Session 6 February 10, 2011 Health System Economics and
Financing Concepts and Consequences of Insurance 1
Slide 2
1. What is meant by the term "health services financing"? What
are the key concepts? What influence does financing have on the
health services delivery system? [p. 198-201] 2. What are the key
concepts of insurance? [p. 201-206] 3. What are the key financing
and cost-sharing characteristics of Medicare Part A and B? What are
the similarities and differences? [p. 207-218] 4. Describe the
other (non-Medicare) publicly funded health financing programs.
Illustrate the differences and similarities of financing and
delivery in the private and public sectors. [p. 219-212] 5. What is
the difference between national health expenditures and personal
health expenditures? What do we know about trends for both? [p.
229-233] 6. What are some of the main problems and issues
pertaining to the financing of health services in the US? [p.
233-237] 2
Slide 3
Medicare Medicaid/SCHIP Centers for Disease Control (CDC)
Indian Health Service (IHS) Veterans Administration Health
Resources & Services Administration Other Government Workers
Compensation Commercial Insurance Large Group Small Group
Individual Commercial Plans Out-of Pocket Costs Plan Types
Indemnity PPO/POS HMO HDHP 3
Slide 4
Source: OECD Health Data 2009,
OECD(http://www.oecd.org/health/healthdata). 4
Slide 5
Department of Health and Human Services Centers for Disease
Control (CDC) $8.8 billion budget (FY 2009) National Institutes for
Health (NIH) $30.5 billion budget (FY 2009) Center for Medicare and
Medicaid Services (CMS) $803.1 billion budget (FY 2010 request)
Health Resources and Services Administration (HRSA) $7.13 billion
(FY 2010 request) Agency for Health Research and Quality (AHRQ)
$372 million (FY 2009) Food and Drug Administration $1.77 billion
general fund; $628 million industry fees (FY 2009) Indian Health
Service $3. 64 billion (FY 2010 request) Substance Abuse &
Mental Health Services Administration $3.5 billion (FY 2010
request) 5
Slide 6
. Source: OECD Health Data 2009,
OECD(http://www.oecd.org/health/healthdata). 6
Slide 7
Uninsured 16.6% 7
Slide 8
Established in 1965, subsequent expansions in
population/benefits Accounts for 13% of total federal outlays
Covers 46 million people nationally Four Parts Part A Part B Part C
Part D 8
Slide 9
Total Benefit Payments = $484 billion NOTE: Does not include
administrative expenses such as spending for implementation of the
Medicare drug benefit and the Medicare Advantage program. Total is
net of $9.4 billion in recoveries for 2009. SOURCE: Congressional
Budget Office, Medicare Baseline, March 2009. Part A Part B Part D
Part A and B 19% 4% 23% 5% 28% 4% 6% 4% 5%
Slide 10
SOURCE: 2009 Annual Report of the Boards of Trustees of the
Federal Hospital Insurance and Federal Supplementary Medical
Insurance Trust Funds. PART A $237 Billion PART D $66 Billion PART
B $196 Billion TOTAL $499 Billion
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Total Number of Beneficiaries, 2005: 37.5 million Total
Medicare Spending, 2005: $265 billion Average per capita Medicare
spending among bottom 90%: $2,934 Average per capita Medicare
spending among top 10%: $44,220 NOTE: Analysis excludes Medicare
Advantage enrollees. SOURCE: Kaiser Family Foundation analysis of
the CMS Medicare Current Beneficiary Survey Cost & Use file,
2005.
Slide 12
Enacted in 1965 as a federal-state partnership to provide
health coverage for welfare recipients; subsequently expanded and
modified: Disproportionate Share (DSH) 1915/1115 Waivers
TEFRA/DRA/OBRA/etc. State Childrens Health Insurance Program
Established by Balanced Budget Act of 1997 Allowed coverage of
children in families
200020042008 All Firms55.3%52.7%52.6% < 1035.1%35.7%31.4%
10-2475.3%70.1%66.3% 25-9991.7%66.3%82.2% 100-99996.9%88.3%98.0%
> 1000100.0% Source: Agency for Healthcare Research and Quality,
2000, 2004 & 2008 Medical Expenditure Panel Survey-Insurance
Component; Table II.A.2. 16
Fee-for-Service Bundled Charges & RVRBS Managed Care,
Capitation, PPS & DRGs Pay-for-Performance High Deductible
Health Plans Concierge Medicine & the Convenience Care Industry
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Slide 19
Plan Type Worker Contribution Firm Contribution Total Premium
Worker Deductible Worker Total Cost Total Premium + Deductible
HMO$3,311$8,568$11,879$750$4,070$12,638 PPO$3,236$9,207$12,443$
1,040$4,276$13,483 POS$3,659$7,929$11,588$1,359$5,018$12,947 HDHP
w/SO $2,856$7,837$10,693$3,596$6,452$14,289 Source: KFF/HRET, 2007.
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Demand for care Information asymmetry Coverage risk and cost
risk Shift from private to public financing Trust, self-interest
and moral hazard Transaction/information costs 21
Slide 22
Major changes in health policy, like major policy changes in
any area, are political acts, undertaken for political purposes.
Victor Fuchs Who Shall Live? 22
Slide 23
Group 3 Presentation Jennifer Tschirpke Jill Arkind Ann Ngo
Paneen Petersen 23
