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Aging & Health Care

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Chapter 32. Aging & Health Care. Older Society. The population of the U.S. is getting older. In 1970, the median age in the U.S was 27.9 years. In 2014, it is 37.6 years . For Men: 36.3 years For Women: 39.0 years.

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older society
Older Society
  • The population of the U.S. is getting older.
  • In 1970, the median age in the U.S was 27.9 years. In 2014, it is 37.6 years.
    • For Men: 36.3 years
    • For Women: 39.0 years

http://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf and www.cia.gov/library/publications/the-world-factbook/fields/2177.html

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u s age distribution 2010
U.S. Age Distribution 2010

Source: factfinder.census.gov

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gender distribution by age 2008
Gender Distribution by Age2008

Population over 18

Population over 65

Source: factfinder.census.gov

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race as of population est 2010 for fun
Race as % of Population est. 2010 (for fun)

Source: factfinder.census.gov

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workers to social security recipients
Workers to Social Security Recipients

* Estimated

Source: www.cbo.gov/doc.cfm?index=4011&type=0

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age health care spending
Age & Health Care Spending

Source: Boyes & Melvin, Economics

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age health care
Age & Health Care
  • As the population ages:
    • More people are receiving Social Security benefits
    • more money is spent on Health Care.

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u s health care expenditures 2008
U.S. Health Care Expenditures 2008

Source: www.chcf.org

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sources of health care payments
Sources Of Health Care Payments

Source: www.chcf.org

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supply demand of health care
Supply & Demand of Health Care
  • Higher costs (new technology, malpractice insurance) is decreasing the supply of health care
    • Shifting left, raising prices
  • Aging population is increasing the demand for health care
    • Shifting right, increasing prices

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medicare medicaid insurance
Medicare, Medicaid, & Insurance
  • The availability of payment assistance makes it “easier” for people to see a doctor – increasing demand
    • Shifts right, increases prices
  • This costs the government, insurance companies, and you (higher premiums, taxes & co-pays)

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insurance companies
Insurance Companies
  • They are for-profit organizations.
  • They want to have more money come in & less money go out.
  • Incentives:
    • Try not to pay your claims
    • Try to get people to reduce their number of claims

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reducing claims
Reducing Claims
  • Health & wellness programs
  • Reward programs for healthy behavior
  • Set limits to coverage
  • Investigate fraud
  • Increase Premiums after each claim
  • Moral Hazard

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moral hazard
Moral Hazard
  • The purpose of co-payments is to make a person “make sure” they really need to see the doctor.
  • They do this by making people pay some of the expense out-of-pocket at the time of the visit.

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definitions
Definitions
  • Co-Payment – money you must pay out-of-pocket at each visit.
  • Premium – monthly payment to insurance company for coverage

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calculating premiums
Calculating Premiums
  • What is the likelihood they must pay a claim on your behalf this year?
  • How much would they have to pay?

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premiums example
Premiums Example
  • Life insurance is easiest:
    • 10% chance Bob will die this year.
    • Bob has $1,000,000 policy
  • There is a 10% chance they will pay $1,000,000 this year, so they will charge him a minimum of $100,000.
  • Of course, they would charge more than that for “processing” & “administration” fees

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premium example
Premium Example
  • They figure he will die sometime in the next 10 years.
  • They hope he will beat the odds & live 11 years.
    • If he died in 10 years, he’d pay them $1,000,000 & they’d pay him $1,000,000
    • If he lived 11 years, he would pay more than $1,000,000.

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premiums behavior
Premiums & Behavior
  • The more likely the insurance will have to pay for you, the higher your premiums.
  • This should encourage you to try to improve your behavior (quit smoking, etc.)

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in network providers
“In-Network” Providers
  • Groups of doctors contract bulk-pricing to insurance companies
  • Customer will pay larger co-pay if they do not go to preferred provider

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socialized medicine
Socialized Medicine
  • Why not let the federal government take over the entire health care system?
  • With Doctors now government employees, the pay will be lower, which reduces the incentives for people to become doctors, & quality of health care goes down.

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