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Break a Leg

Key Economic Concepts:

• Budget
• Choice
• Consumer Economics
• Cost/Benefit Analysis
• Insurance
• Opportunity Cost
• Trade-off

Description:

In this lesson students will learn about the basic components and terminology of individual health insurance. Students will make decisions about the value of insurance protection and you will identify trends in the cost of medical care in the United States.

Lesson Objectives:

Students will:

• Define basic components and terminology of individual health insurance.
• Make decisions about the costs and benefits of health insurance protection.
• Identify trends in the cost of medical care in the United States.

Introduction:

Introduce the lesson by telling the students about an old custom from the theatrical world: It's great to hear somebody say "Break a Leg" if you're an actor about to start a performance. It means that somebody is wishing you good luck. But what if you really did break a leg?

Who would pay for the costs related to your accident?
What might the cost be?
What could you do to reduce your personal financial liability?
What are the potential costs and benefits of medical insurance?
What are the trends in the cost of medical care in the United States?

Resources:

• Health Care Costs are Up Here are The Culprits: This article explains why American health care costs are so high.
  www.csmonitor.com/2003/1215/p21s01-coop.html ^[1]
   
• How Major Medical Insurance Works: This page describes how health insurance works.
  www.healthinsuranceindepth.com/basics-how-it-works.html ^[2]
   
• North Dakota BlueCross BlueShield: At this site students can find more information on how health insurance works.
  www.bcbsnd.com/ ^[4]
   
• How Insurance Works: This page describes how insurance is based on risk and how insurance works.
  www.howitworks.net/how-insurance-works.html ^[3]
   
• Facts on Health Care Costs: Students can use this site to find information on what the average American pays for health care.
  www.unions.org/union-benefits/articles/facts-about-health-care-for-all-union-members-2.html ^[6]
   
• Health Insurance Center: This page is a hub for information regarding various types of insurance. Here students can find out how much health care would cost for them.
  www.ehealthinsurance.com/ehi/Alliance ^[7]
   
• Health Insurance Glossary: This page is a glossary containing vocabulary related to health insurance.
  www.agencyinfo.net/iv/medical/health-glossary.htm ^[5]
   
• Break a Leg Worksheet Teacher Key: An answer key for teachers to reference during the health insurance worksheet portion of this lesson.
  www.econedlink.org/lessons/docs_lessons/312_teacherworksheet1.pdf
   
• Break a Leg Worksheet: A worksheet students will fill out during this lesson to help them understand health insurance.
  www.econedlink.org/lessons/docs_lessons/312_worksheet2.pdf

Process:

Billy Boarddude was doing an "ollie" while next-door neighbor Homer Smith was walking his dog. Sadly, Homer didn't hear or see Billy in time to avoid the crash which broke Billy's leg.

Billy called 911 from his cell phone and was taken to the ER at the local hospital. Five days later, Billy was released to return home. It would be six long weeks until he could "ollie" again.

Before leaving the hospital, Billy's Mom and Dad went to the hospital's business office to get their bill. In the car on their way home, they told Billy that he would have to give up the board and get a job to help his folks pay for the $20,000 bill.

If Billy's parents had no health insurance they would be liable for the whole amount, but for this lesson, we will assume they did have insurance.

1. The students should have already read the article Health care Costs are Up Here are The Culprits ^[1] , before beginning this lesson.
    
2. The students will visit the following sites How Major Medical Insurance Works ^[2] and How Insurance Works ^[3] to read about how health insurance works. For a more refined look at how health insurance works using the North Dakota Blue Cross Blue Shield ^[4] as an example.
    
3. Have the students fill out the Break a Leg worksheet about different scenarios of several insurance policies Billy's parents might hold. Have the students visit this Health Insurance Glossary ^[5] for definitions of terms they will come across in the worksheet's different scenarios.
   
   
4. Have the students draw conclusions about their view of the importance of insurance policies after they complete the exercises in the worksheet. Ask the students to consider what they have read about health care costs and ask them if this knowledge makes them feel less inclined to take risks. Ask them if practicing "risk aversion" would be a good practice to keep health insurance costs down.
    
5. Instruct the students to read the article Facts on Health Care Costs ^[6] to find facts about what the average American pays for health insurance and for a brief history and summary of major problems plaguing the health care system.

Finally, have the students go to the Health Insurance Center ^[7] . There they can get quotes on how much health insurance would cost for them.

Conclusion:

The students should be able to answer the questions using information from the readings as a basis for their answers:

1. Should a family budget money for the purchase of an individual health insurance policy? [The answer depends on each family's circumstances, of course, but for many families the obvious answer is yes, money should be budgeted for health insurance. Many jobs do not offer health insurance, or if they do, it comes at a very high price. Millions of families have no insurance, yet ultimately bills have to be paid. In some cases hospitals also pass some charges on to state and Federal agencies and hospitals also "absorb" some costs themselves. But, in the end, consumers who are able to pay either out-of-pocket or with insurance are forced to defray costs for other consumers who are not able to pay by paying higher rates for all services].

2. What are co-payments, deductibles, covered expenses, claims, exclusions and premiums?

• A co-payment is an amount of coverage that is shared in some ratio between the insured and the insurer.
• A deductible is an amount paid by the insured after enough claims have been filed to "meet" or exceed the deductible amount. After the deductible has been met, coinsurance or shared responsibility for claims goes into effect. Insured and insurer share payments up to preset limits.
• Covered expenses are those expenses the insurer has agreed to pay in the policy with the insured.
• Claims are requests for payments by the insurer to the insured or his agents [doctors, hospitals, etc.]
• Exclusions are exceptions to coverage agreed to in the policy contract between the insurer and the insured.
• Premiums are payments made by the insured to the insurer for coverage agreed to in the contract.

3. Do U.S. consumers spend too much on health care and receive less benefit from those expenditures than we should?

Assessment Activity:

Answer the questions based on the information you have viewed in the various web sites:

Answers:

1. What are three reasons for the extraordinarily high health care costs in the United States?

[Answers include an aging population, new and very expensive technology and related personnel costs, increased paperwork and inefficiency in processing such, medical fraud and malpractice and a system focused on treatment not
prevention, etc.]

2. What percentage of U.S. Gross Domestic Product (GDP) is devoted to health care?

[13.5 % of GDP]

3. Why does the United States have a shortage of primary care physicians and how might that shortage contribute to inflation in the U.S.?

[Insurance firms, drug companies, small business operators, labor unions, Medicare beneficiaries, physicians]

4. Does the U.S. provide universal health care coverage for its citizens? Should it?

[No , it does not. Answers to the second part of this question will vary]

5. What might have to happen to force change in United States Health care policy?

[An event like a war, a depression, or widespread civil unrest]

Links Used:

1. ^{^ ^} "Health Care Costs are Up Here are The Culprits" - (www.csmonitor.com) This article explains why American health care costs are so high.
2. ^{^ ^} "How Major Medical Insurance Works" - (www.healthinsuranceindepth.com) This page describes how health insurance works.
3. ^{^ ^} "How Insurance Works" - (www.howitworks.net) This page describes how insurance is based on risk and how insurance works.
4. ^{^ ^} "BlueCross BlueShield of North Dakota" - (www.bcbsnd.com) This site provides more information on how health insurance works.
5. ^{^ ^} "Health Insurance Glossary" - (www.agencyinfo.net) This page is a glossary containing vocabulary related to health insurance.
6. ^{^ ^} "Facts on Health Care Costs" - (www.unions.org) Provides information on what the average American pays for health care.
7. ^{^ ^} "Health Insurance Center" - (www.ehealthinsurance.com) This page is a hub for information regarding various types of insurance.

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