Health care system
Healthcare system overview The different roles in the healthcare system
Healthcare system overview
- I'm here with Professor Lawrence Baker at Stanford Medical School
- and what we're going to talk about now is the overview of the healthcare system-
- -What is the healthcare system?
- Yeah, and who's in it?
- -And who's in it, and what are they doing?
- I think I can give a go at it. And then correct me, expose my ignorance.
- So clearly, you have your providers, those would be your doctors and nurses and all the rest.
- -Hospitals, and pharmacies, all kinds of people . . .
- Okay, so, everyone who is providing healthcare. So that's right over there.
- So that's hospitals, doctors, pharmacies, all the rest.
- And then, they are providing healthcare to someone.
- So those would be the patients. We did that in another color.
- Call 'em patients yes, sometimes you get details like
- people become patients after they need healthcare.
- But some people just have a question, they aren't really patients.
- They're just asking.
- Okay well, what do you call them then?
- Call them the "population."
- So just the population of the world, or the country or whatever? People.
- And then, on the other hand now, someone has to pay for this.
- Someone has to pay for this.
- And so for the most part, this is insurers.
- Yep, insurance companies. In the old days - like if you go back a hundred years -
- we didn't really have insurance. We had patients and providers,
- and patients would, if they had a question, they had a concern,
- they would go to the provider, they'd make some deal, pay him some money,
- do some service for them, and work it out.
- We got insurance companies really only in the last hundred years,
- maybe really starting in the US in maybe 1930, 1940
- they started to become popular. So that's kind of a new renovation.
- And those three things work together.
- And the general term - and this is a word I've seen a lot -
- it's sometimes a little confusing, because it's very close to "payER,"
- You hear, it's kind of like, "payORS."
- That would be including, that's anyone who's paying for the service.
- And insurance companies would be included there.
- Right. So we have - we call them payors, sometimes we call them health plans,
- because they arrange for some of the care that people get.
- You know, payors could be private companies, private insurance companies,
- or they could be government payors,
- government insurance companies like Medicare.
- And the insurance companies themselves, they're not doing this,
- you know, just out of the goodness of their hearts.
- Someone is paying them.
- And for the most part, in the United States, it tends to be employers.
- Right. So we've made another arrow on your diagram here.
- That would be from the population, or maybe from the patients,
- to the insurance companies, that provides the money
- for the insurance companies to use to pay for the providers.
- So patients might buy an insurance company, or buy an insurance company...
- Buy an insurance policy! [chuckling]
- Patients might buy their own policy, go buy an insurance policy,
- pay them a premium directly, the insurance company collects that money.
- Or, for most people, they work for an employer.
- The employer makes the arrangement to buy that insurance,
- and then implicitly charges the population, the patients, for that,
- maybe directly by having them contribute some of their salary;
- maybe implicitly, by just reducing the amount of cash they give them every month
- and instead giving them this insurance policy.
- I see.
- So, people do that. And the other piece that's floating around in here
- is that in some cases, the population pays taxes to the government -
- Oh right, right.
- - that then functions essentially as an insurer like the Medicare program,
- where there's insurance provided to people, it's paid for by taxes.
- So there's different funds flows going around here, but always money going
- from patients to insurers, through employers, through taxes, by direct payments.
- Those insurers collecting the money, and then paying for a bunch of the care
- that's provided by the providers. That's the basic arrangement.
- There's one more tiny piece, which is,
- at some times, the patients pay the doctors or the hospitals directly.
- You know, you go, you have a $20 copayment.
- And so there's a small payment that goes back and forth.
- Right. Your copay is kind of there, just so that,
- it kind of makes insurance company feel good that you're not just using it willy-nilly.
- That you have to pay your, you know, whatever, ten dollars, or fifty dollars.
- Absolutely. So, insurers know that once they start paying the providers for the care
- and the patient has it totally free, people might use stuff that,
- you know, might be worth a little tiny bit,
- but it costs a lot for everybody to pay for.
- So if you put a copayment on there, it makes people think twice
- about using things that they don't really need.
- Right, that makes complete sense.
- And then within this ecosystem we hear a lot about HMOs,
- that - in my perception - is a combination of the insurance company
- and the provider. It's kind of in one package.
- Right. So, over time, the US has had different kinds of insurers out there.
- In the private market especially, there's been a lot
- of innovation in the last 30, 40 years, in types of insurers that are out there.
- So we have different insurers that have behaved in different ways
- as we've gone through those evolutionary cycles.
- So one version of that is what we call an HMO,
- a Health Maintenance Organization, and that's really just jargon;
- you have to dig into it to figure out what it means.
- But in a lot of cases what that is is a company that's acting as insurance;
- so you pay a premium to them if you're a patient, or a person . . .
- and you buy some coverage, and then they'll cover your care;
- but they'll do that by trying to integrate themselves with the providers.
- And so, the organizations either are integrated
- because the HMO hires doctors directly,
- or maybe owns the hospitals, like Kaiser Permanente, for example;
- or on some cases, it's a contractual relationship. It's not exactly the same . . .
- Oh right. So not all of it is tightly linked to, like a Kaiser,
- where it's like you go to this building that says "Kaiser" on it,
- and that's where your doctor is.
- It could be doctors just have their practices,
- but they're tightly linked with a - I think I saw what, Blue Shield? or one of those.
- Yeah, Blue Shield, or Aetna, or Cigna, some of these different companies.
- And you can start to dig into the details, and every one will be a little bit different from the other.
- But they're contractual relationships.
- And the difference - and I think this is something everyone faces
- when they, you know, sign up with insurance with their employer -
- I had to do it recently - is, you know, they always say,
- you have to pick HMO versus PPO, and they're within the same policy;
- and so my perception is, HMO is - they - you have a set list of doctors,
- that they probably pre-negotiated pricing with.
- Yeah. So, the difference between HMOs and PPOs gets a little bit into the . . .
- OK, I don't want to get too far into the weeds . . .
- . . . But, we can sort of think about it
- in the way that you're talking about it.
- So, an HMO will have a list of doctors that you're supposed to see,
- and you'll have to go see doctors on that list.
- In a stereotypical one, if you don't see the doctors on that list,
- the insurance company's not gonna pay for your care.
- You're gonna pay yourself. And in a stereotypical HMO,
- there's gonna be a fairly tight management
- between the insurance company and the doctors about what's gonna be done,
- what's allowable, and so on.
- And in the most tightly linked case, they'll be like, the same . . .
- the doctor will be employed by the company.
- Right, that's like -
- -Right, Kaiser. As you kind of think about it as a spectrum.
- If you move a little bit away from that to a PPO,
- what's happening in PPOs is you're still gonna get a list;
- so you're gonna be encouraged to see those doctors,
- but maybe there'll be a little more flexibility.
- Like, if you decided not to see someone on the list,
- the plan would still pay some amount,
- maybe not as much as they would if you saw someone on the list,
- but something; whereas in an HMO, maybe nothing.
- And the plan will probably work a little less hard
- at managing what those doctors are doing,
- to try and limit access to, say, high-cost services.
- HMO will tend to work harder, PPO tends to work a little less hard.
- So, it's a little bit of a spectrum.
- You're kind of moving from more managed and more concentrated to a little less managed.
- But still more so than the system we had, say, in the 50s or 60s,
- where anybody went to any doctor and any doctor did whatever they wanted,
- and the insurance company just paid the bill;
- and there was no integration. So, it's a little bit of a . . .
- So that's the main motivation why insurance companies are trying to get
- kind of more integrated with the providers,
- is because just like you said, in the 50s and 60s,
- you have the provider providing a service,
- and obviously the patient would like the service,
- and then you have a third party paying for it.
- And so there's no check on, you know,
- the person deciding on the service and the person getting it says,
- "Yeah! Let's get more service!" And someone else is . . . Right.
- That's just, we've created a big issue.
- Insurance companies are kind of an interesting thing in the health policy world.
- Because we have to have them.
- We have to have them to manage the risk associated with getting sick.
- You can get sick today and get a huge bill.
- And so, we can't leave people on their own for that;
- we gotta have insurance companies.
- But as soon as you create insurance companies,
- and I can have implicitly all my neighbors pay for the health care that I want,
- then I might start using things that turn out to be inefficient;
- and so, you gotta have them, insurance companies,
- but you gotta manage what happens when you have them also;
- and so that's the integration between providers,
- or copayments and utilization review;
- and all these things are basically attempts by insurance companies
- to try and manage what economists would call the "moral hazard,"
- using additional services that you don't necessarily need,
- because everybody else is gonna pay for it for you.
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