Healthcare system overview | Health care system | Heatlh & Medicine | Khan Academy

SALMAN KHAN: I'm herewith Professor Laurence Baker at StanfordMedical School.

And what we're goingto talk about now is the overview of thehealth care system.

LAURENCE BAKER: What isthe health care system? SALMAN KHAN: Yeah, and who's in it? LAURENCE BAKER: And who's in it? And what are they doing? SALMAN KHAN: I think Icould give a go at it.

LAURENCE BAKER: Go for it.

SALMAN KHAN: Andthen correct me.

Expose my ignorance.

So clearly, youhave your providers.

Those would be your doctors, and nurses, and all the rest.

LAURENCE BAKER:Hospitals, pharmacies, all kinds of peopleare your providers.

SALMAN KHAN: OK, so everyonewho's providing health care.

So that's right over there.

So that's hospitals, doctors, pharmacies, all the rest.

And then they are providingthe health care to someone.

So those would be the patients.

Let me do that in another color.

LAURENCE BAKER:Call them patients.

Yeah, sometimesyou get the details like people become patientsafter they need health care.

But some people justhave a question.

They're not really patients, they're just asking.

SALMAN KHAN: OK.

What would you call them then? LAURENCE BAKER: Callthem population.

SALMAN KHAN: Population.

So just the population ofthe world, or of the country, or whatever– people.

And then someonehas to pay for this.

And so for the mostpart, this is insurers.

LAURENCE BAKER: Yup.

Insurance companies.

In the olden days–like if you go back 100 years– we didn'treally have insurers.

We had patients and providers.

And patients would– if they hada question, they had a concern, they go to the provider.

They'd make some deal, pay them some money, do some service forthem and work it out.

We got insurancecompanies really only in the last100 years, maybe.

Really starting inthe US in maybe 1930.

1940, they startedto become popular.

So that's kind ofa new renovation.

And those threethings work together.

SALMAN KHAN: And thegeneral term– and this is a word I've seen alot, and sometimes it's a little confusing becauseit's very close to payer, you hear of these payors.

And that would beincluding anyone who's paying for thepaying for the service.

And insurance companieswould be included there.

LAURENCE BAKER: Right.

So we have– wecall them payors.

Sometimes we callthem health plans because they arrange for someof the care that people get.

And payors could be privateinsurance companies, or they could be governmentpayors– government insurance companies like Medicare.

SALMAN KHAN: And the insurancecompanies themselves, they're not doing this out ofthe goodness of their heart.

Someone is paying them.

And for the most partin the United States, it tends to be employers.

LAURENCE BAKER: So right.

So if we made anotherarrow on your diagram here, it would be fromthe population– or maybe from the patients–to the insurance companies that provides the money forthe insurance companies to use to pay for the provider.

So patients might buyan insurance company– or not an insurance company, buy an insurance policy.

SALMAN KHAN: Only ifthey're very well healed.

LAURENCE BAKER: Some ofthem buy the whole thing.

But they just mightbuy their own policy.

Go buy an insurance policy, pay them a premium directly, the insurance companycollects that money.

Or, for most people, theywork for an employer.

The employer makesthe arrangement to buy that insurance andthen implicitly charges the population, thepatients for that.

Maybe directly byhaving them contribute some of their salary.

Maybe implicitly by justreducing the amount of cash they give them everymonth, and instead giving them thisinsurance policy.

So people do that.

And the other piece that'sfloating around in here is that in some cases, the population pays taxes to the government thatthen functions essentially as an insurer, like theMedicare program, where there's insurance provided to peoplethat's paid for by taxes.

So there's some differentfunds flows going around here, but always moneygoing from patients to insurers, through employersfrom taxes, by direct payments.

Those insurerscollecting the money and then paying for abunch of the care that's provided by the providers.

And that's thebasic arrangement.

There's one moretiny piece, which is that sometimes patients paythe doctors or the hospitals directly.

You go you havea $20 co-payment.

And so there's a small paymentthat goes back and forth.

SALMAN KHAN: Yourcopay is kind of there just so that– it kind of makesthe insurance company feel good that you're not justusing it willy-nilly– that you have topay your $10 or $50.

LAURENCE BAKER: Absolutely.

So insurers knowthat once they start paying the providersfor the care, and the patient saysit's totally free, people might usestuff that might be worth a little tiny bit, butit costs a lot for everybody to pay for.

So if you put aco-payment on there, it makes people thinktwice about using things that they don't really need.

SALMAN KHAN: Right.

That makes complete sense.

And then within this ecosystem–we hear a lot about HMOs.

My perception is that's acombination of the insurance company and the provider.

It's kind of in one package.

LAURENCE BAKER: Right.

So over time, the US has haddifferent kinds of insurers out there.

In the private market, especially, there's been a lot of innovationin the last 30, 40 years in types ofinsurers that are out there.

So we have differentinsurers that have behaved indifferent ways as we've gone through thoseevolutionary cycles.

So one version of that iswhat we call an HMO– a health maintenance organization.

And that's really just jargon.

You have to dig into it tofigure out what it means.

But in a lot ofcases, what that is is a company that'sacting as insurance.

So you pay a premium to them ifyou're a patient or a person, and you buy some coverage.

And then they'llcover your care.

But they'll do that by tryingto integrate themselves with the providers.

And so theorganizations either are integrated because the HMO hiresdoctors directly, or maybe owns the hospitals– like KaiserPermanente, for example.

Or, in some cases it's acontractual relationship.

It's not exactly the same.

SALMAN KHAN: So not all of themis tightly linked as a Kaiser, where it's like, you goto this building that says Kaiser on it.

And that's where your doctor is.

It could be doctors justhave their practices, but they're tightlylinked with a– I think that's how, what Blue Shield? Or one of those.

LAURENCE BAKER: Yeah, Blue Shield, or Aetna, or some of thesedifferent companies.

And you can start todig into the details and every one will be a littlebit different from the other, but they're contractualrelationships.

SALMAN KHAN: Andthe difference– I think this is somethingeveryone faces when they sign up with insurancewith their employer– I had to do it recently–is– they all say, you have to pick HMO versus PPO.

And they're withinthe same policy.

And so my perception is HMO isyou have set list of doctors that they probablypre-negotiated pricing with.

LAURENCE BAKER: Yeah.

So the differencebetween HMOs and PPOs gets a little bitinto the details SALMAN KHAN: OK.

I don't want to get too into– LAURENCE BAKER: We can sortof think about it in the way that you're talking about it.

So an HMO will havea list of doctors that you're supposed to see.

And you'll have to go seethe doctors on that list.

And a stereotypical one, ifyou don't see the doctors on that list, theinsurance company's not going to payfor you care, you're going to pay for yourself.

And in the stereotypicalHMO, there's going to be a fairlytight management between the insurance companyand the doctors about what's going to be done, what'sallowable, and so on.

SALMAN KHAN: And in themost tightly linked case, they'll be the same.

They doctors will beemployed by the company.

That's like Kaiser.

LAURENCE BAKER: As you thinkabout it as a spectrum, if you move a little bitaway from that to a PPO.

What's happening ina PPO is you're still going to get a list, so you're going to be encouraged tosee those doctors, but maybe it'll be alittle more flexibility.

Like, if you decided notto see someone on the list, the plan would stillpay some amount.

Maybe not as much as they wouldif you saw someone on a list, but something.

Whereas in an HMO, maybe nothing.

And the plan will probablywork a little less hard at managing what those doctorsare doing to try and limit access to, say, high cost services.

HMO will tend towork harder, PPO tends to work alittle less hard.

So it's a littlebit of a spectrum.

You're kind of moving from moremanaged and more concentrated to a little less managed, butstill more so than the system we had, say, inthe '50s or '60s, where anybody wentto any doctor, and any doctor didwhatever they wanted.

And the insurance companyjust paid the bill, and there was no integration.

So it's a little bit of a– SALMAN KHAN: So that'sthe main motivation why insurancecompanies are trying to get more integratedwith the providers, is because– just like yousaid, in the '50s and '60s, you have the providerproviding a service.

And obviously thepatient like the service.

And then you have a thirdparty paying for it.

And so there's no checkon– the person deciding and the person getting it says, yeah, let's get more service.

And someone else is– right.

LAURENCE BAKER: So wecreated a big issue.

Insurance companies arekind of an interesting thing in a health policy world.

Because we have to have them.

We have to have them tomanage the risk associated with getting sick.

You get sick todayand get a huge bill.

And so we can't leave peopleon their own for that.

We got to haveinsurance companies.

But as soon as you createinsurance companies, and I can have, implicitly, all my neighbors pay for the healthcare that I want, then I might start using things thatturn out to be an efficient.

And so you got to havethem– insurance companies.

But you got to manage whathappens when you have them also.

And so that's theintegration between providers or co-payments and utilizationreview, and all these things, are basically attemptsby insurance companies to try and managewhat economists would call the moral hazard.

The using additional servicesthat you don't necessarily need because everybody else isgoing to pay for it for you.

SALMAN KHAN: Itmakes complete sense.

Well thanks.

That makes a ton of sense.

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