Term
| Actual versus list prices |
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Definition
| Actual prices are the fees collected or paid for a particular good or service. The difference between actual and list prices are provider discounts that vary by type of payer. |
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Term
| Actuarially fair insurance |
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Definition
| The expected claims for an insured group, exclusive of the loading charge; it is calculated by multiplying the size of the loss by the probability the loss will occur. |
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Term
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Definition
| This occurs when high-risk individuals have more information on their health status than the insurer and are thus able to buy insurance at a premium on a lower-risk group. |
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Term
| Ambulatory surgical center (ASC) |
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Definition
| A freestanding outpatient facility that performs certain types of procedures. |
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Term
| American Medical Association (AMA) |
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Definition
| A national organization established in 1897 to represent the collective interests of physicians. |
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Term
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Definition
| A body of legislation that promotes competition in the United States economy. |
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Term
| Any Willing Provider (AWP) |
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Definition
| Lessens price competition in that these laws permit the participation of any physician in an insurer's provider panel, thereby negating providers' incentive to compete on price to be included in the panel. |
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Term
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Definition
| An agreement whereby the provider accepts the approved fee from the third-party payer and is not permitted to charge the patient more, except for the appropriate co-payment fees. |
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Term
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Definition
| When the physician collects from the patient the difference between the third-party payor's approved fee and the physician's fee. |
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Term
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Definition
| Barriers that may be legal, for example, licensing laws and patents, and/or economic, that is, economies of scale, that limit entry into an industry. |
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Term
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Definition
| The percent of the total premium paid out in benefits to each insured group divided by the price of insurance. |
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Term
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Definition
| Nonprofit health insurers that provide insurance for hospital (Blue Cross) and physician (Blue Shield) services. |
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Term
| Canadian-type health system |
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Definition
| A form of national health insurance in which medical services are free to everyone and the providers are paid by the government. Expenditure limits are used to restrict the growth in medical use and costs. |
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Term
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Definition
| The provider becomes concerned with the coordination of all medical services, providing care in the least costly manner, monitoring the cost of enrollee's hospital use, increasing physician productivity, prescribing less costly drugs, and being innovative in the delivery of medical services. Conversely, the provider has an incentive to reduce the use of services and decrease patient access. |
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Term
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Definition
| A risk-sharing arrangement in which the provider group receives a predetermined fixed payment per member per month (PMPM) in return for providing all of the contracted services. |
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Term
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Definition
| A measure of the relative complexity of the patient mix treated in a given medical care setting. |
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Term
| Certificate of need (CON) laws |
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Definition
| State laws requiring health care providers to receive prior approval from a state agency for capital expenditures exceeding certain predetermined levels. CON laws are an entry barrier. |
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Term
| Charity hypothesis of physician pricing |
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Definition
| Physicians charge higher prices to those with higher incomes and thereby claim that they are able to charge lower prices to those with lower incomes. |
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Term
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Definition
| Refers to the Community Living and Assistance Services and Supports Act. It was included as part of the 2010 health care reform act, a voluntary contribution program providing $50.00 per day support for an elderly person to stay in their home rather than going to a nursing home. Those joining the program must pay premiums for 5 years before they become eligible for benefits. |
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Term
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Definition
| A fixed percentage of the medical provider's fee made by the insurance beneficiary at the point of service. |
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Term
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Definition
| The insurance premium is the same to all of the insured, regardless of their claims experience or risk group. |
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Term
| Comparable worth-based wages |
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Definition
| Wages and salaries are based on an evaluation of each position, including skill required, effort involved, working conditions, and level of responsibility, rather than by supply and demand for that position. |
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Term
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Definition
| The interaction between a large number of buyers and suppliers, so no single seller or buyer can influence the market price. |
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Term
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Definition
| When some regulation or legislation has a sufficiently large effect on a group to make it worthwhile for that group to invest resources to either forestall or promote that effect. |
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Term
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Definition
| A large fee charged by a physician, such as $2,000, similar to a retainer, to cover services not covered by Medicare, such as an annual physical. |
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Term
| Consumer expenditure survey |
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Definition
| Conducted as part of the Consumer Price Index, it is a survey of spending patterns for a specified period of time. It consists of two components, an interview survey to determine expenditures on those items (and quantity) that people purchase and a diary or record keeping survey in which individuals are asked to record small, frequently purchased items. |
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Term
| Food and Drug Administration (FDA) |
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Definition
| A government agency that regulates entry into the U.S. market of all drugs and relevant medical devices, requiring manufacturing firms to demonstrate that their products are safe and efficacious. |
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Term
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Definition
| A list of prescription drugs reimbursed under a managed care plan. |
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Term
| Foundations for medical care (FMCs) |
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Definition
| Nonprofit organizations that own the plant, property, and equipment associated with medical practice and employ nonphysician employees. The foundation, in turn, contracts with the medical group on a mutually exclusive basis to see all of the foundation's patients. The foundation controls the contracts with payers, owns the medical records, and distributes a negotiated share to the medical group. |
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Term
| "Free choice of provider" |
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Definition
| Included in the original Medicare and Medicaid legislation, all beneficiaries had to have access to all providers. Precluded closed provider panels and capitated HMOs. This provision is considered by economists to be anti-competitive in that it limits competition; beneficiaries could not choose a closed provider panel in return for lower prices or increased benefits. |
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Term
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Definition
| Criteria used to determine whether someone is made better or worse off (whether their benefits exceed their costs) as a result of a particular action or policy. |
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Term
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Definition
| The relationship between long-run average total cost (LRATC) and size of firm; as firm size increases LRATC falls, reaches a minimum, and eventually rises. In a competitive market each firm operates at that size that is at the lowest point on the LRATC curve. For a given size market, the larger the firm size required to achieve the minimum costs of production, the fewer the number of firms that will be able to compete. |
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Term
| Employee Retirement Income Security Act of 1974 (ERISA) |
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Definition
| A federal law that applies to employee welfare plans and preempts all state laws with regard to reporting and disclosure policies. Applicable to self-funded plans. |
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Term
| Employer-mandated health insurance |
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Definition
| Under this health reform plan, all employers are required to provide medical insurance to their employees. |
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Term
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Definition
| A value judgement underlying national health insurance in which the financial barriers to medical care would be the same for all. |
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Term
| Equal treatment for equal needs |
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Definition
| A value judgement underlying national health insurance in which everyone should have equal consumption of medical services, regardless of economic or other factors affecting utilization. |
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Term
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Definition
| The weighted sum of the utilities of each outcome, with the weights being the probabilities of each outcome. With regard to the demand for health insurance, expected utility has a linear relationship. |
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Term
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Definition
| Insurance premiums are based on the claims experience or risk level, such as age, of each insured group. |
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Term
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Definition
| Occur when an action undertaken by an individual (or firm) has secondary effects on others; these effects are not taken into account by the normal operations of the pricing system. |
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Term
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Definition
| A method of payment for medical care services in which payment is made for each unit of service provided. |
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Term
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Definition
| Published in 1910, it was a highly critical report evaluating the medical training of physicians in the United States and Canada. This report led to the restructuring of the education and training of physicians and the eventual closure of many medical schools. |
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Term
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Definition
| Calculated by the Bureau of Labor Statistics, it is used as a measure of the rate of inflation or the rate at which a family's income would have to increase to keep up with rising prices. |
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Term
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Definition
| Consumers, rather than health professionals or the government, choose the goods and services they can purchase with their incomes. |
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Term
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Definition
| The difference between what the consumer is willing to pay for each unit and the amount they have to pay. |
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Term
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Definition
| The cost of a treatment is compared to its expected monetary benefits. |
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Term
| Cost-containment programs |
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Definition
| Approaches used to reduce health care costs, such as utilization reviews and deductibles. |
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Term
| Cost-effectiveness analysis |
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Definition
| Determining which programs and/or inputs are least costly for achieving a given objective. |
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Term
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Definition
| Measures the cost of being equally well off as previously (in economic terminology, of remaining on the same indifference curve. The cost-of-living index is influenced by much more than the prices of goods and services that consumers buy; it includes income taxes, government services provided free-of-charge, such as police and fire protection, changes in crime rates, and so forth. |
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Term
| Cost of treatment price index |
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Definition
| An index of the price of medical care based on how the price of a treatment for a particular diagnosis changes over time. |
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Term
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Definition
| The belief that providers charge a higher price to privately insured patients because some payers, such as Medicaid or the uninsured, do not pay their full costs. |
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Term
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Definition
| The expected benefits are measured by the amount of utility gained, such as the number of quality-adjusted life years gained. |
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Term
| Criteria for cost minimization |
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Definition
| The combination of services and/or inputs used to provide medical care that are both technically and economically efficient. |
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Term
| Declining marginal productivity of health inputs |
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Definition
| The additional contribution to output of a health input declines as more of that input is used. |
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Term
| Decreasing marginal utility of wealth |
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Definition
| The marginal utility of money decreases as the person's income or wealth increases. |
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Term
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Definition
| Consumers pay a flat dollar amount for medical services before their insurance picks up all or part of the remainder of the price of that service. |
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Term
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Definition
| The employer/government pays the cost of providing promised benefits, regardless of the cost of those benefits. |
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Term
| Defined contribution plan |
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Definition
| The employee/government pays a fixed dollar amount toward a health plan. |
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Term
| Demand shift (or an increase in demand) |
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Definition
| Changes in factors affecting demand, other than the price of the service. |
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Term
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Definition
| Demand for a particular service or input that is based on the demand for the service for which it is an input. |
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Term
| Determinants of a firm's demand for employees |
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Definition
| Based upon employees' wage relative to other inputs, their employees' marginal productivity, the demand for the firm's product, and the price at which the firm's product is sold. |
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Term
| Diagnosis-related group (DRG) |
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Definition
| A method of reimbursement established under Medicare to pay hospitals based on a fixed price per admission, according to diagnostic related groupings. |
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Term
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Definition
| When the burden of a tax or program is spread over a large population and is relatively small per person so that the per person costs of opposing such a burden exceeds the actual size of the burden on the person. |
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Term
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Definition
| Financial aid targeted to a specific group. |
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Term
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Definition
| Occurs when demand is increasing more rapidly than supply so that an equilibrium price has not yet been established. |
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Term
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Definition
| The optimal rate of output occurs when all marginal benefits equal all marginal costs. |
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Term
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Definition
| Occurs when the quantity demanded exceeds the quantity supplied at a given price. |
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Term
| Economic theory of government |
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Definition
| A theory of legislative and regulatory outcomes that assumes political markets are no different from economic markets, in that organized groups seek to further their self-interests. |
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