1. Insurance/Risk

2. Covering Risks Savings Family and friends Charity Private market insurance contracts Social insurance

3. Risk Risk Aversion Adverse Selection Moral Hazard Welfare Losses

4. Third-Party Transactions Gains Taxes

5. Flow of Funds Private insurance Medicaid Medicare Government programs/charities Uninsured Who pays?

6. Mandated Benefits Mandated benefits Consider substance abuse benefits

7. History of Insurance Guilds Industry Unions National health plans

8. The U.S. Baylor Hospital…1929 Blue Cross World War II The elderly

9. Managed Care Background The Response Closed systems Managed care HMOs

10. Controlling Costs Capitation Gatekeepers Withholds “Dr. Solomon’s Dilemma”

11. Risk-taking by MDs Half of primary care docs Top five Metropolitan areas California = $35-$50 Bankruptcy Treat all as capitated

12. Government’s Role Law and order Public goods and externalities Market failure Income redistribution and care of the poor

13. How Government Works Limited to core public functions Direct contracting Exert influence, but rarely control Entitlement financing Health regulation

14. Problems with Medicare 1997 changes Impending bankruptcy

15. Medicare Shortfall

16. Problems with Medicare Proposals for reform Politics of Medicare reform