Lec 4: Traditional Insurance Concepts

Question 1

Most individuals over age 65 are covered by

Answer 1

Government (Medicare)

Question 2

Of the remaining not covered by Medicare, people are covered by _____, _____, or ______.

Answer 2

Medicaid
Uninsured
Private insurance

Question 3

Private insurance can be…

Answer 3

Group or individual

Question 4

Who are the 4 key players in insurance?

Answer 4

Patients/consumers
Providers
Insurance companies
Employers

Question 5

What is a premium?

Answer 5

Monthly payment

If not paid, insurance can get cancelled

Question 6

Does Medicaid have a premium?

Answer 6

No, the taxpayers are paying for it

Question 7

How do employer sponsored premiums work?

Answer 7

You pay part, employer pays other part

Question 8

What is a copay?

Answer 8

Pay something at the time of visit

Question 9

Are copay for PCP vs. specialist different?

Answer 9

Yes

Question 10

What is a coinsurance?

Answer 10

It is a percentage of the bill

Example: 80/20 split in Medicare

Question 11

What is a deductible?

Answer 11

How much comes out of your pocket before insurance starts paying

Question 12

What is the out of pocket maximum?

Answer 12

Most you will ever have to pay in any year for the benefits that your plan covers; insurer will pay 100% of maximum for the rest of the year

Question 13

What is a provider network?

Answer 13

List of doctors and hospitals that are connected to your plan
In network: discount
Out of network: full price

Question 14

Difference between HMO/EMO and PPO?

Answer 14

HMO/EMO will pay nothing, but PPO: insurance will pay

Question 15

The possibility of a substantial financial loss from an event of which the probability of occurrence is relatively small is what?

Answer 15

Risk

Question 16

Who assumes risk?

Answer 16

Insurer

Question 17

Risk spreading: in any given year: ___% of the population accounts for almost 1/4 of all health care spending in the US

Answer 17

1

Question 18

Risk spreading: The sickest __% of people account for half of total spending

Answer 18

5

Question 19

Risk spreading: The healthiest ___% of the population accounts for about 3% of total health care spending, in any given year

Answer 19

50%

Question 20

What is the purpose of health insurance?

Answer 20

To pool many people together to spread (or share) the costs generated by a small number of people

Question 21

What are the 4 fundamental principles of insurance?

Answer 21

1. Risk UNPREDICTABLE to individual insured
2. Risk can be PREDICTED with REASONABLE ACCURACY within a group/population
3. Risk transferred from INDIVIDUAL TO GROUP by pooling of resources
4. ALL MEMBERS OF INSURED GROUP share actual losses on some equitable basis

Question 22

What are the 3 risk options for insurance?

Answer 22

Guaranteed issue
Experience rating
Community rating

Question 23

What is guaranteed issue?

Answer 23

Requirement that insurance be sold WITHOUT regard to health status

Question 24

What is experience rating?

Answer 24

Premiums determined by group’s own medical claims experience

Question 25

What is community rating?

Answer 25

Risk spread among members, premiums set without regard to health status, determined by utilization experience of larger community

Question 26

What is ADVERSE SELECTION?

Answer 26

People with a higher than average risk of needing health care are most likely than healthier people to seek health insurance.

Question 27

Adverse selection results when...

Answer 27

These less healthy people disproportionately enroll in a risk pool

Question 28

4 ways how insurers traditionally managed adverse selection?

Answer 28

Medical underwriting Pre-existing condition exclusions Risk-based rating Benefit design

Question 29

What is medical underwriting?

Answer 29

Process insurers use to evaluate the risk of applicants

Question 30

What is risk-based rating?

Answer 30

Charging premiums based on an individual's likely health care needs

Question 31

What is benefit design?

Answer 31

Coverage exclusions, high cost sharing | "Cherry picking"

Question 32

Health conditions that were traditionally ALWAYS DENIED?

Answer 32

``` Cancer HIV/AIDS Diabetes MS Pregnancy Stroke ```

Question 33

Health conditions that were traditionally OFTEN DENIED

Answer 33

Overweight High BP Cancer Hx Asthma

Question 34

Health conditions that were traditionally SOMETIMES DENIED?

Answer 34

Acne | Hay Fever

Question 35

T/F: Health insurance is static?

Answer 35

FALSE! IT IS NOT STATIC

Question 36

Coverage options can change with these 5 things:

Answer 36

``` Loss/change of job Change in family status (divorce/death of spouse) Bday Move Change in health status ```

Question 37

What does PRIVATE health insurance cover? (5 things)

Answer 37

Covered benefits Cost sharing Terms of coverage Condition exclusions ESI typically (not always) more comprehensive [individual insurance typically (not always) less so

Question 38

What does PRIVATE health insurance cover?: What are the covered benefits?

Answer 38

ACA: essential benefits required Mandated benefits Benefit limits (annual, lifetime, service and cost limits)

Question 39

What does PRIVATE health insurance cover? Cost sharing?

Answer 39

Deductibles, co-pays, co insurance | OOP cost sharing maximums, balance billing

Question 40

What does PRIVATE health insurance cover? Terms of coverage?

Answer 40

Provider networks | Care authorization/Utilization review

Question 41

What is the definition of balance billing?

Answer 41

Providers ability to bill the patient for the difference between what insurance covers and what their charges are

Question 42

In order to receive care authorization, PT needs to be...

Answer 42

Medically necessary

Question 43

What does health insurance cost depend on?

Answer 43

``` WHO is covered WHAT is covered Insurer profits, administration Subsidies Underlying health care costs, inflation ```

Question 44

Before Obama Care, most expensive plans had the most benefits and least expensive plans had the least benefits, true or false?

Answer 44

True

Question 45

COBRA applies to job-based plans sponsored by employers with _____ employees

Answer 45

Greater than or equal to 20 employees

Question 46

Under COBRA, you will have temporary continuation of coverage after qualifying event such as?

Answer 46

Loss of employment: 18 months Change in family/dependent status: 36 months Disability: 29 months

Question 47

Under COBRA, employer premium contribution is....

Answer 47

NOT REQUIRED

Question 48

COBRA can be very ______ for individuals

Answer 48

Costly