Uses of Health Care Funds in the U.S. (2010)

Source: Centers for Medicare and Medicaid Services [2012c].

10-1

Sources of Health Care Funds in the U.S. (2010)

10-2

Source: Centers for Medicare and Medicaid Services [2012c].

The Advantages of Employer-Provided Health Insurance

• Increase the risk pool• Reduce adverse selection• Lower administrative costs

10-3

Employer-Provided Health Insurance and Job Lock

• Job lock• Health Insurance Policy Portability and

Accountability Act of 1996 (Kennedy-Kassenbaum Act)

10-4

Medicare Expenditures(1966-2010)

Expenditures on Medicare as a Share of GDP

Real expenditures on Medicare

Source: Centers for Medicare and Medicaid Services [2012c].10-5

How Medicare Works

• Eligibility: elderly over 65 and disable

• Financing– Payroll tax funds => Hospital Insurance– General revenues fund => Supplementary

Medical Insurance

10-6

Cost Control Under Medicare

• Medicare’s retrospective payment system• Medicare’s prospective payment system:

setting fixed reimbursement level– Diagnosis related groups– Resource-based relative value scale system

10-7

Medicare: Impacts on Spending and Health

• Expenditures on health care for the elderly• Has health improved?• Page 211

10-8

Medicaid: Overview

• Medicaid• Eligibility: low – income people• State Children’s Health Insurance Program

10-9

Medicaid Expenditures (1966-2010)

Source: Centers for Medicare and Medicaid Services [2012c].

10-10

Financing and Administration

• Joint Federal-State financing• State administration

10-11

Benefits

• States obligated to offer minimum package of benefits

• States may offer more generous benefits

10-12

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

10-13

Final Thoughts

• Security vs. efficiency• No free lunch• Connection between health care expenditures

and healthhttp://www.ahrq.gov/

10-14