1. GOVERNMENT AND THE MARKET FOR HEALTH CARE
Chapter 10

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

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

4. Private Health Insurance
The Implicit Subsidy for Employer-Provided Insurance
World War II era price controls
Federal tax subsidy

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

6. Employer-Provided Health Insurance and Job Lock
Health Insurance Policy Portability and Accountability Act of 1996 (Kennedy-Kassenbaum Act)

7. Cost Control and Private Insurance
Cost-based reimbursement (fee-for-service)
Managed care
Capitation-based reimbursement
Health Maintenance Organizations (HMOs)
Preferred Provider Organizations (PPOs)
Point-of-service (POS)

8. Medicare Expenditures (1966-2010)
Expenditures on Medicare as a Share of GDP
Real expenditures on Medicare
Source: Centers for Medicare and Medicaid Services [2012c].

9. How Medicare Works Benefits Financing Part A – Hospital insurance (HI)
Part B – Supplementary Medical Insurance (SMI)
Financing
Payroll tax funds HI
General revenues fund SMI

10. Prescription Drug Benefit
Part C – Medicare Advantage
Part D – Prescription Drug Benefit
Monthly premium
Low deductible
Donut hole
Generous coverage for high costs

11. Cost Control Under Medicare
Medicare’s retrospective payment system
Medicare’s prospective payment system
Diagnosis related groups
Resource-based relative value scale system
Medicare Managed Care

12. Medicare: Impacts on Spending and Health
Expenditures on health care for the elderly
Health outcomes

13. Medicaid: Overview
Medicaid
State Children’s Health Insurance Program

14. Medicaid Expenditures (1966-2010)
Source: Centers for Medicare and Medicaid Services [2012c].

15. Financing and Administration
Joint Federal-State financing
State administration

16. Benefits States obligated to offer minimum package of benefits
States may offer more generous benefits
State administrative flexibility

17. Medicaid: Impacts on Health
Take-up rate
Crowding out
Empirical evidence: Are Medicaid expansions effective? Crowding out and taking up

18. Does Public Insurance Crowd Out Private Insurance?
A. Person who places relatively high value on private insurance
B. Person who places relatively low value on private insurance
C. Person who is uninsured before public insurance
Quantity of all other goods
Quantity of all other goods
Quantity of all other goods F F A F A A B B B E C C C M
Health insurance M
Health insurance M
Health insurance
Amount of publicly provided insurance
Amount of publicly provided insurance
Amount of publicly provided insurance

19. Health Care Reform Individual mandates Health savings accounts
The Massachusetts Plan
Health savings accounts
Catastrophic insurance policy
Single payer
International experiences
Canada
United Kingdom

20. Health Care Costs and Health Outcomes: U.S., Canada, United Kingdom

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