Presentation on theme: "Conflict and Change in America's Health Care System"— Presentation transcript:
1 Conflict and Change in America's Health Care System Yaseen Hayajneh, PhD
2 Major Actors in Any Health Care System PurchasersSupply the funds.Individuals, businesses, and government.Ultimately individuals are the purchasers.Government and businesses are major player as the organize purchasers of health careInsuresReceive money from the purchasers and reimburse the providers.Assume riskGovernment and businesses assume the rule of insurer when they pay providers directly.
3 Major Actors in Any Health Care System ProvidersHospitals, physicians, nurses and others.. who actually provide the care.HMOs may be viewed as Insurer and providerGovernment as provider.SuppliersPharmaceutical and medical supply industriesManufacture equipment, supplies and medicaitons.
4 The Basics Health Care Industry Insurers,Providers andSuppliersPurchasers wish to reduce spending, while the HC Industry wishes to increase spending.
5 1945-1970: Provider-Insurer Pact Independent hospitals and small private practices.Limited supply of providers > Competition was minimal between providers.HC industry was marked by an ALLIANCE between Insurers and Providers.Many private insurers.Blue Cross – American Hospital AssociationBlue Shield – State Medical Associations & AMAProviders dominated insurers, especially blue cross and blue shield.
6 1945-1970: Provider-Insurer Pact Reimbursements for providers were generous.Insurers paid without asking questionsPurchasers (individuals, business, and government) had relatively little power.In 1960s the pact was so strongDictated the reimbursement provisions of Medicare and Medicaid.
7 : Healthy EconomyBusinesses paid with little interest to question increases in costAmerican businesses controlled domestic and foreign markets without serious competition.Economy was in a good shapeGovernment subsidized health insurance.
8 Provider-Insurer Pact: Results Costs of health care inflated at a rapid pace.Between 1962 and 1978 costs had rised about 10% per year.
9 The 1970s: Tension develop Japan and Europe competed US for markets. US economy weakened.Between 1970 – early 1990s, unemployment and inflation in US.Purchasers (especially government) become concerned about costs of health care.Under pressure from purchasers, insurers begin to question generous reimbursements of providers.Early 1970s control of hospitals and physicians over the blues was loosened.
10 The 1980s: Revolt of the Purchasers Economy still in trouble.Late 1980s cost of health insurance jumped about 40% in two years ( ).Percentage of total payroll paid on insurance is about 10% (1988). Double that of 1976.Self insurance: by 1991, 40% of employees were self-insured by their employers.Businesses carried the risk for HC expenditures.Businesses’ goal to control costs of health care.
11 The 1980s: The Rise of Managed Care PurchasersBusinesses shifted to managed care (HMOs) as a cost-control device.Shift from FFS to CapitationShift risk for purchasers and insurers to providers.Private Insurersincreased dramatically premiumsIncreased policy cancellations for chronic patients.GovernmentPPS and DRGsControlled Medicare hospital costsOutpatient Medicare costs and private purchasers costs escalated.Reduce Medicaid but was forced later to increase it.Started to experiment with managed care.
12 The 1980s: Revolt of the Purchasers Selective contractingPurchasers and insurers will do business only with providers who keep cost downPatients lost choicePurchasers revolt led toManaged care became the dominant in heath care.
13 The 1990s: Breakup of provider-insurer pact Providers formed networksHospital systems instead of independent hospitals.Providers started to compete for contracts and patients.Selective Contracting continuedPatients’ choice of provider became limited.The 1990s was a period of purchaser dominance.Purchaser groups formed coalitions to negotiate with HMOsEnrollment in HMOs doubled in the 1990 (40-80 millions)
14 1990s: Bargaining PowerTo improve bargaining power, purchasers, insurers and providers consolidated.HMOs merged together.Providers also consolidatedBy 2000, 80% of hospitals were members of multi-hospital systems.
15 1990s: …Conclusion Price competition is introduced. Large physician groups emerge.Insurance companies dominate many managed care markets.For-profit institutions increase in importance.Insurers gain increasing power over providers, creating conflict and ending the provider-insurer pact.Pharmaceutical companies…