Introduction to Healthcare and Public Health in the US: Financing Healthcare (Part 1)
Discussion Questions
Discussion questions (for individual assignments or small group discussion):
1. Healthcare and the Economy
Describe the role of the healthcare industry in the US economy.
Expected Outcome: Student(s) will be able to describe the position healthcare has in the US economy and in comparison with other countries.
Fifth largest sector of the economy by sales.
One of every six dollars spent in the US in 2009 went to healthcare.
Per person expenditures in 2009 over $8000.
Highest healthcare expenditures among any country in the world
Objective(s): 1
Lecture(s)/Slide(s): b5-9
2. Financing and Expenditures
Distinguish between healthcare financing and healthcare expenditures, and describe the different ways to examine healthcare expenditures.
Expected Outcome: Student(s) should be able to distinguish between the pooling of funds to pay the various ways spending can be examined.
Financing is the collection and pooling of funds to pay for healthcare services.
Expenditures or spending is the value of the healthcare services provided to a population by its healthcare system over time.
Expenditures can be viewed by the type or category of expense, e.g. hospital expenses or pharmaceutical expenses, the contributors to the funds used to pay for services, i.e. government or private sources, and the payers or insurance plans or programs that provide direct payment for the services delivered. Depending on the viewpoint, there will be different statistics on spending.
Objective(s): 1, 2
Lecture(s)/Slide(s): b4, 10-15
3. Private vs. Public Health Insurance
What are the main types of private health insurance and what is the primary source of funding? What is meant by “public” health insurance?
Expected Outcome: Student(s) should be able to describe the various types of private health insurance and the funding sources as compared to public health insurance.
Two (2) categories of private insurance:
1) State-licensed health insurance organizations
Commercial insurers
BlueCross BlueShield
Managed care organizations
2) Self-funded employer-sponsored insurance plans
Funding from employers and individuals
Objective(s): 1, 4
Lecture(s)/Slide(s): a15-17
Public health insurance is insurance given to specific population groups based on eligibility criteria and funded by the government. No healthcare services are provided directly by the government, rather it provides payments for services either directly or indirectly. This should be distinguished from government provided and funded healthcare through a program such as the VA. Funds may come from general tax revenues or from payroll tax.
Objective(s): 5
Lecture(s)/Slide(s): a18 & d8
4. The Federal Government in Healthcare
What are the three roles of the US government in the healthcare system and on health insurance? Provide some examples of the influence the Federal government has on private health insurance.
Expected Outcome: Student(s) should be able to describe the roles of the government in the healthcare system and the influence government laws and subsequent regulations have on the shape of the current US healthcare insurance system.
The 3 roles of the US government in health insurance are:
1) Provider of healthcare services
Veterans Health Administration and TRICARE
Indian Health System
2) Funder of third-party services:
Outsourcing of healthcare services, claims paperwork, and grants e.g. Medicare
Funds to state and local healthcare programs, e.g. Medicaid and CHIP
3) Lawmaker:
Ensure fair competition, protect the public.
Sherman Anti-Trust Act—prohibits monopolies and restraint of trade
Clayton Act—prohibits price-fixing and exclusive dealings
Food, Drug, and Cosmetic Act—created the Food and Drug Administration
Hatch-Waxman Act— gives drug and device companies an incentive to develop new products by allowing them extra-long patent periods
American with Disabilities Act—gives people with disabilities equal access to employment, government services, and public accommodations
Social Securities Act—established Medicare and other benefits
Hill-Burton Act—stimulated construction of hospitals and other facilities
Stark Law—governs ability of physicians to refer patients to facilities in which they have a financial interest
ERISA—Employee Retirement Income Security Act—regulates pension plans and health plans in private industry
COBRA—Consolidated Omnibus Budget Reconciliation Act—allows employees to choose continuation of group health benefits in certain cases
HIPAA—Health Insurance Portability and Accountability Act—defines “protected health information” and helps ensure its privacy; protects participants in group health plans
Affordable Care Act—“healthcare reform law” of 2010—many benefits
Objective(s): 1, 2, 3, 5
Lecture(s)/Slide(s): a7, 9-13, 18-21, and d19, 20-24
5. Single and Multi-payer Systems
Describe some of the key features of the multi-payer and single payer health systems in the United Kingdom and Canada. What are the similarities and differences between them? How are they different from the multipayer US system?
Expected Outcomes: Student(s) should be able to describe the difference between a single payer and multipayer system, and that the UK and Canada have a single government payer for country specific basic healthcare services for all citizens, and contrast to the UK and US multipayer system.
United Kingdom:
Type: Multi-payer:
1) National Health Service centralized. The UK government collects taxes and distributes them to five regional National Health Services.
Main source of funding: Income taxes
Coverage: Universal
Services provided: Primary care, specialists, hospital care, long-term care, preventive care, mental health, rehabilitation, dental, eye care
Cost: Not free, but out-of-pocket costs are much lower than in the US
2) Private insurance: Provides more choices of services and shorter wait time, purchased by employers or individuals
Objective(s): 2
Lecture(s)/Slide(s): c5-14
Canada
Type: Single-payer; regionally run. The federal government collects taxes and distributes them to Health Canada, which funds Medicare. Medicare funds the provinces and territories, which run their own programs. Some provinces and territories supplement the money with lotteries, sales taxes, and patient premiums.
Main source of funding: Income taxes from government (~50%) and balance from province/territory governments
Coverage: Universal
Services provided: Medicare requires only medically necessary services to be covered, but many provinces and territories cover additional services, such as dental and eye care.
Cost: Not free, but out-of-pocket costs are much lower than in the US
Role of private insurance: Many people buy supplemental private insurance, but it cannot be used for publically covered services.
Objective(s): 2
Lecture(s)/Slide(s): c5, 15-24
Similarities: Both countries’ systems are public and tax-funded, provide universal coverage, result in lower out-pocket costs than in the US, and are working to reduce wait times.
Differences: type of payer system, services covered, role of private insurance.
The UK and Canada provide universal coverage to all its citizens in contrast to the US which has approximately 16% uninsured.
Objective(s): 2
Lecture(s)/Slide(s): c5 - 24
6. Managed Care
What is the definition of “indemnity” insurance? Why do you suppose it has largely been replaced by managed care? What are the three main types of managed care organizations? What are the pros and cons of each type?
Expected Outcome: Student(s) should be able to distinguish between an indemnity insurance policy and managed care with its combined insurance and delivery.
Indemnity insurance is a traditional type of policy in which the insurance company simply pays the provider a fee for the service. Usually there are no restrictions on the patient’s choice of provider, or the fees for which a provider can charge and receive payment.
Managed care became popular because it controls costs better than an indemnity plan does. Health insurance and delivery of healthcare are combined into a single system.
The 3 main types of managed care organizations are:
Health maintenance organization (HMO)—Lowest cost for the patient, but also the least flexibility. No specialty services without precertification and referral from primary care physician (PCP). Preventive care is typically covered.
Preferred provider organization (PPO)—Much more choice, but the most expensive of the 3 kinds of plans. Broad network of providers, and no PCP is required. Referrals are not needed, and precertification is not generally required. Some preventive care is usually covered.
Point-of-service plan (POS)—A hybrid between an HMO and a PPO. Referrals are generally required only if the provider is out of network, and precertification is not usually required. A PCP is recommended but not required. Costs are usually intermediate between those of an HMO and a PPO.
Objective(s): 4
Lecture(s)/Slide(s): d9-19
7. The Government as Payer
What are the major differences between Medicare, Medicaid, and CHIP? What is Medicare? Does the government fund it completely? How is the funding for Medicaid and CHIP different from the funding for Medicare? What are the four parts of Medicare and what do they cover, in general? Most Americans pay no premiums for Part A - why? What is meant by “prospective payment system,” and what part of Medicare does it affect?
Expected Outcome: Student(s) should be able to describe distinguishing features of the three government programs
Medicare is the public (government-funded) healthcare payment program for older adults and people with certain disabilities.
Medicare is not funded completely by the government. Workers and their employers pay into it through FICA payroll taxes (FICA stands for Federal Insurance Contributions Act).
The 4 parts of Medicare are:
Part A—inpatient care, hospital outpatient care, and hospice
Part B—outpatient care and home healthcare
Part C—Medicare Advantage Plans; in general, these are managed care plans that include Part A and B coverage, and sometimes Part D
Part D—prescription drug insurance
Americans who have paid into FICA for enough years do not pay any premiums for Part A coverage.
The prospective payment system (PPS) is Medicare’s system for reimbursing Part A charges. The provider receives a predetermined, fixed dollar rate for most patients, regardless of the services provided.
Medicaid and CHIP differ from Medicare in terms of:
Who is covered: Eligibility varies by state, but in general, Medicaid is for people with limited income and resources
Source of funding: Federal income taxes and state general tax revenues
Administration: Run by the states, not the federal government; the states are subject to federal regulations
Objective(s): 1, 6
Lecture(s)/Slide(s): e5-16
Health IT Workforce Curriculum Introduction to Healthcare and 1
Version 3.0/Spring 2012 Public Health in the US
Financing Healthcare (Part 1)
This material (Comp1_Unit4) was developed by Oregon Health and Science University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC000015.