Economics of Health Care Chapter 12 Economics of Health Care Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Factors Influencing Health Care Costs Historical payment systems Unnecessary use of services Lack of preventive care Lifestyle/health behaviors Societal belief that disease would be eradicated Technological advances Aging of society Utilization of drugs Shift from nonprofit to for-profit health care Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Public Financing of Health Care: Medicare Entitlement program to provide health care to the growing population of those 65 years of age or older Part A Includes inpatient care in hospitals/skilled nursing facilities, hospice care, some home health care Must pay a deductible for health services Does not pay for all health care costs of enrollees; co-payments required after 60 days Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Public Financing of Health Care: Medicare (Cont.) Entitlement program to provide health care to the growing population of those 65 years of age or older Part B Purchased by monthly fee Not compulsory Helps pay for out-of-pocket costs for physician services, hospital outpatient care, durable medical equipment, and other services, including some home health care Enrollees must pay deductibles and coinsurance Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Public Financing of Health Care: Medicare (Cont.) Entitlement program to provide health care to the growing population of those 65 years of age or older Part C Medicare Advantage Plans Optional “gap” coverage Provided by private insurance companies approved by, and under contract with, Medicare May include HMOs and PPOs May include vision, hearing, dental care, and other services not covered by Medicare Parts A, B, or D Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Public Financing of Health Care: Medicare (Cont.) Entitlement program to provide health care to the growing population of those 65 years of age or older Part D Initiated in 2006 to help defray costs of prescription drugs Optional; must enroll in an approved prescription drug plan Monthly premium, deductibles, and co-payments Must pay 100% of costs when costs reach “coverage gap” or “donut hole” Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Public Financing of Health Care: Medicaid Title XIX of the Social Security Act—a public welfare assistance program Provides universal health care coverage for the indigent and children A joint state and federal venture Eligibility for this program depends on the size and income of the family; federal government sets baseline eligibility requirements, but states can lower eligibility Priority participation is given to children, pregnant women, and the disabled Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Public Financing of Health Care: Medicaid (Cont.) Federal government sets baseline services, but state governments may provide more services Must include inpatient and outpatient hospital care, pregnancy-related care, vaccines for children, family planning services, rural health clinics, home health care, lab and x-ray services, and EPSDT Care by pediatric and family nurse practitioners is covered Children under 18 also eligible for Children’s Health Insurance Program (CHIP) Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Public Financing of Health Care: Governmental Grants Directed toward funding large populations and different aggregates Historically for health promotion and disease prevention measures Administered by DHHS “Block grants” provided to states to impact the health of the public as a whole Health care providers and programs compete for funds through grant proposals and applications Closely related to Healthy People 2020 objectives Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Philanthropic Financing of Health Care Often research or disease oriented Eligibility for services limited to the specific disease or population of interest May include services rendered plus ancillary needs like transportation, parental housing, or wigs Informational and research activities constitute the majority of services provided by these organizations Examples include American Heart Association and the Shriners Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Health Insurance Plans First established in 1930s Types of plans Indemnity, HMO, PPO, POS Private insurance, cooperatives, cafeteria plans Reimbursement mechanisms Retrospective and prospective plans Scope of services covered Routine care, catastrophic, ambulatory Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Cost Containment Capitated reimbursement Access limitation Rationing Prospective reimbursement for services Access limitation Primary care provider as gatekeeper Managed care plans—preauthorization requirements for additional services Rationing Determining the most appropriate use of health care or directing the health care where it can do the most good Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Trends in Health Financing New and innovative health care approaches Cost sharing Health alliances Self-insurance Flexible spending accounts Health promotion and disease prevention Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Health Care Financing Reform Lack of insurance is the major factor associated with lack of access to medical care. The current dilemma is how to provide health care to all Americans that is acceptable and affordable. Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Caring for the Uninsured Should health care be one of those necessities available to all without cost? Should health care be a right for all rather than a commodity to be available only to those who can afford it? Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Access to Health Care—Barriers Insufficient financial support Physical barriers Structural inaccessibility, lack of appropriate equipment, or inability to communicate Inequality in the distribution of services, transportation difficulty, conflict with work hours, and failure to provide services Sociological barriers Language difficulties and fear of reprisals Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Health Care Reform 2010 Individual mandate Employer requirements Expansion of Medicaid Expansion of CHIP Premium and cost-sharing subsidies to individuals Changes to private insurance Cost-containment provisions Prevention and wellness Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Nurse’s Role in Economics Researcher Investigate efficient, cost-effective care, culturally sensitive treatment modalities, health education, disease prevention, and factors to change behaviors Investigate, develop, and evaluate the effectiveness of health promotion and disease prevention Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Nurse’s Role in Economics (Cont.) Educator Health education is the foundation of community health nursing practice Understand that knowledge empowers clients to actively participate in their health care Demonstrate the effectiveness and value of education Outcome measures for health education need to be established Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Nurse’s Role in Economics (Cont.) Provider of care Care must be appropriate, necessary, and cost effective. Judicious application of the nursing process is imperative. Serve as program service provider, health education provider, and heath program participant Participate in grant proposal process, program design, and evaluation of these programs Participate in statistical information–gathering process as basis for determining needs Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.

Nurse’s Role in Economics (Cont.) Advocate Become more involved in the economics of health care Increase knowledge of health care funding and policy making Use political power to influence health care funding Advocate for increase in health promotion/disease prevention funding Plan programs, seek funding, and evaluate program effectiveness through outcome measures Copyright © 2015, 2011, 2007, 2001, 1997, 1993 by Saunders, an imprint of Elsevier Inc.