Reforming the Healthcare System

The Diagnosis of the Sick Man of Public Policy

By: Lasitha Gunaratna

Health care can be described as the largest single industry in the United States and policymaking in the field involves a complex network of decisions made by various institutions and bureaucrats across a broad range of the public and private sectors. These institutions and policymakers include federal, state, and local governments in the public sector. In the private sector they include health care providers such as hospitals and nursing homes, health care professionals, and health care purchasers such as insurance companies, industries and consumers. In addition, a wide variety of interest groups too influence and shape health care politics and policymaking in the country.

These institutions, bureaucrats and interest groups are involved in getting health care related problems to the government and agenda setting; policy formulation and legitimization; implementation, evaluation, and decisions about policy continuation; modifications and  termination. Some of the problems in health care policymaking are rooted in this diversity of institutions, bureaucrats and interest groups and any decision designed to affect the health care system generates immediate and heated responses from one group or another. Furthermore attempts to regulate the health care system also produce pressures from opponents of regulation who either favor market-oriented approaches to the delivery of health care or those who oppose a strong government role, thus preventing the development of a comprehensive and consistent health care policy.[1] Furthermore, given the complex nature of global and domestic health care systems, it would be important to analyze several models that exists world wide before prescribing a solution to the ailment.

Health care systems vary from country to country and can differ with respect to financing, delivery of health care, and the role of the government. Currently there are three primary models of health care called private, public and hybrid[2]. In a private health care system, workers and their dependents are covered through private insurance, even though the insurance is generally bought through employers. Government provides public insurance programs for those not covered by private insurance. Health care is delivered mostly by private hospitals and doctors. The United States is an example of such a health care system. Some other countries have health care systems that are mostly public where health care is paid out of general taxation or through payroll taxes and is provided by publicly owned hospitals and salaried doctors[3]. Examples of countries with such a system include Great Britain, Sweden, and Italy. The third model of health care system is called the hybrid model[4]. In such a system, as seen in Germany, Japan, Canada, France and the Netherlands, the health care system is mostly publicly financed, generally through payroll taxes, but is delivered by private hospitals and doctors[5]. However, most nations incorporate both public and private elements in formulating their health care systems and many countries do not stick to one system exclusively.   

As mentioned, the U.S. health care system follows the model of the mostly private health care system and a majority of Americans are covered through private insurance, usually bought through their employers[6]. The government provides public insurance programs to cover the health care needs of groups such as the poor, the elderly, and veterans[7]. Nevertheless, public insurance programs do not cover all uninsured Americans and a sizable number of individuals who cannot afford private health insurance for one reason or another are not covered by public programs[8]. Therefore, the concept of a health care system that covers all remains a major issue and any analysis of the ailments of the modern health care system should also include a historical evaluation.

Historically the development of the U.S health care system and policy making has occurred in three stages or periods[9].  The 1875-1930 periods saw the development of the health services, organizational structures, physical facilities, personnel infrastructure and methods of paying for the services before health insurance. From 1930-1965, voluntary health insurance emerged as means for people to pay for health care services as costs increased. The enactment of the Social Security Act in 1935 marked what could be described as the beginning of the U.S system of social welfare. This legislation brought about two concepts: first the concept of social insurance for the working population, which is, unemployment insurance, workers compensation and guaranteed retirement benefits and the second concept of public assistance in the form of direct financial aid to those unable to work from the state[10]. Even though not intended as a medical insurance program, this precedent-setting law provided for grants to states for public health, maternal health, child health, services for disabled children and for public assistance for the aged, blind, and families with dependent children[11]. Amendments to the Social Security Act in 1950 authorized grants to the states for direct provider payments for treatment of individuals on public assistance such as the permanently disabled[12]. As the health care expenses doubled throughout the 1950’s, the debate focused on the problem of hospital costs faced by the aged and support grew to address the problem[13], and in 1960, the Congress passed the Kerr-Mills Act which was widely seen as the forerunner of the Medicaid law to assist the elderly[14]. However, after enactment many states moved very slowly or even failed to take advantage of the Kerr-Mills Act.

The third stage of health care policy making began with the establishment of Medicare and Medicaid in 1965 and extends till present. The establishment of Medicare and Medicaid in 1965 was the end result of a lengthy debate during the early part of the twentieth century over the role of the federal government in financing health care and focused on two competing models[15].Of the two models proposed, the first was a universal coverage model, under which the federal government would provide health insurance to all people on a compulsory basis financed by taxes on earnings[16].The second model, which policy makers followed during the 1950’s and the 60’s, envisioned a more limited role for the federal government in providing assistance to the needy[17]. These constraints were applied on the health care services to manage and direct the pace of increasing expenditure and to assure greater equality of access and an equal distribution of facilities and personal, and the trend continued well into the 1970’s[18].

By 1970, health care policy in the United States had reached its maturity with private insurance covering most of working America. As health care costs increased dramatically beginning in the mid-1960s and well into present time, portions of the population were left out of the system, thus defining two major issues faced by the modern health care system: cost increases and access. The cost of health care in the United States had been rising faster than the general growth rate of the economy and health care expenditures accounted for an increased share of the national income[19]. National health care expenditures increased from $27.1 billion in 1960 to $74.3 billion in 1970 and to $251.1 billion in 1980. By 1993, health care expenditures had jumped to $884.2 billion and spending for health care amounted to 13.9 percent of the gross domestic product (GDP) in 1993, more than double the figure of 5.3% in 1960[20]. Since 1993 economic growth has matched health spending growth, resulting in a relatively stable health-spending share of GDP and in 1997 that share fell to 13.4% with a slight increase of 13.5% 1998[21]. The total spending for health care topped $1.1 trillion in 1998, up by 5.6% from 1997[22]. Further analysis of health care spending during the latter part of the 90’s shows a slow growth in public spending and an accelerated growth in private spending[23]. The decrease in public spending has been attributed to Medicare and Harrington and Estes described the reason as “an early impact of the Balanced Budget Act (BBA) of 1997 and continued progress in combating fraud and abuse combined to reduce spending growth from 6% in 1997 to 2.5% in 1998”[24]. In addition it should be noted that Medicare provisions of the BBA were Congress’s response to anticipated depletion of the Medicare Hospital Insurance or HI trust fund and Medicare spending growth that had exceeded private insurers’ spending growth in every year between 1992 and 1997 by wide margins[25].Therefore it could be concluded that during the past decade overall increase in medical expenses are attributed mostly, but not exclusively to the expansion of insurance coverage, effecting the ability of the health care industry to provide an affordable service and a  patient’s ability to access the health care system since accessibility is affected by age, gender, ethnicity, location and socioeconomic status and should be analyzed thoroughly.  

The lack of health insurance and access to appropriate health care among the poor as well as a growing number of low-income families and workers is a serious problem in the contemporary American society. Rates of uninsured are typically high among young adults, children, minorities, the poor and middle-income families and spans an array of occupational groups which also include thousands of nursing assistants, dietary workers, and housekeeping employees in the health care sector itself[26]. The first and foremost reason for such disparity in access to health care is that health care services in the United States are rationed to those who can pay and exclude all those who cannot, and most individuals in small businesses, the service sector and those who are not unionized cannot afford to purchase health insurance[27]. Another reason for disparity in access to health care is the slow transformation of the system to suit the needs of a growing population of women and the aging. Therefore, it would be important to analyze each of these factors plus additional issues involved such as increasing alcohol and drug abuse, microbial and toxic agents, firearms, sexual behavior and motor vehicles and how they would shape future health care policy.

Women have a vested interest in health care policy making as well as mechanisms that fund their health care services since they are major consumers of health care services, negotiating not only their own complex health care but often managing care for their family members as well. Furthermore, their reproductive health needs as well as their greater rates of health problems and longer life spans compared with men make women’s relationships with the health care system complex[28]. Another aspect that should get attention with policy makers is the increasing female to male ratio and the increasing number of women in the population. Women are also more likely to be low-income and often face the added challenge of balancing work with family health and care giving responsibilities, and for the one in five women who are uninsured, access to high quality, comprehensive care is even more difficult[29]. Surveys done by reliable sources such as the Kaiser Family Foundation and Alan Guttmacher Institute examining women’s health status, health care costs, insurance, access to care, prevention, and their role in family health care found that a substantial percentage of women cannot afford to go to a doctor or get prescriptions filled[30]. Although a majority of women are in good health and satisfied with their health care, many have health problems and do not get adequate levels of preventive care. Since the availability of health care to women is influenced by a broad range of factors as mentioned, analysis of women’s health policy cuts across many sectors of the health care financing and delivery systems, including reproductive health policy, reforms to publicly-financed health programs, as well as private sector efforts to contain costs and improve health[31]. Medicaid now accounts for nearly two-thirds of spending on publicly financed family planning services and supplies, and provides health coverage to over 7 million women of reproductive age nationwide. This represents critical assistance with the costs of health care – including family planning services to over one-third of low-income women 15 to 44 years of age. Twenty-one states have initiated expansions that extended eligibility for Medicaid-funded family planning to nearly 2 million men and women who otherwise would not be covered. However, many states confronting serious budgetary shortfalls have cut back on Medicaid eligibility and services in a variety of ways at federal level and there are proposals to cut Medicaid spending and restructure the program in significant ways. Since women comprise the majority of beneficiaries in publicly –funded programs such as Medicaid, Medicare, and welfare, reduction in funds and restructuring these programs has caused concern among women’s groups as key stakeholders in the health care policy debate and affordability and cost of care have become important and critical issues for them. 

Children differ from adults in their patterns of using of health services, in their distinctive developmental vulnerabilities, strengths, and in their dependence on others for access to care and financial resources. In addition their health care issues, major diseases, physical and behavioral health problems, differ from the patterns found among adults. The fact that children are special with their own needs is also reflected in the creation of pediatrics, a specialty of medicine focused upon children, and many larger cities contain healthcare facilities that cater to the needs of children. Furthermore, the specialty of pediatrics has its own patterns of supply with unique policy concerns. Of all physicians in the United States in 1997, a little over 7 percent are pediatricians[32]. While women are increasing in all medical fields, pediatrics has been particularly impacted by this trend. Women make up 47 percent of all U.S. pediatricians, versus only 22 percent of all physicians[33]. Keeping these trends in mind and catering to the growing healthcare demands of the younger population, a number of programs that deal with social and health services for children have been formulated. Efforts to protect the interests of children in healthcare policy making has met with some success, with contractions in children’s eligibility for Medicaid in the early 1980’s and the rectification of series of expansions in the latter part of the 1990’s[34]. An example of such an expansion is the Child Health Insurance Program (CHIP), which was enacted in 1997 to provide health insurance for children of the near poor and working poor, thus expanding health care services beyond those children that have qualified for Medicaid for many years[35]. Another important group that should be mentioned along with children is the adolescents or the young adults. At a glance, the healthcare needs of the adolescents may not seem to overlap with those of infants and children, but it has to be noted with an increased number of teenagers with children or “children with children” as they are termed and with an ever increasing number of teen pregnancies, healthcare policy makers should find common ground in addressing issues that are common to both. Furthermore, with an alarming rise in child hood and teenage obesity, alcohol and drug abuse and sexually transmitted diseases, it would be important to formulate a healthcare policy that is up-to-date and educate children and teens alike in issues that concern their health. Compared to many developed nations such as the Scandinavian and Western European countries and Canada, the U.S healthcare for children and adolescents is still inadequate, flawed and often out of terms with modernity and need considerable improvements to assure healthy adults in the future.

The aging of the U.S. population has been one of the most important social trends of the last half of the twentieth century and is expected to affect healthcare, for the next 50 years. With an increased population of elderly, a greater use of health care facilities is expected since seniors have an increased need for health care services, including regular physician care, hospital-based care and, perhaps particularly important long-term care[36]. Long term care includes care for chronic and other conditions in which the goal of most treatment is control and maintenance, not cure, services such as nursing home facilities, visiting nursing care, physical therapy and homemaker services such as meal preparation and light housekeeping[37]. Additional special services required by the elderly include congregate living facilities with family-style meals and special retirement communities with medical assistance[38]. Policy in the health care area linked to aging presents a number of important challenges, as well as some areas of basic social and political agreement in the face of strong lobby groups such as the AARP. There is wide agreement on certain basic premises about aging in American society. These include the belief that elderly Americans have the right to health care and long term facilities, which has partially been enacted into law through various acts passed by Congress such as the Nursing Home Reform Act. However as a final note it has to be mentioned that despite tremendous progress made in formulating a suitable healthcare policy for the elderly, there are visible disparities along the fault lines of ethnicity, socioeconomic status and location such as the marginalization of elderly populations in underdeveloped or rural areas that needs to be addressed so that healthcare benefits are evenly distributed amongst all who deserve them. 

Even after nearly fifty years of desegregation of the society, healthcare remains a chronic issue among minorities such as African-Americans, Native Americans and Hispanics. In 1996 the poverty rate for Whites was 11.6% while it was 29.4% Hispanics, 28.4% for African-Americans and of total American Indian/Alaska Native households 27% lived below federal poverty lines and many studies have shown disparities across racial and ethnic groups in access to healthcare due to chronic poverty[39]. In addition to poverty, lack of education and poor environmental quality, access to better healthcare for minorities is also influenced by continuing discrimination in society and by members of the healthcare industry, which has not been totally eliminated[40]. These trends have raised questions about the effectiveness of the current healthcare policies related to minorities and there is an immediate need to overhaul the current healthcare system to address some of the issues faced by under represented segments of the society. 

The core issues faced by the modern healthcare system could be summarized as problems of the uninsured, the underinsured, low-income groups, children and youth, women, the elderly and the minorities and to some extent, as observed, these problems overlap. While good portions of the uninsured are low-income people, some are not. Meanwhile minorities in general have lower incomes than Whites; however, not all the problems of minorities and health care result from lower incomes and rural areas have access problems to health care in the same way that inner cities do- lack of providers[41]. Perhaps the most underlying issue in looking at the disadvantaged and health care is equality and equity[42]. 

Several aspects that should be considered when formulating a feasible healthcare policy for the new century is the rapid technological advances and the magnitude of the impact of technology on the healthcare delivery process and the high levels of expectations and trust that health care providers as well as consumers have put upon the system. This in turn has raised questions about the factors that have contributed to the growth of medical technologies, the cost and effectiveness of such technologies, and the ethical dilemmas they raise. Therefore, as much as an effective health care policy should relate to maintaining and improving the health status of the population, policy makers should not over look the improper utilization of technology in the health care industry and must make necessary amendments possible to resolve any complications that may arise due this reason.

One of the most important parts of health policy relates to how to maintain and improve the health status of the population. An important goal of any national health policy is to improve the health and well-being of the citizens of that country. By considering the issues faced by the current healthcare system, it is obvious that the U.S. healthcare system needs reforming and how to reform it are clearly among the most important and much debated policy issues for the coming decades, just as, in many ways, they have been in the past[43]. Although public support for healthcare reform has risen and fallen over the last two decades, the basic trends of opinion on the issue have remained fairly stable. Americans believe that healthcare should be provided to all those who need it, dislike the structure and expense of the medical system, and support the general goal of systemic reform[44]. At the same time, they are generally satisfied with their own medical arrangements, fear that excessive government involvement in medicine may cause diminution in the quality or availability of their care, and do not seem willing to make large sacrifices to enable reform[45]. This lack of interest and the apathy shown by the public towards healthcare reforms are not the only factors that have slowed down possible modernization of the system eventhough the U.S political system reflects the wishes of the people[46]. Another simple explanation to this issue is that the experts have not got the facts right yet and in reality the United States lacks a national healthcare program that reflects the needs of its citizens[47]. Historically major steps to overhaul and reform the healthcare sector have ended disastrously as in the case of the 103d Congress[48].  One reason for this is that reform of the system always begins a discussion of who now has access to health care and whether that access varies across the population. This leads to a discussion about insurance coverage and its variation, along with an examination of major national programs already in place to deal with issues of access to health care services and to help provide insurance coverage to certain population groups[49]. With a large number of interest and lobbyist groups pushing their own agenda’s to make a complex situation worse, long term reforms to the health care system have come to a standstill. However, two distinct groups have emerged with their own suggestions and solutions as to how health care reforms should be carried out.

The pro-privatization lobby suggests the total privatization of the health care system. By doing so they believe the system will be able to facilitate the health coverage of the uninsured, move organizations onto tax rolls, enhance access to much needed capital, facilitate more efficient use of resources and end the “fiction” that only public health departments can provide quality accessible services to low income individuals[50]. However, the opponents of such a system feel that privatization would bring about the loss of the social benefits of public sector healthcare, are uncertain about how best the interests of the public would be protected in the even of a total privatization of the system, feel strong about preserving the public sector and preventing private incursion and have put forward their own idea: the proposal for a national medical care system[51].

Throughout the 20th century, in roughly 20-year intervals, the vision of a national health care system has risen to prominence in the public policy agenda and has been defeated by a powerful coalition of groups with a vested interest in maintaining their status quo[52]. Despite such set backs it should be mentioned that if implemented successfully, a national health care system would be the best pill to cure most ailments seen in the current system.  The American Medical Association, traditionally a leading opponent of systemic change[53], along with the Council on Medical Care and the National Association for Public Health Policy has officially sponsored a plan to achieve universal coverage that departs in many, if not all, respects from positions organized medicine has taken in the past.  According to the proposals put forward by these organizations, a national medical system is only one of many elements in a national program. An important and a determining factor of such a system would be the standard of living with an overall movement for full employment, higher wages, improved working conditions, decent housing, better education and affirmative action to end discrimination in all spheres[54]. It is also thought by implementing such a system which covers the entire population would improve not only medical care including dental, mental and long term care, but preventive health care measures as well[55]. Another aspect of the proposed system is the elimination of financial barriers such as deductibles, co-payments, extra charges by providers and geographical barriers[56]. There would be no direct payments to individual practitioners in the proposed National Medicare System and any payments shall be made to provider organizations such as community health centers, group practice organizations and individual practice associations with or without affiliation with hospitals or other facilities[57]. Finally, the proposed healthcare system would be administered by the federal state and financed by both the federal government and the states with the share of the federal government varying between 75%-90% of the total, with increased proportions going to poorer states[58]. Other additional suggestions put forward by the proponents of this system include the formation of a Board of Health consisting 100% of public representatives comprising all sections of the population and allowing states to put forward their own proposals to meet the basic requirements of the larger national system[59]. However, the above proposals are not a finished blue print as stated by the Council on Medical Care and the National Association of Public Health Policy but an initial draft for a national medical care system and is subjected to change. It is hoped that if implemented would provide high quality of care and give the assurance of equity in medical care for all Americans regardless of age, gender, race and social status.