Introduction
© 2008 Delmar Cengage Learning.
Overview
• Health care in America is fundamentally
political
• Like every other issue, health care tends to
follow the public policy process
• Costs are a paramount issue in American
health politics
• Managed care is a revolution without
revolutionaries
2
© 2008 Delmar Cengage Learning.
Health Care Is
Inherently Political
• Health care decisions relate to the
allocation of scarce resources
– The very definition of politics
• National health care systems are reflective
of a country’s political traditions and norms
3
© 2008 Delmar Cengage Learning.
Health Care
and the Policy Process I
• First step in policy process
– Getting item on national political agenda
• National Health Insurance (NHI)
– First appeared on agenda due to the efforts of
early (private) reformers
• Returned to agenda as part of FDR’s New Deal
4
© 2008 Delmar Cengage Learning.
Health Care
and the Policy Process II
• In second step of policy process:
– Political solutions to a given problem are
formulated
• Could be “re-heated” policies hatched
previously
– Garbage can theory of policy making
5
© 2008 Delmar Cengage Learning.
Health Care
and the Policy Process II
• Early proposals to provide “workingman’s
insurance” resurrected during New Deal
era and after
6
© 2008 Delmar Cengage Learning.
Health Care
and the Policy Process II
• Those opposed to comprehensive (public)
provision of benefits offered private
schemes
– More modest federal financing proposals
• Hill-Burton, et. al.
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© 2008 Delmar Cengage Learning.
Health Care
and the Policy Process III
• Third step of policy process involves
making a political decision
• National health insurance never enacted
– Medicare and Medicaid passed by Congress
• Signed into law 1965
8
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Health Care
and the Policy Process IV
• In fourth stage of the policy process
– Political decision (law) is implemented
• Medicaid initially left states with wide
latitude
9
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Health Care
and the Policy Process IV
• Some, such as New York, used program as
means to achieve universal coverage by
lowering eligibility requirements
• Federal government soon clarified law by
setting maximum income levels
10
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Health Care
and the Policy Process V
• Fifth stage of policy process involves the
administration of a given program
• Relates to the day-to-day functioning of
government program
11
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Health Care
and the Policy Process VI
• This final stage of policy process often not
realized
– Involves evaluation of a given program
12
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The Cost of
Health Care in America
• American health care system is by far the
most expensive in the world
– Accounting for an ever-burgeoning share of
gross domestic product (GDP)
– Many of the political issues revolving around
health relate to the cost of care
13
© 2008 Delmar Cengage Learning.
The Managed Care “Revolution”
• Managed care offered as means of
reducing growth in health care costs
• Featured in failed Clinton health plan
– Eventually adopted independently by private
sector
• After brief stabilization:
– Health care costs continue(d) to rise
14
© 2008 Delmar Cengage Learning.
Values in Health Care:
Fairness and Efficiency
• Broad agreement on desirability of both
values in principle
– But difficult, if not impossible, to achieve
consensus on realizing both
• “Inherent tension” between the two
• Multiple definitions of both
– Depending on one’s perspective
15
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Efficiency Defined
• Most simply, efficiency can be conceived
as a bargain
– With the ideal of achieving the highest ratio of
outputs to input
• Myth: efficiency can be measured
– Efficiency can only be properly defined in
reference to an individual, party, or
constituency
16
© 2008 Delmar Cengage Learning.
Assumptions of the Ideal Market:
The Rational Actor
• Individuals are rational when it comes to
their behavior in a given market
• Persons possess the ability to discern
which goods or services will improve their
situation
– Employing all available information, individuals
will choose the best of available options
17
© 2008 Delmar Cengage Learning.
Realities of the “Health Care Market”
The Rational Actor
• “Counterfactual problem” in health care
makes it difficult to decide if an alternative
decision in care would have yielded a
better, or even different, outcome
– Market offers few cues
• Few know about different health plans
– Good “report cards” on plans hard to come by
18
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Assumptions of the Ideal Market:
Predetermination of Preferences
• Preferences are inherent to the very
identity of an individual
– Produced, as if by magic, through the
“Immaculate Conception of the Indifference
Curve”
• Providers of goods and services cannot
significantly alter individual preferences
19
© 2008 Delmar Cengage Learning.
Realities of the “Health Care Market”
Variability of “Consumer” Preference
• Patient preferences can be “physicianinduced”
– Doctors possess far more information than
patient
– Extent to which this actually occurs is unclear
20
© 2008 Delmar Cengage Learning.
Assumptions of Ideal Market: Broad
Agreement on Resource Distribution
• Members of society:
– Expected to share some degree of consensus
on the way in which goods and services are
distributed
• Improvements in the fortunes of others do
not cause significant distress on the part of
others
21
© 2008 Delmar Cengage Learning.
Realities of the
“Health Care Market”
• Possible resentment at superior care
offered some
– Vastly superior care available to the wealthy in
American society
– Could create envy among those who are not
better off
22
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The Individualistic
Model of American Politics
• Americans “born free without having to
become so”
• Tocqueville historically relying on
themselves
– Not a paternalistic monarch or state to attain
privileges
23
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The Individualistic
Model of American Politics
• Early philosophical liberalism written into
U.S. Constitution and design of government
institutions
• Self-interest often seen to trump hard
science
– Presenting continual challenges to health care
professionals
24
© 2008 Delmar Cengage Learning.
Considerations of the
“Community” in American Politics
• Political historians have discerned long
tradition of appeal to communal traditions
and assistance
– Broad public health programs launched by
cities at the turn of the 20th century
• New Deal-era legislation
25
© 2008 Delmar Cengage Learning.
Divergence
within the Puritan Tradition
• Early Puritan ethos elaborated into twin
moral stream in American political history
• Individualistic “neo-Puritans” stressed sins
of the individual, or the “other”
26
© 2008 Delmar Cengage Learning.
Divergence
within the Puritan Tradition
• Collectively-inclined neo-Puritans chose to
focus on the sins of the community
– Advocating collective action to solve problems
• Including those relating to public health
27
© 2008 Delmar Cengage Learning.
Morality Politics in Practice:
Case of School Health Clinics-1
• Public health officials by 1990s advocated
opening health centers directly inside
schools
• Conflicted with cultural conservatives
– Recommended alternative course of
emphasizing individual discipline
– “Just say no” anti-drug campaign
28
© 2008 Delmar Cengage Learning.
Morality Politics in Practice:
Case of School Health Clinics-2
• Despite opposition, clinics flourished and
multiplied across country
• Developed home-grown constituency of
parents, students, public-health advocates
• Achieved compromise with conservatives
on certain issues
29
© 2008 Delmar Cengage Learning.
Morality Politics in Practice:
Obesity Debate-1
• Surgeon general first defined obesity as
public health crisis in 2001
• Reactions focused on the individual obese
• Fast-food industry came to be blamed by
new breed of “muckrakers”
30
© 2008 Delmar Cengage Learning.
Morality Politics in Practice:
Obesity Debate-2
• Villainizing of fast-food purveyors led, in
turn, to villainization of the obese
• Policy options mooted include mandating
high insurance premiums for the obese
31
© 2008 Delmar Cengage Learning.
Morality Politics in Practice:
Obesity Debate-2
• In the end:
– Biggest impact of definition of obesity as public
health crisis may come in the way it informs
the public
• Changing lifestyle choices
32
© 2008 Delmar Cengage Learning.
Chapter 3 Summary
• American political history often viewed
through the lens of individualism,
community, or, in the case of this study,
morality
33
© 2008 Delmar Cengage Learning.
Chapter 3 Summary
• Original Puritan impulse led to divergent
world views
– One focusing on the sins of the individual
• Or groups thereof
– Other focusing on the ills of society
• Social gospel
34
© 2008 Delmar Cengage Learning.
Chapter 3 Summary
• Morality politics can be seen at play in the
cases of school health clinics and the
debate over obesity in America
35
© 2008 Delmar Cengage Learning.
U.S. Congress:
A Unique Institution
• Few other legislatures play such a powerful
role when it comes to initiating policy
• Accords with the “consensus” model of
policy making
– Interests must bargain with numerous
institutional actors in order to achieve positive
outcome on any given issue
36
© 2008 Delmar Cengage Learning.
U.S. Congress:
A Unique Institution
• Lack of competing national (unifying)
institutions
– Tradition of bureaucratic government ensures
Congress retains powerful role in policymaking
37
© 2008 Delmar Cengage Learning.
The Changing
Face of Congress
• Party unity/discipline has changed over
time
– Generally lower than in majoritarian systems
• House started 20th century as a highly
centralized institution
– Power gradually decentralizing over time
– Up to the 1990s
38
© 2008 Delmar Cengage Learning.
The Fate of Health
Care Reform in Congress-1
• National health care reform legislation first
introduced (gingerly) by Robert Wagner in
1939
• President Truman made health care reform
a priority
– Further reform attempts were made in the
1970s
– Most recently, in 1993-’94
39
© 2008 Delmar Cengage Learning.
The Fate of Health
Care Reform in Congress-1
• Not a single piece of health care reform
legislation ever made it to the stage of
debate on the floor of the House or Senate
40
© 2008 Delmar Cengage Learning.
The Fate of Health
Care Reform in Congress-2
• Despite Democratic majorities in mid-20th
century and party leadership commitment
to health care reform
– Party cohesion in Congress was low
throughout the period
41
© 2008 Delmar Cengage Learning.
The Fate of Health
Care Reform in Congress-2
• Conservative southern Democrats
managed to scuttle reform efforts through
the mid-1960s
• Next, the American Medical Association
(AMA) became an obstacle to reform
42
© 2008 Delmar Cengage Learning.
The Fate of Health
Care Reform in Congress-2
• Newer groups such as the National
Federation of Independent Business (NFIB)
led interest group opposition to health care
reform legislation over time
43
© 2008 Delmar Cengage Learning.
Presidential Strategy
and Health Care Reform
• President Clinton waited too long to unveil
reform plan
– Too close to the midterm elections
• Ordering of process also proved faulty
– Administration hoped to prevail in the House
before moving on to the Senate but this did not
work
44
© 2008 Delmar Cengage Learning.
Presidential Strategy
and Health Care Reform
• Lengthy (secretive) process of formulating
reform plan gave interest groups time to
galvanize members against it
• Intensity of opposition generated greater
than expected enthusiasm among natural
allies
45
© 2008 Delmar Cengage Learning.
Chapter 4 Summary
• Congress is unique among the legislatures
of the world
• Structural profile of Congress has changed
significantly over time
46
© 2008 Delmar Cengage Learning.
Chapter 4 Summary
• Congress has often served as the
graveyard of health care reform legislation
• Clinton health care reform package died
largely as a result of poor legislative
strategy
47
© 2008 Delmar Cengage Learning.
The Limited Presidency
• Presidential power is often curbed by the
other governing institutions
– Including Congress and the judiciary
• Popular distrust of centralized authority has
further limited presidential power
48
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The Powerful Presidency
• Crises tend to increase the powers of the
president
– Particularly in time of war
• Real or figurative
• Powerful personalities and skilled political
operators have taken full advantage of the
powers left to the president
49
© 2008 Delmar Cengage Learning.
Three Faces of the Presidency:
The Individual
• Individual presidents possess the power to
place items on the national agenda
– To “shape the national conversation”
• Some presidents have entered office with a
passion for health reform
– Others have been forced to address the issue
50
© 2008 Delmar Cengage Learning.
Three Faces of the Presidency:
The Political Operator
• Presidents must become masters of the
broader political system if they hope to
accomplish their objectives
• Some presidents (particularly Johnson)
have proven successful in health policy
through their shrewd approaches to
handling Congress and other political
institutions
51
© 2008 Delmar Cengage Learning.
Three Faces of the Presidency:
The Policy Manager
• President must lead an executive branch of
1.8 million employees
– Paying particular heed to his cabinet
• “Successful” presidents
– Achieve a balance between carefully
considering the advice of policy advisors, and
becoming bogged down in details
52
© 2008 Delmar Cengage Learning.
The Presidents and Health Care:
Franklin D. Roosevelt (1933-45)
• Universal health insurance initially included
among suggested New Deal reforms
– Eventually scrapped out of fear that such
“overreach” could jeopardize the broader
program of social security
53
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The Presidents and Health Care:
Harry S. Truman (1945-53)
• Early champion of national health
insurance
• Initial health insurance plan foiled by
intransigent Congress
54
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The Presidents and Health Care:
Harry S. Truman (1945-53)
• Despite defeat in first term, Truman
presented his plan to Congress during
second term
– He did not get much further
55
© 2008 Delmar Cengage Learning.
The Presidents and Health Care:
Lyndon B. Johnson (1963-69)
• In wake of JFK assassination:
– Democrats made huge Congressional gains
– Johnson did not need to rely on support
conservative southern Democrats
• Proposals for national health insurance
narrowed to plans to provide health
coverage to the poor and elderly
56
© 2008 Delmar Cengage Learning.
The Presidents and Health Care:
Lyndon B. Johnson (1963-69)
• 1965
– Medicaid (coverage for the poor) and
Medicare (coverage for the elderly) signed
into law
– In the presence of former President Truman
57
© 2008 Delmar Cengage Learning.
The Presidents and Health Care:
Richard M. Nixon (1969-74)
• Early champion of health maintenance
organizations (HMOs)
– Signed legislation that encouraged their
(gradual) expansion across the country
58
© 2008 Delmar Cengage Learning.
The Presidents and Health Care:
Bill Clinton (1993-2001)
• Great latter-day champion of
comprehensive health care reform
• Reform plan foundered due to poor
Congressional political strategy
59
© 2008 Delmar Cengage Learning.
Chapter 5 Summary
• Two aspects of the presidency:
– The powerful and the limited
• Three faces key to understanding
presidential role in health care
policymaking:
– The individual, political operator, and policy
manager
60
© 2008 Delmar Cengage Learning.
Chapter 5 Summary
• The presidents from FDR forward have
each had a unique impact on the direction
of health policy
61
© 2008 Delmar Cengage Learning.
The Role(s) of the Courts
• Legislatures pass laws
– Wording is often left (deliberately) vague
– To serve competing interests
• It is the role of the judiciary to clarify
legislation
– To assist in the implementation of laws
62
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Three Models of Health Law
• Used to conceptually describe the
overarching legal climate that shape
important court decisions at a given time
63
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Three Models of Health Law
• Some, or all, might be present at a single
point in time
– Nonetheless, one has tended to dominate
during the historical periods outlined in the
slides that follow
64
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Model of Professional Authority
(1880-1960)
• During early period
– Health law seemed to exist for the sole
purpose of supporting and enhancing the
authority of the professional physician
65
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Model of Professional Authority
(1880-1960)
• During early period
– Supported doctors in their quest to determine
the terms under which they were to practice
– Difficult for patients to collect malpractice
damages during period
66
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Model of Professional Authority
(1880-1960)
• Key case:
– Schloendorff v. Society of New York Hospital
• Involved the complaint of a patient, on
whom a surgeon in hospital performed an
operation without consent
67
© 2008 Delmar Cengage Learning.
Model of Professional Authority
(1880-1960)
• New York Court of Appeals ruled that the
hospital could not be held liable for the
operation
– As it did not exercise control over the medical
professionals who happened to work there
68
© 2008 Delmar Cengage Learning.
Model of Professional Authority
(1880-1960)
• Major shortcomings:
– Precedents established under model could not
effectively provide for those who could not
afford care under fee-for-service model
– Doctors could not always regulate themselves
• Provided no mechanism by which medical costs
could be controlled
69
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Model of the Egalitarian
Social Contract (1960-’70s)
• Rather than simply reinforcing discretion of
the medical profession
– Stressed importance of broad “contract”
between doctor and patient governed by
fairness and justice
70
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Model of the Egalitarian
Social Contract (1960-’70s)
• Decisions abolishing medical discrimination
on the basis of race, gender, etc.
established under this model
71
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Model of the Egalitarian
Social Contract (1960-’70s)
• Key case:
– Rosado v. Wyman
• Not directly related to health care
• Aligned more broadly with social welfare programs
72
© 2008 Delmar Cengage Learning.
Model of the Egalitarian
Social Contract (1960-’70s)
• Court held that:
– a) Federal statutes ensuring beneficiary
protections were to be taken seriously,
enforced
– b) Administrators should exercise (limited)
discretion when implementing law,
ensuring that values, conditions of the
beneficiary are taken into account
73
© 2008 Delmar Cengage Learning.
Model of the Egalitarian
Social Contract (1960-’70s)
• Court held that:
– c)
In cases in which the law was directed
to states, the individual beneficiary
could bring legal action against the
State if he/she had a grievance under
the law
74
© 2008 Delmar Cengage Learning.
Model of the Egalitarian
Social Contract (1960-’70s)
• Major shortcomings:
– Failed to control rapid upward spiral in health
care costs
– No meaningful guidance on how to
regulate/ration the use of expensive medical
technology
– Failed to broaden access to (particularly
public) health coverage
75
© 2008 Delmar Cengage Learning.
Model of Market Competition
(1970s-???)
• Proposed addressing the twin problems of
cost containment and rationing
– Allowing the “invisible hand” of the market to
send appropriate cost signals to “consumers”
• Assumed that the bulk of the health care
consumed was actually discretionary
– Not a life-or-death proposition
76
© 2008 Delmar Cengage Learning.
Model of Market Competition
(1970s-???)
• Key case:
– McGann v. H.& H. Music Company
• AIDS patient claimed benefits under
company insurance plan
– Company capped lifetime benefits for AIDS
patients alone
– Employee claimed discrimination under statute
of ERISA law
77
© 2008 Delmar Cengage Learning.
Model of Market Competition
(1970s-???)
• Court ruled that ERISA only protected
employees under a specific plan
– Allowed firms to change plans at any time
– Ruled against H. & H. employee
78
© 2008 Delmar Cengage Learning.
ERISA (1974) Explainer
• Employee Retirement Income Security Act
– Sought to expand employee protections vis a
vis company-provided pension schemes and
health plans
– Providing means by which employees who felt
they were the victims of discrimination under a
play could seek recompense
79
© 2008 Delmar Cengage Learning.
ERISA (1974) Explainer
• Made acceptable to large firms by
simultaneously voiding prior state
regulation statutes
– Law thus conflicted in tone/intent
80
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Model of Market Competition
(1970s-????)
• Major shortcomings:
– Limited success in cost containment
– Rationing has come at the cost of decreasing
legitimacy being accorded the health care
sector by those for whom legal protection is
sparse
81
© 2008 Delmar Cengage Learning.
Model of Market Competition
(1970s-????)
• Redistribution of resources has occurred
under model
– But from the poor to the (already) wealthy
82
© 2008 Delmar Cengage Learning.
Emergent Fourth
Model(?) of Health Law
• Many now seek middle ground between
unrestrained market forces, social solidarity
• Emergent recognition that forces of
globalization must be tempered if they are
to have purely positive effects
83
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Emergent Fourth
Model(?) of Health Law
• Advances in biotechnology provides further
wrinkle to a market competition model
already under considerable stress
84
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Chapter 6 Summary
• Judiciary assists in process of
implementing laws once they have been
enacted by legislatures
• Three legal models helped shape direction
of health policy over time
85
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Chapter 6 Summary
• Model of professional authority held sway
from around 1880-1960
– Schloendorff v. Society of New York Hospital
the paradigmatic case
• 1960 through the 1970s
– Model of the egalitarian social contract
prevailed
• Rosado v. Wyman the paradigmatic case
86
© 2008 Delmar Cengage Learning.
Chapter 6 Summary
• Model of market competition reigned from
the 1970s through the very recent past
– McGann v. H. & H. Music Company illustrates
this model
– Fourth model in health law may be emerging
87
© 2008 Delmar Cengage Learning.
Realities of the
“Health Care Market”
• Possible resentment at superior care
offered some
– Causes unease among many policy makers
• Who believe provision of care should not be tied to
ability to pay
88
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Regulation in Health Care:
The Options
• Microregulation
– Relies upon direct observation and control of
key actors in market
– Actually commonly employed in U.S.
89
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Regulation in Health Care:
The Options
• Macroregulation:
– Emphasis is placed on broader incentives or
disincentives
– Examples include global budgeting
• Largely found in systems elsewhere
90
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Policy
Alternatives to “Pure” Market
• Demand-side policies
– Seek to regulate pricing of services through
such mechanisms as patient cost-sharing
• Consumer-driven health care
91
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Policy
Alternatives to “Pure” Market
• Supply-side policies
– Seek to control the amount, availability of
services available through controls on
“suppliers”
– Measures include global budgeting, limits on
quantity of physicians, hospital beds
92
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Markets and Government in Health
Care: Cross-National Complexity
• Different countries attach differing ideals to
their respective health care systems
• Detection of the level of regulation versus
market processes often problematic
93
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Markets and Government in Health
Care: Cross-National Complexity
• Even measures of outcomes are imperfect
• Decisions on the role of markets and
regulation in health care
– Require the consideration of national ideals
and priorities
94
© 2008 Delmar Cengage Learning.
Chapter 2 Summary
• Economists define the ideal market as:
– One in which individuals are rational
– Preferences are pre-established
– Broad agreement exists on the distribution of
resources
95
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Chapter 2 Summary
• None of these conditions are met in the
case of health care
• Various forms of regulation present
alternatives in cases of market failure
96
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Efficiency in Practice
• “The Waiting Room Game”
– Efficiency from doctor’s point of view
• Always having patient available to treat, thus filling
waiting room
– Does not factor in wasted time on the part of patients
– One person’s efficient outcome represents another’s
wasted time/resources
97
© 2008 Delmar Cengage Learning.
Contesting Fairness: Actuarial
Fairness vs. the Solidarity Principle
• Actuarial fairness stressed by certain
insurers beginning in 1980s
– Tied cost of insurance premium to an
individual’s risk
– Rhetorically asking why one should be forced
to finance another’s risks
98
© 2008 Delmar Cengage Learning.
Contesting Fairness: Actuarial
Fairness vs. the Solidarity Principle
• Solidarity principle/ideal more closely
approximated in European systems
– Society at large funds the care of the sick and
those (otherwise) least able to finance care
99
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Actuarial Fairness in Practice
• Insurers first sought to exclude racial
minorities for their “greater risk”
• Despite laws seeking to reform such
practices:
– Minorities in some areas, as well as those
suffering from certain diseases, find
themselves unable to receive coverage
100
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Actuarial Fairness in Practice
• Many insurers continue to perfect ways to
further fragment market
– Closely matching premiums to level of risk
• While excluding certain groups altogether
101
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The Solidarity
Principle in Practice
• Seeks to accomplish the ideal of basing
distribution of medical care on the basis of
need
– Not ability to pay
• Assumes that the community should be
responsible for the cost of care for the
infirm
102
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The Solidarity
Principle in Practice
• Represents subsidy from the vast majority
to the minority
– Underlying principle of social insurance
103
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Efficiency and Fairness in the
American Health Care System
• Current system infused with the spirit of
actuarial fairness
– Difficult to overcome
104
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Efficiency and Fairness in the
American Health Care System
• Neither efficiency, nor fairness are “neutral
criteria” through which to judge quality of
health care system
– They are values that have different meanings
to different people
105
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Efficiency and Fairness in the
American Health Care System
• There will always be winners and losers in
nearly any health care system
106
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Chapter 1 Summary
• Fairness and efficiency
– Two values crucial to any health policy debate
• Idea of efficiency requires one to define
specific perspective
107
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Chapter 1 Summary
• Central to the idea of fairness
– Tension between actuarial fairness and the
solidarity principle
• Contemporary health care system tends to
favor actuarial fairness over solidarity
108
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Three Periods
of (Health Care) Federalism
• Minimalist period (American Revolution
through the Civil War era)
– States and federal governments “tested the
waters” as to the policy areas in which one or
the other could claim dominance
– Most health functions were consigned to local
jurisdictions
109
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Three Periods
of (Health Care) Federalism
• Emergent period (approx. 1865-1965)
– Federal government and, particularly, the
states entered the health policy arena, through
state regulation of the incipient medical
profession, and such federal measures as
Sheppard-Towner and Hill-Burton
110
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Three Periods
of (Health Care) Federalism
• Contemporary period (post-1965)
– Witnessed a vast expansion in federal health
programs
– Increased fiscal entrepreneurialism on the part
of the states
– Federal grants to states have played a
prominent role in this expansion
111
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Federal Grant Typology
• Categorical grants are sums issued to
states that must then be used for a specific
purpose
– Usually governed by a specific statute or
statutes
112
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Federal Grant Typology
• Block grants are sums given to states in the
interests of achieving a broader goal
– Allow states to use them at their discretion
113
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Federal Grant Typology
• Entitlement programs
– Opposed to those operating under fixed
budgets
– Require states (or, in some cases, the federal
government) to fund any beneficiary as defined
by a specific plan or piece of legislation no
matter the cost
– Outlays toward such programs can thus only
be predicted in a given year, not controlled
114
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States as Fiscal Entrepreneurs
• States normally try to extract as much
federal money as possible under such
programs as Medicaid
115
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States as Fiscal Entrepreneurs
• Many programs match federal funds to
state contributions
– So states often devise tricks
• Collecting payments from localities or hospitals, to
(artificially) inflate their state contribution
– This, in turn, increases their federal match
116
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Devolution and the States
• With mixed success, recent presidential
administrations have attempted to reduce
the federal commitment to states
• Many measures of retrenching devolution
allow states greater flexibility in
administration of programs
– Reducing the federal match in exchange
117
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Chapter 7 Summary
• The nature of the relationship between the
states and federal government has
changed over time
• Various types of federal grants to states are
chief venues of federalism in health policy
118
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Chapter 7 Summary
• Retrenching devolution has changed the
dynamic between the federal government
and the states in recent years
119
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States and Health Care:
Protecting the Public’s Health
• Since mid-19th century
– States have taken the lead in monitoring the
health conditions amongst their citizens
120
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States and Health Care:
Protecting the Public’s Health
• States are largely responsible for the
control and, where possible, elimination of
microbial and airborne substances that can
give rise to ill health
– The latter is of particular significance in the
wake of 9/11
121
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States and Health Care:
Providing a Health Safety Net
• Through such institutions as state hospitals
and divers funding programs (including, but
not limited to, Medicaid)
– States are responsible for providing health
care to those left behind by the fee-for-service
health care service
– Or those generally unable to fend for
themselves
122
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States and Health Care:
Supervising the Medical Profession
• Through Boards of Health
– States are responsible for the licensure of
medical professionals
• Effectively regulating the profession
123
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States and Health Care:
Regulating the Insurance Industry
• States are responsible for regulating the
health insurance industry within their
borders
– Determine whom they must cover
– Benefits they are to provide
124
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States and Health Care:
Regulating the Insurance Industry
• This task has been made more difficult with
the passage of ERISA (1974)
– Drastically limits the state regulatory role in
self-insuring firms and the plans they provide
125
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States and Health Care Diversity:
Demographics
• States vary significantly in terms of their
demographic characteristics
– Impacts the nature of the health care system to
be found in each
126
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States and Health Care Diversity:
Demographics
• Factors that can influence health and
health care:
– Rural/urban character of a state
– Levels of poverty
– Racial/ethnic profile
127
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States and Health Care Diversity:
State Health Profile(s)
• Conditions within certain states (including
demographic characteristics)
– Can contribute to different patterns of ill (and
good) health
– Affect range of ailments encountered
• Distribution across the state
128
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States and Health Care Diversity:
Access to Care
• States differ considerably when it comes to
the ease with which their citizens can
access care
• Factors that can influence access to care:
– Economic health of states
– Population distribution
129
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States and Health Care Diversity:
Political Culture
• Depending on the predominant political
traditions and beliefs found among citizens
– Some states simply tend to be more innovative
and/or generous in the field of social welfare
130
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States and Health Care Diversity:
Political Culture
• Elazar et. al.
– Offer geographically-dispersed political
cultures that affect policies/political structures
found in each area
131
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Medicaid:
The 900-Pound Gorilla
• As outlined in previous chapter:
– Federal and state governments provide health
care coverage to:
• The poor
• Many children
• Those suffering from certain conditions (including
HIV/AIDS)
• Two-thirds of those receiving nursing home care
132
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Medicaid:
The 900-Pound Gorilla
• State contribution toward Medicaid often
comprises a full one-fifth of the overall
(state) budget(!)
• Funding crunches are common:
– Just when state revenue is contracting during
bad economic times, the numbers requiring
benefits under Medicaid tend to rise
133
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Medicaid:
The 900-pound Gorilla
• Many states offer benefits for groups
ineligible for Medicaid
– But unable to acquire coverage on the private
market
134
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Chapter 8 Summary
• States play broad and varied role in health
care:
– Monitoring public health
– Providing a health “safety net” for the less
fortunate (and uninsured)
– Licensing members of the medical profession
– Regulating health insurers
135
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Chapter 8 Summary
• Several variables determine the precise
nature of health services in a given state:
– Demographics
– State health profile
– Access to health care
– Political culture
• Medicaid
– The states’ “900-pound gorilla”
136
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U.S. Health Spending:
More than Meets the Eye
40
37.6
36.4
35.7
35
30.4
30.1
30
26.5
25.9
25
21.8
20.3
20.8
20
17.1
15
10
5
0
Aust ralia
Canada
Denmark
Finland
Germany
Ireland
It aly
Net herlands
Sweden
Unit ed
Kingdom
Unit ed St at es
• At first glance, the U.S. (far right), appears to
spend far less on health care than (otherwise)
comparable nations…
137
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U.S. Health Spending:
More than Meets the Eye
30
1.8
1.6
0.8
25
0.8
3.9
3.8
1.4
20
8.3
3
3.5
1.5
Public
Spending,
Including Tax
Expenditures
15
25.1
25.9
25.4
23.6
10
20.9
18.7
17.7
22.1
21.2
17.3
Publicly
Regulated and
Subsidized
Private
Spending
16.2
5
0
Aust ralia
Canada
Denmark
Finland
Germany
Ireland
It aly
Net herlands
Sweden
Unit ed
Kingdom
Unit ed St at es
• Once one factors in tax breaks and publiclyregulated/subsidized private benefits, however,
U.S. spending levels (again, far right) rise
considerably.
138
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Rise of Private,
Employer-Sponsored Health Coverage
• Early battle by progressives to enact
national health insurance drew attention to
the need to expand health coverage
• Such groups as AMA, insurance
companies championed private coverage
as an alternative to government
intervention
139
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Rise of Private,
Employer-Sponsored Health Coverage
• Early treatment of employer contributions to
health plans as non-taxable fringe benefits
led firms to use employer-sponsored health
plans as a means to entice, retain workers
140
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Expansion of
Private Health Coverage
• After first successful employer group
insurance plan (Baylor Hospital, 1929)
arose
– Concept caught on across the country during
the 1930s and 1940s
141
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Expansion of
Private Health Coverage
• Following second (failed) attempt to enact
national health insurance in association
with Social Security
– Private insurers redoubled efforts to expand
coverage
142
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Expansion of
Private Health Coverage
• Price/wage controls in wartime made health
coverage particularly important as a
recruitment tool
• President Eisenhower (1954)
– Clarified tax status of private health plans,
confirming their tax-exempt status
143
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Covering the Consequences: Political
Legacy of Private Health Coverage
• Spread of private health coverage gave rise
to numerous parties with an interest in
defending the status quo
– Thus limiting the political “room” to enact
comprehensive reform
144
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Covering the Consequences: Political
Legacy of Private Health Coverage
• Use of private enterprise to serve public
goals gives government little leverage over
the health care system/industry
145
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Covering the Consequences: Political
Legacy of Private Health Coverage
• Most, though by no means all, receive
some form of health insurance under
present system, blunting demands for
reform
• Costs for switching from largely private to
public provision of health insurance would
now be monumental
146
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The Dreamers: Attempting to Develop a
System of National Health Insurance
• President Truman famously failed to attain
national health insurance in late-1940s
• Passage of Medicare and Medicaid in mid1960s represents first (and only) broad
expansion of public health coverage
147
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The Dreamers: Attempting to Develop a
System of National Health Insurance
• Competing visions of national health
insurance in early-1970s withered in the
shadow of Watergate
148
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The Dreamers: Attempting to Develop a
System of National Health Insurance
• President Clinton’s attempt to enact
national health insurance failed
– Private insurers implemented portions of it
– Shepherding policyholders into managed care
plans
149
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Chapter 9 Summary
• U.S. spends greater proportion of income
on health care than it initially appears
– Once tax breaks and private benefit structures
are taken into account
• Nonetheless, the redistributive aspects of
health spending tends to favor the rich
150
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Chapter 9 Summary
• Though many have, over time, recognized
the need for a greater government role in
health coverage and spending
– The rise of private insurance and its vast
consequences have made national health
insurance little more than a perennial fantasy
151
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Early Competitors
to a Profession on the Rise
• Medical schools of questionable quality and
standards arose across the country
• Massive quantity of medical schools soon
fed a growing surplus of physicians
– This lowered their prices for patient services
152
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Early Competitors
to a Profession on the Rise
• Cities and local jurisdictions established
dispensaries during the nineteenth century
– Where the newest procedures from the leading
specialists were “tested” on supposed charity
cases
153
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Early Competitors
to a Profession on the Rise
• Dispensaries spread quickly in the face of
rising immigration
– Correspondingly meeting the greater need in
many communities
154
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Early Competitors
to a Profession on the Rise
• Alternative healers offered care located
outside incipient medical mainstream
• Until the 20th century:
– Medical science offered little better than those
outcomes achieved by eccentric healers
• Latter offered stout competition
155
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Early Competitors
to a Profession on the Rise
• Many physicians contracted with mutual aid
societies
– Government bodies that provided care at low
prices
• Those outside of contract care felt such a
practice placed considerable downward
pressure on health care prices
156
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Early Competitors
to a Profession on the Rise
• Patent medicines and nostrums were
common during much of the nineteenth
century and into the twentieth
• Poor record of medical science up to that
point fed demand
157
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Combating Competition: The
Medical Profession Fights Back
• From 1870 forward:
– State licensing boards were established
– “Captured” by local medical societies, which
selected members
158
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Combating Competition: The
Medical Profession Fights Back
• Revitalized AMA opened campaign to
improve the scientific quality of medical
schools
• Council on Medical Education’s Flexner
Report led to the closure of many inferior
institutions
159
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Combating Competition: The
Medical Profession Fights Back
• Monetary support soon followed to schools
that “passed the test”
– This led to a decline in the number of newlyminted physicians
160
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Combating Competition: The
Medical Profession Fights Back
• “Poor working conditions” of physicians
under contract medicine were exposed
– Contract doctors pressured to abandon such
practices
• Mutual aid societies switched from contract
schemes to reimbursement of (physiciandetermined) medical costs
161
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Combating Competition: The
Medical Profession Fights Back
• Localities urged to leave the field of clinical
medicine
– Limiting role of free medicine in dispensaries
• Hospitals transformed from charitable
institutions to scientific centers
– Managed in the interests of physicians
162
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Combating Competition: The
Medical Profession Fights Back
• As the medical profession established lists
of approved drugs:
– Nostrums and quack remedies sidelined
• Drugmakers prohibited from listing the
ingredients on bottles and the diseases a
drug was designed to treat
– Allowed physicians to make that determination
163
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A Profession Consolidated
• By the 1920s
– Organized medicine had established a legal
monopoly
– Competition from any quarter was largely
vanquished
164
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A Profession Consolidated
• Physician autonomy and a focus on
treating those who could pay was
effectively institutionalized
• Medical profession received further
assistance from an amenable legal climate
during a period of “professional authority”
165
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Paying the Price of Success
• Private corporations soon realized the
extent to which profits could be made
– Became involved in the veritable health care
monopoly formed by physician leaders
• Payers soon rebelled against high health
care costs
– HMOs and other managed care schemes
expanded
166
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Paying the Price of Success
• Physicians now face greater interference
from private firms than they might possibly
have encountered from the state under a
system of national health insurance
167
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Chapter 10 Summary
• Emergent medical profession was
challenged by five sources of competition:
1.
2.
3.
4.
5.
Proliferation of “medical schools”
Rise of free care at local dispensaries
Patent/quack medicine
Alternative healers
Contract medicine
168
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Chapter 10 Summary
• These forces of competition led to low
income and prestige for the bulk of
physicians
169
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Chapter 10 Summary
• Proceeding years and decades were
largely spent suppressing sources of
competition
• By the end of the twentieth century:
– Physicians paid the price of success as
professional autonomy came under fire from
various payers
170
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