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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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Chapter 32

Chapter 32

Aging & Health Care


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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Health care spending as of gdp

Health Care Spending as % of GDP

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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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