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HIPAA, Huh? To understand the debate over health-care reform, it helps to know what the lingo means

This article first appeared in the St. Louis Beacon, June 30, 2009 - Do you know a capitation from a co-pay?

Or, a HRA from a HSA?

Who is this "single-payer" that keeps getting mentioned in the national debate over health-care reform? And how can someone be "underinsured?"

Here is a glossary to help you understand what's being discussed. We've included definitions for terms unfamiliar to most people outside the health-care or insurance industries, as well as more common terms for, say, recent graduates who just left the cozy nest of their parents' health insurance plans.


Access: Simply put, this describes an individual's ability to get needed medical care. Access is not equal and can vary because of insurance coverage, cost and even geographic location.


Capitation: In this type of plan, health-care providers receive a set payment for each patient covered rather than payment for specific services. This is also called "covered life." Payments can be adjusted for expected costs and demographics of the plan's members, including age and gender.

CHIP: The Children's Health Insurance Program is a federal-state program enacted in 1997 that provides coverage for uninsured low-income children who are ineligible for Medicaid. The federal government matches state spending, but the funds are capped.

COBRA: The acronym stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, the legislation that enables employees to continue their employer-sponsored coverage for up to 18 months after leaving their jobs. It is a pricey option because they must now pay the full premium price. The American Recovery and Reinvestment Act subsidizes 65 percent of the premium for people who have lose their jobs between Sept. 1, 2008, and Dec. 31, 2009.

Co-insurance: A form of cost-sharing in health-insurance plans that requires the insured to pay a designated percentage of their medical costs -- after meeting their deductible.

Co-pay: A designated amount paid by the insured when receiving service from a health-care provider. These fees vary widely by plan.

Cost-sharing: Health plans that require the insured to pay a portion of the costs of their care through co-pays, co-insurance and annual deductibles.


Deductible: The insured is responsible for paying his or her health-care costs, up to a dollar amount specified in the plan. After that amount is met, the insurance plan kicks in and begins to pay for services.

Diagnosis-related groups: A system of classification for inpatient hospital services based on diagnosis, age, sex and the presence of complications. It is used to identify the costs of services and as a payment method, mostly for hospital services.


Employee Retirement and Income Security Act (ERISA): This federallaw, enacted in 1974, protects workers from the loss of benefits provided through the workplace. While ERISA does not require employers to establish apension or health plan, it sets minimum standards when those plans areestablished and requires that specific information about plans be given toparticipants. ERISA allows self-insured employer plans to be exempt from stateregulations.

Employer Health-Care Tax Credit: An incentive that encourages employers to offer health insurance to their employees. Employers are allowed to deduct from their federal taxes an amount that is a percentage of their contribution to their employees' premiums.

Employer mandate: Would require all employers of a certain size to offer health benefits to their employees. Variations are being debated, including exemptions for small businesses that have trouble purchasing coverage and penalties for businesses who do not offer coverage.

Employer pay-or-play: A proposal that would require employers to offer employee health benefits and pay a portion of the costs -- or to pay a specified amount into a public fund that would finance coverage for those who do not have employment-based coverage. Massachusetts, Vermont and San Francisco currently have pay-or-play requirements.

Entitlement program: People who meet eligibility criteria have a right to certain federal programs, such as Medicare and Medicaid, and the federal government is required to fund them. Enrollment cannot be capped.


Federal Employee Health Benefits Program (FEHBP): Program that provides health- insurance plans for federal employees.

Federal Medical Assistance Percentage (FMAP): The matching rate the federal government uses to reimburse a state for Medicaid expenditures. The rate varies, depending on a state's per capita income. The federal government pays, on average, 57 percent of the costs of Medicaid. That percentage was temporarily increased -- through 2010 -- by the American Recovery and Reinvestment Act.

Fee-for-service: Doctors and hospitals are paid for each service they provide. Payment method varies: In some cases, the insured pays the bill and is reimbursed by the plan. Or, the provider may bill the insurance plan directly.


Group health insurance: Insurance that is offered to a group of people, such as the employees of a company. While the majority of Americans are insured through their employers, the proportion of nonelderly Americans covered by employer-based health insurance dropped from 66 percent in 2000 to 61 percent in 2007, according to the U.S. Department of Health and Human Services. The percentage of small businesses offering coverage dropped from 68 percent to 59 percent, while large firms remained at 99 percent.


Health insurance exchange/connector: A program that would provide insurance to small businesses and individuals. Exchanges could be state, regional or national in scope and could set standards for coverage and costs. An example: the Commonwealth Connector created in 2006 in Massachusetts.

Health Insurance Portability and Accountability Act of 1996 (HIPAA): Provides access to health coverage through high-risk insurance pools for individuals who lose employer-based coverage; there are no exclusionary periods for pre-existing conditions. Many Americans are familiar with the HIPAA acronym because the legislation also set guidelines for the security and privacy of personal health records.

Health maintenance organization (HMO): A health plan that provides specific services to participants for a fixed, prepaid premium.  

Health Reimbursement Account (HRA): An account funded by an employer for employees to use to pay for health expenses. The accounts are tax-exempt and often paired with high-deductible health insurance plans.

Health Savings Account (HSA): A tax-exempt savings account that an individual who has high-deductible health coverage uses to pay for medical expenses. The accounts can be set up by employers, or individuals can arrange for them at private financial institutions. Deductibles must be at least $1,150 for an individual or $2,300 for a family.

High-deductible health plan: These plans have lower premiums than traditional health plans but higher deductibles -- at least $1,150 for an individual and $2,300 for a family. These plans are often paired with Health Savings Accounts.

High-risk pool: State-provided programs for residents who are unable to buy individual coverage because of medical problems, including pre-existing conditions. Programs vary widely in the 34 states that provide them.


Individual mandate: Just as many states require drivers to have auto insurance, these mandates would require individuals to get health insurance. Mandates could be limited to specific population groups, such as children. Massachusetts was the first state to require all adult residents to have health insurance.


Lifetime benefit maximum: The limit, or cap, insurers will pay for an individual's health care over the lifetime of a policy.


Managed care: Controlling access to and the use of health-care services. The goal is to limit costs and improve quality of care. Plans require individuals to seek the counsel of primary-care physicians who direct their care.

Mandatory benefits: Benefits that states require of insurers who are licensed to do business in their states, such as substance-abuse treatment and mental-health services, or even breast reconstruction after a mastectomy. Benefits vary widely by state. Empployers who self-insure are exempt from state-mandated benefits.

Medicaid: A federal entitlement program that provides health coverage to poor Americans. The program was enacted in 1965, under Title 19 of the Social Security Act and varies by state, which must meet broad guidelines set by the federal government.

Medical loss ratio: Percentage of a plan's premium dollars spent on medical care by an insurance company.

Medical underwriting: Process that determines whether an insurer will accept applicants for coverage, based on their medical history.

Medicare: Federal entitlement program that provides health coverage to 45 million Americans, including people 65 or older or younger people with permanent disabilities or certain illnesses.


Out-of-pocket costs: Expenses that must be met by an individual, in addition to premium costs. These can include deductibles, co-pays and co-insurance.

Out-of-pocket maximum: The limit set by a health plan on how much an individual pays for health care, excluding the insurance premium.


Pay for performance: Program that pays incentives to providers for meeting or exceeding benchmarks for quality and sometimes cost.

Payment bundling: Providers or hospitals receive a single payment for all of the care provided for an episode of illness, rather than per service.

Portability of coverage: Rules that enable individuals to obtain health coverage as they move from job to job or in and out of employment. Individuals changing jobs are guaranteed coverage with the new employer without a waiting period and insurers must waive any pre-existing condition exclusions for individuals who were previously covered within a specified time period.

Pre-existing condition exclusions: An illness or medical condition for which an individual was treated or diagnosed before becoming insured by a plan. Plans can exclude benefits for treatment of these "pre-existing" conditions altogether or for a defined period of time.

Preferred provider organization: A health-care delivery system that contracts with providers for services at discounted fees. Members may seek care from providers outside the plan but pay extra to do so. 

Point-of-service plan: Health-care organization that allowsmembers to choose services from participating and nonparticipating providers,but reduces the level of coverage for out-of-plan providers.

Premium:The cost of health insurance, usually per month. The premium may be paid entirely by an individual or shared with their employers or government purchasers.

Premium subsidies: Percentage of a premium provided to help individuals purchase health coverage. Such subsidies are usually determined by a sliding scale based on income.

Preventive care: Health care that emphasizes early detection and treatment of diseases.

Primary-care provider: Most often a physician specializing in internal medicine, family practice or pediatrics who is responsible for providing primary care and coordinating other necessary health-care services for patients. Nurse practitioners, physician assistants and health-care clinics can also be primary-care providers.

Provider payment rates: The amount a provider, hospital, or community health center receives when they provide medical services to a patient.

Public plan option: A proposal to create a new national insurance plan administered and funded by the federal or state governments that would compete with private plans. Public plans that already compete with private insurers include Medicare, Medicaid and the Federal Employees Health Benefits Program. A public option differs from a single-payer system because individuals with private insurance could choose to keep their plans.


Reinsurance: Insurance that is purchased by insurers, usually from other insurers, to limit losses. Reinsurance programs enable insurers to lower their premiums by limiting their exposure to very high health costs. 

Risk adjustment: Increasing or reducing payments to health plans to reflect higher or lower spending. Risk adjusting is designed to compensate health plans that enroll an older and sicker population.


Section 125 plan: Allows employees to receive benefits on a pre-tax basis.

Self-insured plan: An employer assumes direct financial responsibility for the costs of medical claims of the insured. Employer-sponsored self-insured plans typically contract with a third-party administrator or insurer to provide administrative services.

Single-payer system: A national health-care system in which a single entity pays for all health-care services for the population. This entity, which can be the government but doesn't have to be, collects health-care fees and pays for all health-care costs, but is not involved in the delivery of health care. Doctors and hospitals are paid through a single public fund, similar to the way Medicare operates. (See definition for public plan option.)

Socialized medicine: A national health-care system in which the government operates health-care facilities and employs health-care professionals.


Tax preference for employer-sponsored insurance: According to current U.S. tax law, the amount that employers contribute to health benefits is excluded, without limit, from the taxable income of most workers, and contributions made by employees toward insurance premiums are tax-free. Some argue that this is unfair to individuals who don't have employer-based coverage. The tax code allows them to deduct only the amount of their total health-care expenses that exceeds 7.5 percent of their adjusted gross income.


Uncompensated care: Costs of health-care services that are provided but not paid for by the patient or by insurance. Health-care providers incur some of this cost, as does the federal government.

Underinsured: An estimated 25 million American adults who have health insurance but who face out-of-pocket health-care costs or limits on benefits that keep them from seeking care -- or their ability to pay for it. By definition, they are individuals or families with deductibles of 5 percent or more of their income, or who spend 10 percent or more of their earnings on out-of-pocket medical expenses (5 percent if they are low-income). In 2005, more than 29 million Americans with insurance had some medical debt.

Uninsured: About 46 million Americans, including 729,000 Missourians, do not have health insurance, according to federal government estimates. Most are from working families with low incomes; about two-thirds live in poverty and are unlikely to be offered employer-sponsored coverage. About 13 million of the uninsured are employees of firms with less than 100 workers.

Universal coverage: A national system that would provide health coverage to all Americans. Reform proposals that would provide some type of universal coverage include the individual mandate or single-payer plans.


Young adult health plan: Health plans aimed at young adults that offer lower premiums in exchange for high deductibles and/or limited benefit packages.

Sources: The Henry J. Kaiser Family Foundation, the Missouri Foundation for Health

Mary Delach Leonard is a veteran journalist who joined the St. Louis Beacon staff in April 2008 after a 17-year career at the St. Louis Post-Dispatch, where she was a reporter and an editor in the features section. Her work has been cited for awards by the Missouri Associated Press Managing Editors, the Missouri Press Association and the Illinois Press Association. In 2010, the Bar Association of Metropolitan St. Louis honored her with a Spirit of Justice Award in recognition of her work on the housing crisis. Leonard began her newspaper career at the Belleville News-Democrat after earning a degree in mass communications from Southern Illinois University-Edwardsville, where she now serves as an adjunct faculty member. She is partial to pomeranians and Cardinals.