hcmg midterm Exam 100% Correct!!
first major health policy report in the US - ANSWERScommittee on the costs of medical
care (found access disparities, economic barriers)
blue cross - ANSWERSbeginning of private health insurance (prepayment for hospital
care)
basic problem with blue cross - ANSWERSadverse selection (people who are more
likely to need healthcare are the ones who buy insurance)
AMA against _____ - ANSWERS3rd party payment (want to keep control over
healthcare provision: only liked insurance over professional control)
nixon's economic stabilization program (ESP) - ANSWERSwage/price controls to deal
with inflation, hospital rate setting programs
quasi-market price system (US) - ANSWERSprices negotiated by private insurers with
providers (public insurers set prices, but otherwise gov't doesn't control payment)
quasi-governmental system - ANSWERSprices regulated by one public insurer/direct
from government
why isn't healthcare a well-functioning market? - ANSWERSlimited provider
competition, information gap, third party payment changes prices
why should we worry about high healthcare spending? - ANSWERSopportunity cost,
financial burden, inequity in spending
role of insurance - ANSWERSprotection against losses (reduces economic uncertainty,
supports risk-averse individuals
when do insurance markets work well? - ANSWERSlosses are not too rare or common,
losses are easily assessed, minimal moral hazard, symmetric information
3 approaches to pricing risk - ANSWERSindividual risk-rated (life/auto insurance),
experience rated (ESHI), community rated (medicare)
calculating a fair premium - ANSWERSpopulation of sick people * cost
medical loss ratio - ANSWERSpercentage of the insurance premium that is spent on
health care services (ACA limits to 80-85%)
, adverse selection - ANSWERSa high-risk person benefits more from insurance, so is
more likely to purchase it (consumer knows more about their risk than the insurer)
death spiral - ANSWERScycle of average risk/cost increases → low-risk individuals
drop out
ways to limit adverse selection - ANSWERSgroup insurance (natural risk pools),
insurers seek "advantageous selection", public policy
moral hazard - ANSWERSwe seek more care when we have insurance than when we
don't
types of moral hazard - ANSWERSex-ante (before medical event), ex-post (after
medical event)
requirements for moral hazard - ANSWERSprice distortion (don't feel full cost of
treatment when covered), price sensitivity (increase consumption if costs go down)
PPO - ANSWERSpreferred provider organization: higher premium upfront but patients
can go to any provider
HMO - ANSWERShealth maintenance organization: lower premium, lower cost-sharing,
higher tradeoff with convenience (selective coverage/prior authorization)
HDHP - ANSWERShigh-deductible health plan: lower premiums but full cost burden
(encourages shopping around to find cheapest care)
study: company-mandated switch PPO to HDHP - ANSWERSconsumers didn't use
price transparency tools, instead cut back on low AND high value care
behavioral hazard - ANSWERSeven if price of care is subsidized, patients still misuse
care
factors of behavioral hazard - ANSWERSattention, present-bias, memory, beliefs
value-based insurance design (VBID) - ANSWERSminimizes out-of-pocket expenses to
steer patients to high-value care (principles incorporated into mainstream products, but
does not appear to meaningfully reduce healthcare costs)
how do insurance plans differ? - ANSWERScarrier, provider networks, coverage level,
cost sharing components
public sources of insurance in US - ANSWERSmedicare/medicaid
private sources of insurance in US - ANSWERSESHI, individual (non-group) insurance
first major health policy report in the US - ANSWERScommittee on the costs of medical
care (found access disparities, economic barriers)
blue cross - ANSWERSbeginning of private health insurance (prepayment for hospital
care)
basic problem with blue cross - ANSWERSadverse selection (people who are more
likely to need healthcare are the ones who buy insurance)
AMA against _____ - ANSWERS3rd party payment (want to keep control over
healthcare provision: only liked insurance over professional control)
nixon's economic stabilization program (ESP) - ANSWERSwage/price controls to deal
with inflation, hospital rate setting programs
quasi-market price system (US) - ANSWERSprices negotiated by private insurers with
providers (public insurers set prices, but otherwise gov't doesn't control payment)
quasi-governmental system - ANSWERSprices regulated by one public insurer/direct
from government
why isn't healthcare a well-functioning market? - ANSWERSlimited provider
competition, information gap, third party payment changes prices
why should we worry about high healthcare spending? - ANSWERSopportunity cost,
financial burden, inequity in spending
role of insurance - ANSWERSprotection against losses (reduces economic uncertainty,
supports risk-averse individuals
when do insurance markets work well? - ANSWERSlosses are not too rare or common,
losses are easily assessed, minimal moral hazard, symmetric information
3 approaches to pricing risk - ANSWERSindividual risk-rated (life/auto insurance),
experience rated (ESHI), community rated (medicare)
calculating a fair premium - ANSWERSpopulation of sick people * cost
medical loss ratio - ANSWERSpercentage of the insurance premium that is spent on
health care services (ACA limits to 80-85%)
, adverse selection - ANSWERSa high-risk person benefits more from insurance, so is
more likely to purchase it (consumer knows more about their risk than the insurer)
death spiral - ANSWERScycle of average risk/cost increases → low-risk individuals
drop out
ways to limit adverse selection - ANSWERSgroup insurance (natural risk pools),
insurers seek "advantageous selection", public policy
moral hazard - ANSWERSwe seek more care when we have insurance than when we
don't
types of moral hazard - ANSWERSex-ante (before medical event), ex-post (after
medical event)
requirements for moral hazard - ANSWERSprice distortion (don't feel full cost of
treatment when covered), price sensitivity (increase consumption if costs go down)
PPO - ANSWERSpreferred provider organization: higher premium upfront but patients
can go to any provider
HMO - ANSWERShealth maintenance organization: lower premium, lower cost-sharing,
higher tradeoff with convenience (selective coverage/prior authorization)
HDHP - ANSWERShigh-deductible health plan: lower premiums but full cost burden
(encourages shopping around to find cheapest care)
study: company-mandated switch PPO to HDHP - ANSWERSconsumers didn't use
price transparency tools, instead cut back on low AND high value care
behavioral hazard - ANSWERSeven if price of care is subsidized, patients still misuse
care
factors of behavioral hazard - ANSWERSattention, present-bias, memory, beliefs
value-based insurance design (VBID) - ANSWERSminimizes out-of-pocket expenses to
steer patients to high-value care (principles incorporated into mainstream products, but
does not appear to meaningfully reduce healthcare costs)
how do insurance plans differ? - ANSWERScarrier, provider networks, coverage level,
cost sharing components
public sources of insurance in US - ANSWERSmedicare/medicaid
private sources of insurance in US - ANSWERSESHI, individual (non-group) insurance
