Lecture delivered 21 March 2023 discussing private funding and social enterprise healthcare options.

1. Developed for Dr. Phyu Phyu Thin Zaw
School of Public Health
Li Ka Shing Faculty of Medicine
University of Hong Kong
By William P. Kittredge, PhD
21 March 2023
Healthcare Alternatives
Guest Lecture

2. Your Guest Lecturer
 45 years policy experience, primarily finance related
 Academic
 PhD Maxwell School, Syracuse University
 Faculty positions University Georgia SPIA, Carnegie-Mellon
 Practitioner
 Director Programs and Evaluation US Department of Commerce
 USG representative OECD Development Policy
 Consultant
 Various governments around the world

3. Caveats
 There are no “perfect” systems
 There are no “theoretically pure” systems
 The most important statement in any policy space is : “I don’t
know”

4. Basic Definitions
 Goods = goods and services
 Production = Government or private entity making goods
 Provision = Government or other funding to production entities
 Private = non-governmental entities
 Charity = non=government entity providing goods using
donations
 Social Enterprise = entity producing goods charging market
prices to some and using surplus to provide goods to
others

5. Basic Definitions
 Healthcare = wide range of goods intended to maintain or
improve physical or mental health
 Health insurance = funding mechanism for healthcare
 Moral hazard = The risk that an individual or organization will
behave recklessly or immorally when protected
from the consequences.
 Externalities = factors that are outside the policy decision
process but that nevertheless impact outcomes

6. Basic Definitions
 Statute and effective policy
 Externalities = factors that are outside the policy decision
process but that nevertheless impact outcomes
 Air quality
 Eating habits – obesity
 Exercise practices
 “progress” push bicycles to motor bikes

7. Private Healthcare
 Health Maintenance Organization (HMO)
 Preferred Provider Organization (PPO)
 Exclusive Provider Organization (EPO)
 Point-of-Service Plan (POS)
 Catastrophic Plan

8. Health Maintenance Organization (HMO)
 An HMO delivers all health services through a network of
healthcare providers and facilities.
 With an HMO, you may have:
 The least freedom to choose your health care providers
 The least amount of paperwork compared to other plans
 A primary care doctor to manage your care and refer you to
specialists when you need one so the care is covered by the health
plan; most HMOs will require a referral before you can see a
specialist.

9. HMO, continued
 What doctors you can see. Any in your HMO's network. If you see
a doctor who is not in the network, you'll may have to pay the full
bill yourself. Emergency services at an out-of-network hospital
must be covered at in-network rates, but non-participating doctors
who treat you in the hospital can bill you.
 What you pay:
 Premium: This is the cost you pay each month for insurance.
 Deductible: Your plan may require you to pay the amount before it
covers care except for preventive care.

10. Preferred Provider Organization
(PPO)
 With a PPO, you may have:
 A moderate amount of freedom to choose your health care
providers -- more than an HMO; you do not have to get a
referral from a primary care doctor to see a specialist.
 Higher out-of-pocket costs if you see out-of-network doctors vs.
in-network providers
 More paperwork than with other plans if you see out-of-network
providers

11. PPO, continued
 What doctors you can see. Any in the PPO's network; you can
see out-of-network doctors, but you'll pay more.
 What you pay:
 Premium: This is the cost you pay each month for insurance.
 Deductible: Some PPOs may have a deductible. You will likely
have to pay a higher deductible if you see an out-of-network
doctor.
 Copay or coinsurance: A copay is a flat fee, such as $15, that

12. Exclusive Provider Organization
(EPO)
 A moderate amount of freedom to choose your health care
providers -- more than an HMO; you do not have to get a
referral from a primary care doctor to see a specialist.
 No coverage for out-of-network providers; if you see a provider
that is not in your plan’s network – other than in an emergency
– you will have to pay the full cost yourself.
 Lower premium than a PPO offered by the same insurer

13. EPO, continued
 Premium: This is the cost you pay each month for insurance.
 Deductible: Some EPOs may have a deductible.
 Copay or coinsurance: A copay is a flat fee, such as $15, that
you pay when you get care. Coinsurance is when you pay a
percent of the charges for care, for example 20%.
 Other costs: If you see an out-of-network provider you will have
to pay the full bill.
 Paperwork involved. There's little to no paperwork with an EPO.

14. Point-of-Service Plan (POS)
 A POS plan blends features of an HMO with a PPO.
 With POS plan, you may have:
 More freedom to choose your health care providers than you
would in an HMO
 A moderate amount of paperwork if you see out-of-network
providers
 A primary care doctor who coordinates your care and who
refers you to specialists
 What doctors you can see. You can see in-network providers
your primary care doctor refers you to. You can see out-of-

15. POS, continued
 What you pay:
 Premium: This is the cost you pay each month for insurance.
 Deductible: Your plan may require you to pay the amount of a
deductible before it covers care beyond preventive services.You
may pay a higher deductible if you see an out-of-network
provider.
 Copays or coinsurance: You will pay either a copay, such as
$15, when you get care or coinsurance, which is a percent of
the charges for care. Copayments and coinsurance are higher
when you use an out-of-network doctor.
 Paperwork involved. If you go out-of-network, you have to pay

16. Catastrophic Plan
 If you are under the age of 30 you can purchase a catastrophic
health plan. With a catastrophic health plan you may have:
 Lower premium
 3 primary care visits before the deductible applies
 Free preventive care, even if you haven’t met the deductible
 What doctors you can see. Any in the plan’s network; individual
plans may have additional rules on specialists.

17. Catastrophic Plan, continued
 What you pay:
 Premium: This is the cost you pay each month for insurance.
 Deductible example: A catastrophic health plan has a deductible
of $8,150 for an individual and $16,300 for a family in 2020.
After you reach that deductible, the plan will pay 100% of your
medical costs for covered benefits.
 Paperwork involved. You will want to keep track of your medical
expenses to show you have met the deductible.

18. High-Deductible Health Plan
 Similar to a catastrophic plan, you may be able to pay less for
your insurance with a high-deductible health plan (HDHP). With
an HDHP, you may have:
 One of these types of health plans: HMO, PPO, EPO, or POS
 Higher out-of-pocket costs than many types of plans; like other
plans, if you reach the maximum out-of-pocket amount, the plan
pays 100% of your care.
 A health savings account (HSA) to help pay for your care; the
money you put in an HSA is not taxed and can be used tax-free
on eligible medical expenses. In order to have a HSA, you must

19. High-Deductible Health Plan, continued
 What doctors you can see. This varies depending on the type of
plan -- HMO, POS, EPO, or PPO
 What you pay:
 Premium: An HDHP generally has a lower premium compared
to other plans.
 Deductible: The deductible is at least $1,400 for an individual or
$2,800 for a family, but not more than $6,900 for an individual
and $13,800 for a family in 2020. Like with all plans, your
preventive care is free even if you haven't met the deductible.

20. Health Savings Accounts
 You can set up a Health Savings Account to help pay for your
costs. The maximum you can contribute to an HSA in 2020 is
$3,550 for individuals and $7,100 for families (US IRS rules).
 Paperwork involved. Keep all your receipts so you can withdraw
money from your HSA and know when you've met your
deductible.

21. Some National Examples
 No plan is a truly pure form and other challenges exist because
the very nature of healthcare financing.
 Many of these challenges involve moral and fiscal issues in
conflict.
 Medical technology, including new drug development or
applications may require change due to cultural or social
position evolutions.

22. Australia
 Statutorily public production
 Parallel private payment system with private insurance
available
 Private insurance and system “gets you to the front of the line”
 Thorny moral issues (e.g. heart transplant priority)

23. USA
 Statutorily mixed system
 Public production for veterans
 Public provision for poor and elderly
 Private provision
 Personal or individual health insurance
 Employer or union health insurance

24. Nongovernmental Solutions
 Charities – Institutions exist around the world that are funded by
charitable donations.
 Angkor Hospital for Children Siem Reap, Cambodia
 Charity donations & volunteer medical professionals
 Social Enterprise - In some cases, medical professionals have
taken on the issues directly without government or external
private funding.
 The entities are generally termed social enterprise

25. Aravind Eye Hospitals
 Social enterprise founded by Dr. Govindappa Venkataswamy in 1976
 Emulates the service efficiency of McDonald's
 Aravind began performing surgeries on a large scale with treatment
being free or heavily subsidized for the poor cross subsidized by the
paying patients
 Global reputation for excellence draws residents (the final stage of MD
education) from all over the world.

26. Summary
 Many different private, broadly construed, healthcare funding
methods exist.
 None are ‘perfect’.
 All face serious challenges in light of aging global populations
and climate change impacts.