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Under indemnity insurance, the insurers guarantee payment to any licensed health care provider for all covered services. In recent years, fee-for-service indemnity plans also have grown more similar to man- aged care plans. Traditionally, fee-for-service indemnity plans gave individuals an unrestricted choice of licensed health care professionals. Care providers were free to determine which services were appropriate based on their professional judgment and were reimbursed for all the care they delivered.
Today, nearly all fee-for-service plans have adopted some form of the utilization- management strategies formerly associated with managed care, such as preauthorization for hospitalization or referral to specialists.
In my opinion the indemnity design will not be around in the next thirty years it is losing favor with employers. HMOs are the most tightly closed of all managed care systems. HMOs typically provide no coverage for out-of-plan services and require health care providers to share the financial risk for the amount of services provided. Data have shown that, at an aggregate level, premiums are lower n communities with a higher penetration of HMO plans and more intense competition among health plans (Stein, 1997).
Restricted provider networks and a strong reliance on primary care physicians have been major forces allowing HMOs to keep health care premiums below those of other plans. However, the tradeoff between low cost and limited provider choice has been unacceptable to many consumers, as evidenced by the recent trend toward looser and more expensive forms of managed care, such as PPOs and POS plans (Sisk, Gorman, Reisinger, 1996, Stroul, 1996).
This trend is likely to raise premium levels and individual copayments and deductibles in the future. Because of the rising of premiums I predict that within the next thirty years HMOs will slowly fade away. In the mid-80s, legislation allowing insurers to contract selectively with different providers at different reimbursement rates provided a starting ground for the development of preferred provider organizations (PPOs) (Gabel &Ermann 1985). Generally, the term PPO refers to a third-party payer system that contracts certain providers for patient services on a discounted fee-for-service basis.
Patients are encouraged to select these “preferred providers” with economic incentives including broader coverage, and in-network providers gain a larger patient base in return for their discounted services (Gabel & Ermann 1985). Unlike health maintenance organization (HMO) coverage, PPO patients retain the ability to go out-of-network for care. Although patients are responsible for most of the costs in such situations, there is usually a yearly limit on out-of-pocket payments that allows patients who experience severe chronic conditions to access long-term out-of-network specialty care without prohibitive costs.
PPOs have made a huge leap in the past two decades as a model for health insurance (Sengupta & Kreie 2011): In 1988, PPOs represented 11 percent of employer-provided health care; by 2005, 85 percent of large employers offered at least one PPO option (Hirth, Grazier, Chernew, & Okeke, 2007). PPO will be around for the next thirty years because it allows PPO patients to retain the ability to go out-of-network for care. Very long paragraph here 2. Debate whether or not private health insurance violates the standard principles of insurance. Don’t start at bottom of page.
Start at top of next page PHI began with coverage principally for hospital and physicians’ services. As political debates in the United States continue regarding health insurance, there has been considerable argument and criticism about the overhead generated by the PHI mechanism (Woolhandler & Himmelstein, 1991). From1960 to 2000, the total overhead costs of PHI averaged about 12 percent of premiums, ranging from about 9 to 16 percent. This total includes administrative costs, taxes, profits and other nonbenefit expenses (Lemieux, 2005).
The full cost of PHI administration to Americans including insurer’s administrative cost, net additions to reserves, rate credits and policyholder dividends, premium taxes, and carrier’s profits or losses is estimated to be about 15 percent of total national health expenditures. None of this including the formidable “hidden” costs to providers for filing claims, collecting data on quality of care, and submitting various financial reports to insurers. Private health insurance is made up of the three principal entities, which is commercial carriers, the Blues, and HMOs plus self- funded plans.
The important of PHI as a source of financing for personal health care expenditures has increased slowly, but steadily (Williams & Torrens, 2010). Although there is no denying that some government health insurance programs such as Medicare deliver benefits at far less administrative cost per dollar of reimbursement than the PHI industry, health insurance by itself is not always a profitable business for insurers. This is particularly true at the high end of the market, where self-funded administrative-services-only customers generate relatively narrow profit margins for most group insurers.
Indeed, the health insurance industry suffered a net underwriting loss in many years since 1976. Health insurance is beneficial for many insurers because it servers as a vehicle for selling other, more profitable products (such as insurance) and because health insurance premiums generate revenues via investment income (Whitted, 2001). A number of health insurance entities (including commercial carriers and the blue) offer insurance coverage for individuals and their families (pPauly & Percy, 2000). Some f the nation’s largest commercial accident and health insurers sell few or no individuals policies.
Ordinary individual policies for basic medical (hospital and the physician coverage are extraordinarily expensive. This is because of adverse selection: insurers assume that the individual knows something that the insurance plan doesn’t future health needs. Therefore, the insurer adds on premium can easily reach $5,000 per year, even for HMO plans with extensive cost-sharing provisions. In addition, underwriting guidelines for individuals policies have become increasingly stringent; so many people who might wish to purchase coverage are not able to do so (Saver & Doescher, 2000). . Analyze the evolution of the promotion of health and disease prevention in the U. S. and identify the point at which a clear shift in the thinking in the dominant culture occurred residing in the greatest impact on the health care insurance system in the United States. Organized public health activities in the United States began in local seaport communities and only gradually expanded to state and federal government agencies. The Constitution of the United States reserves to the state all functions such as health not specifically earmarked to the federal government.
For most of our country’s history, public health was an activity that was primarily carried out by a local or state governmental agency, and it was only after World War II that it was received as necessary or appropriate to have a federal cabinet-level Department of Health, Education, and Welfare. This development would suggest that our country views public health activities and perhaps health activities in general as a local and state matter; federal government involvement developed mostly after World War I, and mostly because of the abundance of federal tax revenues to be redistributed to states and local governments.
The continuing efforts to reduce the size and scope of the federal government and to return basic functions and funds to local and state government in recent years may be seen as a continuation of this general idea (Williams & Torrens, 2010). According to (Williams &Torrens, 2010), organized public health activities in the United States began with the quarantine and isolation of potential disease carriers, moved on to the improvement of sanitation in the environment, then went on to focus on immunization of children and control of individuals with contagious infectious disease.
Almost all the activities focused on acute infectious diseases, regardless of their origins. This has given rise to an unofficial and generally unspoken agreement that the primary mission of organized public health efforts in the United States should be toward the prevention and control of acute illness rather than chronic disease. Organized public health efforts in the United States have focused on out breaks of illness such as diphtheria and polio because of the suddenness and the severity of any outbreaks of this illness.
The much more serious and public health problems of the United States are no longer-term degenerative conditions such as heart disease, cancer, and stroke. Because of the unfortunate political controversies of the 1930’s around a possible national health insurance program, it would have to be admitted that there has been a relatively guarded relationship between the private medical sector and organized public health agencies throughout the country.
As long as the organized public health agencies kept to the more traditional public health role of sanitation, immunizations, and infectious diseases control, their activities were generally supported by the private sector. However, whenever the public health sector became more active in the provision of general health services or in the governance or planning facilities and personnel in the private sector, considerable opposition arose.
As a result of this opposition, organized public health agencies have been rather cautious about expanding their efforts beyond the boundaries of what were perceived as “tradition” public health activities (Williams & Torrens, 2010). It is assumed that public health must protect the interest of the public in obtaining access to appropriate health services of high quality, but that has not been an accept role for organized public health in the United States until now. References Gabel J, & Ermann D. (1985). Preferred provider organizations: performance, problems, and promise.
Health Aff (Millwood). 1985; 4(1): 24-40. Hirth RA, Grazier KL, Chernew ME, Okeke EN. Insurers’ competitive strategy and enrollment in newly offered preferred provider organizations (PPOs). Inquiry. 2007; 44(4): 400-411. Lemieux, jJ. (2005). Perspective: Administrative cost of private health insurance plans. Washington, DC: America’s Health Plans. Pauly, M. V. , & Percy, A M. (2000). Cost and performance: A comparison of the individual and the group health insurance markets. Journal of the health politics policy and law, 25,9-26 Saver, B. G. , & Doescher, M. P. (2000).
To buy, or not to buy: Factors associated with the purchase of non- group private health insurance. Medical Care, 38, 141-151. Sengupta B, & Kreier RE. (2011) A dynamic model of health plan choice from a real options perspective. Atlantic Econ J. 2011; 39(4): 401-419. Sisk, J. E. , Gorman, S. A. , & Reisinger, A. L. , List all authors here etal(1996). EvaluationofMedicaidmanagedcare: Satisfaction, accessanduse. ?Journal of the American Medical Association (1996) 276:50–55. Stein, R. E. K. , ed. Health care for children: What’s right, what’s wrong, what’s next. New York:
United Hospital Fund, 1997. Stroll, B. , ed. (Year) Children’s mental health: Creating systems of care in a changing society. Baltimore, MD: Paul H. Brookes Publishing Company, 1996. Whitted, G. (2001). In S. J. Williams & P. J. Torrens (Eds. ), Introduction to health services (6th ed. ). Albany, NY, Delmar. Williams, S. J. , Torrens, P. R. , (2010). Introduction t health services (7th ed. ). Albany, NY, Delmar. Woodhandler, S. , & Himmelstein, D. (1991). The deteriorating administrative efficiency of the U. S. health care system. New England Journal of Medicine, 324(18), 1253-1258.
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