HCMG EXAM 1 QUESTIONS AND
ANSWERS 100% CORRECT
Tax Subsidies for Private Health Insurance: Who benefits and at what cost? -
ANSWER-Brief: policy makers are considering modifying the tax treatment of employer
sponsored insurance - ESI - as a way to help pay for health reform and reduce
healthcare costs
What is the largest subsidy for private insurance? - ANSWER-the tax exclusion for
employer contributions to ESI
FSA - ANSWER-A Flexible Spending Account (also known as a flexible spending
arrangement) is a special account you put money into that you use to pay for certain
out-of-pocket health care costs. You don't pay taxes on this money.
Who benefits the most from the current tax subsidies from ESI? - ANSWER-higher
income workers; since they are in a higher tax bracket, this makes the tax exclusion
more valuable (also, they're more likely to work with employers who offer ESI)
How much will the tax exclusion for ESI provide in income and payroll tax subsidies? (in
2010) - ANSWER-240 billion
How are lower income workers disadvantaged when it comes to the benefits of ESI? -
ANSWER-Part time workers are often ineligible
Their firms may not offer coverage
More likely to have non-group coverage, w/ little benefit from tax subsidies
Value of the federal subsidy on ESI for families - ANSWER-Families with income over
200,000 get a subsidy worth more than 1/3 of the premium
ESI subsidy trends - ANSWER-Average subsidy increases as income increases;
(subsidy includes income and payroll tax savings)
What about eliminating the tax exclusion for ESI? - ANSWER-- Eliminating the tax
exclusion would significantly raise payroll and income tax receipts which could be used
to provide other subsidies to encourage the purchase of insurance (subsidies could take
into account income and health status to make sure hard to insure populations are
covered)
- HOWEVER: eliminating the exclusion altogether would increase the cost of insurance
for workers and result in less employer coverage
What about capping the tax exclusion for ESI? - ANSWER-Could cap the exclusion
based on income, geography, or the cost of insurance premium
, Allowing non-group coverage to be purchased with pre-tax dollars? - ANSWER-- does
not have the effect of raising revenue (would actually increase the federal subsidy) but
would provide a similar tax advantage to those purchasing coverage outside the
employer system
Advantages of ESI? - ANSWER-- Pool risks because job choice is not representative
usually of healthcare use
- ESI offers a way to create large groups ---> lower administrative costs
High-Deductible Health Plans - ANSWER-in brief: increasing plan deductibles has
emerged as 1 potential solution to slowing health care cost growth by reducing use
What does a high deductible health plan do? - ANSWER-Higher deductible reduces a
plan's monthly premium payment, while increasing the amount consumers are
responsible for paying for their case before their insurance pays for benefits (so
increases the price consumers face when deciding whether to get care or not and may
reduce medical spending)
High deductible health plans (HDHPs) are increasing in prevalence, why? - ANSWER-
Group market: rising insurance costs make HDHPs more attractive to employers.
Survey of e employers shows that deductibles have increased by 67 percent since
2006.
Individual market: ~90 percent of enrollees in ACA marketplaces are in a plan with a
deductible above the amount that qualifies a plan as an HDHP
HDHP background - ANSWER-- other than some preventive services, all medical care
must be paid for out of pocket until the deductible is met
HDHPs with a savings option (health savings account - HSA) or HRA are also referred
to as consumer-driven health plans - ANSWER-Increased role for consumers in
shopping for services and reducing use of unnecessary care
Difference between HSA and HRA - ANSWER-HSA - a savings account that employees
own
HRA - a reimbursement arrangement between employers and employees
Section 2713 of the ACA requires all private, non grandfathered plans to cover a set of
preventive services without imposing any form of cost sharing including a deductible -
ANSWER-Enrollees in HDHPs should also be able to access these services without
having to meet their deductible
RAND Health Insurance Experiment - ANSWER-study concluded that higher
deductibles did reduce use of care
ANSWERS 100% CORRECT
Tax Subsidies for Private Health Insurance: Who benefits and at what cost? -
ANSWER-Brief: policy makers are considering modifying the tax treatment of employer
sponsored insurance - ESI - as a way to help pay for health reform and reduce
healthcare costs
What is the largest subsidy for private insurance? - ANSWER-the tax exclusion for
employer contributions to ESI
FSA - ANSWER-A Flexible Spending Account (also known as a flexible spending
arrangement) is a special account you put money into that you use to pay for certain
out-of-pocket health care costs. You don't pay taxes on this money.
Who benefits the most from the current tax subsidies from ESI? - ANSWER-higher
income workers; since they are in a higher tax bracket, this makes the tax exclusion
more valuable (also, they're more likely to work with employers who offer ESI)
How much will the tax exclusion for ESI provide in income and payroll tax subsidies? (in
2010) - ANSWER-240 billion
How are lower income workers disadvantaged when it comes to the benefits of ESI? -
ANSWER-Part time workers are often ineligible
Their firms may not offer coverage
More likely to have non-group coverage, w/ little benefit from tax subsidies
Value of the federal subsidy on ESI for families - ANSWER-Families with income over
200,000 get a subsidy worth more than 1/3 of the premium
ESI subsidy trends - ANSWER-Average subsidy increases as income increases;
(subsidy includes income and payroll tax savings)
What about eliminating the tax exclusion for ESI? - ANSWER-- Eliminating the tax
exclusion would significantly raise payroll and income tax receipts which could be used
to provide other subsidies to encourage the purchase of insurance (subsidies could take
into account income and health status to make sure hard to insure populations are
covered)
- HOWEVER: eliminating the exclusion altogether would increase the cost of insurance
for workers and result in less employer coverage
What about capping the tax exclusion for ESI? - ANSWER-Could cap the exclusion
based on income, geography, or the cost of insurance premium
, Allowing non-group coverage to be purchased with pre-tax dollars? - ANSWER-- does
not have the effect of raising revenue (would actually increase the federal subsidy) but
would provide a similar tax advantage to those purchasing coverage outside the
employer system
Advantages of ESI? - ANSWER-- Pool risks because job choice is not representative
usually of healthcare use
- ESI offers a way to create large groups ---> lower administrative costs
High-Deductible Health Plans - ANSWER-in brief: increasing plan deductibles has
emerged as 1 potential solution to slowing health care cost growth by reducing use
What does a high deductible health plan do? - ANSWER-Higher deductible reduces a
plan's monthly premium payment, while increasing the amount consumers are
responsible for paying for their case before their insurance pays for benefits (so
increases the price consumers face when deciding whether to get care or not and may
reduce medical spending)
High deductible health plans (HDHPs) are increasing in prevalence, why? - ANSWER-
Group market: rising insurance costs make HDHPs more attractive to employers.
Survey of e employers shows that deductibles have increased by 67 percent since
2006.
Individual market: ~90 percent of enrollees in ACA marketplaces are in a plan with a
deductible above the amount that qualifies a plan as an HDHP
HDHP background - ANSWER-- other than some preventive services, all medical care
must be paid for out of pocket until the deductible is met
HDHPs with a savings option (health savings account - HSA) or HRA are also referred
to as consumer-driven health plans - ANSWER-Increased role for consumers in
shopping for services and reducing use of unnecessary care
Difference between HSA and HRA - ANSWER-HSA - a savings account that employees
own
HRA - a reimbursement arrangement between employers and employees
Section 2713 of the ACA requires all private, non grandfathered plans to cover a set of
preventive services without imposing any form of cost sharing including a deductible -
ANSWER-Enrollees in HDHPs should also be able to access these services without
having to meet their deductible
RAND Health Insurance Experiment - ANSWER-study concluded that higher
deductibles did reduce use of care
