Chapter 5 Health Econ

Chapter 5 HEALTH FINANCE AND MANAGED CARE SYSTEM Health Maintenance Organization(HMO)- is a type of managed health care system. It has a goal f reducing health care costs and on preventive care and implementing utilization management controls. Primary Care Physician- he is your first contact when you join an HMO. He provides your general medical care before you consult the specialist. DEFINITION OF HEALTH CARE FINANCING -It refers to a system that pays even first Peso/Dollar health care cost on a collective basis via employer or government funding. CURRENT TRENDS AND GROWTH OF ALTERNATIVE METHODS OF HEALTH CARE FINANCING IN THE PHILIPPINES One way of describing the financing of health system is by identifying the major providers of health services and the role played by the government. The government is the major/sole provider of health services. Furthermore, for market commodity, some aspects of health care may be financed directly by consumers through a system of user charges or fees for service. On the other hand, as a social good, aspects of health care may be directly financed by the government through public subsidy program supported by general on specific taxes. There may also be cases of private sector participation as deliverers of specific health services for particular groups. Below is a brief overview of the various options for financing health care: USER CHARGES- these means of financing health care are particularly suited for those aspects for health care that are considered private goods. PUBLIC SUBSIDY- the most appropriate for those aspects of health care whose benefits are widely spread and therefore not quite amenable to a system of user charges. COMMUNITY FINANCING- this has been demonstrated to be effective not only to mobilizing resources for health care, but also evoking improved health consciousness among community members and stimulating collective action to achieve common health goals. HEALTH INSURANCE- this is relatively more complex and structured form of health financing based on a system risk sharing. INVOLVEMENT OF PRIVATE SECTOR- a response to a market need for demand for services with corresponding willingness to pay. This type of involvement is largely influenced by market factors but also encouraged by government.

FINANCING HEALTH SERVICES IN THE DEVELOPING COUNTRIES: What should governments of developing countries do to cope with the present crisis in the financing of health services? In order for governments to do this especially in developing countries, these three options should be considered or rather be included in their health plans: 1. Mobilizing additional resources from outside the Health sector. 2. Mobilizing additional resources from within the Health sector.; and 3. Altering the organizational Make-Up of the Health sector. HEALTH INSURANCE: VOLUNTARY HEALTH INSURANCE- the government provides or gives access to the poor people to the same health services as were used by the better off. COMPULSARY HEALTH INSURANCE- was first introduced in Germany in 1883. Employers were forced to pay, as well as employees in order to have access in health care or health services. HEALTH INSURANCE AND POLITICAL ABILITY: Below are some considerations concerning Health Insurance : If your country already has health insurance: • Does it include prevention? • Is it built on primary health care principles? • Does it promote equity or create privilege? • What say has the Ministry of Health about its resources and how it uses them? • What would it cost to give the uninsured the same services as the insured? • How could health insurance be adapted to conform better to health-for-all objectives? If your country has no health insurance: • Is there a social security scheme on which it could be built? • What could the insured be offered for their contributions without undermining health-for-all goals? Health Care can also be financed by: • Obtaining more tax revenues, possibly as earmarked taxes • Attracting more external cooperation • Requiring employees to provide defined services • Encouraging fund-raising by NGO’s • Stimulating community financing and voluntary health insurance • Economizing through more efficient use of resources

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Re-orienting priorities within existing service or selecting less costly methods of service delivery. If your country does not have a financial master plan, you may wish to consider: • Distributing to key officials and training institutions the WHO manual on this subject. • Holding seminars to promote awareness among senior staff about the importance of financial planning. • Including an element of financial planning in courses of health management and health planning. • Undertaking a study on health financing and health expenditures in your district or country. • Contracting institutions that can provide basic training for the health sector’s financial planners, providing fellowships for such training, and developing a training programme. • Reviewing the financial implications of your daily work, where do your financial resources come from, do you spend them wisely and are additional resources available locally? OUT-OF-POCKET / FEE-FOR-SERVICE OUT-OF-POCKET = payments made by individuals or their family, rather than an insurance company, HMO, government or other third party, for medical care. FEE-FOR-SERVICE = is a method of charging whereby a physician or other practitioner bills or services. MEDICAL INSURANCE INSURANCE = method of pooling risk so that one person’s loss is shared across many people rather than being borne by the person alone. HEALTH MAINTANCE ORGANIZATIONS AND OTHER MANAGED CARE ORGANIZATIONS HEALTH MAINTANCE ORGANIZATION ACT = was passed on 1973 providing federal funding for health maintenance organizations that followed the federal regulations, which were stricter than the state regulations. HEALTH MAINTANCE ORGANIZATION = one type of managed care service that provides health care to members for a fixed, usually monthly payment. 1. PREFFERED PROVIDER ORGANIZATION (PPO) Another type of managed care service that used as provider networks to deliver health care to its members. A PPO plan includes preferred provider physicians, insurers and employers.

2. EXCLUSIVE PROVIDER ORGANIZATION -A plan that requires its members to get their services within that particular network only. The participants usually must select a primary care physician and a hospital that they will use exclusively. 3. CAPITATION Is another, and relatively new, type of health care plan that is becoming popular. With capitation, the ensurer or employer will pay a provider a set free for all the medical expenses necessary for each member covered under that plan. 4. POINT OF SERVICE (POS) A Point-of-Service medical plan is basically a combination of a PPO and HMO. They key to POS plans are established to provide lower cost medical care to those that remain in the provide POS’s are structured in the same way as PPO medical plans. As with HMO plans, POS plans typical preventive care and health improvement programs. OUT-OF-POCKET HEALTHCARE FINANCING -health care costs paid out of your own pocket without limitation. In other words, it is the commonly type of payment most patients has to pay. ADVANTAGES: 1.MINIMUM COSTS - It is merely depend on the primary care physician who attend for your treatment and healthcare institution where you have been admitted. The shorter you treated the lower payment. 2. NO “GATEKEEPER” FOR NON-NETWORK CARE -if you prefer to go outside the network for treatment, you are free to see any doctor or choose without first consulting primary care physician. DISADVANTAGES: 1.HIGH-OUT-OF-POCKET COSTS -with most types of insurance, you are responsible for paying the amount of the bill every time you receive medical care excluding the value of free medical goods. 2.LESS COVERAGE FOR TREATMENT PROVIDED BY PHYSICIAN -there is a strong financial incentive to use other network physician. But members may receive some reimbursement for care obtained from network physicians but only for treatment provided by non-network physicians. 3.NO FREEDOM OF CHOICE

-for example, your patient could not choose the primary care physician he would like to attend for his treatment. These case mostly happen to the patients who has no ability to pay the required physician they like. CONCEPT OF MEDICAL INSURANCE Insurance modifies the nature of the economic exchange by redirecting the flow of money. It changes who negotiates prices, who bears responsibility for mistakes, and who has the right to profit from directing business to one hospital rather than another. COSTS AND PRICING OF MEDICAL INSURANCE: ACTUARIAL (MEDICAL) COSTS AND ADMINISTRATIVE COSTS Section II, Article XIII of the 1987 constitution of the Republic of the Philippines – declares that the state shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all the people at affordable cost. NATIONAL HEALTH INSURANCE PROGRAM(NHIP) – refers to a compulsory health insurance program of the government as established in the National Insurance Act of 1995 (Republic Act. No. 7875), which shall provide universal health insurance coverage and ensure affordable, acceptable, available and accessible health care services for all citizens of the Phil. In the pursuit for a National Health Insurance Program (NHIP), this revised Implementing Rules and Regulations shall adopt the ff. guiding principles: a. The NHIP shall underscore the importance for government to give priority to health as a strategy for bringing about faster economic development and improving quality of life. b. The NHIP shall provide all citizens with the mechanism to gain financial access to health services, in combination with other government health programs. c. The NHIP shall give the highest priority to achieving coverage of the entire population with at least a basic minimum package of health insurance benefits. d. The NHIP shall adequately meet the needs for personal health services at various stages of a member’s life. COST AND ADMINISTRATIVE COSTS COST- a sacrifice of resources and it is a measurement in monetary terms of the amount of resources used for some purpose. The benefits under NHIP shall consist of the following: 1.Inpatient hospital care 2.Out patient care

3.Emergency and Transfer Services; and 4.Such other health care services that the corporation determines to be appropriate and cost effective. HEALTH MAINTENANCE ORGANIZATION: an off-shoot of medical insurance and emphasis on preventive and promotive healthcare ADVANTAGES OF HMO’s 1.Low out-of pocket costs 2.Focus on wellness and preventive care 3.Typically no-lifetime maximum pay-out DISADVANTAGES OF HMO’s 1.Tight controls can make it more difficult to get specialized care 2.Care from non-HMO provide generally not covered GROWTH AND TRENDS OF THE HMO INDUSTRY GROWTH OF HMO’s FROM 1970 TO 1994 1970 1975 1976 1977 1978 1979 1980 1981 1982 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

33 148 175 165 203 215 236 243 265 306 393 595 700 653 591 569 550 562 541 546

3,600 5,600 6,000 6,300 7,500 8,200 9,100 10,200 10,800 15,100 18,900 23,700 29,000 30,300 34,500 36,500 40,400 44,300 49,100 56,800

EMPHASIS ON EFFICIENCY AND OUTCOMES EFFICIENCY- in economics, it refers to the ratio of output to input.

ECONOMIC EFFICIENCY-is the ratio of the value of its product to the value of input of resources. Thus, the greater the ratio the greater is economic efficiency. MEDICAL TECHNOLOGY EVALUATION MEDICAL TECHNOLOGY EVALUATION-evaluates the vital information about the risks, benefits and cost for new technologies in order to make informed decisions abut which ones to adopt and how to use them. It includes methods like randomized controlled trials, meta-analysis, economic evaluation methods (cost-benefit, cost effectiveness and cost-utility analysis). COST BENEFIT ANALYSIS-one method for economic evaluation which can effectively indicate whether a health care treatment or intervention is worthwhile.

Reporters:     

Ser Francis Acosta Keith Randolf Cruz Michael Alvin Cruz Jeffrey de Guzman Jeffrey de Jesus