Risk premium
Presents the max amount that individuals are willing to pay to avoid the consequences of an uncertain loss.
Loading fee
amount that is paid over the expected loss. This includes admin costs, reserves and profits.
Why is the total premium the ER pays on behalf of the EE not used by analysts to examine the impact of insurance premiums on the choice of health insurance plan?
- the total premium that an ER pas on behalf of EEs is the relevant premium from the insurer's point of view and theoretically it should also be the relevant price for EEs since they trade lower wages or reductions in other benefits for the ER sponsored health insurance. - Analysts typically argue that because ERs tend to split the premium into the ER's share -- paid for with largely unseen wage and benefit reductions -- and the EE's share paid for by the explicit out-of-pocket premiums -- the out of pocket price is what affects the EE's decision during the OE period. - Since EEs' nominal wages do not immediately change as a result of their insurance decision, this is not an unreasonable approach.
Discuss the findings of the 1986 study cited in the textbook investigating the extent to which HMO enrollment was a function of prices differences between the plans offered.
- study found that 10% increase in the monthly OOP premium had a short-run effect of reducing the HMO share of a firm's subscribers by 2% and a long-run effect of a reduction of 6%. - B/c the ER paid approximately 90% of the premiums of the firm being studied, a 10% premium increase would cause a 20% reduction in the insurers' market share almost immediately and a 60% reduction after workers had time to explore options and fully adjust to the new set of premiums.
What other factors besides changes in OOP premium add complexity to estimating the effect of OOP premiums on health plan choice?
1. Availability of other plan substitutes within and outside the EE's own firm.2. The introduction of a different ER contribution structure3. the degree of choice of providers among the plans being offered4. The EE's age and household income 5. The presence of chronic disease in the EE's household
Size of the effect of higher monthly OOP premiums
- is also dependent on1. the initial enrollment share of the plan raising it's price2. The share the plan has of overall enrollment of similar plans
Explain the reasons the level of insurance coverage through ERs has declined over the years
Decline has been linked to three potential sources:1. Fewer firms are offering coverage2. Fewer workers are eligible for the coverage offered3. Fewer eligible workers take the coverage offered to themIn the past decade, much of the decline is attributable to the reduced proportion of ERs offering coverage -- this is mainly a small employer phenonmenon
EE's demand for health insurance has been inching somewhat downward. To what extend can this trend be explained by higher OOP premium contributions?
- studies show the OOP premium has a minor influence on the decision to decline coverage (EEs)
Describe the various methods insurers use to determine out-of-network benefits?
- vary by plan- most commonly reimbursement is capped using either a percentage (usually 140-250%) of the Medicare rate OR the usual and customary rate (UCR). UCR -- although there is no one generally accepted UCR formula, it is often calculated employing a stated percentile (80th percentile) of billed charges for a specific service in a geographic area. The individual is then responsible for any coinsurance on the UCR, deductible and the balance bill amountFAIR Inc, established to manage the reimbursement database and improve transparency in provider prices.
Discuss why avoiding OON providers may be difficult for EEs
1. Because using an OON provider is often not an informed or voluntary choice. Information is not often transparent to the consumer2. For some specialties and some geographic areas, access to in-network providers may be limited3. In some cases, hosptial based providers (anesthesiologists or radiologist) are not chosen by the consumer may be OON even if the hosptial is in-network. The same may apply to ER providers at an in-network hospital
What issues make it difficult for individuals to manage access of OON services?
1. Inadequate or outdated directories to determine provider network participation2. Failure by most providers to publish list prices for their services3. Difficult understanding insurers' OON reimbursement schedules
How have some states and the ACA addressed the issue of network adequacy?
1. States may require insurers to report provider-to-enrollee ratios or statics related to driving distance to providers2. CA became the first state to add wait time for an appointment to network adequacy standards3. Current ACA rules stipulate that qualified plans include essential community providers and "maintain a network that is sufficient in number and types of providers, including provider that specialize in mental health and substance abuse services...to avoid delay"Many states default into a federally facilitates ACA exchange -- meaning the HHS will need to create a more specific definition.
Which factors affect adequacy of provider network?
- Affected by geography, provider type, the absolute number of providers, the amount of provider competition and insurer policies -- including reimbursement
What are the incentives and disincentives for providers to join a network?
Incentives -- 1. provider competitionDisincentives -- 1. Lack of competition (Ex. all anesthesiologists in an area are in the same practice and would be taking a reduced rate by joining a managed care firm)
What controversy has swirled around the payment of ER care?
1. Balance billing for ER services has been a longtime controversial topic among stakeholders. Physician groups such as AMA and ACEP (American College of Emergency Physicians) argue for the preservation of balance billing to make up for the routine underpayment by insurers.2. Additionally, providers argue that since by law they are to treat patient in the ER regardless of ability to pay, remuneration at their listed prices is necessary. Insurers counter by saying charges billed to OON providers are often unreasonable and thus should not be required to pay inordinately high payments for service.
Discuss the unexpected OOP expenses that individuals may incur from a hospital stay
1. involuntary use of "other hospital based providers" (discussed earlier)
How is the implementation of the ACA impacting OON Coverage?
1. ACA has broad implications2. Insurers are now required ot provide details on their plans using plain language and a standardized form called a "Summary of Benefits and Coverage (SBC)"3. Provision on transparency in coverage requires plans to disclose "information on cost sharing and payments with respect to any OON coverage
What approach does the ACA take to the problem of involuntary OON ER care?
1. ACA acknowledges that consumers may be unable to find an in-network provider in an emergency. 2. The law tries to regulate insurers by requiring that plans not impose higher copayments or coinsurance for OON ER room providers.3. Insurers must also reimburse the greatest of three possible amounts: 1. the amount negotiate with in-network providers for the ER service 2. the amount for the ER service calculated using the same method the plan generally uses to determine payments for OON services but substituing the in-network cost-sharing provisions for the OON cost-sharing provisions 3. the amount that would be paid under Medicare for the ER serviceNotably ballance billing by the provider is still allowed. Some state law prohibit this practice.
Steer Patients
to higher value health care providers, policy makers and plan sponsors but be mindful of lack of accurate info on entwork participation and cost transparency