HEALTH INSURANCE PLANS

BACKGROUND INFO Cost is a major concern Health care is over 15% of gross national product Without insurance, the cost of an illness could become a financial disaster Most people rely on employer-provided health insurance coverage. With increased costs, employees are having to pay a higher portion of their health insurance.

TYPES OF PAYMENT METHODS Private insurance Direct payment Government plans

PRIVATE INSURANCE Primarily employment-based Can get better rates buying for a group of people Offered by thousands of companies; Ex. Blue Cross Blue Shield TERMS & DEFINITIONS: Premium-monthly amount paid to an insurance company for coverage Deductible-money a person pays before the insurance policy provides benefits (usually high deductibles mean lower premiums)

PRIVATE INSURANCE CONT. Co-insurance-(cooperative insurance) plan that requires the insured to share a portion of cost (usually 10 to 30 percent) Co-pay- flat fee paid for each service (ex. Insured must pay $20 toward a doctor visit)

MANAGED CARE 50 % of plans Response to try to control health care costs Puts health care providers in position of managing a patient’s use of health care Types of plans: HMO, PPO, POS

CHARACTERISTICS OF MANAGED CARE In-network providers—belong to plan Out-of-network providers—do not belong to plan Emphasizes primary & preventive care Eliminate duplicate services Encourage cost containment Provide profit for both providers & insurance companies Includes a utilization review Primary care provider serves as a gatekeeper(must make a referral in order for a person to see a specialist)

HMO Health Maintenance Organization Provides coverage only if care is delivered by a member of its group Monthly fee or premium is paid regardless of amount of care provided Advantage: provides ready access to health care, early detection and treatment of disease, individual usually maintains better state of health Disadvantage: can only use HMO affiliated providers, must pay higher costs if go out of network

PPO Preferred Provider Organization Sets up a network of participating providers of health care services Usually requires a deductible and co-pay Patient would have to pay higher out-of-pocket costs if they go out of network

POS Point-of-service Physician coordinated plan which combines HMO & PPO plans

DIRECT PAYMENT Patients pay for their own health care More likely to shop around Illness could be devastating

GOVERNMENT PLANS Plans funded by government agency Medicaid, Medicare, Tricare, SCHIP

MEDICAID Government program for low-income & disabled people Established in 1965 as part of Social Security Act Jointly funded by federal and state governments, but regulated by states

MEDICARE Federally funded health care program Established in 1965 by Social Security Act to provide health care to Americans 65 or older Expanded in 1972 to include permanently disabled workers who qualify for Social Security, as well as their dependents Converted to prospective payment system in 1983 to help control costs (DRG’s)

MEDICARE CONT. THREE MAIN TYPES: Part A: covers hospital services & extended care facility, home health after hospitalization, hospice Part B: covers doctor services, outpatient services, therapy, lab, x-ray Requires individual to pay a premium. 80/20 % co-insurance Part D: helps with pharmaceutical expenses Many people opt to choose supplemental plans to cover additional costs.

TRICARE Provides medical coverage for active & retired military service personnel and their dependents

SCHIP State Children’s Health Insurance Program New program established in 1997 Provides matching funds to states to help expand health care to uninsured children

WHY ARE COSTS INCREASING? DRUG COSTS TECHNOLOGY PROFESSIONAL COSTS AGING POPULATION

Importance of health professionals knowing economics of health care Professionals know how finances affect each person’s experience Workers can make conscious and practical decisions that promote affordable, quality care for every patient.