What is "Health"? What is the focus of healthcare in US?
1958 WHO definition:
"A State of complete physical, mental and
social well-being, and not merely the
absence of disease."
? What is our focus in the US? Is it this
comprehensive?
No, Absence of disease is the focus in US right now
Natural Histories of Disease and Levels
of Prevention:
The evolutionary stages of disease & the points at
which health services can intervene to:
? Prevent disease onset (Primary Prevention)
? Attenuate disease progression (Secondary
Prevention)
? Rehabilitate (Tertiary prevention)
An Enormous and Complex Industry
U.S. health care:
� $ 2.7 trillion; 16 million+ workers; 11% of U.S.
employment; 17% of GDP
? larger than total economy of Italy!
� Poorly aligned infrastructure, medical specialization
- a confusing labyrinth for patients & providers
� Public (government) and private paym
Examples US Healthcare Challenges (Enduring Challenges)
� Size and complexity contribute to problems of:
? Limited access, inconsistent quality, high costs
� Unwarranted variations in performance
? Ineffectiveness (lack of evidence)
? Inefficiency (overuse & duplication)
� Inexplicable contradictions in object
How does US health care compare Internationally?
� Compared to U.K., Germany, Sweden, Canada,
France, Australia, & Japan, U.S. health status ranks
8
th
(last!) on important health status indicators:
? Life expectancy at birth
? Infant mortality rate
? Probability of dying between ages 15 and 60
� U.S. h
Important dates and events in the Efforts to Reform HC System
? 1900s: start of legislative proposals for
comprehensive reform by eight U.S. presidents
? 1960s: Increased access for low-income & older Americans
? 1970s-1980s: controls to slow cost growth
? 1990s: more cost controls + quality improvements;
market inf
Patient Protection and Affordable Care
Act of 2010 (ACA)
� Biggest change since Medicare & Medicaid in
1965; ACA affects virtually all Americans
� Cover 32 M currently uninsured
? except illegal immigrants; low-income who do not
enroll in Medicaid; "opt-outs" preferring to pay the
penalty
� Merge public health
Health Care System Stakeholders
- The Public
- Consumer (AARP) & disease-specific groups
- Large, small employer coalitions (purchasers)
- Providers: AMA, other professional organizations
- Hospitals, facilities: AHA, others
- Governments: Federal, state
- Managed care, insurance organi
New Issues and Challenges
� Aging population
? by 2030, ~20% over 65; by
2050, ~21% aged 85+:
? More culturally sensitive,
geriatric providers needed
? Medicare & private insurance
don't cover services for chronic
disabilities
? Nursing home care major
financial burden (personal &
ACA Responses to these Challenges
� For conflicts of interest:
� For aging populations:
� For conflicts of interest:
? "Sunshine" policies on kickbacks to
providers/hospitals
? CMS posts information pertinent to transactions
in a searchable, downloadable data base
� For aging populations:
? Adjusting Medicaid payments to make community
care
Ethical Issues in Health Care
Issues arise from
? treatment options, domains of law, politics,
journalism, administration, public, providers
Issues expand with
? genetic advances, organ transplantation, and life-prolonging technologies, among other issues
Ex: Cochlear implants: ethica
Overview of Health Care Finance �
Insurance
� Most people in U.S. obtain insurance through
their employer
? employer pays part of premium
� Health insurance industry acts as an
intermediary between patients and providers
� Millions of others covered by Medicare,
Medicaid, CHIP, state/county program
Health Care Access -
Uninsured and Underinsured
� Being uninsured means you have:
? Less access to care, less timely care, less likely to
follow treatment recommendations due to cost
� Being underinsured means you:
? do not have financial resources to cover the gap
between what your insurance covers an
Health Care Access -
Coverage and Workforce
- Insurance coverage
limitations
- Workforce Issues
Insurance coverage
limitations
� High cost-sharing
? co-payments
? deductibles
? premiums
� Reimbursement and visit caps
� Service exclusions
Workforce Issues
� Provider shortages
? Especially primary care and
public health
? Problem will be exacerbated
b
Three common types of health care systems
? Publically financed, privately delivered national
health care system (Canada)
? Publically financed and delivered national health
systems (Britain)
? Socialized insurance system with mandatory
contributions and private delivery (Germany)
Type of health insurance design relates to key issues
for patients
? Affordability
? Differences in access by income level
? Waiting lists/wait times
? Choice
? Complexity of interacting with insurance system/
paperwork
? Patient satisfaction
- every system has trade-offs
Health Care Industry Transformation
� Until 1940s (pre-insurance), industry dominated
by physicians, hospitals
� Patient/MD/DO relationships sacred;
treatments, payments confidential
� Mostly personal payments
"No third party must be permitted to come between patient and
physician in any me
From Personal to Insurance Payments
� Dramatic alteration in physician/patient
relationship
� Distanced patients from awareness of costs &
responsibility for decisions
� Created "business" of medicine
Health Insurance History
1880s
1915
1917
1919
1929
� 1800s: some employer sickness insurance,
fraternal orders, unions
? fixed sum replaced lost wages
� 1915: drive for compulsory insurance begun on
European models
? Protect workers from lost income due to accidents
� 1917: WWI interrupted drive for compu
Health Insurance History
AMA
Insurance plans did what?
government exempted...?
Post WWII
� AMA: opposition to government involvement
� All insurance plans served hospital and
physician interests
? What about patient interests?
� Government exempted health insurance benefits
from wage/price controls, and workers'
contributions were pre-tax
? W
Federal Government Steps In
1935
Post WWII
� Social Security Act of 1935: most significant U.S.
social initiative
-Federal aid to states for public health, welfare,
maternal/child health, crippled children
-Legislative basis for most health, welfare
programs including Medicare & Medicaid
� Post WW
Political Values Shape HC
Kennedy vs Nixon
� Kennedy-Johnson Era: "Creative Federalism"
? Federal grants increased from $7 to $24 million
? 1963 Health Professions Educational Assistance Act
? 1965 Medicare & Medicaid
? Many other "access" related policies
� Nixon-Ford Era: "New Federalism"
? Dele
More HC Developments &
Consequences
- Health Maintenance
Organizations
- Unintended Effects of
Legislation
Health Maintenance
Organizations
- 1973 Health Maintenance
Organization Act funded federal
demonstration projects to:
? link service delivery and
financing
? promote prevention
- Quickly adopted
- Backlash ensued
Unintended Effects of
Legislation
- Hill-B
The Reagan Administration
� 1981-1989: Reductions in government
involvement and funding
- Block grants to states
- Reductions in social program support
- Prospective Medicare hospital reimbursement
- Diagnoses related groups (DRGs)
- Payment based on admitting diagnosis, not on fe
Interest Group Influence
� Many problems arise from division between
governments, private health care industry
� Tax-funded proposals spawn well-financed
lobbying by providers, insurers, consumers,
business, labor unions
? Everyone wants a seat at the table, and a piece of
the pi
Big Health Care Interest Groups and what they do
Physician Group Lobbies
� American Medical Association
(AMA): est. 1847 to improve
medical education
? 217,000 members; ~17% of of
MD/Dos and students
? History of opposition to
government controls &
advocacy for physician
autonomy
? American College of
P
Health Care Interest Groups cont.
Consumer Lobbies
� American Association of
Retired Persons (AARP), est.
1958
� Coalitions, e.g. Patients'
Coalition of 50+ major national
not-for-profit health
organizations
Health Insurance Lobbies
? Health Insurance Association
of America (1956)
? Group
Health Care Interest Groups cont.
Labor Lobbies
� American Federation of Labor
and Congress of Industrial
Organization (AFL-CIO)
peaked at 13 million members
? Employer-sponsored health
insurance
? OHSA legislation
� Service Employees
International Union (SEIU)
? 2.11 M members
? 1.1 mill
Health Insurance Portability &
Accountability Act (HIPAA) of 1996
� Ensured coverage renewal for workers changing
jobs
� Regulated insurers' coverage of pre-existing
conditions
� Mandated special enrollment periods for
employees in specific circumstances
� Mandated medical record computerization and
privacy (implementat
Other Major HC System Issues
� Oregon's "Death with Dignity" Act (1994)
? Terminally ill can request lethal medication
? 2009 report:
- Fewer than 100 patient requests per year
? Fewer than 50% of patients use lethal dose
� HC System not Prepared for Surprises
? 2001 terrorist attack
2010 Landmark Legislation
Patient Protection and Affordable Care
Act
? New competition among insurers and "exchanges"
to increase consumer choice
? New payment methods for "medical homes"
? New incentives for primary care and prevention
? Prohibits denials for pre-existing conditi
Difficulty of Reform in the U.S.
Individualistic culture
� Dislike of big government
� Lack of consensus
� Federal system rules and structure make it
difficult to achieve major reform
� States generally home to social welfare issues
� Powerful interest groups against national
health refo
Key Failed Attempts at National
Health Reform
1912
1915
1948
1969 and 1972
1993
� 1912 Progressive Party candidate T. Roosevelt supported
social insurance platform; included health insurance
� 1915 American Association for Labor Legislation proposal
for working class health insurance
� 1948 President Truman won re-election on nationa
Why did the Affordable Care Act pass when so
many prior attempts had failed?
? Commitment and leadership
? Learned lessons from past failures
? Political pragmatism
(these are why professionals thought it passed)
Class Discussion on why:
- economic downturn
- structure of congress
- occupy movement
- middle class people struggle b
The Affordable Care Act (ACA):
Key Features (1)
Private Insurance Market Changes:
� Private Insurance Market Changes
? No pre-existing condition
exclusion
? Dependent coverage to age 26
? Preventive services without cost
sharing
? Prohibitions against lifetime and
annual coverage limits
? No rescission without fraud
? New appeals proce
The Affordable Care Act (ACA):
Key Features (2)
� Medicare and Medicaid Changes
The Affordable Care Act (ACA):
Key Features (2)
� Medicare and Medicaid Changes
? Preventive services without cost
sharing
? One time rebate, then 50%
discount for seniors' uncovered
prescription drug costs
? New Center for Medicare and
Medicaid Innovatio
The Affordable Care Act (ACA):
Key Features (3)
Individual and State
� Individual Mandate: in 2014 most people have
to purchase health insurance or pay a penalty
? Exemptions for certain populations; based on
affordability
� State Health Insurance Exchanges
? Separate exchanges for individuals and small
businesses
? Must o
Essential Health Benefits (States)
All plans in the state exchanges must offer the following benefits:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health services
- Prescription drugs
- Rehabilitation services, rehabilitative s
The Affordable Care Act (ACA):
Key Features (4)
Medicaid
� Medicaid Expansion:
? enrollment of individuals earning less than 133%
of the federal poverty level income
? Optional for states
? Federal government pays 100% of expansion for
first couple of years; then pays 90%
� Support for states' coverage of non-M
The Affordable Care Act (ACA):
Key Features (5)
Financing for low income
� Premium tax credits for individuals who purchase
insurance in an exchange and income between
133%-400% of poverty level
� Cost sharing subsidies for individuals who
purchase insurance in an exchange and have
income up to 250% of poverty level
? For both
The Affordable Care Act (ACA):
Employer Mandate
� In 2014, employers with 50 or more employees
must provide affordable health insurance or pay
a penalty
? Insurance is affordable if it has an actuarial value
of at least 60% or is not more than 9.5% of an
employee's income
? Penalty is per employee afte
The Affordable Care Act (ACA):
Financing Health Reform
� Changes to Medicare provider
reimbursement
� Changes to Medicare
Advantage reimbursement
� Medicare Part A increases for
high earners
� Changes in Medicare Part D
subsidies
� Changes in Medicare employer
subsidy
� Changes in Disproportionate
Share payme
The Affordable Care Act (ACA):
Conclusion
� CBO (Congressional Budget Office) estimate of ACA 2012-2021 net cost for 32 M
new insured: ~$ 1.1 trillion; new revenues from
taxes, penalties and other sources: $ 510 B.
? Budget projects are speculative and will evolve over
succeeding years
� ACA incl