Transcript Slide 1
Why Does the Government Produce Health Insurance? • In the Medicare and Medicaid programs, the government acts as a producer of health insurance – For certain segments of the U.S. society • Elderly people, some disadvantaged groups, and people with certain disabilities – As a producer, the government: • Collects the tax and/or premium revenues • Bears some residual risk • Establishes the reimbursement paid to health care providers (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Medicare Program • Objective – Improve access to medical care for elderly people by underwriting a portion of their medical expenditures • Eligibility – Age 65 and older – Individuals with end stage renal disease (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Medicare Program • Four distinct components: – Part A, Hospital insurance program • Covers inpatient hospital services, some types of post-hospital care, hospice care – Part B, Supplementary Medical Insurance (SMI) program • Provides benefits for physician services, outpatient medical services, emergency room services and a variety of other services • Voluntary and requires a monthly premium to participate (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Medicare Program – Part C, Medicare Advantage (MA) program, • Gives individuals the opportunity to participate in private health insurance plans – Part D • Voluntary for most individuals • For dually eligible Medicaid/Medicare individuals it is mandatory • Offers Medicare beneficiaries prescription drug benefits for a heavily subsidized monthly premium (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Financing and Cost of Medicare • Financed – By the federal government – Sources of fund: • Payroll tax • Interest income emanating from the Federal Hospital Insurance Trust Fund • Rise in Medicare expenses through the years can be attributed to an: – Increase in the number of enrollees – Increase in reimbursement per enrollee (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Figure 10.1 - Receipts for the Hospital Insurance Program, 2006 Taxation of benefits 6% Interest 8% Other 2% Payroll tax, 84% SOURCE: U.S. Department of Health and Human Services, Social Security Administration. Annual Statistical Supplement, 2011. (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Financing and Cost of Medicare • Medicare Part A – Intent is to provide insurance coverage for short-term hospital stays – Enrollment is compulsory • Part B, SMI – Enrollment is voluntary – Heavily subsidized premium • Monthly premium is set below the expected benefits – Modest annual deductible – 20 percent coinsurance rate (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Figure 10.2 - Receipts for the Supplementary Medical Insurance Program, 2010 Interest & Other 3% Premiums 21% Government Contributions 76% SOURCE: U.S. Department of Health and Human Services, Social Security Administration. Annual Statistical Supplement, 2011. (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Medicare Program Reforms • MMA of 2003 established Part D of Medicare – Medicare beneficiaries have two options to obtain prescription drug coverage • Remain in the traditional Medicare program under Part A and purchase a private stand-alone prescription drug plan • Join an MA plan that offers medical and prescription drug coverage (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Figure 10.3 - Coinsurance Rate for the Standard Benefit Package Under Part D of Medicare for 2008 100% Percentage of drug expenditures paid by beneficiary Doughnut hole Catastrophic coverage Deductible 25% 5% $320 $2,930 $6,657.50 Total drug expenditures (c) 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.