Role of Government in Health Care

1. Role of Government in Health Care Ty Borders, Ph.D. and James Rohrer, Ph.D. Department of Health Services Research & Management School of Medicine / Texas Tech Health Sciences Center

2. Learning Objectives 1. Understand government’s role in health care. 2. Understand three theories of health policy. 3. Define public health. 4. Explain the relationship between public health and private medicine. 5. Identify essential public health services. 6. Identify social trends affecting health and health care.

3. Learning Objectives 7. Describe some common types of national health systems. 8. Describe health insurance systems in other developed countries. 9. List some common types of health problems facing developed nations. 10. List some of the pressures for health care reform. 11. Explain the causes and consequences of managed care. 12. Explain why the U.S. does not have NHI.

4. Government’ Role and the Politics of Health Care • Government roles • Financing • Medicare, Medicaid • We should not view US as a private health system because Gov’t role is so large • Delivery • VA, HIS • Regulation (e.g. licensure, rate-setting, CON)

5. Theories • Marxixm • Economic conflict, labor vs. capital • Gov’t aids capital • Appeasement • Interest Group Pluralism • Interest groups represent more than money • Social groups may take precedence over economic groups

6. J.Q. Wilson’s Model:Government as Mediator • Concentrated benefits - concentrates costs • Interest group conflict • e.g. Payers vs. hospitals in rate regulation • Diffuse benefits - diffuse costs • Requires grassroots movement, policy entrepreneur, social movement. • Usually nothing happens (e.g. NHI)

7. J.Q. Wilson’s Model:Government as Mediator • Concentrated benefits - diffuse costs • e.g. Medicare • Diffuse benefits - concentrated costs • e.g. Stringent CON

8. Other theories • Technocratic corporatism • government as arbitrator • Other factors • Culture, ideology, wealth, party competition, values of elected officials

9. Public Health • Definition A • Prevention of disease, disability, and premature death by organized efforts of government • Assumes major preventive thrusts are beyond organizational capacity of individuals physicians • Need communal effort under police powers of state

10. Public Health • Definition B • Assurance of conditions in which people can be healthy • Assumes private sector has the resources to do more than the public sector • Public-private partnerships will be required

11. History • Phase I (pre-depression) 1840-1890 • Sanitation • Phase II 1890-1910 • Bacteriology • Isolation • Disinfection • Immigration led to creation of slums, need for neighborhood health centers

12. History • Phase III 1910 • Personal hygiene • Preventive medicine • Medical exams • (this was more politically acceptable because federal money was passed on to local agencies) • Phase IV? 1970s • Chronic disease

13. Boundaries of Public Health • MDs resisted incursions into personal medicine • Public health less prestigious, paid less, had secondary status because it needed to prevent illness indirectly by coordination of the private system

14. Functions • Traditional functions • Communicable disease control • Immunizations • Restaurant regulation • Environmental sanitation • Water, air quality • Health education • Lab test • Vital statistics

15. Functions • Newer functions • Licensure (professional and institutional) • Health education (more) • Health system planning • Substance abuse • Personal health services (CHC) • Research

16. Local health agency responsibilities • Vital statistics, reportable diseases • Epidemiology, surveillance • Health code development and enforcement • Health planning • Inspections • Health education • Sewage disposal • Vector control • STD counseling • Family planning

17. Federal gov’t responsibilities • Regulation of foreign and interstate commerce • FDA, FTC • DHHS/PHS • HRSA, SAMHSA, AHRQ, NIH, CDC, NCHS, HCFA • GAO • Works for congress, monitors feds • CBO • Fiscal policy

18. New Public Health in America • New roles • Assessment • Policy development • Assurance • Essential services • Surveys for needs assessment • Health education and promotion • Planning • Enforcement • Professional education

19. Trends (Barry Levy) • Changes in financing and welfare lead to reductions in financial access • Increased recognition of alternative medicine poses risks • Information revolution could affect confidentiality • Biotech revolution could lead to discrimination • Diversity and aging will lead to need for prevention and treatment

20. Trends (Barry Levy) • Economic changes will lead to increased number of working hours per week and reduced benefits • Changing role of gov’t will lead to reduced activism • Social deterioration will lead to reduced civic virtue, more crime, and more family violence

21. Comparative health care • Types of health insurance and health systems • Private (19th century) • Pluralistic (US) • NHI (Canada, France, Japan) • NHS/NHI (UK) • Socialized (Eastern Europe before conversion)

22. Common problems • Imbalance between hospitals and primary care • Continuity of care • Bureaucratic inflexibility, option for consumer input • Lack of accountability

23. Canada • NHI paid for by general tax revenues • MDs reimbursed on FFS • Negotiated fee schedule • Hospitals are private, not-for-profit • Funding from NHI • Paid by provinces • Underfinanced • Low MD fees • Hospital budgets too low

24. Canada • Not enough use of non-MDs • No incentive to be efficient • Patients have no incentive to constrain use • Managers have no incentive to evaluate or find cost-effective alternatives • Low innovation in HCOs • Higher satisfaction than in America • Other quality indicators just as good

25. Britain • 5.8% of GDP • Very popular • Inefficient • Internal markets - money follows patients

26. U.S.A. • Truly needy vs. undeserving poor • Anti - government • Individualism vs. solidarity • Anti-monopoly vs. promoting consolidation • Higher percentage of out-of-pocket costs • Innovation in HCOs • More management of MDs • Health status worse • More uninsured • Higher costs

27. Future • 1994 prediction • NHI • Consolidation • Reduced medical expenditures per capita • Increased government regulation • Declining MD influence • Pressures • Aging population, increasing diversity increases need for NHI

28. Future • Pressures • Aging population, increasing diversity increases need for NHI • Increased patient expectations regarding quality and access simultaneously • High expectations for HCOs to manage system • Advances in MIS leading to potential for more managerial control • new technology leading to cost-effective treatments

29. Future • Pressures • More practice guidelines • Politics • people becoming more unhappy with health care system • Culture • Consumerism pushes patient satisfaction • Increased number of poor people means greater need for NHI

30. External Pressures for Accountability • Government pushes for higher quality • Clinicians becoming more corporatized • HCOs becoming more business-like • Education/credentialling • Pressure to shorten medical school to 2 years plus 2 years of residency • Some movement toward re-licensing

31. Health Care Reform • Current situation / reasons why costs are higher in the U.S.A. • Hospital over capacity • MD over supply • Insurance coverage • Technology • (of course, all of the above problems are a results of earlier successful policy efforts)

32. Payer Reactions to Cost Problems • Medicare • DRGs, RBRVS, Capitation, Reduced GME payments • Medicaid • Managed care, selective contracting, reduced eligibility • Private insurance • Reduced mental health benefits, increased cost-sharing, utilization review, managed care

33. Provider Reactions to Payer Actions • Reduced costs • MIS, marketing, joint ventures with medical staffs, purchasing of labs and other medical services • Increased revenue from other services

34. Patient and Community Reactions to Payer and Provider Actions • Avoid job changes • Increased local government payment for uninsured • Small businesses drop health insurance • Closure of public hospitals, trauma centers

35. End Result • Significant cost control is not achieved • System will not be able to contain costs in the future • Providers will not control costs voluntarily • Health system will continue to be in chaos!

36. National Health Insurance: Why Not in the U.S.A.? • International examples since 1880s • Germany (1883) • 12 other countries by 1912, but not U.S. • Liberals vs. conservatives • Conservatives supported NHI • 1915-1920 • Progressives supported NHI • Labor and business opposed • Insurance industry opposed

37. NHI: Why Not in the U.S.A.? • 1943-1950 Truman Failed • AMA rich opponent • Public opinion malleable • Industry supported AMA • Anti-socialist public opinion • VA took pressure off • Private health insurance coverage increased • Nixon administration • NHI probably would have passed if not for Watergate

38. NHI: Why Not in the U.S.A.? • Possible routes to NHI • PHS hospitals, CHCs, Medicare, Medicaid, VA, Hill-Burton Act • General Pattern • Different times call for different justifications • lost wages, access, cost control • Each time NHI proposed, opponents favor limited plan, liberals favor general plan • No majority

39. NHI: Why Not in the U.S.A.? • Private sector “reform”? • Medical sovereignty depends on low competition and low regulation • This has led to higher costs followed by corporate control • Elements of corporate transformation • Increase in for-profit activity • Horizontal integration • Vertical integration • Corporate ethos

40. Insights for Reform • Capitation of operating expenses • Control of capital budgets • Negotiable global budgets • Capitation of health care and social systems • National health insurance