Final answer:
The health plan referred to as the "payer of last resort" is Medicaid, which provides coverage to needy individuals after all other health insurance options have been used. Medicaid operates as a safety net, preserving its resources by being the last to pay among potential payers.
Step-by-step explanation:
The health plan referred to as the "payer of last resort" is typically Medicaid. This public health insurance program is designed to provide coverage to individuals and families with low income and resources.
As the payer of last resort, Medicaid only kicks in after all other potential forms of health insurance coverage have been exhausted. This includes private insurance, Medicare, employer-sponsored health plans, and any state-funded health programs. The term "payer of last resort" indicates that Medicaid has a statutory obligation to pay last, ensuring that all other avenues for payment have been pursued. This helps to manage the program's expenditures by only covering costs that cannot be paid by other sources first.
The fee-for-service system and health maintenance organizations (HMOs) are alternative ways that healthcare providers can be reimbursed. However, when it comes to being the payer of last resort, it is usually referring to government-funded programs like Medicaid. The structure of Medicaid as a fallback option exemplifies its crucial role in the healthcare safety net, providing coverage only when no other payer is responsible. Such a mechanism is key in managing costs associated with adverse selection within insurance markets.