1. Healthcare Finance Systems and Reforms Paul J. DiPietro, Ph.D. September, 2009

2. How does Healthcare Financing work in a for-profit system?

3. A group of investors Investors Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Dividends Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

4. Invest funds Investors Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Dividends Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

5. To set up an insurance company. Investors Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Dividends Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

6. Patients buy insurance policies. Investors Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Dividends Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

7. Patient needs medical care. Investors Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Dividends Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

8. Investors receive dividends (profits). Investors Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Dividends Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

9. Most service providers also earn profits. Investors Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Dividends Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

10. How does Healthcare Financing work in a non-profit system?

11. Non-Profit Insurance / Public Optionor Single Payer (Public Financed) Government / Private Charity Administrators Applications Claims Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

12. Non-Profit Insurance / Public Optionor Single Payer (Public Financed) Government / Private Charity The administrative process is simplified and its costs are significantly reduced. Profits are not taken out of the insurance system. This allows much more of the health spending to go to patient care. Administrators Applications Claims Premiums Payments Profits Insured Patient Service Provider Medical Service Co-pay & Deductibles

13. How does Healthcare Financing work in a publicly financed system?

14. Medicare / Medicaid Government Administrators Applications Claims Taxes Payments Tax Payer Profits Service Provider Medical Service Elderly Poor Co-pay & Deductibles

15. Medicare / Medicaid Government Again, administrative costs are lower and profits are not taken. This is not an insurance system because the patients are not paying the premiums. Instead tax revenues are funding healthcare for those who could not otherwise afford it. Administrators Applications Claims Taxes Payments Tax Payer Profits Service Provider Medical Service Elderly Poor Co-pay & Deductibles

16. How can Healthcare Financing be reformed? How can we improve on the problem of high spending and poor outcomes?

17. Healthcare Reform Options Option 1 Universal access would reduce costs of healthcare and improve childhood development, student performance and adult productivity by emphasizing preventative care and regular treatment of chronic conditions. Many of the following options would help achieve universal access. Investors Dividends Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Payments Premiums Profits Service Provider Insured Patient Medical Service Co-pay & Deductibles

18. Healthcare Reform Options Option 3 Remove profit motive from medical services with Government Health Service. Focus spending on patient care. (Britain, Veteran’s Administration) Option 2 Remove profit from medical financing with public financing (Canada, Medicare) or non-profit insurance (Germany, Japan.) Focus spending on patient care. Investors Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Dividends Payments Premiums Profits Service Provider Insured Patient Medical Service Co-pay & Deductibles

19. Healthcare Reform Options Option 6 Eliminate advertising costs and exorbitant salaries and bonuses for insurance executives. Option 4 Simplify claims process by eliminating pre-existing conditions exclusions. Investors Dividends Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Option 5 Prevent dropping patients or changing terms and pricing when they become ill. Option 7 Eliminate or limit differentiated pricing based on age, gender or health condition to ensure that the elderly and sick can get health insurance. Payments Premiums Profits Service Provider Insured Patient Medical Service Co-pay & Deductibles

20. Healthcare Reform Options Option 8 Improve treatment and reduce avoidable complications with improved collaboration, record keeping, oversight. Option 9 Change payment structure to reward good outcomes rather than more procedures and visits. Investors Dividends Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Payments Premiums Profits Service Provider Insured Patient Medical Service Co-pay & Deductibles

21. Healthcare Reform Options Option 10 Limit malpractice law suits and penalize frivolous law suits to reduce defensive medicine and the overhead costs of malpractice insurance. Investors Option 11 Reduce poverty and relative poverty. Dividends Executives Advertising Applications Claims Investigate Pre-Existing Conditions Exclusions Option 12 Improve general health through diet and exercise and reducing smoking. Payments Premiums Profits Service Provider Insured Patient Medical Service Co-pay & Deductibles