Uses of Health Care Funds in the U.S. (2010) Source: Centers for Medicare and Medicaid Services [2012c]. 10-1

Sources of Health Care Funds in the U.S. (2010) 10-2 Source: Centers for Medicare and Medicaid Services [2012c].

The Advantages of Employer-Provided Health Insurance Increase the risk pool Reduce adverse selection Lower administrative costs 10-3

Employer-Provided Health Insurance and Job Lock Job lock Health Insurance Policy Portability and Accountability Act of 1996 (Kennedy- Kassenbaum Act) 10-4

Medicare Expenditures ( ) Expenditures on Medicare as a Share of GDP Real expenditures on Medicare Source: Centers for Medicare and Medicaid Services [2012c]. 10-5

How Medicare Works Eligibility: elderly over 65 and disable Financing – Payroll tax funds => Hospital Insurance – General revenues fund => Supplementary Medical Insurance 10-6

Cost Control Under Medicare Medicare’s retrospective payment system Medicare’s prospective payment system: setting fixed reimbursement level – Diagnosis related groups – Resource-based relative value scale system 10-7

Medicare: Impacts on Spending and Health Expenditures on health care for the elderly Has health improved? Page

Medicaid: Overview Medicaid Eligibility: low – income people State Children’s Health Insurance Program 10-9

Medicaid Expenditures ( ) Source: Centers for Medicare and Medicaid Services [2012c]

Financing and Administration Joint Federal-State financing State administration 10-11

Benefits States obligated to offer minimum package of benefits States may offer more generous benefits 10-12

Health Care Costs and Health Outcomes: U.S., Canada, United Kingdom 10-13

Final Thoughts Security vs. efficiency No free lunch Connection between health care expenditures and health