View Full Version : Part 5: US Health insurance familiarity required?

02-29-2004, 07:08 PM
I've almost skimmed through all of the readings, and felt I was making fairly good headway this weekend, until I came up against this so-called Intoduction to capitation and health care provider excess insurance. Now, the concepts are not so difficult, but I definitely feel handicapped by lacking familiarity with the USAmerican health insurance system. With as many individual managed care oganizations as are in the country, are they mainly regionally separated or overlapping? Would a hospital run an HMO and gather local doctors under this umbrella, for example? Or are the traditional insurance companies more heavily involved in HMOs and PPOs, too?

Does anyone know of a somewhere I might find something written and available which would actually provide an introduction to the present system as a whole?

03-01-2004, 09:32 AM
I wouldn't feel too handicapped; Health is unfamiliar to most P/C actuaries including, I venture, most of the Exam 5 Committee.

I can't recommend any overview to "the system". In fact, I think such an overview would be difficult to author given the myriad benefit plan designs that exist.

For example, you have national players, regional players, and state players. You have networks designed based on what will sell to customers (premium paying employers, trusts, or individuals) and what's acceptable to providers (hospitals, doc's, pharmacies, etc.). You have Blues plans and Indemnity insurance plans. What works, or is allowed, in one state may not work or be allowed, or may not be acceptable to the customer in that state.

I think you run into the same issues regarding variety of insurance coverage design here as you do elsewhere in P/C. The major difference is terminology.

03-02-2004, 01:42 AM
Hmm, I'm not entirely sure if I buy that, but OK...I suppose understanding of the system isn't what'll be tested, anyway. I do have a more specific question arising from something in the article, though:
[T]he insurance regulations of most states ... prohibit a capitated contract between an employer and a provider.
As capitation implies being paid a flat rate to provide medical services for a set number of patients for a given period, does this mean (as it sounds to me) that it's illegal for a physician to work for a salary, instead of a fee per service ??

03-02-2004, 11:41 AM
No, it means that it's illegal in those states for a group of physicians to contractually provide insurance - via the direct capitation arrangement - when they are not licensed to do so.

03-02-2004, 11:49 AM
First, it sounds more like surety than insurance to me anyway, since they bearer of risk is contracting to provide medical services, not financial restitution ... but that's neither here nor there, really.

As for the doctor, I'm not sure I fully understand the scope of capitation, then. If a physician contracts to provide medical services as needed for a fixed group of patients, in return for a set fee per patient, this would be capitation, and thus not allowed in these states, right?
Whereas, if the physician was salaried on an annual, rather than pe-customer basis, this is of course permitted, as you say, because the assurance of service availability remains with the employer, rather than the provider?

03-02-2004, 12:13 PM
With all due respect to physicians and auto mechanics ...

Say, for example, that you establish a company that offers to perform routine maintenance and physical damage repairs on automobiles in return for a fixed amount per car per month.

Is your company providing insurance?

Does this determination depend on whether your company pays the mechanics it employs a fixed annual salary, an hourly rate, or by the type of repair?

Who repairs the vehicles if the negotiated capitation is too low and your company - being unable to pay its vendors, and without cash to pay the mechanic's salaries - stops repairing cars and goes out of business?

Who has the statutory responsibility to provide regulatory oversight of your company?

Wigmeister General
03-02-2004, 01:08 PM
This is the kiss of death. Everyone ignoring "health" because few P/C actuaries are familiar with it screams for 20% of the exam to be "health".

03-02-2004, 07:55 PM
PAC: First, let me say I appreciate your patience here (;

I think your hypothetical repair shop is providing insurance, as defined by the states referenced above.

So what you're saying is, it's a question of how the payment is made, but just what responsibility is undertaken in return for the payment. So the company may pay its mechanics a fixed salary, or could even pay them a salary based on the number of customers, but can't require them to service all the vehicles if you hire too few mechanics. And here there's also the question of material costs, which I hadn't considered in the medical question.

I think I'm seeing the light! The confusion is terminology, perhaps. In your repair shop, who is the service provider, the company or the employee?

LVB: It's not a question of being unfamiliar with "health", so much as the US hodgepodge of systems in particular. Ask a question about Canadian health care, and I betcha I'll have much less trouble (; ...ask a question about Brazilian health care and I bet you'd be as lost as me.

03-03-2004, 09:48 AM
I think pp.s 116-117, including figure 1, tell the story.