for A-plus writer only
nosyistypesif
soc320_chapter_11.pdf
Ex ac
to st
oc k/
Su pe
rs to
ck
Learning Objectives
In this chapter you will learn to:
• Identify key issues and specific areas of concern for policy makers within contemporary U.S. public health policy.
• Articulate the issues policy makers must consider when designing health policy in the United States.
• Describe the process of making health policy in the United States in the context of policy adoption.
A Case Study in Policy Adoption: Comprehensive and Incremental Approaches to Health-Care Policy
11
the80472_11_c11_339-370.indd 339 11/21/12 1:04 PM
Section 11.1 The Government’s Role in Health Care CHAPTER 11
Previous chapters explored how policy theory, in particular the stages-heuristic approach to the policy process, offers insight into the actual policy decisions and issues on the U.S. policy agenda, such as the environment, education, and welfare. With each issue or problem, various factors are at play within the policy arena, and the policy actors involved may have greater or lesser influence at a particular time or within a given set of circumstances. One constant remains: policy making is a complex, often con- tentious process. Nowhere has this contentious nature been more apparent than in the pol- icy adoption discussion surrounding health-care reform. As this chapter explores, efforts to institute a comprehensive, national health-care system in the United States have run into repeated roadblocks. Nonetheless, in 2010 President Barack Obama’s administration successfully enacted what many believe to be the most significant change to U.S. health- care policy in the nation’s history. How Obama succeeded where many others failed gives some crucial insights into the policy adoption stage of the policy process stage.
11.1 The Government’s Role in Health Care
The state’s involvement in formulating and developing health policy is a relatively modern phenomenon. However, modern societies have consistently been concerned that citizens maintain good health and that scientists search for cures to diseases. In nation after nation, expanding welfare states have resulted in more government provi- sion of health care, as society has acknowledged that good health is intrinsic to human welfare. Before the development of the welfare state, governments, at most, attempted to slow the spread of infectious disease, and few citizens looked to the government for help with their health. However, following the expansion of state responsibilities and a num- ber of scientific advances in the 20th century, the number of pre- ventive public health initiatives rose, and governments increased their role in curative care via reg- ulation, funding, and the provi- sion of care itself.
The relationship between health and welfare is important, because the objectives of health policy and welfare provision go hand- in-hand. Policy makers know that promoting and attaining good health requires citizens to have adequate or satisfactory living conditions. Societies need healthy populations to function, and healthy people are more productive than unhealthy people. For example, sick workers take more sick days than healthy workers—even when they are self-employed. Indeed, research reveals significant
Blend Images/Superstock
Research demonstrates a clear link between population health and productivity.
the80472_11_c11_339-370.indd 340 11/21/12 1:04 PM
Section 11.1 The Government’s Role in Health Care CHAPTER 11
correlation between economic growth and better health standards. For example, studies using mortality and fertility rates have shown how population health affects a nation’s gross domestic product (GDP) over time. Other studies highlight the economic impact of household health. This research demonstrates a clear link between a nation’s disease levels, productivity, and earnings (World Health Organization [WHO], 1999). Indicators of such a relationship include life expectancy rates, infant mortality rates, birth rates, and climate conditions.
One study shows that an improvement in adult life expectancy was responsible for 8% of total growth in 53 nations between 1965 and 1990 (Jamison, Lau, & Wang, 1998). Such growth was attributable to improved productivity from healthier workforces. Research- ers found less absenteeism, increased incentives for investment in human and physical capital as life expectancy increases, and higher rates of saving, as longer life expectancies meant workers had more need to save for retirement (Jamison, Lau, & Wang, 1998). Pan American Health Organization studies and research conducted by the Inter-American Development Bank also support the existence of a relationship between health and eco- nomic growth. According to these data, if male life expectancy increases by 1 year, GDP will increase by an additional 1% after 15 years (WHO, 1999). Numerous studies have also shown the correlation between economic performance and birth rate (WHO, 1999). As a population’s health improves, child mortality rates increase, which over time leads to decreased fertility rates. After birth rates fall, economic growth increases as the propor- tion of the population participating in the labor force increases. There are exceptions of course. For example, data also show that having more young adults in the workforce does not automatically lead to growth (Bloom & Williamson, 1998). Clearly, some health factors affect workers’ productivity, such as nutrition (Strauss & Thomas, 1998). And the effect of sickness on individual productivity is greater in poorer nations. Nonetheless, overall health arguably influences earnings (Strauss & Thomas, 1998).
In the provision of health care, the state may be a regulator, a funder or purchaser, or a provider or planner. In many industrialized nations, the state combines all or most of these roles. What role or combination of roles the state takes in a given nation depends on the scope and extent of its welfare state. In all industrialized nations, governments manage and provide a range of basic public health services such as health education, vaccination programs, sanitation projects, and the regulation of food and drug quality. In some nations, the government directly provides curative care; in others government involvement is minimal. Even when the government directly provides services, individ- uals may still seek private health care and treatment. Likewise, even in market-oriented systems, the government plays a considerable role. Since the late 1940s all nations have pursued what they perceive to be the optimal mix of public and private health-service activity. Consequently, countries have chosen various operating models of health-care provision that reflect these different mixes (see Table 11.1). In creating their health-care models, governments also select from among multiple measures that attempt to control costs (Table 11.2).
the80472_11_c11_339-370.indd 341 11/21/12 1:04 PM
Section 11.1 The Government’s Role in Health Care CHAPTER 11
Table 11.1: National policy models for curative care
Model Characteristics Example Nation
National Health Service
Government guarantees citizens access to all health-care services.
Health-care system paid for and administered directly by government; all or most costs absorbed by government.
Government pays doctors, nurses, and hospitals directly to provide comprehensive care.
Citizens pay into system through mandatory, national health insurance contribution.
Demand for services often exceeds supply, resulting in long waiting lists for elective procedures.
Citizens can go outside of system and receive treatment from private vendors.
United Kingdom
Limited National Health Service
Government-run hospitals staffed by government-salaried doctors and nurses.
Citizens guaranteed access to government-run hospitals.
A high number of citizens goes outside to private vendors.
Quality and availability of care often insufficient.
Command Economies (e.g., North Korea, China)
Single Payer Citizens guaranteed access to health care via a single insurance program run directly by government.
Government negotiates best rates from hospitals and doctors.
Health care provided by private vendors.
Canada
Mandatory National Health Insurance
Government guarantees citizens access to care.
Multiple payers and multiple providers.
Citizens receive health coverage through private insurance tied to job.
Government regulates benefits and controls fees.
Government provides insurance to unemployed, self- employed, and retired.
Germany
Market Maximized
Government does not guarantee citizens access to care.
Government does provide access for certain groups.
Access to care is a choice, not a right, of citizens.
Some regulation of private health insurers by government.
Access to many services is guaranteed by citizens’ ability to pay, not by urgency of need.
United States (before 2010 Patient Protection and Affordable Care Act)
the80472_11_c11_339-370.indd 342 11/21/12 1:04 PM
Section 11.1 The Government’s Role in Health Care CHAPTER 11
Table 11.2: Cost-control measures
Measure Objective Main Criticism Example Regulation
Alter behavior of those receiving services
Require individuals to monitor usage of health services.
Patients’ decision to receive care dependent upon economic considerations.
Requiring copayments. Requiring patients to pay in full when care is received; reimbursement at a later date.
Influence physicians behavior
Limit number of procedures physicians provide.
Patients’ ability to receive services dictated by economic considerations.
Fee-for-service. Fees based upon number of patients and not services provided.
Limits on technological acquisition
Decrease likelihood of unnecessary procedures.
Long waiting lists for certain technologies.
Limit what and who can buy certain equipment.
Use a gatekeeper Decrease use of specialists using unnecessary procedures.
Referrals made on basis of cost savings rather than need.
Only internists make referrals to specialists.
The World Health Organization (WHO), in its 2012 annual World Health Statistics Report, compared 194 nations’ health systems using 10 health indicators for 2010. The report showed that although the United States surpasses many countries, it lags behind many other developed nations (see Table 11.3). For example, in terms of life expectancy, the United States ranks 32nd among nations—even further behind other developed nations than it was a decade ago. In terms of infant mortality, a gap exists between the Unites States (43rd) and many other countries—the rates of Sweden, Spain, Italy, Germany, France, the Czech Republic, Slovenia, and Iceland are all half the United States’ rate. However, stud- ies by the World Bank indicate that one area where the United States does lead the world is in per-capita health-care spending and use of health-care services. This data explains, in part, why health policy in the United States is such a visible issue on the public agenda.
the80472_11_c11_339-370.indd 343 11/21/12 1:04 PM
Section 11.1 The Government’s Role in Health Care CHAPTER 11
Table 11.3: Recent WHO rankings for low infant mortality and high life expectancy compared to nations’ health expenditures as percentages of GDP
Nation WHO Infant Mortality Ranking 2010
WHO Life Expectancy Ranking 2010
Health Expenditure as % of GDP 2010
Australia 21 7 8.7
Austria 21 11 11
Belgium 21 11 10.7
Canada 30 11 11.3
China 89 76 5.1
Czech Republic 8 35 7.9
Denmark 8 32 11.4
Finland 8 11 9
France 8 2 11.9
Germany 8 11 11.6
Greece 8 11 10.2
Hungary 30 52 7.3
Ireland 8 26 9.2
Israel 21 11 7.6
Italy 8 7 9.5
Japan 3 1 9.5
Mexico 80 52 6.3
Netherlands 21 11 11.9
New Zealand 21 11 10.1
Norway 8 11 9.5
Poland 30 35 7.5
Portugal 21 26 11
Spain 8 2 9.5
Sweden 3 11 9.6
Switzerland 21 7 11.5
United Kingdom
30 26 9.6
United States 43 32 17.4
Karlarni, Levin-Rector, Ezzati, & Murray, 2011; Nolte, & McKee, 2011; OCED, 2011.
the80472_11_c11_339-370.indd 344 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
11.2 A Historical Overview of the U.S. Government’s Approach to Health-Care Policy
In the first years of the 21st century, health care is still a contentious item on the Ameri-can public agenda. It is a system that observers—including policy analysts and actors, health-care professionals, and advocacy groups—argue is in a state of near crisis, one that is only likely to worsen as longer life expectancies place growing burdens on the health-care system. According to some estimates, 20% of the population will be age 65 or older by the year 2030 (Sultz & Young, 2011). As the number of Americans with age- related illnesses increases, so does the need for full-time caregivers and infrastructures to support them. In addition, health expenditures continue to outpace inflation; as Table 11.3 shows, by 2010 expenditure was approximately 17% of GDP (WHO, 2012). A 2010 analysis of 12 industrialized nations (see Table 11.4) showed that even though health- care spending in the United States far outweighed the other 11 nations, given its GDP the United States had fewer hospital beds and physicians and fewer hospital and physician visits (Squires, 2011). Additionally, the United States had the highest prescription drug use, prices, and spending, as well as the highest rates of diagnostic imaging and cost (Squires, 2011). What stands out from such data is the fact that the United States had the largest private health-care spending among nations in 2009. Out-of-pocket spending in the United States was second-highest (Squires, 2011). (Note that many of the nations in this study rely on government-payer or social insurance models, not private insurance.)
Table 11.4: Governments’ expenditures on health as percentages of total expenditures on health, 2010
Nation 2004 2005 2006 2007 2008 2009 2010
Australia 66.7 66.9 66.6 67.5 68.0
Austria 75.7 76.1 76.0 76.4 77.2 77.7
Belgium 76.0 75.9 73.9 73.5 75.0 75.1
Canada 70.2 70.2 69.8 70.2 70.5 70.6 70.5
Czech Republic
89.2 87.3 86.7 85.2 82.5 84.0
Denmark 84.3 84.5 84.6 84.4 84.7 85.0
Finland 75.0 75.4 74.8 74.4 74.4 74.7 75.1
France 78.8 78.8 78.7 78.3 77.7 77.9
Germany 76.7 76.6 76.4 76.4 76.6 76.9
Greece 59.1 60.1 62.0 60.3
Hungary 72.4 72.3 72.5 70.3 71.0 69.7
Iceland 81.2 81.4 82.0 82.5 82.6 82.0 80.5
Israel 77.4 77.0 76.8 76.9 76.7 75.0 (continued)
the80472_11_c11_339-370.indd 345 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
Table 11.4: Governments’ expenditures on health as percentages of total expenditures on health, 2010 (continued)
Italy 76.0 76.2 76.6 76.6 77.5 77.9 77.6
Japan 80.8 81.6 79.4 80.4 80.8
Mexico 45.2 45.0 45.2 45.4 46.9 48.3 47.3
New Zealand
76.9 77.1 77.5 79.8 80.3 80.5
Norway 83.6 83.5 83.8 84.1 84.3 84.1
Poland 68.6 69.3 69.9 70.8 72.2 72.2
Portugal 67.1 67.1 66.1 65.7 65.1
Spain 70.4 70.6 71.3 71.5 72.6 73.6
Sweden 81.4 81.2 81.1 81.4 81.5 81.5
Switzerland 58.4 59.5 59.1 59.1 59.5 59.7 59.0
United Kingdom
81.3 81.9 81.3 81.3 82.4 84.1
United States
44.0 44.1 44.9 45.1 46.0 47.7
OCED. (2011). Health data. Retrieved from www.stats.oced.org/index
As these studies clearly indicate, among developed nations the health-care model in the United States is unique. That uniqueness to some extent is attributable to the U.S. culture. Historically, many Americans have strongly opposed on ideological grounds a health-care system that the federal government pays for and directly administers. Many Americans perceive such a model as “socialized” medicine—in other words, un-American. However, since the 1990s general dissatisfaction with the system has grown, with ongoing public dialogue urging changes (see Figure 11.1).
the80472_11_c11_339-370.indd 346 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
Figure 11.1: Public opinion on government responsibility for health care on the affordability and availability of health care
Since the 1990s there has been a growing dissatisfaction with the health-care system.
Adapted from Gallup Polls, 2000–2012.
Two issues are central to the health-care reform debate in the United States. The first is cost containment, a concern that Americans share with many other industrialized nations’ populations. The second issue is particular to the United States: the growing number of uninsured (see Figure 11.2). In 1987, 31 million Americans were uninsured (12.9% of the population); in 1993, the number had risen to 39.7 million (15.3%); by 2008, 44.8 million Americans did not have health insurance (14.9%) (US Census Bureau, 2011). By 2008 many critics of the current model were arguing that extending coverage to all Americans was a just and necessary undertaking. In a joint address to Congress in February 2009, newly elected president Obama laid out his administration’s agenda and stated that health-care reform was too urgent to be on hold any longer. A year later, he spearheaded the enact- ment of the Patient Protection and Affordable Care Act of 2010, which many believe to be a historic expansion of health insurance coverage. This chapter traces the road to that legislation through a discussion of contemporary health care in the United States. To give some background and context to the passage of the Affordable Care Act, let’s take a brief history of health-care policy in the United States.
0
40
20
60
80
100
20 12
20 11
20 10
20 09
20 08
20 07
20 06
20 05
20 04
20 03
20 02
20 01
20 00
% Yes, it’s government responsibility % No, it’s not government responsibility % Who worries about health care availability and affordability
P e rc
e n
ta g
e
Year
the80472_11_c11_339-370.indd 347 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
Figure 11.2: Percentage of uninsured Americans, 1987–2010
In 2008, 14.9% of Americans did not have health insurance.
US Census Bureau. (2011). Income, poverty, and health insurance coverage in the United States: 2010. Washington, DC: US Department of Commerce, Table C-1
Health Care as a Private Concern: The 1780s Through the 1950s
The U.S. health-care system was founded upon entrepreneurial principles. Government assistance originally aimed to inform society about activities that would improve general health or to assist people who were economically or physically disadvantaged. In essence, government offered a safety net for those who had no other options in health care. The first facility to care for low-income and destitute citizens was the Pennsylvania general hospital established in 1752. Treatment was limited and resources scarce, but local needy were afforded some sort of health care. Beginning in 1798 with the establishment of the U.S. Public Health Service, originally meant to provide health care for merchant seamen, the pattern was set: People who were well-off were afforded the very best in health-care services, whereas people who were poor and disadvantaged had to struggle for limited resources, such as those offered by charitable organizations and religious institutions.
The first expansion of services and facilities for the destitute occurred in the early 1900s. By the start of World War I, religious groups and communities established and ran approxi- mately 4,000 hospitals. Relying on the patronage of the wealthy, these institutions subsi- dized charitable donations with patient fees. Over time, these facilities became workshops or training grounds for physicians. In addition, the government expanded the number of hospitals serving the needs of injured soldiers and wounded veterans, a movement that had its origins in the post–Civil War era. In 1930 President Herbert Hoover established the Veterans Administration, consolidating a number of government programs dedicated to veterans’ needs, including health care. Veterans’ hospitals vastly increased in number and scope following World War II; for many, they continue to play a vitally important role in today’s health-care industry. In 1946 the Hill-Burton Hospital and Survey and Construction
0
8
6
4
2
10
12
14
18
16
19 97
19 98
19 95
19 96
19 93
19 94
19 90
19 91
19 92
19 89
19 87
19 88
20 09
20 10
20 07
20 08
20 05
20 06
20 02
20 03
20 04
20 01
19 99
20 00
% Uninsured
P e rc
e n
ta g
e
Year
the80472_11_c11_339-370.indd 348 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
Act expanded the number of nonprofit hospitals by granting a one-time federal contribu- tion of nearly 25% of total costs for the construction of rural medical facilities and hospitals.
As facilities expanded, a medical insurance industry emerged. The birth of insurance in the United States began in 1847 with the Massachusetts Health Insurance Company. The company was the first company in the United States to offer sickness insurance to employed workers. Ironically, at this point in U.S. history support for a national insurance system was great. Even President Theodore Roosevelt supported legislation to implement such a system. Initially, the American Medical Association joined Roosevelt in support for a national insurance system but later joined the growing movement of businesses, health-care workers, insurance companies, and others to oppose such legislation. By the early 1900s, any support for the introduction of a national insurance system similar to that found in some European nations was scant, and such an idea was off the public agenda.
In 1933 the private insurance company Blue Cross introduced the nation’s first “prepay- ment” system in California and Michigan. These Blue plans eventually spread to all states in the union. Prepayment plans calculated premiums that at first applied equally to all citizens within a given community and were based upon community ratings. As high-risk groups and activities began to emerge, insurers changed the Blue plans to an experience rating based on individual health status in order to minimize risks and maximize profits. By the early 1950s estimates showed nearly 50% of Americans had some form of health-care insurance. Such industry development was facilitated by generous tax exemptions. Again, renewed concern for the uninsured led President Harry S. Truman to propose replacing pri- vate insurance with a national system. However, after lobbying from the American Medical Association and the insurance industry, the proposal was defeated in Congress. Supporters of national insurance were pacified by legislation like the Kerr-Mills amendment to the 1960 Social Security Act, which authorized insurance grants to the medically indigent.
The Growth of Public Involvement: The 1960s
In the 1960s health care was back on the institutional agenda. Both John F. Kennedy and Lyndon B. Johnson attempted to change the existing system and expand health-care pro- vision to certain sectors of the population. First, in 1960, the Kerr-Mills Act created a new program called Medical Assistance for the Aged. This means-tested grant program pro- vided federal funds to states that chose to cover the medically needy and aged, defined as elderly individuals with incomes higher than those levels needed to qualify for public assistance but still in need of financial aid for medical expenses. Health-care insurance was extended to those who qualified for Social Security.
Second, the adoption of the Migrant Workers Act in 1962 federally funded health pro- grams for migrant workers for the first time in American history. The act also established rural clinics to offer care, health information, and preventive programs to the migrant rural population. The success of the Migrant Workers legislation led to its expansion to low-income families. Further, in 1963 community mental health centers were established to provide assistance for those with mental health concerns.
Additionally, Johnson’s War on Poverty programs directly influenced numerous other programs created as part of the 1965 Social Security Act. For example, the War on Pov- erty health-care reforms introduced the Medicare and Medicaid programs. Medicare was designed to provide health insurance to all older Americans and some people with
the80472_11_c11_339-370.indd 349 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
disabilities as well. Medicaid provides federal grants to states for insuring select lower-income citizens. For the most part, Medicaid assists single mothers with dependent children and the elderly. Both the Medicare and Medicaid are single-payer systems, which means they fund medical care from a single insurance pool run by the state. The initial goal of these two programs, ideally, was to func- tion like private insurance. Physicians and hos- pitals would be reimbursed for “reasonable and necessary” expenses with little federal inter- ference. Realistically, rising health costs (15% between the 1960s and 1970s) forced the fed- eral government to become more involved with both Medicare and Medicaid than was originally intended (Marmor, 1994). The Medicare/Medic- aid issue resulted in rising frustration. Physicians and hospitals complained of receiving fewer reimbursements than they deserved, and patients criticized services and limited coverage.
Through the Economic Opportunity Act of 1964 and the Comprehensive Health Planning Act of 1966, states and localities funded neighborhood health facilities and were able to hire medical per- sonnel and obtain necessary resources.
Managed Care and Escalating Costs: The 1970s and 1980s
The 1970s saw the introduction of a managed-care system in the United States. This sys- tem prohibited movement toward a system of public health provision that resembled Brit- ish, Swedish, or German systems. The Health Maintenance Organization Act of 1973 sanctioned managed care, appropriating $375 million to subsidize the formation of pre- paid insurance groups. Managed care is simultaneously a health-care financing and a health-care delivery system. It creates a network of health providers that controls cost of services, manages the use of services, and measures the performance of health-care pro- viders’ prepaid insured enrollees. Among the different types of managed-care plans, the most common are the health maintenance organization (HMO), preferred provider organiza- tions (PPOs), and independent practice associations (IPAs). Managed care supposedly would provide comprehensive services, greater efficiency, and improved convenience for con- sumers. In fact, the federal government encouraged employers to offer HMOs to employ- ees through tax exemptions and other benefits. However, the actual effect of the Health Maintenance Organization Act was to shift the burden and responsibility of health care away from the public sector and more securely into the hands of the private sector.
The mid-1970s through early 1980s were marked by escalating U.S. health costs. Medi- care costs, physicians’ costs, and hospital expenses were increasing at alarming rates, and access was becoming even more limited. At the same time, the uninsured population was expanding rapidly. In response, the 1974 National Health Planning and Resource Development Act (NHPRD) mandated the implementation of nearly 200 health-planning
Fotosearch/Getty Images
Health-care provisions in the 1960s targeted certain segments of the population, such as senior citizens.
the80472_11_c11_339-370.indd 350 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
areas to guide hospital construction, initiate new technology, and develop master plans for health services. In addition, the NHPRD controlled hospital bed supply and hospital charges, and it monitored physicians and hospitals through peer review boards. The goal of NHPRD was to curb rising health-care costs through more efficient planning and dis- tribution of government resources for health care, with the hope that this would improve access to care.
As it had in other policy sectors, the administration of President Ronald Reagan defined the problem as one of inefficiency due to lack of competition. Policy makers argued for greater use of market forces to improve efficiency and financial responsibility. The gov- ernment introduced cost-control measures. The Reagan period was one of diminishing health-care support and elimination of federal grants—all part of Reagan’s privatiza- tion agenda. For example, in 1983, to curb the federal government’s increased financial obligations, the administration unilaterally imposed fee schedules under the Medicare supplemental program. These uniform fee schedules, designed to scale back Medicare and Medicaid costs, were based on diagnosis-related groups (DRGs). DRGs signified America’s first major national effort to identify, describe, and specify costs for categories of disease and illness. The goal of the DRGs was to contain hospital costs and improve efficiency in health-care delivery by preestablishing schedule payments for each category of illness (initially 470 illnesses total). In addition, the resource-based relative value scale (RBRVS) was introduced to measure and develop consistent fees for physicians’ services. Such cost-cutting efforts continued through the remainder of the decade—to no avail. Higher-use rates per insured in Medicare and an extension of the Medicaid-covered pop- ulation guaranteed ongoing cost increases.
In the last years of the Reagan presidency, three major pieces of legislation, enacted by Congress and signed by the president, sought to extend care to Americans who found themselves in a dire health situation. The first was the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which mandated that insurance programs not cut off some employees’ coverage up to 18 months after employment loss. The following year the 1986 Emergency Medical Treatment and Active Labor Act was passed as part of the Consolidated Omnibus Budget Reconciliation Act. It requires hospitals to treat anyone needing emergency health care, regardless of citizenship or ability to pay. The third piece of legislation was the Catastrophic Coverage Act, passed in 1988. This act attempted to alleviate the strain on Medicare by solving the problem of individuals’ spending so much on catastrophic care that they reached the poverty limit, thus qualifying them for Medi- care or Medicaid. However, most of the act was repealed in 1989 because of the negative reaction of many prominent interest groups, including pressure from the elderly.
From 1988 to 1992, during the George H. W. Bush administration, the need for health reform became obvious. Costs continued to rise, as did the number of uninsured, and many viewed managed care as the pursuit of profit ahead of quality care. Responding to demands for reform and observing the issue’s return to prominence on the institutional agenda, Congress considered a number of plans to introduce some form of national health insurance. All had the same objective: Increase access to health care regardless of economic or employment status and limit patients’ cost-sharing by replacing private insurance premiums with public expenditures through taxes on individual households. Although opposed to national insurance, many Republicans offered alternatives for dealing with the crisis of care. Most of these suggestions used tax credits or vouchers to require every- one to have private insurance coverage.
the80472_11_c11_339-370.indd 351 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
The Era of Reform: 1990s and Early 21st Century
When Bill Clinton took office in 1993, the time seemed ripe for radical reform. The cost of the U.S. health-care system was, for many individuals, out of control. From 1960, costs had increased in all areas of health expenditure (see Table 11.5). Against this agenda-setting backdrop, in 1993 the Clinton administration pledged to create a national health insurance system that would solve the twin problems of spiraling medical care costs and unequal access. Clinton appointed a special task force of 500 people, led by his wife, Hillary Clin- ton, and Ira Magaziner, an industrial policy expert. The task force was charged with developing a health reform proposal. With such presidential commitment and growing numbers of business leaders who had publicly spoken in favor of reform, a major reform of some sort appeared likely.
Table 11.5: Health expenditures by type of expenditure, 1960–1993 (in billions of dollars) Type of Expenditure 1960 1970 1980 1990 1993
Hospital $9.3 $28.0 $102.7 $256.5 $326.6
Physician 5.3 13.6 45.2 140.5 171.2
Dental 2.0 4.7 13.3 30.4 37.4
Other professional 0.6 1.4 6.4 36.0 51.2
Home health care 0.0 0.2 1.9 11.1 20.8
Drugs and other medical nondurables 4.2 8.8 21.6 61.2 75.0
Vision products and other medical durables 0.8 2.0 4.5 10.5 12.6
Nursing home care 1.0 4.9 20.5 54.8 69.6
Other personal health care 0.7 1.3 4.0 11.4 18.2
Program administration and net cost of private health insurance
1.2 2.8 12.1 38.3 48.0
Government public health activities 0.4 1.4 7.2 21.6 24.7
Research 0.7 2.0 5.6 12.2 14.4
Construction 1.0 3.4 6.2 12.1 14.6
Adapted from data obtained from Health Care Financing Administration, Office of National Health Statistics, 2000.
In the autumn of 1993, the Clinton administration released its Health Security Plan. The proposal invited Congress to pass a Health Security Act, which—among other things— required employers to provide health insurance coverage to all employees, created an internal market device to purchase coverage and services, and placed price controls on insurance premiums. The objective of the plan was managed competition, in which insur- ance alliances would provide to everyone access to both the sale of health insurance and the purchase of health care at affordable rates. Clinton’s plan attempted to shape market forces within a framework of national health insurance. The plan was formally submitted to Congress in October 1993, but it never emerged as legislation.
The plan failed to win support, because many policy actors saw Clinton as trying to pass comprehensive reform rather than incremental reform—simply put, it was too much change, too quickly. Additionally, critics charged that the proposal was too complex,
the80472_11_c11_339-370.indd 352 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
which led opponents to misrepresent the plan. The president failed to correct these mis- assumptions with members of the public and their congressional representatives, result- ing in strong opposition. A variety of private-sector actors also opposed the plan: small health insurers, pharmaceutical companies, and small-scale businesses. The Health Insur- ance Association of America launched a fierce media campaign, claiming the plan would reduce patients’ choices, increase costs, and decrease the quality of services. Then, as now, many Americans equate national health care with socialism—a direct threat to individual rights, responsibilities, and freedom.
Congressional Democrats and Republicans drew up alternative plans. Six major health reform bills were circulated during the 1993–1995 session. They ranged from proposals for a single-payer model to a less comprehensive, managed competition plan driven by employer-mandated insurance. Other proposals changed tax codes to give access to more citizens. So many diverse positions presented a serious challenge to crafting a voting majority in support of one major proposal. In the end, none of the proposed health-care bills received a floor vote because a consensus could not be achieved, and the chance to enact radical health-care reform passed. (For a complete discussion of why the Clinton health proposal failed, see the case study in this chapter.)
The late 1990s saw the implementation of cost-controls in the private-dominated health- care sector. Many employers contained health-care costs by encouraging competition among managed-care plans. Additionally, they required or strongly encouraged employ- ees to enroll in HMOs—in 1988, only 30% of the insured population was in some form of managed care; by 1998 that figure had risen to 86%. Insurance providers and managed- care plans have increasingly been pressured to keep premiums down. In turn, managed- care providers pressured hospitals and physicians to cut costs by discounting services.
This ongoing transformation of the health-care system renewed concerns about reform and led to its reappearance on the systemic and institutional agendas. For example, both physicians and patients complained that in the effort to control costs, insurers sometimes failed to cover necessary tests and treatments. Public discussions followed on perceived decreases in the quality and freedom of care, and insurer regulation appeared on the pol- icy agenda. The changes contributed to slower rates in health-care spending by the late 1990s. As the decade and his time in office came to a close, Clinton issued an executive order requiring federal agencies to adopt a Patient’s Bill of Rights by 1999. The bill gave patients direct access to medical specialists, the right to receive information on all medi- cal options regardless of the cost, the right to appeal managed-care decisions to outside panels, and the right to have emergency care paid for if a “prudent layperson” would conclude the visit was necessary. Clinton’s executive order on the patient’s bill of rights was intended to lay the groundwork for future legislation.
George W. Bush indicated in his campaign for the presidency that he believed that changes in health care were necessary. Specifically, he focused on the uninsured and on restruc- turing Medicare. The first summer of Bush’s administration witnessed the fight over the federal patient’s bill of rights. Passage of the legislation would create a host of new protec- tions for patients. The most controversial aspect of the legislation was that it increased the number of individuals who would be able to sue their HMOs. Bush had urged Congress to cap all noneconomic damages at $500,000. Because lawmakers could not agree on the parameters of liability, the legislation failed.
the80472_11_c11_339-370.indd 353 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
Meanwhile, the centerpiece of Bush’s health-care policy was the 2003 Medicare Prescrip- tion Drug Improvement and Modernization Act (MMA). MMA was the largest expan- sion of Medicare since its creation (Wood, 2011). The initial projected cost of the program was $400 billion for the first 10 years; it is now projected to be closer to $600 billion (Wood, 2011). Among the most salient provisions of the MMA were the addition of prescription coverage to Medicare and the creation of health savings accounts, which allow individ- uals to save pretax dollars for future medical costs. By 2012 approximately 12 million Americans were enrolled in such accounts (US Census Bureau, 2012). Two years later the Patient Safety and Quality Improvement Act was passed, encouraging reporting and discussion of poor treatment and dangerous conditions. In 2007 Bush vetoed the State Children’s Health Insurance Program, legislation designed to expand federally funded health-care benefits and plans to 10 million children from low-income families, up from 6 million. Bush defended his veto of the measure, declaring that it represented a move toward socialized medicine. He also claimed the program would benefit many non-low- income families who did not need assistance (Stout, 2007).
Barack Obama was elected to the White House as the United States faced rapidly rising health-care costs and stagnant health outcomes (Reynolds, 2009) (see Figure 11.3). In 2008, 44.8 million Americans did not have health insurance, and the nation’s health indicators lagged behind those of other industrialized nations (Marmor, Oberlander, & White, 2009). Obama made health-care reform a central aspect of his presidential campaign platform, promising it would be a central legislative priority. In his first address to a joint Congress in February 2009, the president kept his promise, acknowledging that passage of reform would be difficult but insisting it had to happen.
Figure 11.3: National health-care expenditures in selected calendar years, 1993–2009
Rising health-care costs and the large number of uninsured Americans were significant topics during the 2008 presidential election.
Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group; and U.S. Department of Commerce, Bureau of Economic Analysis and Bureau of the Census.
$0
$2,000
$1,500
$1,000
$500
$2,500
$3,000
2008200720061993
NHE
2009
E x p
e n
d it
u re
( in
b il li o
n s )
Year
the80472_11_c11_339-370.indd 354 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
Obama’s election, a Democratic majority in Congress, and the health-care financial crisis set the stage for reform. In mid-July 2009 House Democrats introduced a 1,017-page plan which the president announced he wanted Congress to approve by the end of that year. The plan met with considerable opposition from both institutional and noninstitutional actors. Heavy interest-group activity from the insurance industry and physicians was mobilized. In August 2009 the administration conducted a number of town-hall meetings focusing on health-care reform, and the public was vocal in its opposition. In substance, Obama’s plan was very similar to Clinton’s 1993 plan, and was thus opposed for almost identical reasons.
On September 9, 2009, Obama addressed concerns about the proposed reform in a speech to a joint session of Congress. On November 7, 2009, by a vote of 220 to 215, the House passed the health-care bill, which included a government insurance plan. Thirty-nine Democrats opposed the bill and one republican supported it. On December 24, 2009, the Senate passed a health-care bill without government insurance, 60 to 39, with Republicans unanimously opposed. In February 2010 the president released details of a new health- care proposal that was very similar to the Senate bill. A month later the House approved the Senate December bill, 219 to 212. On March 23, 2010, Obama signed the health-care reform into law as the Patient Protection and Affordable Care Act (known as the Afford- able Care Act, ACA). In doing so, he accomplished what no other president had achieved: a health-care system that covered 95% of Americans—nearly universal health-care cover- age for the public (“Health Care Reform at Last,” 2010). After its passage 13 states filed suit against the new legislation.
Unlike Clinton’s proposed comprehensive plan in 1993, which aimed for sweeping change, the Patient Protection and Affordable Care Act was carefully crafted to be phased in over a 4-year period. The incremental nature of the ACA’s implementation is worth noting from a political perspective. The rollout occurs over the course of several national elections, including a presidential election in 2012. A potential shift of party influence at the federal level and its possible effects on the law—if any—will be watched with great interest by policy analysts.
Some aspects of the Affordable Care Act are controversial. For example, the act establishes a health-care system that continues to rely mainly on private insurance and private health- care providers. In addition, despite the fact that the legislation will extend health coverage to an estimated 32 million more people by 2019, it still leaves around 23 million still uninsured. Under its most controversial component, the law requires all individuals to purchase health insurance by 2014. Those who do not will pay a penalty, unless they are exempt because of low income or other reasons (Grier, 2010). However, many aspects of the law provide unprecedented protections. For example, one of the law’s main provisions expands state Medicaid eligibility to include anyone with an income up to 133% of the federal poverty level. Table 11.6 highlights some of the key immediate components of the legislation.
the80472_11_c11_339-370.indd 355 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
Table 11.6: The 2010 Patient Protection and Affordable Care Act
Key components
• Individuals with preexisting conditions cannot be denied insurance coverage. Law immediately covers children with preexisting conditions, and adults will be added in 2014. Until then, sets up a temporary high-risk pool to cover adults with preexisting conditions.
• Small businesses with fewer than 50 employees will receive tax credits covering up to 50% of em- ployee premiums.
• Seniors will receive a rebate to fill Medicare drug coverage gap, known as a “donut hole,” which limits prescription medication coverage. From 2011, 50% of donut hole will be filled.
• Young adults up to age 26 who are dependent upon parents will be covered by parents’ plans. • No lifetime caps on the amount of insurance payout an individual can receive. Annual caps will be
limited and banned in 2014. • Preventive care without copays mandatory in all new insurance plans. All plans will be affected by
2018. • Insurance companies can no longer drop individuals when they get sick. • Insurers must now reveal how much money is spent on overhead. • New plans must implement a customer-appeals process for coverage determinations and claims. • A 10% tax on indoor-tanning services effective for services on or after July 1, 2010. • New screening procedures will be implemented to help eliminate health insurance fraud and
waste. • Medicare payment protections will be extended to rural areas. • To take advantage of IRS tax-deduction benefits, nonprofit Blue Cross organizations will be required
to maintain a medical-loss ratio (money spent on procedures over money incoming) of 85% or higher.
• Chain restaurants will be required to provide a “nutrient content disclosure statement” to be listed on both in-store and drive-through menus of fast food restaurants.
• Implements a temporary program for companies that provide early retiree health benefits for those ages 55 to 64.
• The Department of Health and Human Services will create a new website to provide consumer information on affordable health insurance options. The site will also include information for small businesses.
• A 2-year temporary credit (up to a maximum of $1 billion) to encourage investment in new thera- pies for the prevention and treatment of diseases.
Following its passage, the Patient Protection and Affordable Care Act faced a series of legal challenges (see Figure 11.4). By September 2011, the Obama administration, 26 states, and the National Federation of Independent Business all asked the Supreme Court to rule on the law’s constitutionality. On June 28, 2012, the Supreme Court announced its decision to uphold the Patient Protection and Affordable Care Act of 2010. In a 5-to-4 decision, the court declared the individual mandate compelling people to buy health insurance consti- tutional because the fines for not having insurance amounted to a tax, which falls within Congress’s constitutional powers of taxation. (The Obama administration had argued the penalty was not a tax but was constitutional because such a mandate was permissible under the Constitution’s commerce clause.) However, the court rejected the mandatory Medicaid expansion, ruling that it is not legal to threaten to withhold other benefits if states opt against certain other portions of the Affordable Care Act.
the80472_11_c11_339-370.indd 356 11/21/12 1:04 PM
Section 11.2 A Historical Overview of Health-Care Policy CHAPTER 11
Figure 11.4: Legal challenges to the 2010 Patient Protection and Affordable Care Act
Thirteen states filed suit against the Patient Protection and Affordable Care Act after its passage in March 2010 on grounds that the act was unconstitutional.
Nov 14, 2011 Supreme Court agrees to take case.
March 26–28, 2012 Supreme Court arguments.
June 28, 2012 Supreme Court upholds health care law.
Nov 8, 2011 The U.S. Court of Appeals for the District of Columbia upholds February 22 decision to dissmiss a challenge.
Oct 7, 2010 Democrat-appointed U.S. District Judge in Michigan upholds key provisions of the health care law. He refuses an injunction to halt preparations for putting changes into full effect in 2014.
Nov 30, 2010 Democrat-appointed U.S. Distric Court Judge rules the law’s individual mandate is constitutional in a Virginia case, dismissing a challenge filed by Liberty University.
Dec 13, 2010 Republican-appointed U.S. District Judge in Richmond, VA, becomes the first federal judge to strike down the law.
Feb 22, 2011 Democrat-appointed judge in U.S. District Court in Washington dismisses a lawsuit that the requirement for all Americans to have health insurance violates religious freedom of those who rely on God to protect them.
June 29, 2011 A divided three-judge panel of the 6th Circuit Court of Appeals upholds U.S. District Court Michigan decision from October 2010 that the individual mandate is constitutional. One judge is the first Republican appointee to vote to uphold the law.
Aug 12, 2011 A three-judge panel of the 11th Circuit Court of Appeals agrees with the U.S. District Court Judge of Florida that the mandate is unconstitutional but does not throw out the entire law.
Sept 8, 2011 A three-judge panel of the 4th Circuit Court of Appeals overturns U.S. District Judge ruling of December 13, ruling unanimously that Virginia does not have the authority to challenge the law.
Sept 28, 2011 Supreme Court asked to rule.
Jan 31, 2011 Republican-appointed judge in U.S. District Court in Pensacola, Florida, declares the law unconstitutional because of its mandate that people buy insurance, giving Florida and 25 other states a victory. Judge declares that the invalidated individual-mandate provision cannot be separated from the rest of the health care law.
the80472_11_c11_339-370.indd 357 11/21/12 1:04 PM
Section 11.3 The Process of Adopting Health-Care Reform CHAPTER 11
Republicans’ response to the court’s ruling was to announce their intentions to step up efforts to repeal “Obamacare,” should they win control of Congress in the November 2012 elections. Following the court’s decision, the Republican 2012 presidential nominee, Mitt Romney, held a press conference and vowed to repeal the legislation on his first day in office, claiming the law was simply bad policy—even though as Massachusetts governor, he had signed a very similar policy into law. In the days following the Supreme Court decision, public support for Obama’s overhaul of the health system remained divided (see Figure 11.5).
Figure 11.5: Public attitudes on the Patient Protection and Affordable Care Act
Public attitudes about the act were fairly divided up until March 2012.
Adapted from Gallup Polls, 2010–2012.
11.3 The Process of Adopting Health-Care Reform
How did the groundbreaking Affordable Care Act become law when earlier policy efforts had fallen short? Recalling theories surrounding the policy making process may shed some light. By the early 1990s, health-care policy had moved from what Cobb and Elder’s agenda-setting model would call the systemic (or public) agenda to the institutional (or policy making) agenda (see Chapter 4). Widespread calls for reform were fueled by higher costs to both patient and provider and increased concern over competi- tive market forces in the provision of health care. This chapter has already discussed the failed 1993 attempt by the Clinton administration to reform the U.S. health-care system, and the successful pursuit of similar legislation by Obama 16 years later. The questions now are why Obama succeeded where Clinton failed and what the two legislative situa- tions tell us about policy adoption.
0
40
30
20
10
50
60
201220112010
% Believe law is good
% Believe law is bad
% No opinion
P e rc
e n
ta g
e
Year
the80472_11_c11_339-370.indd 358 11/21/12 1:04 PM
Section 11.3 The Process of Adopting Health-Care Reform CHAPTER 11
Designing Health-Care Reform: 1993 Through 2010
To understand the Obama’s administration success in policy adoption, it is helpful to con- sider how the health-care climate in the years before the ACA influenced policy design. The U.S. health-care system provided individuals with curative health services through either the private market or limited insurance programs. Though the need for reform was apparent by the 1990s, American policy makers were faced with the problem of designing policy that would achieve cost containment, reduce severe gaps in health coverage, and reduce cost-shifting from doctor to patient, doctor to insurance company, employer to employee, and insurance company to employer.
Everyone was willing to allow cost-shifting—as long as the economy grew and business was protected from the effects of competition. However, with economic recession and changes in the structure of the American labor market, the problems of cost and access became more visible. After the 1980s, more employees lacked fringe benefits and more individuals were forced to pay out-of-pocket for their own health insurance. For many workers, the choice was between underinsurance and no coverage at all. Meanwhile, employers who did not provide fringe benefits kept their labor costs down (Giaimo & Manow, 1999). Those firms that did provide benefits believed their higher labor costs put them at a disadvantage when competing with both U.S. companies that did not provide benefits and overseas competitors. Employers who insured their employees started to protest the higher premiums being passed on to them to cross-subsidize the uninsured or underinsured. Some businesses lobbied government to adopt a national insurance pro- gram, which would require all employers to pay their share of workers’ health-care costs (Giaimo & Manow, 1999).
Although the Clinton plan failed, it did help to foster the idea that change was needed. The policy initiative’s effect was to stimulate business to regulate health insurance. Business forced competition among insurance providers, who were pressured to keep premiums down as a consequence. Government also subsequently enforced incre- mental regulation of the insurance market to foster competition. In addition, it passed consumer-protection laws governing what HMOs and other providers could and could not do. Even so, between 1999 and 2008, health insurance premiums nearly doubled (see Figure 11.6), the number of uninsured continued to rise, and health-care costs were a major contributor to the U.S. fiscal deficit.
Former President Clinton Discusses Health-Care Reform The main issues facing health-care reform have changed in the past 10 years. New presidential can- didates learn from the failures of past presidents to form their own reform plans. Former president Bill Clinton discusses his administration’s failures and what he hopes for in the future of health-care reform here: http://www.youtube.com/watch?v=9UWASJNGt5Q
Critical Thinking and Discussion Questions
1. What specific reasons did former president Clinton give for why health-care reform didn’t work during his administration?
2. Which stakeholders does he identify as taking a different position now versus during his term? 3. Which factor does he consider critical to cost savings?
the80472_11_c11_339-370.indd 359 11/21/12 1:04 PM
Section 11.3 The Process of Adopting Health-Care Reform CHAPTER 11
Figure 11.6: Average health insurance premiums, 1999 and 2008
Health insurance premiums nearly doubled between 2000 and 2008.
Adapted from Manchikanti & Hirsch, 2009, pp. 289–304.
Both Clinton and Obama faced very similar policy contexts: an acknowledged health- care crisis, a polarized political climate, soaring deficits, and distrust of government. Both administrations faced the task of designing a policy that corrected the gaps in cov- erage and the rising costs of provision and services. The alternatives were clear. Each president could
1. Do nothing and fail to correct any of the system’s shortcomings. 2. Create a national health service, which would correct access problems but would
not deal with cost containment. It would also result in higher taxes and meet with opposition from private insurers.
3. Build upon existing employment-based insurance—thereby ending employers’ free rides—and pool all risks within a national scheme.
4. Regulate the market in order to expand access and replace cost-shifting with cost containment.
Both presidents chose to combine the third and fourth alternatives in formulating the 1993 Health Security Plan and the plan Obama presented to Congress in 2009. The goals of both policies were the expansion of access, cost containment, and distribution of costs across the board to all employers.
0
4,000
3,000
2,000
1,000
5,000
6,000
7,000
9,000
8,000
10,000
1999 2008
Employee contributions Worker contributions
C o
n tr
ib u
ti o
n s (
in d
o ll a rs
)
Year
the80472_11_c11_339-370.indd 360 11/21/12 1:04 PM
Section 11.3 The Process of Adopting Health-Care Reform CHAPTER 11
Case Study: Why the Clinton Plan Failed and the Obama Plan Succeeded What was so different about Obama’s health-care reform plan that enabled it to succeed where Clinton’s failed? The two plans have a great deal in common in both design and formu- lation. Obama’s rhetoric resembled Clinton’s. Both presidents proposed their health-care plans during a joint session of a Democrat-controlled Congress. So why was the outcome so different, and what does it the passage of the 2010 Patient Protection and Affordable Care Act reveal about policy design and policy adoption?
To some extent, policy was adopted in 2010 because the Obama administration did not repeat the mistakes of Clin- ton’s administration. Learning from the past, Obama did not follow the Clintons’ adoption strategy (Oberlander, 2009).
First, Obama worked closely with congressional leaders to design the health reform proposal, whereas Clinton appointed a task force that would deliver recommendations without real congres- sional input. The Obama administration did not merely present a final law to be adopted by Con- gress, as the Clinton administration had. Obama worked with key members of Congress daily to reconcile edits to the law. He also met with other key policy actors in the health system to listen to concerns and to convey his position.
The Obama administration’s efforts to work with key stakeholders contrast with Clinton’s, who either ignored or openly battled stakeholders like the insurance industry and small businesses. Obama obtained agreement from the nation’s health insurers that they would stop denying coverage to those with existing medical conditions, provided everyone was required to buy insurance. That was one of many deals Obama made with key stakeholders, including hospitals and pharmaceutical com- panies, to build consensus (Oberlander, 2009).
Among the key stakeholders in both debates were businesses. Clinton’s administration did not take into account that compelling all employers to provide what it believed many employers were already doing was viewed as undermining corporate autonomy. Also, Clinton’s policy designers did not con- sider the economic feasibility for smaller businesses, which foresaw higher labor costs. Obama’s plan, in contrast, sought to minimize the impact on small businesses through subsidies.
The policy adoption’s timing played an important role. By 2009 many health stakeholders found reform of the health system more palatable. To protect itself from stricter regulation and scrutiny in the future, the insurance industry was willing to back reform. Of course, the industry had a financial incentive to do so: Essentially, the government was providing them with an expanded consumer base—more people who would require insurance.
The speed of adoption was a key factor. Obama’s administration, unlike Clinton’s, pushed its proposal through the legislative process quickly. Obama made health-care reform his chief priority. At the time, he pursued no other legislative initiatives, thereby saving the White House’s political capital and taking advantage of the policy window opening: an electoral mandate. Clinton, on the other hand, was simultaneously attempting to pass both the budget and the North American Free-Trade Agreement. By the time Congress received his health plan, Clinton’s political capital was weakened— the honeymoon was over and his mandate largely forgotten.
Getty Images
The speed of policy adoption was critical for President Barack Obama’s 2010 Patient Protection and Affordable Care Act.
(continued)
the80472_11_c11_339-370.indd 361 11/21/12 1:04 PM
Section 11.3 The Process of Adopting Health-Care Reform CHAPTER 11
Applying the Policy Process to a Fragmented Health-Care System
Obama’s health-care initiative succeeded, in part, because he understood that health-care policy making in the United States is highly diffuse. One reason for such diffusion is the lack of a unified, national, health-care policy. Like many other policy areas, the U.S. health- care system is decentralized and fragmented. As a result, health-care reform proposals can emerge from a variety of arenas. Any state government has the ability to formulate and enact health-care policy. At the federal level, a number of executive agencies are engaged in health-care policy formulation, including the Centers for Medicare and Medicaid Ser- vices, the Department of Health and Human Services, and the Surgeon General’s Office. Additionally, presidents can assemble groups of interested actors to formulate policy rec- ommendations. At the same time, Congress is also active in one or more aspects of health- care policy through its committee system—from 1980 to 1991, 10 House committees and 7 Senate committees held hearings on health-care reform.
Case Study: Why the Clinton Plan Failed and the Obama Plan Succeeded (continued) Obama also made sure key Democrats in both congressional houses always knew where he stood and what he wanted, which enabled him to control his own party. In 1993 the party was clearly split over the Clinton proposal, with different bills demanding support. In 2009 the House introduced a health bill jointly sponsored by three separate committees, representing a united front.
Obama was also willing to make compromises over substance, while Clinton was not. For Clinton, health-care reform was all or nothing. Obama, meanwhile, took a pragmatic approach: he would do whatever was necessary to get the core of his proposal adopted. Perhaps his largest compromise was to give up the goal of a universal health-care system, one that is organized around providing a specified package of benefits to all members of the system. Obama also accepted reductions in the scope of benefits and cost controls. Indeed, the final legislation reflected many Republican ideas that were proposed in response to Clinton’s plan. What was ultimately adopted was a modified proposal, but one that the president believed kept the plan’s core intact.
Successful policy adoption occurred in 2010 and not in1993 because Obama played the policy game differently than Clinton had, using different strategies. Obama’s plan was packaged as an expansion of the existing system. Clinton’s plan was designed as complete regulation. For Obama and his advis- ers, the proposal represented a compromise between Democratic versions of universal health insur- ance and conservative opposition. Although the Clinton administration considered its plan feasible, nearly every other policy actor saw it as too much, too soon.
The 1993 Health Security Plan’s failure is a good example of how the design of alternatives is crucial to the type of policy that is formulated and also to possible adoption. Policy feasibility must always take into account all actors within any given policy sector. Although the Clinton administration felt it had designed a plan with all the constituent groups in mind, it did not understand that constituent groups are composed of many stakeholders who may share goals but have different needs.
The 2010 Affordable Care Act, a result of compromise and pragmatism, attempts to improve the system by filling in existing gaps, as opposed to completely overhauling the system. The Obama legislation, aiming for feasibility, took into account stakeholders, the need for an inclusive legislative process, and the desire for modification rather than the overthrow of the system.
the80472_11_c11_339-370.indd 362 11/21/12 1:04 PM
Section 11.3 The Process of Adopting Health-Care Reform CHAPTER 11
The Affordable Care Act The Supreme Court upheld the Patient Protection and Affordable Care Act in 2012. President Barack Obama discusses what this law means to Americans with private insurance and what it means for those without. Watch his statement on this pivotal health-care decision here: http://www.youtube .com/watch?v=pdMHO-6zMTg.
Critical Thinking and Discussion Questions
1. According to the president, what are the benefits of this legislation? 2. What are the specific benefits for the uninsured? 3. What does the president say—or not say—about the individual mandate?
The American health-care system is also financed at many different levels. The federal government is responsible for 50% to 60% of the expenditure, while state and local levels pick up the remainder (Heffler, Smith, Keehan, Clemens, & Zezza, 2003). Federal health- care revenues are collected through income and corporate taxes. At the state level, reve- nues are collected through income and sales taxes, whereas at the local level health revenues are provided through sales and property taxes. Voluntary agencies supplement additional health-care revenues.
The debate since 1993 demonstrates impediments to expanded govern- ment activity in this policy sector and highlights the limitations of the American policy-making pro- cess. U.S. citizens are wary and distrustful of government inter- vention. Interest groups have suf- ficient power to stop major reform from reaching the top of the insti- tutional agenda or the power to broker deals which allow them to alter the tone and nature of reform once on the agenda. The structure of the federal system allows policy to be made and stopped at multiple levels of government. The separa- tion of powers permits divided government and a decentralized legislative process in which mul-
tiple poles of power exist in both houses of Congress. Clinton’s failed proposal and Obama’s successful one show that a president’s ability to devise major legislation and see it adopted depends in large part on the executive’s power to persuade both the public and individual legislators to support a presidential initiative, using a strategy of compromise, pragmatism, and incentives.
iStockphoto/Thinkstock
Proposals for health-care policy can come from different arenas and from different actors, such as the Surgeon General’s Office.
the80472_11_c11_339-370.indd 363 11/27/12 3:06 PM
Section 11.4 Health-Care Policy Instruments CHAPTER 11
11.4 Health-Care Policy Instruments
American health policy, arguably, has three generic goals (Stone, 1988):• security, the provision of a minimum of services • equity, which can be understood as a guarantee of access • efficiency, or the best level of services for the least amount
In contemporary U.S. health-care policy (see Table 11.7), the government has used five commonly recognized policy instruments to achieve these three goals. One instrument is direct provision of services. A second instrument is rules—who may provide services, how services are to be provided, what services may be provided, how services will be financed, and who may receive services. Inducements or incentives, both negative and positive, are the third instrument used in health policy. These ensure compliance by both providers and target populations. Facts that persuade the target population to undertake change in behavior are a fourth policy instrument. Finally, governments rely on powers that provide them the authority to make decisions.
Table 11.7: Major legislation affecting health care in the United States
Year Legislation
1946 Hill-Burton Hospital and Survey and Construction Act
1960 Kerr-Mills Act
1962 Migrant Workers Act
1964 Economic Opportunity Act
1965 Social Security Act
1966 Comprehensive Health Planning Act
1973 Health Maintenance Organization (HMO) Act
1974 National Health Planning and Resource Development Act (NHPRD)
1985 Consolidation Omnibus Budget Reconciliation Act (COBRA)
1986 Emergency Medical Treatment and Active Labor Act
1988 Catastrophic Coverage Act
1996 Health Insurance Portability and Accountability Act
2003 Partial-Birth Abortion Ban Act
2003 Medicare Prescription Drug Improvement and Modernization Act (MMA)
2010 Patient Protection and Affordable Care Act
the80472_11_c11_339-370.indd 364 11/21/12 1:04 PM
Key Points to Remember CHAPTER 11
Summary
Some critics have argued that the U.S. health-care system is “the paradox of excess and deprivation” (Mueller, 1993, p. 77). The system boasts the greatest density of high-tech services, more employees per bed than any other country, and arguably the best medical research and training in the world (Mueller, 1993). However, the United States also possesses the highest health-care costs, the largest health-care expenditure of any industrialized nation, and a large number of individuals who fear the financial con- sequences of illness.
In 2010 Obama oversaw the enactment of a historic reform of the U.S. health-care system, one that was specifically designed to remedy the two major issues facing health-care pol- icy: staggering costs and a significant number of uninsured citizens. The process by which Obama’s policy was adopted is highly instructive of the nature of U.S. policy making in general. Because health care, like many policy areas, is decentralized, any major policy decisions require the input and cooperation of numerous actors, both institutional and noninstitutional; various levels of government; and support and influence from interest groups, advocates, and industry. The 2-decade battle over health-care reform also illus- trates the highly political atmosphere that inevitably surrounds major policy initiatives. In addition, the public’s role in health-care reform is far from insignificant. Even after the passage of the health reform legislation, public opinion remained sharply divided, a strong indication of cultural, distinctly American attitudes about just what role citizens expect their government to play in the arena of health and well-being.
Key Points to Remember
• The United States, one of the world’s wealthiest and most powerful nations, ranks surprisingly low in many health-related areas.
• The U.S. health-care system is a market-oriented one, and despite recent reform, it will remain so in the near future.
• The United States remains the lone industrial nation of its economic stature with- out some kind of national health insurance provided by the government through tax revenues.
• Greater public sector health-care provision in the United States continues to be blocked by a culture that fears “big” government. Cultural and historic emphasis on individualism, self-reliance, and limited government means that many per- ceive direct provision by government of health services as erosion of individual rights and choices.
• The U.S. health-care system provides individuals with curative health services through either the private market or limited insurance programs.
• By the early 1990s many individuals desired health reform of some kind, and the need for it appeared obvious. U.S. policy makers were faced with the problem of designing policy that would achieve cost containment, reduce severe gaps in health coverage, and reduce cost-shifting.
the80472_11_c11_339-370.indd 365 11/21/12 1:04 PM
Key Terms CHAPTER 11
Blue plans A prepayment health insur- ance system created by Blue Cross in 1933 in California and Michigan.
diagnosis-related groups (DRGs) Imposed in 1983, the United States’ first major national effort to identify, describe, and specify costs for categories of disease and illness.
Health Maintenance Organization Act of 1973 Legislation enacted during the Nixon administration that sanctioned managed care, appropriating $375 million to subsi- dize the formation of prepaid insurance groups.
health savings accounts Medical sav- ings account that allow employees with high-deductible medical insurance to save pretax dollars for future medical costs.
Health Security Plan A 1993 health policy reform proposal put forth by the Clinton administration but never enacted, whose objective was to ensure that insurance alli- ances would provide everyone with access to both the sale of health insurance and the purchase of health care at affordable rates.
Kerr-Mills Act Legislation adopted during the Kennedy administration in 1960 that authorized federal funds to states that chose to cover the medically needy and aged.
managed-care system Both a health-care financing and health-care delivery system that creates a network of health providers that controls cost of services, manages the use of services, and measures the perfor- mance of health-care providers’ prepaid insured enrollees; most common type is the HMO.
Medicaid U.S. health program that pro- vides means-tested federal grants to states for insuring select lower-income citizens and their families.
Medicare National social insurance pro- gram created in 1965 as part of the War on Poverty programs to provide health insur- ance to Americans aged 65 and older and some people with disabilities.
• One lesson of the 2-decade battle over health-care reform is that reform of health care can only be accomplished in the United States through incremental changes.
• Health policy reform was successfully enacted in 2010 because the Obama administration understood legislation is only feasible if it takes into account dominant stakeholders, the politics of the legislative process, and public opinion.
• Feasibility is the key to successful policy adoption—in brief, it might not be the best policy, but it is the one that legislators will support.
• Contemporary U.S. health-care policy has used five of the commonly recognized policy instruments to achieve its goals: direct provision of services, rules, induce- ments and incentives, facts, and powers.
Key Terms
the80472_11_c11_339-370.indd 366 11/21/12 1:04 PM
Critical Thinking and Discussion Questions CHAPTER 11
Critical Thinking and Discussion Questions
1. When governments experiment with the introduction of market forces into health-care provision, should they distinguish between a citizen and a customer? How so?
2. Should health care be a public provision and open to all regardless of income? Explain your answer.
Medicare Prescription Drug Improve- ment and Modernization Act (MMA) Health reform legislation enacted during the George W. Bush administration in 2003 that was the largest expansion of Medicare since the program’s inception; created health savings accounts and added prescription drugs to Medicare.
Patient Protection and Affordable Care Act of 2010 National health reform legisla- tion signed into law by President Barack Obama. Among other reforms, the act bans denial of coverage for preexisting condi- tions, eliminates lifetime payout caps, and requires all Americans to buy medical insurance by 2014.
Patient’s Bill of Rights Executive order issued by President Bill Clinton, but never enacted, that required the enactment of federal legislation by 1999 that would guarantee new protections for patients, including access to specialists and emer- gency-room care.
prepayment plans Calculated insurance premiums that originally applied equally to all citizens within a given community and were based upon community ratings; later evolved into experience rating based on individual health status.
resource-based relative value scale (RBRVS) Cost-containing measure intro- duced during the Reagan administration that measured and developed consistent fees for physicians’ services.
single-payer system Medical care funded from a single, state-managed insurance pool.
universal health-care system A health- care system organized around providing a specified package of benefits to all mem- bers of a society, with the end goal of pro- viding financial risk protection, improved access to health services, and improved health outcomes.
U.S. Public Health Service Established in 1798, this was one of the first government agencies in the United States to care for low-income groups. It is now a primary division of the U.S. Department of Health and Human Services.
the80472_11_c11_339-370.indd 367 11/21/12 1:04 PM
Applied Internet Exercises CHAPTER 11
Applied Internet Exercises: Health-Care Policy What do people think about the health-care reform? Do they know what it contains? Your assign- ment is to assume the role of a Democratic or Republican pollster and obtain a cross-section of opin- ions regarding the 2010 legislation. (Flip a coin to choose Democrat or Republican.)
During the 2010 health-care debate this statement was raised: “If people only knew what was in there, they would overwhelmingly support it.” Now that the law has been upheld, your job is to answer the question of whether people really know what the law contains. Additionally, do they know any of the key facts, including when it is being implemented? Using online tools (including e-mail or Skype) or social network sites (Facebook, Google+), survey 10 of your friends on their opin- ions about the 2010 health-care reform legislation.
Your tasks are as follows:
1. Write a short survey (five to seven questions) about health-care reform. To guide you, feel free to use published surveys on health care, readily available at http://www.pollingreport.com. Include questions that assess the following. • Favorability/unfavorability of health-care reform • Repeal or not repeal reform • Support for or against the individual mandate • Support for or against the notion of the individual mandate if it is called a tax • Support for or against the Supreme Court’s decision to uphold the law • Open-ended question that asks participants to identify three provisions in health-care
reform, e.g., please identify three benefits or new provisions from the Patient Protection and Affordable Care Act.
2. Survey each of your friends and total the responses for each question. (Bear in mind that the open-ended question is critical because you want to assess whether people actually know any- thing specific about the legislation without giving them those specifics.)
3. Prepare a summary two-page memo to a particular partisan stakeholder in the policy discus- sion (for example, a Democratic or Republican congressional staffer) that outlines your findings and your recommendations. Keep the following in mind: • Your memo should be objective in assessing the findings, meaning no commentary, just the
facts. • Since your work is for a specific partisan stakeholder, your recommendations depend on
whether you are a Republican or Democratic pollster. • Your recommendations should provide direction about the kind of legislative steps, if any,
your partisan stakeholder can now take, and whether or not the public will support the stakeholder’s agenda. Note: The agenda of the Democrat stakeholder is to ensure the law is strengthened and fully implemented, while the agenda of the Republican stakeholder is to repeal the legislation.
• Based on your research findings, highlight openings or obstacles to achieving these legisla- tive goals. Be sure to provide no more than five recommendations.
the80472_11_c11_339-370.indd 368 11/21/12 1:04 PM
Suggested Readings CHAPTER 11
Suggested Readings
Bodenheimer, T., & Grumbach, K. (2008). Understanding health policy—a clinical approach (5th ed.). New York: McGraw-Hill Medical Publishing Division.
Geyman, J. (2003). Myths as barriers to health care reform in the United States. Interna- tional Journal of Health Services, 33(2).
Himmelstein, D., & Woolhandler, S. (2010, March 30). Obama’s reform: No cure for what ails us. British Medical Journal.
O’Rourke, T. (2009). Commentary—health reform opinions. American Journal of Health Studies, 24(3).
Riegelman, R. (2010). Health reform 101: What it means to you and to the American people. Boston: Jones & Bartlett.
Rushefsky, M. E., & Patel, K. (1998). Politics, power, and policy making: The case of health care reform in the 1990s. New York: Sharpe.
Skocpol, T. (1996). Boomerang: Clinton’s health security effort and the turn against government in U.S. politics. New York: Norton, 1996.
the80472_11_c11_339-370.indd 369 11/21/12 1:04 PM
the80472_11_c11_339-370.indd 370 11/21/12 1:04 PM
