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HCM 402 Chapter 3 || Already Graded A+.
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  • HCM 402

Consumers pay for healthcare. correct answers * Directly, via out-of-pocket payments * Indirectly, via - insurance premiums, - wage reductions, and taxes. Financing is important. correct answers We pay for most care indirectly via premiums, wage reductions, and taxes. How we pay for...

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  • August 16, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • consumers pay for healthcare

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  • HCM 402
  • HCM 402

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HCM 402 Chapter 3 || Already Graded A+.
Consumers pay for healthcare. correct answers * Directly, via out-of-pocket payments
* Indirectly, via
- insurance premiums,
- wage reductions, and
taxes.

Financing is important. correct answers We pay for most care indirectly via
premiums, wage reductions, and
taxes.

How we pay for care influences correct answers what providers recommend, and
what patients choose to do.

Why Insurance? correct answers 1 percent of the population with the highest spending accounted
for 21.0 percent of the total

Insurance correct answers * pools the risks of healthcare costs;
* affects how and how much
- consumers pay and
- providers get; and
* affects incentives.

Fee-for-service (FFS) insurance pays a share of the billed amount. correct answers For a bill of
$100,
- the customer pays 20 percent or $20, and
- the insurer pays 80 percent or $80.

FFS pays a share of the bill.
For a bill of $100,
the customer pays $20, and
the insurer pays $80.
For a bill of $200 or two bills of $100,
the customer pays $40, and
the insurer pays $160.
What problems does this create? correct answers 1. Providers may feel comfortable raising fees
or scheduling extra services (e.g., two follow-up visits rather than one).
2. Consumers have muted incentives to resist higher fees or extra services.

Managed Care Insurance correct answers * A reaction to the shortcomings of FFS
- Negotiated discounts: managed care organizations negotiate prices and receive discounts from
providers
- Utilization review: by reviewing the utilization of services managed care organizations
provides disincentives for excessive use of healthcare services

, * Steering customers to low-cost providers: provides incentives to the customer to seek for low
cost providers
* A reaction to variability of care
- Cost
- Quality

Preferred provider organizations are the most common type of managed care. Preferred can mean
correct answers * willing to accept a discount, and
acceptable quality.
* Usually a preferred provider organization emphasizes negotiating a low price.

What is "moral hazard"?
A. Personal failings of healthcare providers
B. Personal failings of healthcare consumers
C. Insured customers use more care
D. Fraud and abuse in healthcare correct answers Insured customers use more care

What is "adverse selection"
in insurance?
A. Higher-risk customers will pay more for it
B. Lower-risk customers will pay less for it
C. Refusing to pay your insurance bill
D. Being picked last for dodge ball correct answers Both A and B are examples of adverse
selection.

Adverse Selection correct answers Adverse selection happens as a result of asymmetric
information. Meaning that one party in a transaction has more information than other party. This
causes a negative results for the party in the dark. From the insurance perspective higher risk
customer would be more willing to buy insurance for higher prices because they know that they
have high risk and will be using the healthcare services a lot. Similarly, lower-risk customers
will be willing to pay less because they know that they are pretty healthy and will not be using
much of healthcare services.

Robinson on Payment Systems correct answers "There are many mechanisms for paying
physicians; some are good and some are bad. The three worst are fee-for-service, capitation, and
salary."

Payment systems are important. correct answers They affect incentives for
- providers,
- patients, and
- insurers.
They affect care via
- what gets provided,
- who provides it, and
- where it gets provided.

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