Health Care Costs and Payment Models

Health Insurance Terminology2
Health Insurance Sources3,4
2016 Data:

An individual person pays a premium directly to a “health plan” or insurance company, which reimburses providers

• An individual person pays a premium directly to a “health plan” or insurance company, which reimburses providers
• Plans offered directly from insurance companies or through marketplaces or exchanges

Insurance Types: Individual Private

Employers usually pay all or part of the premium for their employees

• Employers usually pay all or part of the premium for their employees
• Tax-deductible business expense, not counted as taxable income for employee
• In essence, government is subsidizing employer-sponsored health insurance

Insurance Types: Employer Private

In the late 1950s, less than 15% of the elderly had health insurance

• In the late 1950s, less than 15% of the elderly had health insurance
• In 1965, Medicare (for elderly) and Medicaid (for poor) was enacted
• First tax-financed government insurance

Insurance Types: Government
Medicare Plan Structure5

Part A	Hospital services
Part B	Physician services, outpatient, durable medical equipment
Part D	Voluntary prescription coverage
Medicare Advantage	“Part C”, Medicare benefits through private insurers
Medigap	Supplemental insurance, can cover copays, deductibles, and other costs

Medicare Part A

Medicare Part A

• Hospital insurance plan for the elderly
• Financed through social security taxes (SSI)
• At age 65, pts who have paid >10 yrs. into SSI automatically enrolled
• Those <65 totally and permanently disabled may enroll after 24 mos of disability
• Those on dialysis usually enrolled without wait period