Health Insurance

1
Health Insurance

• Introduction
• Health Insurance in US is provided by employer
  voluntarily to employees (usually full-time)
• Many small employers in US (not provide health insurance
• 43 million people in US have no health insurance
• Most other countries provide health insurance to
  all citizens by funding through taxes
• Ex Canada has a national health system

2
Health Insurance Costs are Increasing - Heres Why

• Lack of Incentives in the Market
• Demand for medical care is inelastic
• New Medical Technologies are Expensive
• Cost of Malpractice Insurance
• Defensive Medicine means expensive procedures
• Cost Shifting - to pay for Uninsured patients
• Aging Population - heavy users of medical benefits

3
Health Insurance Models

• Traditional Plan - Fee for Service
• Managed Care - Health Maintenance Organization
  (HMO)
• Managed Care - Preferred Provider Organization
  (PPO)

4
Traditional Health Insurance Plan

• Fee for Service - Few Cost Controls
• Provides Maximum Choice of Doctors
• Becoming Obsolete - 10 US ees currently use
• Financial Features
• Deductible - employee pays first 200-1000
• Co-insurance - plan splits medical costs - 80/20
• Premium - monthly cost of policy - employer and
  employee both contribute
• Cap or Stop Loss Point - employees contribution
  ends at a certain planned level of medical costs
• Ex Blue Cross/ Blue Shield

5
Health Maintenance Organizations (HMOs)

• Comprehensive care for one price
• Focus on wellness Preventative Medicine
• Pay monthly premium, co-payment (10 fee per
  visit), no co-insurance or deductive
• Less paper work or claims forms
• Doctors need approval for some procedures
• Some restrictions on choice of doctors
• Use primary care physicians as gatekeepers
• Ex Kaiser Permanente

6
Preferred Provider Organizations (PPOs)

• Networks of doctors and hospitals - negotiate
  lowered fees for plan, receive more patients
• Incentive to use doctors in network - lower cost
  to patients under plan - covered under premium
• Employee has flexibility to use non-network
  doctors - higher fees subject to deductible
  co-insurance
• Has some features of both HMO and fee for
  service plans.

7
Managing Health Insurance Costs

• Self-Funding Plan - CU currently uses and lost
  control of its costs under this approach
• Coordinate both spouses HI policies -split
  medical costs and dependents
• Develop wellness program - components cover diet
  ,health screenings, exercise, weight control
• Cost sharing with employees - increase employee
  contributions to premium, 2nd opinions,flexible
  benefit plans

8
COBRA Regulations - Health Insurance Continuance

• Government rules provide continuation of health
  insurance coverage for employees and dependents
  after separating from firm
• Employee (or dependents) pay 102 percent of
  premiums to continue group insurance rate
• Qualifying events - employee quit, layoff,
  employee death or divorce
• 18-36 months of extended coverage
• Penalties for non-compliance of company