CHAPTER 10

1. CHAPTER 10 GOVERNMENT AND THE MARKET FOR HEALTH CARE

4. Private Health Insurance • The Implicit Subsidy for Employer-Provided Insurance • World War II era price controls • Federal tax subsidy

5. The Advantages of Employer-Provided Health Insurance • Increase the risk pool • Reduce adverse selection • Lower administrative costs

6. Employer-Provided Health Insurance and Job Lock • Job lock • Health Insurance Policy Portability and Accountability Act of 1996 (Kennedy-Kassenbaum Act)

7. Cost Control and Private Insurance • Cost-based reimbursement (fee-for-service) • Managed care • Capitation-based reimbursement • Health Maintenance Organizations (HMOs) • Preferred Provider Organizations (PPOs) • Point-of-service (POS)

8. Medicare: Overview Expenditures on Medicare as a Share of GDP Real expenditures on Medicare

9. How Medicare Works • Benefits • Part A – Hospital insurance (HI) • Part B – Supplementary medical insurance (SMI) • Financing • Payroll tax funds HI • General revenues fund SMI

10. Prescription Drug Benefit • Part C – Medicare Advantage • Part D – Prescription Drug Benefit • Monthly premium • Low deductible • Donut hole • Generous coverage for high costs

11. Cost Control Under Medicare • Medicare’s retrospective payment system • Medicare’s prospective payment system • Diagnosis related groups • Resource-based relative value scale system • Medicare Managed Care

12. Medicare: Impacts on Spending and Health • Expenditures on health care for the elderly • Health outcomes

13. Medicaid: Overview • Medicaid • State Children’s Health Insurance Program

15. Financing and Administration • Joint Federal-State financing • State administration

16. Benefits • States obligated to offer minimum package of benefits • States may offer more generous benefits • State administrative flexibility

17. Medicaid: Impacts on Health • Take-up rate • Crowding out • Empirical evidence: Are Medicaid expansions effective? Crowding out and taking up

18. Health Care Reform • Individual mandates • Health savings accounts • Catastrophic insurance policy • Single payer

19. Final Thoughts • Security v efficiency • No free lunch • Connection between health care expenditures and health

20. Does Public Insurance Crowd Out Private Insurance? Quantity of all other goods Quantity of all other goods Quantity of all other goods F F A F A A B B B C C C 0 0 0 M M M Health insurance Health insurance Health insurance Amount of publiclyprovided insurance Amount of publiclyprovided insurance Amount of publiclyprovided insurance