National Academies Press: OpenBook

Employment and Health Benefits: A Connection at Risk (1993)


Suggested Citation:"GLOSSARY AND ACRONYMS." Institute of Medicine. 1993. Employment and Health Benefits: A Connection at Risk. Washington, DC: The National Academies Press. doi: 10.17226/2044.

Glossary and Acronyms



The timely use of personal health services to achieve the best possible health outcomes.

acute care

Services within a hospital setting intended to maintain patients for medical and surgical episodic care over a relatively short period of time.

administrative expenses

For health insurance, expenses incurred in one or more of the following general categories: claims administration; general administration; interest credit; risk and profit charge; commissions; and premium taxes.

administrative services only (ASO) agreement

A contract for the provision of certain services to a group employer or similar entity by an insurer or its subsidiary. Such services often include actuarial services, benefit plan design, claim processing, data collection and analysis, employee benefit communications, financial advice, and stop-loss coverage.

admission review

Assessment of the appropriateness of urgent or emergency admissions that must occur within a limited period (e.g., 24 to 48 hours) after hospitalization.

adverse selection

The disproportionate enrollment of individuals with poorer-than-average health expectations in certain health plans (see biased risk selection).

ambulatory care

Medical services provided on an outpatient (nonhospitalized) basis. Services may include diagnosis, treatment, surgery, and rehabilitation.

appropriate care

Care that is clinically justified; sometimes used interchangeably with necessary care and sometimes used only to refer to

Suggested Citation:"GLOSSARY AND ACRONYMS." Institute of Medicine. 1993. Employment and Health Benefits: A Connection at Risk. Washington, DC: The National Academies Press. doi: 10.17226/2044.

whether the use of a particular site of care (for example, hospital) is justified.



Conventionally defined as the amount payable for a loss under a specific insurance coverage (indemnity benefits) or as the guarantee that certain services will be paid for (service benefits).

biased risk selection

Exists (1) when the individuals or groups that purchase insurance 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.


cafeteria plan

A flexible benefit plan that allows employees to choose benefits from a number of different options, such as group health insurance and dependent care assistance.


A fixed rate of payment, usually provided on a per member per month basis, to cover a defined set of health services for members of a health plan.


An entity providing insurance or administering a medical expense protection plan; under Medicare, the private organization administering claims and certain other tasks for Part B.

case management

A planned approach to organizing medical and other services for an individual with a serious medical problem. When applied to members of a health benefit plan, exceptions to coverage limits or exclusions may be used to permit the most cost-effective mix of services.

catastrophic expense protection (or out-of-pocket limit)

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 additional covered expenses in full.

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)

A government health plan for dependents of active and retired members of the uniformed services (e.g., Army, Navy).


An itemized statement of services provided to a specific patient by a health care provider. It is submitted to a health plan for payment.


Regionally based groups of employers and/or providers, insurers, and labor representatives who may disseminate information on health care issues, collect and analyze data, and provide other services for members.


The percentage of a covered medical expense that a health plan or a beneficiary must pay (after the deductible is met).

collective bargaining

A negotiation between organized labor and employer(s) on matters such as wages, hours, working conditions, and health and welfare programs.

Suggested Citation:"GLOSSARY AND ACRONYMS." Institute of Medicine. 1993. Employment and Health Benefits: A Connection at Risk. Washington, DC: The National Academies Press. doi: 10.17226/2044.
Page 334
Suggested Citation:"GLOSSARY AND ACRONYMS." Institute of Medicine. 1993. Employment and Health Benefits: A Connection at Risk. Washington, DC: The National Academies Press. doi: 10.17226/2044.
Page 335
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The United States is unique among economically advanced nations in its reliance on employers to provide health benefits voluntarily for workers and their families. Although it is well known that this system fails to reach millions of these individuals as well as others who have no connection to the work place, the system has other weaknesses. It also has many advantages.

Because most proposals for health care reform assume some continued role for employers, this book makes an important contribution by describing the strength and limitations of the current system of employment-based health benefits. It provides the data and analysis needed to understand the historical, social, and economic dynamics that have shaped present-day arrangements and outlines what might be done to overcome some of the access, value, and equity problems associated with current employer, insurer, and government policies and practices.

Health insurance terminology is often perplexing, and this volume defines essential concepts clearly and carefully. Using an array of primary sources, it provides a store of information on who is covered for what services at what costs, on how programs vary by employer size and industry, and on what governments do—and do not do—to oversee employment-based health programs.

A case study adapted from real organizations' experiences illustrates some of the practical challenges in designing, managing, and revising benefit programs. The sometimes unintended and unwanted consequences of employer practices for workers and health care providers are explored.

Understanding the concepts of risk, biased risk selection, and risk segmentation is fundamental to sound health care reform. This volume thoroughly examines these key concepts and how they complicate efforts to achieve efficiency and equity in health coverage and health care.

With health care reform at the forefront of public attention, this volume will be important to policymakers and regulators, employee benefit managers and other executives, trade associations, and decisionmakers in the health insurance industry, as well as analysts, researchers, and students of health policy.


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