Issues related to health care financing
This presentation is the property of its rightful owner.
Sponsored Links
1 / 26

Issues Related to Health Care Financing PowerPoint PPT Presentation


  • 127 Views
  • Uploaded on
  • Presentation posted in: General

Issues Related to Health Care Financing. Overview of the size and growth of the health care sector The distribution of personal health care services Flow of Funds for Health Care Nature of Financing Decisions Judith R. Lave, Ph. D. January 2004.

Download Presentation

Issues Related to Health Care Financing

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Issues related to health care financing

Issues Related to Health Care Financing

  • Overview of the size and growth of the health care sector

  • The distribution of personal health care services

  • Flow of Funds for Health Care

  • Nature of Financing Decisions

    Judith R. Lave, Ph. D.

    January 2004


Share of national health expenditures by type 2002

Share of National Health Expenditures, By Type 2002


Notes on data

Notes on Data

  • Summary Information: Jan/Feb Issues of Health Affairs (K. Levit et al. Health Spending Rebound Continues. Health Affairs. 23(1), 2004.

  • Complete data:www.cms.gov: Search: National Health Expenditures, Click: Health Accounts. Click: Tables


Annual percent change in national health spending selected years current dollars

Annual Percent Change in National Health SpendingSelected YearsCurrent Dollars


Many definitions of healthcare costs

Many Definitions of Healthcare Costs

  • Healthcare Expenditures (p x q)

  • Prices of Individual Services

  • Premiums for Health Insurance

  • Out-of-Pocket Payments

  • % of GDP to Health Care (14.9%)


National health expenditures as a percent of gdp 1970 2010

National Health Expenditures as a Percent of GDP1970-2010

Managed care and

BBA impacts: “one-

time” effects on price

and volume levels

Moderate

Growth

Accelerated growth


Distribution expenditures on personal health care 2002

Hospitals

36.3%

Distribution Expenditures on Personal Health Care 2002

Nursing--

home

care

Prescription

drugs

12.1%

10.4%

Other health

services

Physician&

Clinical Services

15.9%

25.3%


Percentage change in expenditures 2000 20002

Percentage Change in Expenditures2000-20002


The financing of health care

Third Parties

Government Agencies

Insurance Companies

(Health Plans)

Employers

Employees

The Financing of Health Care

premiums, general taxes, payroll taxes

premiums, general taxes, payroll taxes, state lotteries

fee-for-service, budgets, capitation

“claims”

Providers

(doctors, hospitals, dentists, etc.)

Patients

medical services

HouseholdsTax payers

out-of-pocket payments

Financing Side

Reimbursement Side


Nonelderly americans with selected sources on health insurance coverage 2002

Nonelderly Americans With Selected Sources on HealthInsurance Coverage: 2002

Population: 250.8 million

* Does not add up to 100% because people can have

more than one source of health insurance


Sources of supplemental coverage among non institutional medicare beneficiaries 1999

Sources of Supplemental Coverage: Among Non-Institutional Medicare Beneficiaries: 1999

Other* 2%

Medicare

Only

13%

Medicare

HMOs

17%

Employer-Sponsored

33%

Medigap

24%

Medicaid

11%

Total = 34.7 million non-institutional Medicare beneficiaries


No standard health plan

No Standard Health Plan

  • Health Insurance Policies Vary With Respect to:

    • covered services

    • covered providers

    • administrative terms under which services are accessed

    • methods for paying providers


Importance of insurance coverage

Importance of Insurance Coverage

  • Use of services is a function of price (which depends on insurance structure and coverage) (i.e., Claritin)

  • Decisions to cover or not cover certain providers/technologies/services can make or break an industry (i.e., physical therapy, mammograms, obesity surgery)

  • Medicare is often pace-maker on ways to pay providers


Brief discussion of health care financing terms

Brief Discussion of HealthCare Financing Terms

Insurance policies vary considerably. They vary with respect to which services will be covered, how much cost sharing will be borne by the policy holder, administration conditions under which consumers/patients access care, what providers will be covered, how much providers will be paid.

Private Health Insurance: Health insurance is purchased in the market by groups (either through the place of business or through professional associations) or by individuals. The premium is the price paid for the insurance policy. Under employer sponsored group health insurance plans, the cost of the premiums is paid in whole or in part by the employer.


Definitions of terms in the following charts

Definitions of Terms in the Following Charts

  • Direct Patient Payments: This is the total amount paid out of pocket by the patient or by the patient’s family for a given service.

  • Private Third Parties: This is the total amount paid for a given service on the behalf of the consumer or services. This would include payments made by blue cross, blue shield, a health maintenance organization, Aetna, etc.

  • Public Federal: This is the total amount paid by the federal government for health care. It includes expenditures made under Medicare, Medicaid, The Veteran’s Administration, etc.


National health expenditures by source of funds selected calendar years 1970 2002

National Health Expenditures By Source of Funds Selected Calendar Years1970-2002

Source of Payment

1970

1980

1993

2002

Total

100%

100%

100%

100%

Private Funds

62.1

57.3

56.0

54.1

Out of Pocket Payments

34.3

23.7

16.5

13.7

21.2

27.7

33.6

Private Health Insurance

35.4

Other

6.6

5.9

5.9

5.0

Public Funds

37.8

42.6

44.0

45.9

Federal

24.0

29.0

30.9

32.5

State & Local

13.7

13.6

13.1

13.4


Percent of personal health care expenditures paid out of pocket

Percent of Personal Health Care ExpendituresPaid Out of Pocket

*This is for 1992


Issues related to health care financing

Source of Payment for Personal Healthcare: Percent Distribution for Selected Services (2002)Note: only selected sources enumerated

Source of Expenditure (%)

Private

Government

Type of Service

Expendi-tures

(billions)

Total

Total Private

Private Insu-rance

Out of Pocket

Medi-care

Medicaid

(Fed & State)

Total Personal Healthcare

100.0%

55.8

35.8

15.8

19.3

17.4

$1,340.2

Hospital Care

486.2

100.0%

41.1

33.9

3.0

30.7

17.2

66.2

Physician Services

339.5

100.0%

49.2

10.1

20.3

12.4

Dental Services (99)

70.3

100.0%

93.6

49.5

44.0

….

5.4

Prescription Drugs (99)

162.4

100.0%

77.7

47.8

30.0

0.2

17.6

Nursing Home Care

103.2

100.0%

35.9

7.5

25.1

12.5

49.3


Issues related to health care financing

What are some of the problems that people have with current insurance?


Employer sponsored health insurance

Employer Sponsored Health Insurance

  • 90% of Private Health Insurance Obtained Through Employer

  • Employer Share of Premium Excluded from Taxes

  • Employer Selects Plan

  • Who Bears the Cost?

    • Economists: The Employee in lower wages

    • Others: The Employer in lower profits


Question

Question

What are the advantages/disadvantages of getting health insurance through the employer?


New wrinkle defined contribution

New WrinkleDefined Contribution

  • Pay same amount towards all plans offered by employer.

  • Pay employee fixed amount divided between cash and a catastrophic cap. Employee selects a plan from a network of providers.

  • Pay employee fixed amount to purchase insurance privately.


A very conservative position

A Very Conservative Position

  • Decide how much you want to subsidize health care—who do you want to help?

  • Get rid of the incentives that encourage people to obtain their health insurance through their employers.

  • Eliminate the tax subsidy of employer based health insurance: treat all health insurance equally—probably with a tax credit.

  • Let people use their own dollars to purchase medical care/insurance—let them make their own trade-offs. (could be defined contribution)

Note: Similar to the A.M.A. position.


Selected policies by third parties

Selected Policies By Third Parties

  • Control Over Prices

    • Government – Administered Prices

      • Prospective Payment System

        • Hospitals – “DRG’s”

        • Nursing Home – “RUG’s”

        • Home Health Agencies – “HHRG”

        • Outpatient Department – - “APC”

        • Rehabilitation Facilities – “FIM-FRG”

DRG = Diagnoses Related Group

RUG = Resource Related Group

HHRG = Home Health Related Group

APC = Ambulatory Patient

Classification

FIM-FRG = Functional Independence Measure-

Function Related Group


Development of managed care strongly encouraged by capitation

Development of Managed Care Strongly Encouraged By Capitation

  • Selection of Physician/Providers who Practice Cost-Effectiveness Care

  • Capitation of Primary Care (Gate-Keeper and Other Providers)

  • Utilization Management

    • Care management

    • Preadmission screening

    • Concurrent review

    • Guidelines

    • Disease management

  • Introduction of Best Practices


Issues related to health care financing

Percent Distribution of Medicare Enrollees and

Program Payments Under Medicare: CY 1998

29.3 Million Enrollees

$168.2 Billion in Program Payments

$25,000 or More

$10,000-24,999

$5,000-9,999

$2,000-4,999

$25,000 or More

Amount of Program Payments

$500-1,999

$10,000-24,999

$5,000-9,999

$1-499

$2,000-4,999

$500-1,999

Percent of Persons Served

Percent of Program Payments


  • Login