Economy and Taxation

7/29/2019 Economy and Taxation

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1798 US Congress established USMarine Hospital services for seamen.Funded by compulsory deductionsfrom salaries


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Health or medical insurance is the insuranceagainst the risk of incurring medical expenses

among individuals

The benefit is administered by a centralorganization such as a government agency,

private business or a not-for-profit entity


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A health insurance policy is a contractbetween an insurance provider and anindividual or his/her sponsor. The contract canbe renewable, lifelong or mandatory. The type

and amount of health care costs are specifiedin an Evidence of Coverage booklet for

private insurance or in a national health policyfor public insurance.


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Definition of Terms

PREMIUM the amount of thepolicy holder pays to the healthplan to purchase healthcoverage

DEDUCTIBLE the amount thatthe insured must pay out-of-pocket before the health insurerspay its share

CO-PAYMENT the amount thatthe insured must pay out-of-pocket before the health insurerpays for a particular visit orservice


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Definition of Terms

COINSURANCE a percentageof the total cost that the insurermay also pay

EXCLUSIONS not all services

are covered; the insured isexpected to pay the full cost ofthe non-covered services out ofpocket

COVERAGE LIMITS someinsurance health policies coveronly up to a certain amount; theinsured is expected to pay

excess charges for services


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Definition of Terms

OUT-OF-POCKET MAXIMUMS

the insured persons payment

obligation ends when they reach

the out-of-pocket maximums,and health insurance pays all

further covered costs

CAPITATION an amount paid

by the insurer to the provider, forwhich the provider agrees to

treat all members of the insurer


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The Theory of Risk and Insurance

Individuals enter into insurance

contracts to shift the uncertainty of

financial risk to others (Friedman &

Savage, 1948).


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HEALTH

MAINTENANCE

ORGANIZATION andOTHER MANAGED

CARE


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What is health Maintenance

Organization?

A specific type of healthcare plan that sets out

guidelines under which doctors can operate and

restrictions for which healthcare professionals

the patients can use.

HISTORY: The HMO has its roots in the early

20th century, when businesses began offering

their employees prepaid medical programsunder which their care was looked after as long

as it fell within the scope of allowed procedures.


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HMO has 5 recognized types

1. Group Model- The health benefit intermediary contracts

with a large multispecialty group practice

2. Staff Model

- Physicians are the employees of HMO

3. Direct Contact

- Establishes contractual relationships withindividual physicians to provide care for aspecific group of patients.


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HMO has 5 recognized types

3. Network Model

- Utilizes contracts with several differeproviders, including physicians practiceand hospitals, in order to make a full rangof medical services to its enrolees.

4. Independent practice association

- Contracts with individual physicians osmall group practices to provide care tenrolled members


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MANAGED CARE

A term used to describe any number of

contractual arrangements that integrate

the financing and delivery of medical care.

HISTORY: managed care started during

the 1920s. Industrialist Henry J. Kaiser organized 1st

managed care plans


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Types of Managed Care Plans

HMOs

Preffered Provider Organizations

Point of Service Plans Managed Indemnity Plans


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Health Managed Care

HMOs provide medical treatment on aprepaid basis, which means that HMOmembers pay a fixed monthly fee,

regardless of how much medical care isneeded in a given month.


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Preferred ProviderOrganization (PPOs)

Emerging as one of the popular type ofmanaged care plans.

PPO are made up of doctors and/orhospitals that provide medical service onlyto a specific group or association. Ratherthan prepaying for medical care, PPOmembers pay for services as they arerendered.


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Point of Service Plans

Most recent ingredient in the managedcare.

Mixed model health plan

A point of service plan is a type ofmanaged healthcare system where youpay no deductible and usually only aminimal co-payment when you use ahealthcare provider within your network.


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Managed indemnity plans

Health insurance that are administered liketraditional indemnity plans but which includemanaged care overlays such asprecertification and other utilization reviewtechniques.

An indemnity plan reimburses you for yourmedical expenses regardless of who

provides the service, although in some casesyour reimbursement amount may be limited.The coverage offered by most traditionalinsurers is in the form of an indemnity plan.


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Health Insurance and MarketFailure

The dominant feature n the medical marketplace is thereliance on the third-party payment mechanism. Justas insurance has shaped the market for medical care,the tax subsidy to health insurance. Thus, in addition to

the traditional sources of market failure, this subsidy tohealth insurance provides a strong incentive for overconsumption [Pauly, 1986].


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Health Insurance and Market Failure

The subsidy on insurance has the effect of thereducing the after-tax-net loading costs onthe insurance. The result is an increase in the

demand for the types of insurance where netbenefits are small, such as prescription drugs,dental care, and eyeglasses. Deductibles andcopayments also tend to be lower on average

with the subsidy.


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InformationProblems


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Information Problems

Information cost are a centraleconomic decision making. Themost challenging problems thatarise because of costly informationare due to unequal access to

information. One party to aneconomic transaction has moreand better information than allother parties. Two issues arisewhen access to information is not

equal, or, more formally, wheninformation is asymmetricallydistributed: imperfect consumerinformation on price and quality,moral hazard, and adverse

selection.


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Consumer

Information

Problems


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Consumer Information Problems

Rational or purposefulchoice is based on thedecision making ability ofconsumers with disposable

income who know their ownpreferences. Whenconsumers have troublegathering andunderstanding information,

the ability to make informeddecisions is compromised[Rice, 1998].


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Types of HealthCare/Health

Insurance Plans in

the Philippines


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Types of Health Care/HealthInsurance Plans in the Philippines PhilHealth Affordable and continuing social health insurance for

Filipinos of any age at an affordable rate of about $4 permonth, as of June 2010. This program ensureshospitalization discounts for contributing members at any

accredited hospital in the Philippines. There are three kinds of PhilHealth membership available:

employed membership, individually paying membershipand lifetime membership. Filipinos who are regularlyemployed pay less than individually paying (self-employedand freelance) members because employers providemonthly co-payments for their employees, as required byPhilippine law. A lifetime member doesn't have to pay themonthly contribution, since this kind of membershiprequires paying a lump-sum amount to cover the lifetimemembership.


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Private Health Insurance

A private or public health insurance in the Philippine

setting is a term more popularly used for insuring a

person from critical illness and hospitalization. Since a

separate health insurance generally works independentlyfrom an HMO plan, a basic health insurance policy covers

hospital expenses as a supplement to HMO coverage.

Private health insurance companies cover health

expenses for individuals, families and groups. Plans are

either paid in full by freelance or self-employed members

or partially paid or acquired for free by regular

employees. An individual plan may be upgraded to a

family plan to extend coverage to family members. Group

insurance is designed for groups of three or more

persons. Like with a family plan, it can offer customized

coverage with premium discounts.


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Types of Health Care/Health

Insurance Plans in the Philippines Health Maintenance Organization HMO is the common managed care plan in the Philippines while a health insurance plan works

separately for emergency cases and hospitalization. While there are available packages offered

by health insurance companies for additional coverage, the affordability ofHMO plans are more

amenable to Filipinos with average income, especially those who are of considerably healthy

age.

An HMO plan is usually acquired for free through employment. However, freelancers and non-working individuals can also avail themselves of individual and family HMO accounts to cover

basic medical expenses for preventive and outpatient care, medical treatment and

hospitalization. Unlike in the United States, the Philippines only offers HMO plans and not

preferred provider organization (PPO) plans. There are also health discount cards offered by

specific groups, mostly medical and diagnostics clinics, to also supplement HMO and health

insurance coverage. Those who can't afford an HMO plan usually avail of such health discount

cards to help them ease the burden of medical expenses.
http://www.thefreelibrary.com/Philippines+:+Growing+health+awareness+buoys+HMO+sector+growth.-a0226415646http://www.thefreelibrary.com/Philippines+:+Growing+health+awareness+buoys+HMO+sector+growth.-a0226415646


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Types of Health Care/Health

Insurance Plans in the Philippines

International Health Insurance An international health insurance is designed

for individuals, families and groups intendingto be covered while outside the Philippines.This type of health insurance plan protects amember for a few months to one year. Thereare insurance companies that can providestraight coverage for up to three years.International health insurance for Filipinosgenerally provides two options for coverage:worldwide and worldwide except the UnitedStates. Including a U.S. coverage requires a

higher premium as the cost of medicalexpenses in this country is much higher than inother parts of the world. Also, when includingpreventive services and outpatient careinstead of just the basic hospitalizationcoverage, the premium becomes higher aswell.


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Expatriate health insurance is

designed for a non-Filipinointending to maintain healthinsurance coverage whilestaying in the Philippines. Thistype of plan insures a legallyresiding foreigner of hismedical expenses in thecountry. It is generally a

renewable type of plan suitablefor individuals of all ages,nationalities and occupations.
http://www.associatedcontent.com/article/5444810/shopping_in_manila_philippines_the.html?cat=16http://www.associatedcontent.com/article/5444810/shopping_in_manila_philippines_the.html?cat=16http://www.associatedcontent.com/article/5444810/shopping_in_manila_philippines_the.html?cat=16

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Economy and Taxation