IHOP Exam 2 UPDATED ACTUAL Questions and CORRECT Answers
How We Pay for Health Care Insurance or Self Pay
Many payers, many private plans, many government pro-
Complexity of US Health Care System
grams, many payment methods, many uninsured
Financing Influence on Demand This determines who has access to care
lowers out-of-pocket costs, patient's consumer more,
Health Insurance
leads to a "moral hazard"
New services proliferate when they are covered by health
insurance, given rise to subindustries, influence on tech-
Financing Influence on Supply
nology diffusion and utilization, get more of what is paid
for and provide more of what they are paid for
Various Management Decisions Influenced By Reim-
bursement, Financing affects supply & distribution of
Consequences of Financing
health professionals, financing eventually affects total
health care expenditures
Expenditures = Price * Quantity
Expansion of health insurance, increase in health insur-
Expenditures are Increase By
ance premiums
Restricting Insurance, Restricting Reimbursement to
Providers, Having Few Specialists, Spending Less on R & D,
Expenditures Can Be Reduced By
Direct control over utilization, Designating certain services
as not covered
Insurance Protects against risk
The possibility of substantial financial loss from some
Risk
event, where probability of occurrence is small
1. Risk is Unpredictable for the Individual 2. Risk can be
predicted with some accuracy in a large group 3. Insur-
Four Principles of Insurance
ance pools resources to spread risk 4. Losses are shared
,by all members
Underwriting
, Process of using a large group to estimate total risk for an
individual and spread the risk
Is designed to be used, unlike homeowner's insurance,
Health Insurance
flood insurance, car insurance, life insurance etc.
amount charged by insurer to insure against risk, involves
Premiums
employer & employee cost sharing
deductibles, co-payments, coinsurance reduces moral
Cost sharing
hazard
Moral hazard using lots of resources because you have them
Identified the concept that cost sharing reduces moral
Rand Cost Sharing Experiment of 1980s
hazard
amount paid before insurance covers costs, applied annu-
Deductibles
ally
First dollar coverage plans plans without co-pays or deductibles, very rare
Co-payments amount paid along with insurance payment for services
another insurance plan besides primary plan to cover
Coinsurance
other uncovered costs
Two Risk Assessment Methods experience rating, community rating
group's medical claims experience, vary from group to
Experience rating
group
risk spread among a larger community, risks include
Community Rating smoking, pre-existing conditions etc. good risks help pay
for poor risks
reimburses the insured a predetermined amount per ser-
Indemnity plan
vice, insured is responsible for paying provider
provides services to the insured, plan pays the provider
Service Plan
directly-except for deductibles and co-payments
Health Insurance Coverage
How We Pay for Health Care Insurance or Self Pay
Many payers, many private plans, many government pro-
Complexity of US Health Care System
grams, many payment methods, many uninsured
Financing Influence on Demand This determines who has access to care
lowers out-of-pocket costs, patient's consumer more,
Health Insurance
leads to a "moral hazard"
New services proliferate when they are covered by health
insurance, given rise to subindustries, influence on tech-
Financing Influence on Supply
nology diffusion and utilization, get more of what is paid
for and provide more of what they are paid for
Various Management Decisions Influenced By Reim-
bursement, Financing affects supply & distribution of
Consequences of Financing
health professionals, financing eventually affects total
health care expenditures
Expenditures = Price * Quantity
Expansion of health insurance, increase in health insur-
Expenditures are Increase By
ance premiums
Restricting Insurance, Restricting Reimbursement to
Providers, Having Few Specialists, Spending Less on R & D,
Expenditures Can Be Reduced By
Direct control over utilization, Designating certain services
as not covered
Insurance Protects against risk
The possibility of substantial financial loss from some
Risk
event, where probability of occurrence is small
1. Risk is Unpredictable for the Individual 2. Risk can be
predicted with some accuracy in a large group 3. Insur-
Four Principles of Insurance
ance pools resources to spread risk 4. Losses are shared
,by all members
Underwriting
, Process of using a large group to estimate total risk for an
individual and spread the risk
Is designed to be used, unlike homeowner's insurance,
Health Insurance
flood insurance, car insurance, life insurance etc.
amount charged by insurer to insure against risk, involves
Premiums
employer & employee cost sharing
deductibles, co-payments, coinsurance reduces moral
Cost sharing
hazard
Moral hazard using lots of resources because you have them
Identified the concept that cost sharing reduces moral
Rand Cost Sharing Experiment of 1980s
hazard
amount paid before insurance covers costs, applied annu-
Deductibles
ally
First dollar coverage plans plans without co-pays or deductibles, very rare
Co-payments amount paid along with insurance payment for services
another insurance plan besides primary plan to cover
Coinsurance
other uncovered costs
Two Risk Assessment Methods experience rating, community rating
group's medical claims experience, vary from group to
Experience rating
group
risk spread among a larger community, risks include
Community Rating smoking, pre-existing conditions etc. good risks help pay
for poor risks
reimburses the insured a predetermined amount per ser-
Indemnity plan
vice, insured is responsible for paying provider
provides services to the insured, plan pays the provider
Service Plan
directly-except for deductibles and co-payments
Health Insurance Coverage
