Insurance/Risk
Covering Risks Savings Family and friends Charity Private market insurance contracts Social insurance
Risk Risk Aversion Adverse Selection Moral Hazard Welfare Losses
Third-Party Transactions Gains Taxes
Flow of Funds Private insurance Medicaid Medicare Government programs/charities Uninsured Who pays?
Mandated Benefits Mandated benefits Consider substance abuse benefits
History of Insurance Guilds Industry Unions National health plans
The U.S. Baylor Hospital…1929 Blue Cross World War II The elderly
Managed Care Background The Response Closed systems Managed care HMOs
Controlling Costs Capitation Gatekeepers Withholds “Dr. Solomon’s Dilemma”
Risk-taking by MDs Half of primary care docs Top five Metropolitan areas California = $35-$50 Bankruptcy Treat all as capitated
Government’s Role Law and order Public goods and externalities Market failure Income redistribution and care of the poor
How Government Works Limited to core public functions Direct contracting Exert influence, but rarely control Entitlement financing Health regulation
Problems with Medicare 1997 changes Impending bankruptcy
Medicare Shortfall
Problems with Medicare Proposals for reform Politics of Medicare reform