Health Insurance Traditional Fee-For-Service Coverage Blue Cross-Blue Shield Plans Health Maintenance Organizations Preferred Provider Organizations Point of Service Plans Current Health Care Concerns

Traditional Fee-For-Service Coverage Benefits Indemnity Service Valued policy Basic benefits Hospital Surgical Medical expenses

Traditional Fee-For-Service Coverage - continued Major medical insurance Maximum limits Internal limits Benefit period Coinsurance Stop loss provisions Limited contracts Accident of specified illness

Policy Provisions Coordination of benefits Continuation provisions COBRA 1985

Blue Cross-Blue Shield Plans Not-for-profit organizations Hospitals and physicians formed these insurance plans Tax favored organizations Reimburse hospitals at a discounted rate Competition for traditional health insurers

Health Maintenance Organizations (HMOs) Prepaid health care coverage Incentives of HMOs versus Fee-for-service plans Advantages/disadvantages of HMOs Choice of Doctor Coverage for Checkups and Preventative Care Out-of-Area Service Filing Claims

Preferred Provider Organizations (PPOs) Coverage provider negotiates discounts with doctors and hospitals Insured can choose PPO for better coverage Introduces competition into health care

Point of Service Plans (POS) Hybrid arrangement combining a traditional fee- for-service plan with an HMO and/or a PPO Whenever health care is required, participant can choose the managed care option or an alternative health care provider Higher coverage for managed care Reduced coverage for out-of-network treatment Fastest growing health care plan for employees

Health Care Coverage - 1 What health care coverage do you have? A)Own coverage through employer B)Coverage through a parent’s policy C)Coverage through the U of I Student Plan D)Coverage through parent’s and U of I Plan E)No coverage/I don’t know

Health Care Coverage - 2 What type of health care coverage do you have? A)Traditional fee-for-service or BCBS B)HMO C)PPO D)POS E)I don’t know

Current Problem Areas Health care costs Managed care problems Physician compensation and control

Health Care Costs in US Total health care spending $1.9 trillion (2004) –Up 7.9%, 3 times rate of inflation –$6,280 per person –16% of GDP Higher than any other industrialized nation Other nations provide universal coverage 46 million uninsured (at least part of year) Fastest rising cost for employers –11% annual increase –$10,880 for family, $4,024 for individual (2005)

Managed Care Problems Getting treatment for serious ailment –Primary care provider may be reluctant to refer patient to a specialist –Plan may refuse to cover expensive treatment –No coverage for out-of-network care Under fee-for-service, physicians were paid only if they provided a service –Problem – over treatment Under managed care, physicians have an incentive to keep treatment costs down –Problem – under treatment –Potential conflict of interest for physicians

Physician Compensation and Control Starting compensation levels (2006) –General practitioners: $140, ,000 –Specialists (Radiologists, Cardiologists, Orthopedic Surgeons): $260, ,000 –Financial incentive for physician to become a specialist Conflicts between physician and managed care plans –Delays in approving care –Denial of coverage Paperwork requirements Physician satisfaction levels declining