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Risk Pooling in Medical Care Analysis

Risk pooling is a method used by insurance companies to control the risk involved in insuring against dangerous scenarios or offering insurance cover to businesses or individuals who makes big claims. In case a claim occurs from a natural disaster for example an earthquake, the insurance companies share the loss among all the member companies and the company is saved from large claims that could have rendered them bankrupt and left the claimants with nothing. A health risk pool is an insurance program used by people who are unable to pay for normal health insurance as a result of their low income or a serious medical condition that is pre-existing.

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Medical insurance premiums are payments made to health care providers after giving coverage in medical care. The payments are determined by the administrative costs, advertising, type of coverage, and the type of services received from the health care provider.Average medical expenses are the average cost that is used in medical care either annually, monthly or for a certain age group (Getzen and Bruce 78).

Bearing in mind that the poor are provided a variety of insurances, then the insurers would provide higher prices for the services due to the high risk. However, most poor people cannot afford such high prices. This means that the benefits from the high premiums will also be expected to be high. The poor populations usually do not face high risks and the moderate earners are unlikely to afford the high premiums. The presence of charity care may provide an alternative in such a case though less attractive. Therefore, it is an empirical matter as to whether high paid premiums for greater risks discourage people from taking insurance coverage and whether the effects are greater with a fall in income (Getzen and Bruce 79).

Despite the popularity growing that health plans pay for performance and are designed to increase quality and operational efficiency, most doctors are still being paid on contracts based on fee for service. Medicare has formulated a framework for private payments but the MCOs have also formulated their version of valuing services. Doctors in primary care who operate in areas where physicians prevail earn much less compared to specialists. This has triggered physicians to migrate into specialist practice to earn better incomes even with the continued criticism against moving to services that are better paying. A physician has many options in which they can practice (Drummond 91).

A capitation is a form of payment system in health care. In this model, a health care provider is remunerated by the insurer a certain amount per patient in a certain period. The relative value scale is a plan used in determining the amount of cash a health care provider should be paid. It is used by both Medicare and the Health Maintenance Organizations. The relative value scale assigns a relative value to work performed by a physician based on the geographic region and the value is multiplied by a fixed factor to determine the remuneration amount. Staff HMOS are incentives given to mainly specialists and generalists in addition to the normal salary as a form of bonus or incentive for performance and productivity. The staff is employed to take care of beneficiaries of HMOs. Independent Practice Association (IPA) is a model where physicians form an independent organization that makes contracts with the insurers or payers HMOs included to provide medical services at a negotiated rate.

Incentives are mainly financial and are given to encourage the health care providers to increase efficiency and productivity in their work. They are mainly in the form of bonuses, withheld funds, and capitation. HMOs mainly rely on this for financing (Getzen and Bruce 204).

Works Cited

Drummond, Michael. Methods for the Economic Evaluation of Health Care Programs. Oxford [u.a.: Oxford Univ. Press, 2007. Print.

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Getzen, Thomas and A. Bruce. Health Care Economics. Hoboken, NJ: Wiley, 2007. Print.

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