Part A-
Answer all questions in the space provided. Point values are in parentheses.
1. A. Describe how the "backlash against managed care" may have resulted in higher health insurance premiums. B. Describe how "provider consolidation" may have resulted in higher health insurance premiums.
2. Information on the quality of health plans is valuable in its own right. However, knowledge of health plan quality is argued to increase employee price sensitivity with respect to health plans as well. How is this so? What evidence do you have for this effect?
3. Many health policy analysts have argued that the tax treatment of employer sponsored health insurance is one of the fundamental reasons for high health care costs in the U.S. Trace the economic logic that leads from taxing employer-sponsored health insurance as income to reducing health care costs. What evidence can you bring to bear on this issue?
4. Consumer directed health plans, i.e., high deductible health plans with a health savings accounts (HSAs), are supposed to reduce health care spending. What are the mechanisms whereby this occurs? How big are the estimates of savings?
5. The typical single-worker health insurance plan offered by employers costs about $6,000 per year. The Affordable Care Act (ACA) requires larger employers to provide health insurance to their workers or pay a $2,000 penalty per full-time employee. Some have argued that larger employers, currently providing coverage, will drop health insurance and simply pay the $2,000 penalty, saving approximately $4,000 per worker per year. Evaluate the economic soundness of this analysis.
Part B-
Answer all questions in the space provided. Point values are in parentheses.
1. What are the key provisions of the Affordable Care Act that apply to the small group market? What sort of changes do you expect to see in that insurance market as a result of the legislation? Why? These changes may relate to employers offering coverage, premiums, sources of coverage, the effects of the subsidies, etc.
2. Last fall the trustees of the Medicare Trust Fund presented their annual report and indicated that the Trust Fund will be exhausted by 2030.
A. What does it mean to say that the "Trust Fund will be exhausted"?
B. Over the years, people on each side of the political aisle have proposed a "premium subsidy" plan to try to control Medicare's spending. What are the key features of a premium subsidy plan? How is it supposed to reduce Medicare spending?
3. There is good empirical evidence of "crowd-out" as it affects Medicaid and CHIP [Children's Health Insurance Programs]. Define crowd-out and discuss how it applies in states that have expanded their Medicaid programs as a result of the ACA. Do you think the ACA motivated effects for adults will be larger or smaller in magnitude than those seen for the earlier Medicaid and CHIP expansions for children? Why?
4. A key function of the health insurance exchanges is to provide risk mitigation across the plans in the exchange. Even though the premiums are not allowed to reflect health status, the payments that the plans get will take risk into consideration. Please describe each of the mechanisms that the ACA requires to be used: transitional reinsurance, the risk-corridor program, and the formal risk adjustment process.