The U.s. Health are market Private Insurance Cost-based reimbursement / Fee-for- service Insurance policies that provide payments to health care providers based on actual costs of treating patient Little incentive to economize on methods for delivering health care since fully reimbursed
11 The U.S. Health Care Market: Private Insurance • Cost-based reimbursement / Fee-forservice – Insurance policies that provide payments to health care providers based on actual costs of treating patient – Little incentive to economize on methods for delivering health care since fully reimbursed
The U.s. Health are market Private Insurance Managed Care Focus on supply-side(health care provider-side) of market rather than on the demand size Often patients face very little cost sharing(prices close to zero) Quantity constraints (such as seeing a gatekeeper primary care physician before seeing a specialist Capitation based reimbursement - providers received fixed, lump sum per patient, regardless of actual utilization 12
12 The U.S. Health Care Market: Private Insurance • Managed Care – Focus on supply-side (health care provider-side) of market rather than on the demand size. – Often patients face very little cost sharing (prices close to zero) – Quantity constraints (such as seeing a “gatekeeper” primary care physician before seeing a specialist). – Capitation based reimbursement – providers received fixed, lump sum per patient, regardless of actual utilization
The U.s. Health are market Private Insurance Managed care, continued Health Maintenance Organizations (HMOs) a group of physicians work only for a particular plan and patients can only see doctors within that plan Preferred Provider Organizations(PPOs) a group of physicians accept lower fees for access to patient network; patients can go out of the network at greater cost 13
13 The U.S. Health Care Market: Private Insurance • Managed Care, continued – Health Maintenance Organizations (HMOs) – a group of physicians work only for a particular plan and patients can only see doctors within that plan – Preferred Provider Organizations (PPOs) – a group of physicians accept lower fees for access to patient network; patients can go out of the network at greater cost