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Free Market Philosophers

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Chapter 23 - Government-Provided Health Insurance

1. What sort of government subsidized medical care is available in the United States? How can the elderly who are not poor participate?

a. Government subsidized programs include Medicare, Medicaid and Child Health Insurance Program (CHIP).

b. All the elderly who are over 65 years of age are eligible regardless of financial status or whether they are retired or not.

2. What are some of the criteria for eligibility for Medicaid, and what sort of benefits do the poor receive from Medicaid?

a. Anyone who is in a family that is eligible for cash assistance under Temporary Assistance to Needy Families (TANF) or Supplemental Security Income (SSI) is eligible for Medicaid. Children under 19 whose parents' income is less than 133 percent of the poverty line for their family size. Pregnant women and children under a year old whose family income is less than 185 percent of that poverty line are also eligible

3. Who pays for Medicaid, and how are hospitals and doctors reimbursed under Medicaid?

a. Medicaid is paid for by the States and Federal Government, and a portion by taxpayers.

b. Doctors are reimbursed based on varying rates dependent on financial status from state to state.

4. What factors contribute to the very high cost of Medicaid?

a. Medicaid costs are high due to many reasons but some of the more obvious ones are since it is free, people who qualify for Medicaid tend to use it more than people with private insurance. Another obvious reason is the elderly. They are living longer and have higher critical care needs than the young people, their nursing care costs are picked up by Medicaid when the living families cannot afford to pay for them.

5. Why would it be difficult for private insurers to provide Medicare? What is adverse selection? Why is it a problem in Medicare?

a. The two main problems are equity and efficiency that make it difficult for private insurers to pay for Medicare.

b. If the people paying the premiums are not really sick they would much rather keep the money in their pockets instead of paying for something they really don't know they will need. Only the sickest people are willing to buy insurance premiums at high prices because their medical expenses will highly outweigh their premiums. If they were the only ones buying insurance then the expenses for the insurance companies would outweigh their premiums and costs would rise and this is what economists refer to as adverse selection.

c. It is a problem in Medicare when they come to the question of who

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