1. What are the four modes of financing health care? Describe each.
2. Describe regressive, proportional, and progressive financing. Explain how each of the following is regressive, proportional, or progressive: out-of-pocket payments, experience-rated individual private insurance, community-rated individual private insurance, health insurance purchased 100% by the employer (assuming that employees actually pay for health insurance as explained in the text), and the federal income tax.
3. Harvey, who has worked all his life for General Electric, reaches 65 years of age. He does not retire. Is he eligible for Medicare Part A? Part B? Six months later, his wife, who has never worked, reaches 65 years of age. Is she eligible for Medicare Part A? Part B? How are Parts A and B paid for?
4. Hubert has received social security disability for 24 months because he has AIDS. Is he eligible for Medicare?
5. Rena developed chronic renal failure and started renal dialysis 2 weeks ago. She feels fine and is working. Is she eligible for Medicare?
6. Heidi, aged 72 years, on Medicare Part A and B without Medicaid or a Medigap policy, is hospitalized for a stroke complicated by a deep vein thrombosis of the leg and a pulmonary embolus. She is in the acute hospital for 70 days and cared for by a family practitioner and a neurologist. She improves somewhat and is then transferred to the skilled nursing facility (SNF) for rehabilitation. She remains in the SNF for 30 days and is still severely disabled and unable to go home. She is sent to a nursing home for custodial care, where she stays for 3 months. Surprisingly, she improves and goes home, where she receives skilled physical therapy services from a home care agency and also has a homemaker come in for 4 hours a day to buy food, cook, and clean the house. She is on three prescription medications at home. What does Heidi pay and what does Medicare pay? Acute hospital? SNF? Nursing home? Home care? Physicians? Prescriptions while in hospital? Prescriptions while at home?
1. Discuss your experiences with health insurance that was provided through a job. How did you obtain the insurance? Did you pay part of the premium? Were there deductibles or copayments? How many choices of plans did you have? What happened if you left your job?
2. Divide into two groups: one insurance company selling community-rated health insurance policies and the other selling experience-rated policies. Each side should try to convince the instructor to buy its policy, first with the instructor as a young, healthy person, and then with the instructor as an older person with diabetes. Which policy is the young person more likely to choose, and which the older person?
1. Describe the two main categories of people without health insurance.
2. Why did uninsurance increase during the period 1980 to 2010?
3. Compare access to health care for people with private insurance, for Medicaid recipients, and for people without insurance. Give examples.
4. Compare health outcomes for people with private insurance, for Medicaid recipients, and for people without insurance. Give examples.
1. What are some explanations as to why Ace Banks was healthy at age 48 while Bill Downes died at that age?
2. Women on average have more visits than men to physicians. Does that mean that women receive better health care than men?
3. Discuss possible reasons why minority patients receive poorer quality of care than white patients for many diseases.
4. What is the relationship between socioeconomic status (including factors such as income, education, and occupation) and health? Why does such a relationship exist?
5. What would be the best strategies to improve the health status of African Americans in the United States?
1. Explain each mode of physician reimbursement: fee-for-service, episode of illness, capitation, and salary. Explain each mode of hospital reimbursement: fee-for-service, per diem, episode of illness (diagnosis-related group [DRG]), and global budget.
2. How does capitation payment free insurers of risk? How does capitation payment shift risk to providers of care?
3. What are the arguments for risk-adjusting capitation payments?
1. You are a primary care physician (PCP) caring for a young woman with new onset of severe headaches and amenorrhea and a normal physical examination. What are the financial incentives and disincentives that would lead you to order or not to order a magnetic resonance imaging (MRI) scan in a case in which the need for the MRI was equivocal?
(a) under traditional fee-for-service practice;
(b) under fee-for-service practice with utilization review;
(c) under an independent practice association (IPA)-model health maintenance organization (HMO) in which you receive a capitation payment that places you at risk for laboratory and x-ray studies and specialty referrals;
(d) under a staff model HMO that has a two-month waiting list for elective MRI scans?
In the case of the staff model HMO, what would you do if you felt you needed to obtain the MRI within 48 hours?
2. You are a hospital administrator and your hospital is in financial difficulty. You are about to address the medical staff, imploring them to help the hospital financially. In the old days, all you had to say was, in effect: “Admit as many patients as possible and keep them in the hospital as long as you can,” but times have changed. For some methods of reimbursement, you want physicians to admit more patients; for others, you don’t. For some methods, you want patients to stay long, for others, you don’t. What do you tell the medical staff regarding the following:
(a) Medicare (DRG) patients
(b) Medicaid (per diem) patients
(c) HMO (per diem) patients
(d) HMO (capitated) patients
For each of these categories of patients, does it help or hurt the hospital for physicians to
(a) admit more patients;
(b) keep them in the hospital more days;
(c) order more diagnostic studies?
1. You are 63 years old and you begin to experience chest pain when walking. You do not have a physician. A friend suggests that you need a coronary artery bypass and recommends a cardiac surgeon at the medical school. What do you do
(a) under a dispersed model of health care delivery?
(b) under a regionalized model?
2. Give some examples of the statement, “Common disorders commonly occur and rare ones rarely happen.” What are the implications of this statement for the ratio of generalist to specialist physicians in the United States?
3. In Great Britain, 65% of physicians are general practitioners. In Canada, 50% of physicians are generalists. In the United States, approximately one-third of physicians are generalists (general and family practitioners, general internists, and general pediatricians). Assume you are Chair of the Health Subcommittee of the US House of Representatives Ways and Means Committee. What legislation might you propose to increase the proportion of generalist physicians?
4. Discuss the pros and cons of requiring everyone to enter the health care system through a “gatekeeper” health care provider (generalist physician, nurse practitioner, or physician assistant).
5. What are some advantages of a primary-care-based health system?
1. What are the two generations of HMOs? Give examples of each (if possible, in your community).
2. What is vertical integration? What is virtual integration?
3. What is an ACO? What is a medical home and a medical neighborhood? Is a medical neighborhood the same as an ACO?
Describe past and future trends in the physician, “mid-level,” nursing, and pharmacist workforce.
1. Give examples of medical interventions that lie on the steeper portions of the cost–benefit curve, and p>interventions that lie on the flatter portions. Is the elimination of the latter painful or painless cost control?
2. Give examples of painless cost control. Are these painless for everyone?
1. CABGville has four cardiac surgery units; one unit performs 300 coronary artery bypass graft (CABG) surgeries each year, and the other units perform an average of 40 per year. Cardiac surgeons can schedule a CABG anytime they wish. The small units have an operative mortality of 7% compared with 4% for the large unit. To control costs, the health planning council of CABGville closes the three less productive cardiac surgery units. Elective CABG surgeries now have a 1-month waiting list, and because of tight scheduling, surgeons are less likely to operate; the number of CABGs goes down from 420 to 340 per year; both the overall costs of CABG surgery and the unit cost per CABG operation drop, as does the mortality rate. Did CABGville achieve painful or painless cost control?
2. Pretend that total US health care expenditures have been capped and are controlled by a health services commission. Because of tight budgetary constraints, the commission must decide whether to fund an all-out program of mammography or to limit mammography and finance in its place high-cost chemotherapy regimens for patients with metastatic breast cancer, treatments whose effectiveness has not been proven, but which might help certain subgroups of women. Under the first option, several thousand cases of early-stage breast cancer could be treated with curative surgery each year, but women currently suffering from advanced-stage breast cancer would receive no benefit. Which is the more painful cost control option from the point of view of women without breast cancer? From the perspective of women with metastatic breast cancer? From the perspective of society as a whole? Which of these two groups of women should have priority in this decision?
1. You are chair of the health planning council of CABGville, a town that continues to have a health care cost crisis. The town has 30 physicians, each seeing 30 patients a day at a cost of $30 per visit. Total daily cost is 30 × 30 × 30 = $27,000. What methods are available to reduce the total cost of physician services? Would it work to reduce the fee per visit from $30 to $20? If an expenditure cap strategy (tying fees to volume) were used, how would it work?
2. The CABGville health planning council changes the mode of physician reimbursement from fee-for-service to capitation: $20 per patient per month to PCPs, with 20 PCPs each having 2000 patients. (PCPs pay specialists from the $20 capitation.) Total cost per month = $800,000 (approximately $27,000 per day). How could the health planning council reduce the monthly cost? Could physician costs still increase despite this method of cost control? Why or why not?
3. You have finished your residency in internal medicine and have the choice to work at Kaiser or at a private practice that is part of an IPA. You are particularly concerned about your ability to order laboratory tests and x-rays and to obtain specialty consultations. At Kaiser, you learn that you have freedom in ordering tests and obtaining consultations, but that patients may have to wait (except in urgent situations) because of the limited supply of such equipment as MRI scanners and of specialty appointments. At the IPA, you must request prior authorization for expensive diagnostic studies and for specialty consultations, but once prior authorization has been obtained, waiting periods are fairly short. Which work situation would you prefer, and which do you think has the better chance of controlling costs?
4. What are the arguments pro and con patient cost sharing as a cost control strategy?
5. You are the President of the United States, and your first term ends in a year. The cost-control mechanism you instituted 2 years ago, based on patient cost sharing and managed competition, has not worked, and the American people are upset about persistent health care inflation. You are preparing for a major television address on health care costs. What will you propose? Can you convince the public that yours is a painless cost-control strategy?
1. Have you ever experienced or witnessed a medical care encounter of poor quality? What did you do about it? What should you have done?
2. In the vignette about Shelley Rush, who do you think was responsible for the error in giving insulin to the wrong patient?
3. In the vignette about Nina Brown, had the physician been working in a fee-for-service environment rather than a cost-conscious HMO, do you think he or she would have admitted Ms. Brown to the hospital?
4. Reread the example of the 23-year-old graduate student whose x-ray report was lost. If you were the administrator of the hospital, what would you do to prevent such an error from taking place again? If you were the office manager of the internist’s office that never received the x-ray report, what would you do to avoid a recurrence of this problem?
5. What is wrong with the malpractice system? What would you do to fix it?
1. Why did tuberculosis (TB) decline prior to the identification of the TB bacillus? Why did polio morbidity and mortality decline? Why did Hodgkin disease mortality fall in the late twentieth century?
2. What are the first and the second epidemiologic revolutions?
1. Two people are campaigning for the consumer board of their group practice. The incumbent is running on a platform of charging tobacco users higher premiums than nonusers, because their use of tobacco costs the group practice more money. The opponent believes that society rather than the individual is responsible for tobacco addiction and that the group practice should become involved in social action against cigarette smoking. Conduct a debate between these two views.
2. How do you explain the fact that a large number of heart attacks occur at early ages in people with cholesterol levels below the median level for the United States? That heart attacks seldom occur at these ages in Japan? What is the implication for primary prevention of coronary heart disease?
3. You are named as head of the breast cancer prevention section of the US Centers for Disease Control and Prevention. What primary and secondary prevention programs would you favor to reduce the incidence of and mortality from breast cancer?
1. What are activities of daily living and instrumental activities of daily living?
2. What percentage of long-term care services are funded by which funding sources?
3. Which long-term care services are covered by Medicare and which are not? Which are covered by Medicaid?
1. You are president of LTC Insurance Company and are testifying before a Senate committee on long-term care. You are asked two questions: Why do only a few million people carry private long-term care insurance? How do you answer the complaints that senior citizen advocacy groups make about the terms of private long-term care insurance policies? What do you say to the committee?
2. Your mother’s Alzheimer’s disease is getting worse; she wanders around the neighborhood, sometimes unable to find her way home; she sleeps during the day and stays up most of the night; and she has become incontinent. Your father died 2 years ago. You and your spouse both work, you have three school-aged children, and you have an extra room in your home. The hospital social worker calls and says that your mother needs 24-hour-a-day help. Your choices are:
(a) hiring a homemaker to live with your mother at $16,000 per year;
(b) placing your mother in a nursing home whose bill will be paid by Medicaid;
(c) taking your mother home with you. What do you decide?
What reforms in the US long-term care system would have benefited you in this situation? How should such reforms be financed?
1. Pretend that the Lakeberg family discussed in this chapter belongs to an HMO, and that you are the HMO’s medical director. The Lakeberg parents want surgery to separate the Siamese twins at the cost of $1 million. The list of benefits covered in the Lakebergs’ HMO policy neither affirms nor denies their right to the surgery, so the responsibility to approve or deny the surgery falls on you. What do you decide? If you approve the surgery, who will end up paying for it? Is an ethical dilemma involved or not?
2. You are Dr. Marco Intensivo, as described in the vignette in the section “What is Rationing?” What do you do?
3. In the case of Mr. Olds and Mr. Younger described in the organ transplant section, which patient should receive the donor heart?
4. You are the PCP for Rodolfo, a 58-year-old man who suffered a cerebral hemorrhage and has been in a persistent vegetative state for 18 months. He lives in a nursing home, requires tube feedings and round-the-clock nursing attention, and his care is paid for by Medicaid. Rodolfo’s daughter is a nurse in the intensive care unit of your hospital. Rodolfo’s wife is deeply religious and has faith that Rodolfo will get better.
Approximately every 6 weeks, Rodolfo develops a urinary tract infection with septicemia and must be admitted to the hospital—often to the ICU—for treatment. Over the course of 2 years, Rodolfo’s care has cost $260,000. The hospital ethics committee discussed the case and recommended that tube feedings be withdrawn, or that the next episode of septicemia not be treated, thereby allowing Rodolfo to die. When you discussed the ethics committee recommendations with the family, the daughter agreed but the wife demanded that everything possible be done to continue Rodolfo’s life. As Rodolfo’s physician, what do you do? Which ethical dilemmas are involved? Autonomy versus beneficence? Autonomy versus nonmaleficence? Autonomy versus distributive justice? Beneficence versus distributive justice? If Rodolfo’s care were withdrawn, what would happen to the money saved?
5. Evidence from public opinion polls suggests that people in the United States want the right to health care but don’t want to pay for it.
At midnight, a new mother awakens to hear her 2-week-old infant scream. The mother and baby are Medicaid recipients. If she were experienced, the mother would know that the scream is normal, but she is frightened. She phones the emergency department and asks to bring the baby in to be seen. No amount of telephone advice seems to reassure her. Does the right to health care include society paying for her visit to the emergency department? Who is actually paying? Should the mother be advised to come into the emergency department if she is uninsured and wealthy? Uninsured and poor?
6. In Oregon, the Medicaid program was extended to thousands of Oregonians who had previously been uninsured. To help pay for this extension, the breadth of services available to Medicaid recipients was reduced such that recipients lost access to some care that might have been beneficial. You are the Governor of Oregon and you have to testify in a lawsuit alleging that the program is unfair because it deprives Medicaid recipients of certain services enjoyed by privately insured people. What is your response?
7. Should physicians be responsible to serve one master—their patient—or two masters—their patient and the broader needs of society? In your discussion, draw from the examples of the Lake-bergs, Dr. Intensivo, and Rodolfo. How has the distribution system for organ transplantation tried to balance these two masters?
1. You are a secretary in a large company in Germany (Canada, United Kingdom, or Japan). How is your health care paid for? You become sick and are forced to retire from your job. How is your health care paid for in Germany (Canada, United Kingdom, or Japan)?
2. If you developed a urinary tract infection, what would you do in Germany (Canada, United Kingdom, or Japan)? What if you needed cataract surgery? What if you had a sudden abdominal pain in the middle of the night? What if you developed leukemia and needed a bone marrow transplant? In each of these cases, which physician would care for you and where would you be cared for?
3. You are a general practitioner in Germany (Canada, United Kingdom, or Japan). How are you paid? You are a specialist in Germany (Canada, United Kingdom, or Japan). How are you paid? You are a hospital administrator in Germany (Canada, UK, or Japan). How is your hospital paid?
4. How are costs controlled in the four countries?
1. Describe how a government-financed national health insurance plan, an employer mandate plan, and an individual mandate plan would work.
2. What is the difference between a social insurance and a public assistance approach to government-financed national health insurance? Use Medicare and Medicaid as examples.
3. What are the main features of the 2010 Patient Protection and Affordable Care Act (ACA)?
1. You are the speech writer for two candidates for the Democratic presidential nomination. One candidate favors a mixed employer and individual mandate and the other a single-payer approach. What points would you have each candidate make about the strengths of his or her position and the weaknesses of the other candidate’s position?
2. Why do you think that there has been such a polarized debate over the ACA?
1. Describe how the payers of health care services increased their power between 1945 and 1995.
2. Describe changes in the relationships between physicians and insurance companies between 1945 and 1995.
3. Describe the 1995–2000 backlash against managed care.
4. Describe the recently growing power of specialty-oriented providers of care.
1. Discuss potential conflicts between the profit motive and the principles of beneficence and nonmaleficence in the following situations:
(a) a private surgeon receiving fee-for-service reimbursement;
(b) a primary physician in a small group practice that receives capitation payments covering primary care, laboratory, x-ray, and specialty referrals;
(c) a physician who is the utilization manager of a large for-profit HMO receiving requests from her employed physicians to authorize expensive MRI scans for their patients;
(d) the administrator of a nonprofit hospital who has calculated that a new cardiac surgery unit will be profitable even if only one surgery is performed each week;
(e) the CEO of an HMO deciding whether to accept Medicaid patients, for whom the state government is paying premiums 30% lower than premiums paid for private patients.
What changes in the organization of health care could be made that would minimize such conflicts?
2. Discuss how health care is organized in your community—who are the payers, insurers, and providers? To what degree has your local health care system moved from a dispersed set of institutions to a small number of vertically or virtually integrated health care conglomerates?
3. Where in the health care system of the twenty-first century would you like to be—as a provider and as a patient? What are yours fears and hopes for the future?