Health Economics & Policy 3 rd Edition James W. Henderson Chapter 14 Policies That Enhance Access

Medicare l Institutional features –Part A—Hospital insurance –Part B—Physicians’ insurance –Part D—Outpatient prescription drugs in 2006 l Who pays? l Who benefits? l What about the Trust Fund?

Economic Consequences l Spell-of-illness concept l First-dollar coverage l Coverage gaps –Pays 87% of inpatient charges, 67% of physicians’ services, 8% of outpatient drugs, and 0.5% of nursing home l Does not provide catastrophic coverage l Less than 1/3 covered by HMOs

Medicare Spending

Medicare Payment Allocations, 1999

Medicare Assignment l Graphical presentation (see p. 348) l Impact on non-Medicare patients l Impact on the elderly l Impact on medical practitioners

Medicare Assignment

Medicaid l Institutional features –State administered –Federal cost-sharing –Eligibility standards l SCHIP expansion

Medicaid Spending

Medicaid – Large State Spending, 1999

Spending by Eligibility Categories, 1999

Economic Consequences l Nationwide, 60% of poverty population covered l Nursing home care and home health care constitute over 70% of outlays l Covers over 40% of all AIDS costs

Other Economic Issues l Health outcomes l Enrollment in private insurance l Labor supply l Family structure l Savings

Other Government Programs l FEHBP l Defense Department –Direct care –Civilian Health and TriCare Standard l Veterans’ Administration

Summary and Conclusions l Fulfilled stated goals—improving medical care access for poor, elderly, and disabled l Medicare’s structural deficiency—poor coverage for catastrophic illness l Medicare’s limited benefit package—lacks long-term care coverage with outpatient prescription drug coverage still a work-in- progress