A Moral Hazard is the effect that the cost of healthcare is borne by another. In the moral hazard situation an insured individual is more apt to seek care that if they are paying the medical bills for them. Adverse selection involved the insurance company paying the claims. Insurance is mostly purchased by patients needing healthcare. And cost shifting is the transfer of financial responsibility to the appropriate payer. This could be the patient if a co pay is assessed bit he insurance company. It could be a shift for uncovered services in which the payer recoups payment for services that they do not include in their coverage.
The major public programs for the financing of health care are the public programs through Federal government through the States. The two programs are the Medicare and Medicaid payers. Private health insurance payers are mostly funded by employees. If the organization is large they are probably self-insured. Otherwise the employees cover the payer's premium thorough a monthly payment deducted from their salaries.
Medicare and Medicaid are both Federal programs. Medicaid is administered through the States and is for those in need. If covers people below the poverty line, and women and children, addiction programs and many other programs for people in need.
The Medicare program is an entitlement program and is available to seniors as they turn 65. If someone has worked and becomes disabled funds are available from the Medicare program for their health insurance. Medicare Part A is for inpatient hospital stays and a deductible is charged. Medicare Part B is for physicians and outpatient services and is a stipend paid from Social Security payments to the individual. Medicare Part D is for prescription drugs and lowers the co pay that is assessed to the patient.
Four sub-programs of Medicare are as follows:
Part A-inpatient hospital services
Part B- provider services and outpatient care
Part C-Optional managed care plan in which beneficiaries
Part D-provides prescription drug coverage
There are several different reimbursement approaches for health services. The most common is the fee for service arrangement in which the payer usually a health insurance company pays for the health encounter no matter what the outcome and no matter how often the patient seeks the services. Since patients do not pay for the services they tend to overuse this scheme.
Another approach is a HMO option in which a peer review professional will determine which type of health care services are needed and in what frequency. This cuts into the amount of services given to patients and saves costs. However, the patient does not get the care that often is requested. A PPO is the same in which an overseer determines the eligibility of the service according to the self insured plans. The patient then has the choice either to self pay for the treatment or to decide not to have it.
A Managed Care plan is similar to an HMO in that an overseer determines the treatment. In a Managed Care plan only certain providers are able to provide treatment for the payers. They may be reimbursed after the appropriate permissions are secured.
