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Component 1: Introduction to Health Care and Public Health in the U.S. Unit 4: Financing Health Care Lecture 1 This material was developed by Oregon Health & Science University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC000015. Lectures in This Unit • Lecture 1: Distinction between Publically Funded and Privately Funded Health Care • Lecture 2: Single-Payer Systems versus Multiple-Payer Systems • Lecture 3: Insurance and Third-Party Payers • Lecture 4: Government Payment Programs Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 2 Topics in This Lecture • Health care spending – Economic impact and gross domestic product – Health care jobs • • • • Publically funded health care Privately funded health care 3 roles of government in health care Important federal laws Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 3 Health Care Spending and the U.S. GDP • Gross domestic product (GDP) reflects value of goods and services we produce • GDP was $14.1 trillion in 2009 • Health care spending was 17.6% of GDP – One of the highest amounts in the world • The U.S. spent $8,086/person on health care • Health care spending expected to be one fifth of GDP by 2019 Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 4 Major Areas of Health Care Spending • • • • 31% hospital care 21% physicians and medical laboratories 10% prescription drugs Health care spending grows faster than most other sectors of the economy • Spending on government programs has increased at slower rate than private spending – Since 1999, family premiums for employer-sponsored health insurance have increased by 131% Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 5 Health Care Jobs • 10 of the 20 fastest-growing occupations are related to health care • 14.3 million jobs in 2008 – 40% of jobs in hospitals – 21% in nursing and residential care – 16% in physician offices • 3.2 million new jobs between 2008–2018, due to growth of elderly population Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 6 Privately Funded Health Care • 2 categories: – State-licensed health insurance organizations • Commercial insurers • Blue Cross/Blue Shield • Managed care organizations – Self-funded employer-sponsored insurance plans • 1,200 not-for-profit and for-profit insurance companies • 36% of all health care spending • 55% of Americans have insurance through jobs Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 7 State-Licensed Insurance Organizations • Commercial health insurers – Most are owned by stockholders or stock companies – Mutual insurance companies are owned by their policyholders • BlueCross BlueShield – Association of 39 different companies in 50 states – Locally operated; some are for-profit – Largest insurer, covering 1 in 3 Americans Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 8 State-Licensed Insurance Organizations (cont’d) • Managed care organizations – Combine health insurance and health care services – Cost control and utilization control – Some hire their own doctors and have their own facilities – 3 main types: • Health maintenance organizations (HMOs) • Preferred provider organizations (PPOs) • Point-of-service (POS) plans Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 9 Self-Funded Employer Plans • Health benefit plans regulated by federal law • Created by employers, employee organizations, or a combination • Employer assumes risk for workers and pays for care directly • Employer may choose to have a third-party administrator administer the plan Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 10 Publically Funded Health Care • Government programs, some of them funded through income taxes and payroll taxes • Begin in federal legislation • Voted into law by Congress • Help specific population groups • Run by federal government and federal-state partnerships Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 11 Examples of Government Health Care Programs • • • • • • Medicare Medicaid Children’s Health Insurance Program Veterans Health Administration TRICARE Indian Health Service Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 12 Roles of U.S. Government • 3 key roles: provider, funder, lawmaker • Provider of health care services – Veterans Health Administration and TRICARE – Indian Health System – Supports research into new models of health care • Funder of third-party services – Outsourcing of health care services – Outsourcing of claims paperwork – Outsourcing of grants Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 13 Roles of Government (cont’d) • Lawmaker role 1: Ensure fair competition – Sherman Anti-Trust Act, 1890 • Prohibits monopolies and restraint of trade – Clayton Act, 1914 • Prohibits price-fixing and exclusive dealings • Lawmaker role 2: Protect the public – Food, Drug, and Cosmetic Act created FDA, 1938 – Hatch-Waxman Act, 1984 – American with Disabilities Act, 1990 Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 14 Social Security Act • Passed in 1935, part of the New Deal • Established a system of old-age benefits for workers • Also created: – Benefits for victims of industrial accidents – Unemployment insurance – Aid for dependent mothers and children, the blind, and the physically handicapped – Vocational training – Funds for family health programs Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 15 Hill-Burton Act • Hospital Survey and Construction Act, passed in 1946 • Stimulated construction of facilities • Foundation of today’s infrastructure for hospitals and other health care organizations • Continues to authorize funding for hospitals, nursing homes, health centers, rehabilitation facilities • Imposes anti-discrimination rules • Requires participation in Medicare and Medicaid Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 16 Stark Laws • Named for Congressman Pete Stark • Govern ability of physicians to refer patients to facilities in which they have a financial interest (“self-referral”) • Bans self-referrals to clinical laboratories and certain other services under Medicare and Medicaid • Major exception: a physician within a group practice may refer a patient for certain imaging services provided by that practice, as long as the patient receives written notice of other imaging clinics Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 17 Summary • The U.S. spends nearly one fifth of GDP on health care • The health care job market is growing • 2 main types of health insurance: – Privately funded health care insurance • State-licensed insurers • Self-funded employer-sponsored plans – Publically funded (government) programs • The federal government has 3 roles in health care: provide services, fund services, and pass laws that ensure fair competition and protect the public Component 1/Unit 4-1 Health IT Workforce Curriculum Version 2.0/Spring 2011 18