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

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. 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.

13. 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.

14. 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.

15. 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.

16. 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.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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.