difference in spending(see Janson Ch 8
  also some states took advantage to include as
  many as possible in Medicare)

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• Source Rahm 200462-64

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• Source Rahm 200462-64

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US Health Care System

• Third-Party payers
• insurance companies that pay the bills of most
  health care users and
• the government, which paid for Medicare and
  Medicaid
• As a result consumers dont see it as a market,
  or shop around for the best deal,
• so competition doesnt bring costs down
• Demand increased and so did price

Rahm 2004
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The Problem

• U.S. health care eligibility is based on one or
  more of the following three criteria
• 1) employment (private insurance)
• 2) very low income or welfare status
  (Medicaid)
• 3) stage of life (Medicare).
• Those without jobs, not old, or
  ---paradoxically---not poor enough therefore
  often have problems securing health insurance.
  Even many employed people---- notably those in
  small business, contingently- or
  self-employed---also often lack adequate
  (perhaps, any) coverage. (Slide 11 provides the
  details)

• Source Katz MSU

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• Source Rahm 2004101

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NONELDERLY AMERICANS W/OUT HEALTH INSURANCE1987
1997(CALCULATED AS PERCENTAGE OF THE
POPULATION)

• Source Katz MSU

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• Source Rahm 2004107