3.5 Chapter Summary
This chapter provided a glossary of insurance terms and presented the basic concepts of adverse selection and moral hazard. Adverse selection occurs when the insured (i.e., the patient) knows of medical or surgical needs that are not shared with the insurer, allowing the insured to gain coverage below the actual cost of their risk. In healthcare insurance, moral hazard is encountered by individuals who go to the doctor as often as they wish because their visit is “free” with no out-of-pocket cost. Funding of healthcare services in the United States has evolved from an arrangement between patients and physicians to a mixed public/private system where hardly any end users of services make direct payments to providers for the full amount charged for those services. All providers document the services provided that are then paid for by a third-party payer. Hardly anyone receiving those services understands the true cost of health care in the United States, nor do they understand how much or why providers are paid what they are paid. Types of private insurance include employer-sponsored or group insurance, individual or non-group insurance, and managed care plans which package insurance, care provision, and payment into one organization.
Types of government or public insurance include Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and other public health services. While Medicare provides public insurance primarily for the elderly, Medicaid and the Children’s Health Insurance Program, provide public insurance primarily for the poor. In addition, four public health systems provide comprehensive health services to unique populations. These systems include the Indian Health Service, Military Health Service (TRICARE), Veterans Affairs Health Services, and the prison healthcare system. Only about one-third of Americans have government-sponsored coverage. Insurance through the employment sector is more common. However, it does not comprise the majority of spending because those with government-sponsored coverage – the elderly, disabled, and poor – are more expensive to insure. About one in 10 Americans is uninsured, which is considerably lower than before the major elements of the Patient Protection and Affordable Care Act (ACA) were implemented. New trends in health insurance include Accountable Care Organizations and Patient-Centered Medical Homes. Accountable Care Organizations (ACOs) are interdisciplinary teams of providers who come together voluntarily to give coordinated, high-quality care. The focus of the Patient-Centered Medical Home (PCMH) is to provide care with a multidisciplinary approach to primary care delivery.
Key terms included in this chapter are also listed in the Glossary at the end of the book.
