Pubh 6012: Final Exam and All Correct
Answers 2026 Updated.
Uncertainty - Answer people purchase health insurance to protect them from medical costs
associated with both expensive and unforeseen events: how to set the consumers burden of
cost at the right level that it encourages and makes available the proper use of health care while
discouraging improper usage
Risk - Answer Providers: will beneficiary experience a covered medical event?
Consumer: buy insurance to protect themselves against an unforeseen event
asymmetric information - Answer causes insurance to have difficulty matching health people
with low-deductible plans and health people with high-deductible plans
Unhealthy consumers dont share all of the information regarding their condition with provider
so they dont get charged extra
adverse selection - Answer unhealthy people over select a particular plan; this happens
because people at risk all buy the same plan because it is more attractive. this leaves the insurer
with a disproportionate number of high risk individuals. This leads to increase in premiums
What are the two main methods of setting premiums - Answer experience rating and
community rating
experience rating - Answer how much a beneficiary or group of beneficiaries spent on
medical services previously to determine the amount of the premium for each member or
group
community rating - Answer insurers use only geography and family composition to set rates;
in modified community rating, insurers may be allowed to consider other characteristics such as
age and sex
Large Group insurance - Answer usually has cheaper rates than purchasing health insurance
individually or as part of a small group due to having an average risk rate. Carriers also prefer to
insure large groups because most of the admin costs associated with insurance are the same
whether the carrier is covering a few people or a few thousand
Medical underwiting - Answer there are ways for insurers to predict potential future health
expenses: underwiting is whether companies are allowed to consider an applicant's medical
history or other personal information to help assess risk of healthcare needs in the future
(complicated legal question)
, HIPPA (Health Insurance Protability and Accountability Act of 1996 - Answer includes an
important protection for consumers by prohibiting group health plans from excluding or limiting
otherwise qualified individuals due to preexisting conditions (before HIPPA people with
prexisting conditions could be denied health insurance)
Managed Care - Answer system that create incentives to provide fewr services and less
expensive care while still maintaing the appropriate level of healthcare quality. MCOs also
attempt to alter patients decision making through cost sharing requirements cost containment
tools utilization restrictions and free or low cost coverage for preventive care
Cost containment strategies within Managed Care Plans - Answer performance based salary
bonsues or witholdings, discounted fee schedules and capitated payments, gatekeeping and
utilization review
salary and bonuses/withholdings (provider payment cost containment strategies) - Answer
Provider receives a salary as an employee of an MCO: Costs are controlled incentive for provider
to perform fewer and/or less costly services. (MCO and provider assumes financial risk)
Discounted Fee Schedule (provider payment cost containment strategy) - Answer Provider
receives a lower fee than under GGS for each service to members. costs are controlled by pays
provider less per service rendered than under FFS (MCO assumes financial risk but also has
lower costs)
Capitation (provider payment cost containment strategies) - Answer Provider receives a set
payment per month for each member regardless of services provided. Costs are controlled by
incentive for provider to perform fewer and/or less-costly services (Provider assumes financial
risks
Critics of MCO's - Answer 1. MCO plan members will not receive all neccessary care if
providers are incentivized to provide fewer services and less-costly care
2. Encourage providers to save money by providing fewer services and less specialized care
3. Because members switch health plans relatively frequently, MCOs do not have an incentive to
keep their members health because the MCOs will not realize the long term saving as members
come and go
Are MCOs good or bad - Answer No definitive answer: studies have found treatment
decisions under MCO arrangements are mostly influenced by clinical factors,little or no
measureable dfference in health outcomes of patients in FFS versus managed care plans there is
little or no measurable differences in care outcomes.
Answers 2026 Updated.
Uncertainty - Answer people purchase health insurance to protect them from medical costs
associated with both expensive and unforeseen events: how to set the consumers burden of
cost at the right level that it encourages and makes available the proper use of health care while
discouraging improper usage
Risk - Answer Providers: will beneficiary experience a covered medical event?
Consumer: buy insurance to protect themselves against an unforeseen event
asymmetric information - Answer causes insurance to have difficulty matching health people
with low-deductible plans and health people with high-deductible plans
Unhealthy consumers dont share all of the information regarding their condition with provider
so they dont get charged extra
adverse selection - Answer unhealthy people over select a particular plan; this happens
because people at risk all buy the same plan because it is more attractive. this leaves the insurer
with a disproportionate number of high risk individuals. This leads to increase in premiums
What are the two main methods of setting premiums - Answer experience rating and
community rating
experience rating - Answer how much a beneficiary or group of beneficiaries spent on
medical services previously to determine the amount of the premium for each member or
group
community rating - Answer insurers use only geography and family composition to set rates;
in modified community rating, insurers may be allowed to consider other characteristics such as
age and sex
Large Group insurance - Answer usually has cheaper rates than purchasing health insurance
individually or as part of a small group due to having an average risk rate. Carriers also prefer to
insure large groups because most of the admin costs associated with insurance are the same
whether the carrier is covering a few people or a few thousand
Medical underwiting - Answer there are ways for insurers to predict potential future health
expenses: underwiting is whether companies are allowed to consider an applicant's medical
history or other personal information to help assess risk of healthcare needs in the future
(complicated legal question)
, HIPPA (Health Insurance Protability and Accountability Act of 1996 - Answer includes an
important protection for consumers by prohibiting group health plans from excluding or limiting
otherwise qualified individuals due to preexisting conditions (before HIPPA people with
prexisting conditions could be denied health insurance)
Managed Care - Answer system that create incentives to provide fewr services and less
expensive care while still maintaing the appropriate level of healthcare quality. MCOs also
attempt to alter patients decision making through cost sharing requirements cost containment
tools utilization restrictions and free or low cost coverage for preventive care
Cost containment strategies within Managed Care Plans - Answer performance based salary
bonsues or witholdings, discounted fee schedules and capitated payments, gatekeeping and
utilization review
salary and bonuses/withholdings (provider payment cost containment strategies) - Answer
Provider receives a salary as an employee of an MCO: Costs are controlled incentive for provider
to perform fewer and/or less costly services. (MCO and provider assumes financial risk)
Discounted Fee Schedule (provider payment cost containment strategy) - Answer Provider
receives a lower fee than under GGS for each service to members. costs are controlled by pays
provider less per service rendered than under FFS (MCO assumes financial risk but also has
lower costs)
Capitation (provider payment cost containment strategies) - Answer Provider receives a set
payment per month for each member regardless of services provided. Costs are controlled by
incentive for provider to perform fewer and/or less-costly services (Provider assumes financial
risks
Critics of MCO's - Answer 1. MCO plan members will not receive all neccessary care if
providers are incentivized to provide fewer services and less-costly care
2. Encourage providers to save money by providing fewer services and less specialized care
3. Because members switch health plans relatively frequently, MCOs do not have an incentive to
keep their members health because the MCOs will not realize the long term saving as members
come and go
Are MCOs good or bad - Answer No definitive answer: studies have found treatment
decisions under MCO arrangements are mostly influenced by clinical factors,little or no
measureable dfference in health outcomes of patients in FFS versus managed care plans there is
little or no measurable differences in care outcomes.
