1. What factors forced the reform of medical education in the early 20th century?
    Trends moving to 4 year medical colleges. Shifts from lectures to clinical instruction by leading scientists, hooking medical schools with hospitals.
  2. Briefly describe the three phases of the reconstitution of the hospital in the United States
    1750 to 1850 most hospitals were either public hospitals descended from almshouses or voluntary hospitals. From 1851 to 1889 most new hospitals specialized around disease, religion, ethnic groups, children, women, and medical sects. From 1890 to 1920 most new hospitals were for profit.
  3. Discusses the two forms of corporate medicine during the era 1900-1930
    One was informal control, through referrals and hospital privileges. Physicians also gained control through control of education and training.
  4. In several sentences, explain why attempts to establish social health insurance in the United States failed during the first half of the Twentieth Century
    The government is decentralized. The challenge to stability was small and was from agrarians and populists, who were less interested in social insurance. Roosevelt also believed that including health insurance would have jeopardized the passage of Social Security.
  5. Describe the birth of Blue Cross and Blue Shield. Blue Cross plans were “prepayment plans” that paid service benefits.
    They guaranteed services to subscribers in exchange for a fixed payment per subscribers per year. Blue Shield developed in a similar manner, but indemnity payment was also an important option.
  6. Briefly describe the development of employer based insurance 1942-1959. Be sure to comment on the role of the Wagner Act, the War Labor Board, the Taft Hartley Act, and the Inland Steel case.
    Social Security failed to include health insurance and the inclusion within the Wagner Act of the implicit right for labor unions to include health insurance in collective bargaining with employers. 1942 War Labor Board allowed increases in fringe benefits for workers. As a result competition for workers led to offering health insurance. The Taft Hartley Act of 1947 established Taft Hartley Funds which allow a union to require in contracts that employers contribute to a health insurance plan run by the union and management. Taft Hartley also implicitly reaffirmed the right of unions to bargain for health insurance, and this was made explicit by the Inland Steel Case, which ruled that health insurance was covered by the phrase “conditions of employement”
  7. Briefly describe the growth of prepaid practice after 1945
    Kaiser opened their company plans to the public and offered “duel choice”. In New York Mayor La Guardia led an effort which organized 22 medical groups into health insurance plan, and the city paid half the premium for employees that elected covereage.
  8. What were the major federal health initiatives in 1946?
    (The "Class of '46".) Medical research, mental health, community hospital construction, and the VA. The National Mental Health Act of 1946 funded research and training and assisted the states financially in creating mental health clinics. The Hill Burton Act of 1946 provided construction funds for community hospitals.
  9. What were the major features of Forand’s proposal in 1958 and the Kerr-Mills act of 1960? What were major features of each of layers in the “three layered cake” of the 1965 law that established Medicaid and Medicare?
    Forand proposed in 1958 a scaled back health insurance plan for the elderly and only covered hospital costs. Kerr Mills provided federal financial support that matched state spending on welfare medicine for the poor. The three layered cake included Medicaid an expanded version of Kerr Mills, Medicare Part A similar to Forand’s proposal and Medicare Part B which was similar to a Republican proposal to cover physicians fees with the government subsidizing the premium for individuals on social security who choose to take the program.
  10. What major concerns led to the health reforms of the 1960’s? What programs grew out of these concerns
    There was concern that the future supply of physicians and nurses would not be adequate, and 1963 Congress adopted the first of a series of measures to expand education of health professionals. There were concerns that there was too much emphasis on hospitals, and the result was a shift to community based health services, especially mental health, but also primary care health centers. Medicare and Medicaid were a response to the concern that the elderly and poor were unable to afford health care. Starr suggests that Medicaid grew more rapidly than health care center programs because Medicaid in “institutionally compatible” in that it covers cases that would be bad debts. In establishing Medicare key decisions were the agreement to determine costs in the manner hospitals preferred, and the use of fiscal intermediaries that had strong ties to providers.
  11. In several sentences describe the constraints “medicine” began to face in the 1970’s
    Rapid increases in cost in part due to the concessions to providers when Medicare was established, led to increased attention to cost containment. New regulation of health care, including Health Systems Agencies (HSA) and Professional Standards Review Organization (PSRO) contrasted with most instances of professional regulation in that it was designed to control cost, and not to protect providers’ monopolies or allow liberals to control private enterprise. There was a generalization of patients’ rights, including the right to informed consent, the right to see medical records, the right to refuse treatment, and a broadening of the right to care. Also involved Certificate of Need to control healthcare markets.
  12. What was the HMO act of 1973? What were its major provisions?
    Created the “federally qualified” category of HMOs. Employers were required to offer as an alternative a federally qualified HMO if it existed in their area. Grants and loans for federally qualified HMOs. Overrode state laws that prohibited HMOs.
  13. What have been the financial implications of Medicare DRGs for hospitals
    FTE’s in hospitals fell 2-3%, average length of stay also fell. Medicare admission also fell. Medicare inpatient fell 6%, hospitals margins were 11.3%. Since then payments have tended to increase more than cost, but in 1993 cost began to be flat while payments increased up to the BBA 1997.
  14. During the 1990’s what were the major responses of private payers to increased health care cost?
    Growth in Managed care, HMOs, PPOs, growth in self insured plans. Negotiated rates, DRGs for hospitals, Resource Based Relative Value System for physicians and others.
  15. What is the BBA? What were its effects?
    The Balanced Budget Act of 1997. Sharply reduced reimbursement from Medicare to home health agencies, nursing homes, and hospitals. Many nursing homes and home health agencies went bankrupt. Created State Children’s Health Insurance Program (SCHIP) to provide coverage for “near poor” kids. Provided additional preventative services to Medicare recipients.
  16. Why has there been an expansion in the number of firms that self insure?
    Self insured businesses are exempt from state regulations regarding mandated benefits, premiums taxes and reserve requirements for unpaid and unreported claims. Appears to be a gain in efficiency. Self Insurance is less expensive. There are a number of new products which make it more feasible to self insure.
  17. What is a PPO?
    A preferred provider organization consists of contracts between an employer or insurance company and providers who offer discounted fees and agree to establish utilization review procedures to reduce the volume of services. The employer or insurance company pays a larger share of the cost of care when employees use a “preferred provider” so it is less costly for employees to use services “in the network”
  18. What are the major changes to the structure of the health insurance markets since 1970?
    There is an increase in the number of companies that self insure health benefits. There has been an increase in the number of HMOs and in the number of HMO members. There was a growth in managed care organizations such as PPOs. This was a period of decline in the market share of Blue Cross/Blue Shield.
  19. By decade since the 1940’s, summarize the major trends that influenced the amount of resources going into health care in the United States.
    • 1940’s – The class of 46, more resources from the federal government for target areas – Hill Burton, VA NIH, mental health.
    • 1950’s Growth in employer based insurance (sometimes called “private social security”) allowed more people to pay with insurance.
    • 1960’s Entitlement for particular categories of people – elderly poor disabled through Medicaid and Medicare.
    • 1970’s Attempts to shift resources from institutional care, attempts to hold down cost through regulation and HMOs.
    • 1980’s Attempts to hold down cost through reimbursement incentives such as DRGs.
    • 1990’s Attempts to hold down costs through managed cage and the BBA. Expansion of SCHIP.
    • 2000’s MMA brough Medicare Drug Benefits. Consumer directed plans emphasized.
  20. Describe the major features of the covered services of the Medicare program.(Details in parenthesis not required for test).
    • Part A – provides inpatient hospital services, hospice services, some home health services and some skilled nursing home coverage. Funded by payroll tax. In 83 switched to DRG reimbursement system.
    • Part B – covers physician and other providers service, outpatient hospital services, and other services including preventative services and some home health.
    • Part C – Medicare Advantage Plans. Organizations (some HMOs) that contract to provide all Part A, B and D services to Medicare eligible individuals for a set premium.
    • Part D – is the MCR prescription bill, which began in Jan 06.
  21. Describe the major features of the eligibility requirements for individuals for the Medicare program
    Part A is free to all those who are eligible for social security benefits and for a premium for those who are not. Part B is optional to all those who have Part A coverage and requires a monthly payment.
  22. Describe the major features of the eligibility requirements for individuals Medicaid program. What is meant by “dually eligible” what is meant by “spend down”.
    Income tests – there is a maximum amount of eligible both for Medicare and Medicaid. Assets tests – There is a maximum amount of assets that may be owned by the household. Categorical – An individual must fall into one of several “categories” they may be a low income child or their parent, or a pregnant woman, or disabled, or over age 65. Dually Eligible – Means that an individual is eligible both for MCR and MCD. Spend Down – Occurs when an individual starts out ineligible for MCD for asset or income reasons, but “spends down” either their income or assets on medical expenses to the point that they are eligible.
  23. Describe the major features of the covered services of the Medicaid program. What are DSH payments?
    Congress originally mandated that MCD cover hospital and physician care, x-ray, and lab tests. Mandatory nursing home coverage was added in 1972. Some other services that were originally optional have since been “mandated” for example a screening program for kids called EPSDT and rural health clinics. Disproportionate share payments are additional reimbursement to those providers that have a high proportion of uninsured patients.
  24. What are the major measures of inflation? Give an example of how each is used
    Consumer Price Index for Urban Consumers – based on surveys which measure changes in prices in the typical bundle of goods purchased by urban consumers. Implicit Price Deflator – constructed by dividing the Gross National Product (GNP) measured in current prices by the GNP measured in last year’s prices. The Implicit Price Deflator reflects the overall changes in prices in the economy. The Wholesale Price Index – measures change in the prices producers pay for inputs for their products.
  25. What are the major measures of inflation in health care?
    Medical Price Index – is a component of the CPT developed by the US Bureau of Labor Statistics. The measure’s primary weakness is that it tracks “charges” which in fact are now what health care consumers are charged. Medicare Economic Index – is a blend of other indices. These indices are averages so a hospital that does not have a typical mix of services or a typical level of intensity could have costs that change at a rate different than the average rate.
  26. An investor purchases a one year bond with a nominal rate of return of 8%. During the year inflation is 12%. How much will the investor's purchasing power change?
    1.08/1.12 = .9643 The investor earns a negative real rate of return.
  27. Explain the difference between increases in expenditure and inflation by defining three components of changes in expenditures.
    Inflation – the change in the price of particular good. Intensity – changes, so that the cost increases but so does the quality. More Units of Service.
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