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E Glossary Access The timely use of personal health services to achieve the best possible health outcomes (Millman, 1993~. Adverse selection The disproportionate enrollment of individuals with poorer- than-average health expectations in certain health plans. Over time, as plan premi- ums rise as a result of higher enrollee health care costs, the plan becomes less attractive to relatively healthy potential enrollees, attracting relatively sicker en- rollees disproportionately in successive enrollment cycles, which results in spiral- ing costs. Ambulatory care-sensitive condition (ASC) Preventable or avoidable hospi- talizations; a research construct used as an indicator of barriers to access to ambulatory care. Certain diagnoses for inpatient episodes are defined as prevent- able or avoidable if they are responsive to timely and appropriate ambulatory care. Rates of hospitalization above a specified baseline are construed as indicative of inadequate ambulatory care. Benefit The particular services covered by a health plan and the amount payable for a loss under a specific insurance coverage (indemnity benefits) or as the guar- antee of payment for certain services (service benefits). Biased risk selection Exists (1) when individuals or groups that purchase insur- ance differ in their risk of incurring health care expenses from those who do not or (2) when those who enroll in competing health plans differ in the level of risk they present to different plans. Catastrophic expense protection A health plan benefit that limits the amount the enrollee must pay out-of-pocket for coinsurance or other required cost sharing for covered services. Once the limit is reached, plans generally pay for any addi- 143

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44 CO VERA GE MA TTERS: INSURANCE AND HEALTH CARE tional covered expenses in full for the remainder of the year or some other defined period. Coinsurance The percentage of a covered medical expense that a beneficiary must pay (after any required deductible is met). Community As used here, defined geographically, in terms of the residence of individuals and families or a political jurisdiction. Community health center Also called a federally qualified health center (FQHC); a health services facility with a mandate and federal support to care for uninsured persons; when federally qualified, the center is authorized to receive cost-based reimbursement from the Medicare and Medicaid programs. Community rating Setting health insurance premiums at the same level for all individuals or groups in a defined community. Modified community rating may set different rates for subgroups (e.g., individuals or small businesses or by age or gender). Contingent worker One who works under conditions or arrangements differ- ent from full-time, full-year employment with a single employer, with the differ- ences usually related to the time of work (hours and days of the week), the nonpermanent nature of the position, and the terms of the social contract (e.g., benefits) that usually bind employers and workers (Copeland et al., 1999~. Copayment A fixed payment per service (e.g., $15 per office visit or procedure) paid by a health plan member. Core safety net providers Providers distinguished by two characteristics: (1) by legal mandate or explicitly adopted mission to maintain an "open door," access to services is offered for patients regardless of their ability to pay; and (2) a substantial share of the patient mix includes the uninsured, Medicaid recipients, and other vulnerable patients (Institute of Medicine, 2000~. Cost sharing The portion of health care expenses that a health plan member must pay directly, including deductibles, copayments, and coinsurance, but not including the premium. Cost shifting Transfer of health care provider costs that are not reimbursed by one payer to other payers through higher charges for services. Covered services Services eligible for payment by a health plan. Creditable coverage In the context of health plan eligibility, prior health care coverage that is taken into account when determinng the allowable length of preexisting condition exclusion periods (for individuals entering group coverage) or when determining an individual's Health Insurance Portability and Account- ability Act (HIPAA)-mandated eligibility when the individual is seeking indi- vidual nongroup coverage (adapted from HCFA, 2001~. Crowd-out A phenomenon whereby new public programs or expansions of existing public programs designed to extend coverage to the uninsured prompt some privately insured persons to drop their private coverage and take advantage of the expanded public subsidy.* *From the Academy for Health Services Research and Health Policy glossary.

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APPENDIX E 145 Deductible The amount of loss or expense that must be incurred by an insured or otherwise covered individual before an insurer will assume any liability for all or part of the remaining cost of covered services. Deductibles may be either fixed- dollar amounts or the value of specified services (such as two days of hospital care or one nhvsician visits. Deductibles are usually tied to some reference Period over 1 ~ ~ ~ 1 . . . . . . . , in, . . . _ . . .. which they must be Incurred (e.g., ~lUU per calendar year, benefit period, or spell of illnesses Dependent An insured's spouse (not legally separated from the insured) and unmarried child~ren) who meet certain eligibility requirements and are not other- wise insured under the same group policy. The precise definition of a dependent varies by insurer or employer. Exclusions Health care and related services (e.g., cosmetic surgery, long-term care) explicitly not covered by a health benefit plan. Experience rating Basing health insurance premiums in whole or in part on the past claims history of a particular group or its anticipated future claims. Federal poverty level (FPL) One of two federal poverty measurements; also known as "poverty guidelines." Issued annually in the Federal Register by the Department of Health and Human Services; it applies to persons of all ages in family units. The guidelines are a simplification of the poverty measurements for administrative purposes, for instance, determining financial eligibility for certain federal programs. In 1999, the FPL for a family unit of one was $8,240; for a family unit of three, $13,880; for a family unit offour, $16,700. In 2000 the FPL tor a tamely unit ot one, $8,350; for a family unit of three, $14,150; and for a family unit offour, $17,050. In 2001, the federal poverty level for a family unit of one, $8,590; for a family unit of three, $14,630; and for a family unit of four, $14,630. See Appendix C, Table C.1, for more information. First-dollar coverage Health insurance requiring no deductible. Full-year, full-time worker A person on full-time work schedule who works 35 hours or more per week, a person who worked 1-34 hours for noneconomic reason (e.g., illness) and usually works full-time, or someone "with a job but not at work" who usually works full-time.* Full-year, part-time worker An individual who works at least 35 weeks dur- ing the year, works fewer than 35 hours in a typical week, and spends no time looking for work during the year. Guaranteed issue Insurance coverage that does not require the insured to pro- vide evidence of insurability. Health care organization Entity that provides, coordinates, and/or insures health and medical services for people. Health insurance Financial protection against the health care costs arising from disease, accidental bodily injury, or the direct provision of health care (as in some health maintenance organizations). Health insurance usually covers all or part of the costs of treating the disease or injury. Such insurance may be obtained on either an individual or a group basis. Charity care or direct provision by safety net

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46 COVERAGE MATTERS: INSURANCE AND HEALTH CARE providers is not considered a form of insurance coverage. Although the term is often used by policy makers to refer to comprehensive coverage, insurers and regulators also use it to refer to other forms of coverage such as long-term care insurance, supplemental insurance, specified disease policies, and accidental death and dismemberment insurance. * Health insurance premium An amount paid periodically to purchase health benefits. For self-insured groups that do not purchase insurance, the term may refer to the per-employee or per-family cost of health benefits and may be used for planning and analysis purposes even when no contribution to coverage is collected from the employee. Health plan An organization or arrangement that provides defined medical ex- pense protection (and sometimes medical services) to enrolled members. High-risk pool Any arrangement established and maintained by a state primarily to provide health insurance benefits to certain state residents who, because of their poor health history, are unable to purchase individual coverage or can only ac- quire such coverage at a rate that is substantially above the rate offered by the high-risk pool. Coverage offered by a high-risk pool is comparable to individual coverage although sometimes at a higher price. The risk for that coverage is borne by the state, which generally supports the losses sustained by the pool through assessments on all health insurers doing business in the state, based on their relative market shares, and/or through general tax revenues. Household An economic unit comprised of at least two persons, bound by a common residence but not necessarily by legal obligations. Individual health insurance Health insurance purchased through an agent or an association formed for some other purpose, such as a professional organization. Insurance Conventionally, the protection against significant, unpredictable fi- nancial loss from defined adverse events that is provided under written contract in return for payments (premiums) made in advance. Job-lock A situation in which an employee is kept from changing jobs by fear of losing his or her health insurance, when changing jobs might otherwise be benefi- cial. Loading factor The fraction added to the actuarial value of the covered benefit (i.e., to the expected or average amounts payable to the insured) to cover all additional administrative costs and contingencies of issuing the policy, including any profit for the insurer. Managed care Term used broadly to describe health care plans that add utiliza- tion management features to indemnity-style coverage or, more narrowly, to identify group or network-based health plans that have explicit criteria for select- ing providers and financial incentives for members to use network providers, who generally must cooperate with some form of utilization management. Managed care also includes a health plan that integrates the financing and delivery of services for covered individuals. Medicaid The public health insurance program financed jointly by the federal government and the states, and administered by states, that covers certain catego-

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APPENDIX E 147 ries of low-income individuals for health care services as required or permitted under Title XIX of the Social Security Act. Medically underserved population A group experiencing a shortage of personal health services. A medically underserved population may or may not reside in a geographic area with a shortage of health professionals. Thus migrants, American Indians, or the inmates of a prison or mental hospital may constitute a medically underserved population. The term is defined and used to give priority for federal assistance through programs such as the National Health Services Corps.* Medicare The federal health insurance program for people 65 years or older, certain people with disabilities, and people with permanent kidney failure treated with dialysis or a transplant. Medicare has two parts, hospital insurance (Part A) and supplemental medical insurance (Part B). It is authorized by Title XVIII of the Social Security Act. Part A is financed by payroll taxes and Part B by a combina- tion of enrollee premium payments and general revenues. Near-elderly or midlife adult Working-age adult within a decade of reaching the age of 65 years and becoming eligible for Medicare (age 55 through 64 years). Out-of-pocket expenses Payments made by a plan enrollee for medical services that are not reimbursed by the health plan. Out-of-pocket expenses can include payments for deductibles, coinsurance, services not covered by the plan, provider charges in excess of the plan's limits, and enrollee premium payments. Portability of benefits A guarantee of continuous coverage without waiting periods (e.g., for a preexisting health condition) for persons moving between plans.* Preexisting condition A physical or mental condition that exists prior to the effective date of health insurance coverage. Primary care The provision of integrated, accessible health care services by clinicians who are accountable for addressing a large majority of personal health care needs, developing a sustained partnership with patients, and practicing in the context of family and community (Institute of Medicine, 1996~. Quality of care Degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge (IOM, 1990~. Risk The chance of loss. In health insurance, risks relate to the chance of health care expenses arising from illness or injury and the responsibility for paying for or otherwise providing a level of health care services based on an unpredictable need for these services. * Safety net Term referring to those providers that organize and deliver a signifi- cant level of health care and other related services to uninsured, Medicaid, and other at-risk, lower-income patients (Institute of Medicine, 2000~. Self-insurance Funding of medical care expenses, generally by an employer, in whole or part through internal resources rather than through transfer of risk to an Insurer. Social insurance Old-age, disability, health, or other insurance that is mandated

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48 COVERAGE MATTERS: INSURANCE AND HEALTH CARE by statute for defined categories of individuals or the entire population, usually financed by payroll and other taxes. Take-up rate The ratio of employees who enroll in a health insurance plan to those who are eligible to enroll. Third-party payer An organization other than the patient (first party) or health care provider (second party) involved in the financing of personal health care services. Uncompensated care Health care rendered to persons unable to pay and not covered by private or government health insurance plans; includes both unbilled charity care and bad debts (services billed but not paid). Underinsured Individual and family situations in which the health insurance policy or health benefits plan is less than complete and comprehensive. For ex- ample, the family may lack coverage for specific services, have a maximum ben- efits limit or cap on covered services, or have a high copayment or coinsurance rates. Underwriting An insurance practice of determining whether to accept or refuse individuals or groups for insurance coverage (or to adjust coverage or premiums) on the basis of an assessment of the risk they pose and other criteria (e.g., insurer's business objectives). Uninsurance The individual or collective status of lacking health insurance cov- erage.