Term
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Definition
| In many HMOs, the primary care physician, or "gatekeeper," is responsible for the administration of the patient's treatment and must coordinate and authorize all medical services, laboratory studies, specialty referrals, and hospitalizations. |
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Term
| Geographic market definition |
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Definition
| Used in antitrust analysis to determine the relevant market in which a health care provider competes. The broader the geographic market, the greater are the number of substitutes available to the purchaser, hence the smaller the market share of merging firms. |
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Term
| Government policy instruments |
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Definition
| The use of tax policy, expenditures, and regulation available to government to achieve its policy objectives. |
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Term
| Government policy objectives |
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Definition
| According to the Public Interest Theory, government has two policy objectives: improve market efficiency and improve equity and/or redistribute resources (based on a societal value judgement). |
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Term
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Definition
| Health insurers have to offer health insurance to those willing to purchase it. |
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Term
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Definition
| Requires health insurers to renew all health insurance policies within standard rate bands, thereby precluding insurers from dropping individuals or groups who incur high medical costs. |
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Term
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Definition
| The two most commonly accepted measures of health plan and provider performance are based on data from the Health Plan Employer Data Information Set (HEDIS) and the Consumer Assessment of Health Plan Survey (CAHPS). HEDIS measures, such as preventive measures and physician certifications, are gathered from administrative records of health plans and their participating providers. CAHPS data, measuring enrollee satisfaction with participating providers, are based on surveys of health plan enrollees. |
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Term
| HHI index (Herfindahl-Hirschman Index) |
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Definition
| The measure of concentration used by the Department of Justice in its merger guidelines. This index, by summing the square of each provider's market share, makes it sensitive to both the number of firms and to their relative sizes. |
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Term
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Definition
| Enacted in 1996, the Health Insurance Portability and Accountability Act (HIPAA) removed certain health insurance market imperfections. Included in the legislation was Guaranteed Issue, whereby health insurers have to offer group health insurance to groups willing to purchase it. Guaranteed Renewel requires health insurers to renew all health insurance policies, precluding them from dropping individuals or groups who incur high medical costs. Portability enables employees to continue their insurance coverage if they move to another employee group or if they become self-employed. |
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Term
| Health Care Financing Administration (HCFA) |
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Definition
| A part of the U.S. Department of Health and Human Services, responsible for administering Medicare and the federal aspect of state Medicaid programs. |
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Term
| Health Savings Account (HSA) |
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Definition
| Combines a high deductible plan with a tax-free savings account. |
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Term
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Definition
| The resources that are used to produce a specific output referred to as "good health". |
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Term
| Health insurance exchanges |
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Definition
| Included in the 2010 health care reform act, where individuals, employees whose employers do not offer insurance, small businesses, and the uninsured can buy insurance. |
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Term
| Health maintenance organization (HMO) |
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Definition
| A type of managed care plan that offers prepaid comprehensive health care coverage for hospital and physician services, relying on its medical providers to minimize the cost of providing medical services. HMOs contract with or directly employ participating health care providers. Enrollees must pay the full cost of receiving service from nonnetwork providers. |
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Term
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Definition
| Occurs when physicians (or other health professionals) are earning a below-normal rate of return (price would be below the average total cost curve). |
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Term
| Health production function |
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Definition
| Describes the technical relationship between each of the health inputs and their effect (marginal productivity) on health. |
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Term
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Definition
| When two or more firms from the same market merge to form one firm. |
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Term
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Definition
| Competing hospitals in the same market agree on price, output, and/or wage policies. |
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Term
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Definition
| Noncash subsidies provided to specific beneficiary groups based on the donor's (middle-class) preferences. |
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Term
| Incidence of the payroll tax |
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Definition
| The extent to which the payroll tax is borne by employers or employees is determined by the elasticity of demand and supply curves for labor. |
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Term
| Income Contingent Loan Repayment Plans (ICLRP) |
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Definition
| A student loan program to cover both tuition and living expenses that must be repaid by paying a fixed percent of their adjusted gross income. The fixed percent would be based on the amount borrowed. |
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Term
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Definition
| Medical insurance that pays the provider or the patient a predetermined amount for the medical service provided. |
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Term
| Independent Practice Association (IPA) |
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Definition
| A physician owned and controlled contracting organization comprised of solo and small groups of physicians (on a nonexclusive basis) that enables the physicians to contract with payers on a unified basis. |
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Term
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Definition
| Financial aid not targeted to a specific group or recipient, available to all users of the subsidized service. |
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Term
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Definition
| A proposed national health insurance plan under which individuals are required to buy a minimum level of health insurance. Refundable tax credits are provided to those having incomes below a certain level of income. |
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Term
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Definition
| An increase in income leads to a decrease in consumption of that good or service. |
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Term
| Infra-marginal externalities |
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Definition
| Even though there may be external benefits, the private market produces the optimal quantity (for example, physicians). |
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Term
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Definition
| Consists of two parts: the expected medical expense of the insured group, and the loading charge, which includes administrative expenses and profit. |
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Term
| Integrated delivery system (IDS) |
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Definition
| A health care delivery system that includes or contracts with all the health care providers to provide and coordinate medical services to the patient. An IDS also views itself as being responsible for the health status of its enrolled population. |
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Term
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Definition
| A price index in which individual prices are weighted by base-year quantities. The CPI aims to measure how much the average household in its surveyed population will have to spend to buy the same market basket in the current year that it had bought in the base year. |
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Term
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Definition
| The lower the price, the greater the quantity demanded. |
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Term
| Law of diminishing returns |
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Definition
| After some point, continued increases in the variable input will result in the marginal productivity of that input declining. |
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Term
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Definition
| The higher the price, the greater is the quantity firms are willing to produce. |
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Term
| Law of variable proportions/Law of diminishing returns |
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Definition
| After some point, continued increases in the variable input will result in the marginal productivity of that input declining. |
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Term
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Definition
| That portion of the health insurance premium that is added to the pure (actuarially fair) premium, to include administrative expense and profit. |
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Term
| Managed care organization (MCO) |
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Definition
| An organization that controls medical care costs and quality through utilization management, drug formularies, and profiling participating providers according to their appropriate use of medical services. |
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Term
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Definition
| According to state insurance laws, specific medical services, providers, and/or population groups must be included in health insurance policies. |
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Term
| Marginal contribution of medical care to health |
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Definition
| The increase in health status resulting from an additional increment of medical services. |
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Term
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Definition
| The change in total costs from producing one additional unit. |
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Term
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Definition
| The change in total output resulting from increasing the variable input buy one unit, for example, adding one nurse. |
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Term
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Definition
| The change in total benefits from purchasing one additional unit. |
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Term
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Definition
| An indication of the performance of an industry, such as the price competitiveness of the industry, whether both purchasers and sellers have sufficient information to make informed choices, and the existence of "externalities," as when an industry produces pollution in the process of producing its product, in which case the cost of that product does not reflect all its costs, including pollution. |
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Term
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Definition
| When the independent actions of buyers and suppliers cause quantity demanded to equal quantity supplied. The result is an equilibrium price and quantity. |
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Term
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Definition
| The number of suppliers within the market, which is determined by the extent of economies of scale in relation to the size of the market and entry barriers, usually defines the competitiveness of the market. |
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Term
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Definition
| A health insurance program financed by federal and state governments and administered by the states for qualifying segments of those with low incomes. |
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Term
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Definition
| A Medicaid managed care program in which an HMO contracts to provide medical services in return for a capitation premium. |
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Term
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Definition
| Calculated by the Bureau of Labor Statistics and included as part of the Consumer Price Index, it is used as a measure of the rate of inflation in medical care prices. |
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Term
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Definition
| A group of physicians who coordinate their activities in one or more group facilities and who share common overhead expenses, medical records, and professional, technical, and administrative staffs. |
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Term
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Definition
| The percent of the total premium paid out in benefits to each insured group. (also see benefit/premium ratio). |
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Term
| Medical savings account (MSA) |
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Definition
| A form of national health insurance in which a person can annually contribute, tax free, an amount into their MSA equal to 75 percent of their deductible. The unused portion of the MSA can accumulate over time. |
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Term
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Definition
| A federally sponsored and supervised health insurance plan for the elderly. Part A provides hospital insurance for inpatient care, hospice, and a skilled nursing facility. The elderly are responsible for a deductible, but they do not have to pay an annual premium. Part B provides payments for physician services, physician-ordered supplies and services, and outpatient hospital services. Part B is voluntary and the elderly pay an annual premium that is 25 percent of the cost of the program in addition to having to pay a deductible and co-payment. |
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Term
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Definition
| Federally qualified HMOs receive from the government a monthly capitation fee for each enrolled Medicare beneficiary (in addition to the Part B and Part D beneficiary premium) and in return provide Part A, Part B, and Part D services, plus additional services as determined by the HMO. Enrollees using non-HMO participating providers are responsible for the full charges of such providers. |
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Term
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Definition
| May occur when there are market imperfections to that price-competitive markets will not produce the optimal amount of output, which is defined as price equaling marginal cost. |
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Term
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Definition
| Occur as a result of lack of information by consumers regarding their medical diagnosis, treatment needs, the quality of different providers, and prices charged by different providers. Additional imperfections are tax-free employer-paid health insurance, restrictions on entry and on tasks, and externalities. |
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Term
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Definition
| An indication of the economic efficiency of the market. Economic efficiency occurs when the market price equals marginal cost. When there are no positive or negative externalities, then the resulting rate of output is optimal. The marginal benefit (as indicated by market price) equals the marginal cost of producing that last unit. |
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Term
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Definition
| An indication of the degree of monopoly power possessed by the firm. It is measured by the ratio of the firm's price to its marginal cost. The higher the price relative to its cost, the greater the firm's market power. |
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Term
| Medigap insurance policies |
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Definition
| Privately purchased insurance policy by the elderly to supplement Medicare coverage by covering deductibles and co-payments. |
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