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Health Policy POLS 21: The American Political System “The best doctors in the world are Doctor Diet, Doctor Quiet, and Doctor Merryman.’ —Jonathan Swift.

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Presentation on theme: "Health Policy POLS 21: The American Political System “The best doctors in the world are Doctor Diet, Doctor Quiet, and Doctor Merryman.’ —Jonathan Swift."— Presentation transcript:

1 Health Policy POLS 21: The American Political System “The best doctors in the world are Doctor Diet, Doctor Quiet, and Doctor Merryman.’ —Jonathan Swift

2 A Portrait of Health Care in America The United States spends more on health care than other industrialized nation in the world, most of whom (unlike the U.S.) provide health insurance to all their citizens. In 2010, health care spending in the United States reached $2.6 trillion, or $8,000 per person—that’s roughly 4 times more than what we spend on national defense. The U.S. spends more than 17% of its Gross Domestic Product (GDP) on health care—up from just 5% in That proportion will likely reach 20% within the next ten years. Does all of this money buy us better care?

3 A Portrait of Health Care in America

4 Does all of this money buy us better care?

5 A Portrait of Health Care in America The infant mortality rate (IMR) is defined as the number of deaths of children under age 1 per 1,000 live births in a given year. Life expectancy is measured by the average number of additional years a person of a given age could expect to live if current mortality trends were to continue for the rest of that person's life. It is most commonly cited as life expectancy at birth. The United States has improved on both measures—from 26 infant deaths per 1,000 live births in 1960, to just 6.7 in 2008; and from a life expectancy of 69.9 years in 1960 to 78.4 in But we still lag behind other western, industrialized democracies.

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7 Life Expectancy and Infant Mortality According to the Organisation for Economic Co-operation and Development (OECD), average life expectancy in the United States in 2003 was 77.2 years at birth. Only the Czech Republic, Hungary, Korea, Mexico, the Netherlands, Poland, Slovakia, and Turkey ranked lower among thirty industrialized countries. According to the Organisation for Economic Co-operation and Development (OECD), average life expectancy in the United States in 2003 was 77.2 years at birth. Only the Czech Republic, Hungary, Korea, Mexico, the Netherlands, Poland, Slovakia, and Turkey ranked lower among thirty industrialized countries. Also in 2003, infant mortality in the United States was 7 deaths per 1,000 live births. Only Hungary, Mexico, Slovakia, Turkey, had rates that were higher. Also in 2003, infant mortality in the United States was 7 deaths per 1,000 live births. Only Hungary, Mexico, Slovakia, Turkey, had rates that were higher. Countries that rank higher than the U.S. in life expectancy:

8 Health Care Inequalities Finally, because many other countries offer government sponsored health care programs, the U.S. system of care is more unequal. Some Americans have access to the world’s highest-quality care and the best medical technology, but many poorer Americans are relegated to an inferior health care system because health insurance is not universal here. More than fifty million Americans lacked health insurance coverage altogether in To understand the current debate over health care reform demands that we understand this paradox—that of high cost and unsatisfactory performance.

9 The Problem High cost High cost Unsatisfactory performance Unsatisfactory performance Inequalities in coverage Inequalities in coverage

10 Why Have Health Care Costs Skyrocketed? Increase in the number of Americans using health insurance Traditional fee-for-service systems encourage unnecessary tests Demographic changes have led to an aging population that requires more care Malpractice lawsuits pass costs along to patients and encourage "defensive medicine" Technological developments such as MRIs, CAT scans and heart transplants are expensive, as are prescription drugs Administrative costs account for 7% of total spent Administrative costs account for 7% of total spent

11 Financing Health Care Who pays the cost of health care? Under the current system, most health care in the U.S. is financed through employment-based health insurance, voluntarily provided as a fringe benefit of your job. Some government-sponsored health insurance is available, but only to the elderly, the disabled, and the poor through the Medicare and Medicaid programs. Tying health care to employment creates a whole series of inequalities. It means that people with low paying jobs that fail to provide health benefits are left uninsured. It also means that that losing or changing a job often means losing insurance. If you are ill or you live with a chronic medical condition, those costs may not be covered by a new plan that excludes “pre-existing” conditions. Workers can purchase insurance individually to tide them over between jobs, but the cost is surprisingly high.

12 What is Managed Care? Managed care is a term that describes a wide variety of health-care systems that manage and analyze the cost of subscribers' health care, its quality and accessibility. Examples include health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Both have been popular alternatives to traditional insurance programs since the late 1980s. Managed care is a term that describes a wide variety of health-care systems that manage and analyze the cost of subscribers' health care, its quality and accessibility. Examples include health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Both have been popular alternatives to traditional insurance programs since the late 1980s. A Health Maintenance Organization (HMO) is a group of doctors and administrators who agree to provide a full range of health services to members care for a fixed monthly fee. In order to save money, patients are limited in their choices. But in return they pay just a small fee each time they see a doctor, encouraging the kind of preventive care that can detect and stop diseases early on. A Preferred Provider Organization (PPO) is a network of independent physicians who are affiliated with a plan. If a patient wants care from an "in- network" provider, the PPO will pay most or all of the cost. If the patient wants care from an "out-of-network" providers, the PPO will require the patient to pay a much larger part of the bill. Unlike HMOs, PPOs do not require members to select a primary care physician. PPOs pay doctors a discounted rate in exchange for a steady flow of patients. A Preferred Provider Organization (PPO) is a network of independent physicians who are affiliated with a plan. If a patient wants care from an "in- network" provider, the PPO will pay most or all of the cost. If the patient wants care from an "out-of-network" providers, the PPO will require the patient to pay a much larger part of the bill. Unlike HMOs, PPOs do not require members to select a primary care physician. PPOs pay doctors a discounted rate in exchange for a steady flow of patients.

13 Managed Care A Health Maintenance Organization (HMO) is a group of doctors and administrators who agree to provide a full range of health services to members care for a fixed monthly fee. In order to save money, patients are limited in their choices. But in return they pay just a small fee each time they see a doctor, encouraging the kind of preventive care that can detect and stop diseases early on.

14 Managed Care A Preferred Provider Organization (PPO) is a network of independent physicians who are affiliated with a plan. If a patient wants care from an "in-network" provider, the PPO will pay most or all of the cost. If the patient wants care from an "out-of- network" providers, the PPO will require the patient to pay a much larger part of the bill. Unlike HMOs, PPOs do not require members to select a primary care physician. PPOs pay doctors a discounted rate in exchange for a steady flow of patients.

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16 The Health Care Reform Dilemma Accomplishing all three goals simultaneously is the true challenge

17 Case #1 Bill Clinton,

18 Whatever Happened to Health Care Reform? “This health care system of ours is badly broken and it is time to fix it. Our health care is too uncertain and too expensive, too bureaucratic and too wasteful. It has too much fraud and too much greed. At long last, after decades of false starts, we must make this our most urgent priority—giving every American health security, health care that can never be taken away, health care that is always there. That is what we must do tonight.” Bill Clinton presenting his proposed health care reform legislation to the Congress, October 27, 1993.

19 Whatever Happened to Health Care Reform? The idea in the 1,364 page plan was to provide comprehensive health benefits to all Americans, regardless of their health or employment status—meaning that it would continue without lifetime limits on benefits and it would continue without interruption, even if you lose or change your job. Through a series of regional health “alliances” the policy also guaranteed a choice of at least three different plans, some of higher cost and some of lower cost—funded at least in part by employer mandates— creating incentives for cost-conscious decisions. Finally, the plan called for a cap on premiums in order to contain costs. At the time, it was said to reflect “a liberal’s passion to help the needy, a conservative's faith in free markets, and a politician's focus on the middle class.” In short, it seemed like a fair political compromise that could be embraced by the American people. What happened? Just ask Harry and Louise…

20 Harry and Louise Harry and Louise were a fictional middle aged couple featured in a television ad campaign who worried about the details of the Clinton health care plan while talking around their kitchen table. Here is an excerpt— Gentle music plays as the camera closes in on a couple sitting at their kitchen table, surrounded by stacks of bills, an adding machine and yellow pads. The words “Sometime in the Future” flash across the screen, presumably referring to a period after a Clinton-health-care bill is passed. “But this was covered by our old plan,” says Louise, looking at a bill. “Oh yeah! That was a good one, wasn’t it?” says Harry. Dressed as an everyman in a flannel shirt, he is trying to make sense of the paperwork spread out on the table. He punches numbers into the adding machine. He jots down figures and then crumples up the paper in frustration. A voice-over says: “Things are changing, and not all for the better. The government may force us to pick from a few health care plans designed by government bureaucrats.” “Having choices we don’t like,” says Louise, her brow knotted in concern, “is no choice at all.” “They choose,” says Harry. “We lose,” says Louise. The “Harry and Louise” ads were sponsored by the Health Insurance Association of America, who paid $15 million to air them on TV. In six months, they changed the course of the debate. Between September1993, when the President released his proposal, and February 1994, “Harry and Louise” were almost single-handedly responsible for a 20-point drop in public opinion regarding the Clinton plan, which led Sen. Jay Rockefeller (D-WV), to call it “the single most destructive campaign I've seen in 30 years.” In a six month period, the percent of Americans supporting the President’s plan dropped by 18 percentage points.

21 Harry and Louise Gentle music plays as the camera closes in on a couple sitting at their kitchen table, surrounded by stacks of bills, an adding machine and yellow pads. The words “Sometime in the Future” flash across the screen, presumably referring to a period after a Clinton-health-care bill is passed. “But this was covered by our old plan,” says Louise, looking at a bill. “Oh yeah! That was a good one, wasn’t it?” says Harry. Dressed as an everyman in a flannel shirt, he is trying to make sense of the paperwork spread out on the table. He punches numbers into the adding machine. He jots down figures and then crumples up the paper in frustration. A voice-over says: “Things are changing, and not all for the better. The government may force us to pick from a few health care plans designed by government bureaucrats.” “Having choices we don’t like,” says Louise, her brow knotted in concern, “is no choice at all.” “They choose,” says Harry. “We lose,” says Louise.

22 Importing Prescription Drugs According to the Food and Drug Administration (FDA): “Many Americans have been buying prescription drugs from foreign countries as a way to cut costs, but experts at the Food and Drug Administration warn that this practice comes with potential safety risks. The safety and effectiveness of imported drugs have not been reviewed by the FDA, and their identity and potency can't be assured. Patients could get the wrong drug. Or they could get too little or too much of the right drug. All of these differences can be dangerous.”

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24 Case #2 George W. Bush, 2003 Medicare Prescription Drug, Improvement, and Modernization Act

25 Medicare Prescription Drug, Improvement and Modernization Act of 2003 “With this law, we're giving older Americans better choices and more control over their health care, so they can receive the modern medical care they deserve.” —President Bush, signing the bill into law December 8, 2003 “There’s no doubt in my mind that the drug industry got everything it wanted and more. It perhaps should be called the ‘Leave-No-Lobbyist-Behind Bill.’” —Senator John McCain (R-AZ)

26 Medicare Part D The Medicare Modernization Act of 2003 (MMA) created a federally subsidized prescription drug benefit available to all Medicare beneficiaries. The drug benefit will be available through private stand-alone prescription drug plans (PDPs) or through integrated health plans like HMOs and PPOs that provide all Medicare-covered services, including prescription drugs. Beneficiaries who choose to sign up for the drug benefit will pay a monthly premium of $32.20 per month on average, in Beneficiaries will be responsible for the first $250 in drug expenses, and then will pay, on average, a 25 percent coinsurance until they reach the benefit limit ($2,250 in 2006). Once they reach the benefit limit, they will face a gap in coverage—called the donut hole—in which they will pay 100 percent of their drug costs up to $5,100 in total drug spending (equal to $3,600 in out-of-pocket spending). Medicare will then pay 95 percent of drug costs above that amount. Source:

27 The Donut Hole

28 Case #3 Barack Obama, 2010 Patient Protection and Affordable Care Act

29 The Perils of Health Care Reform Entrenched interests (e.g., business and interest groups) Entrenched interests (e.g., business and interest groups) Partisan rancor Partisan rancor Low levels of trust in government Low levels of trust in government Scare tactics and fear mongering Scare tactics and fear mongering

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31 Obama’s strategy: “Fix what’s broken and build on what works.” In other words, think smaller.

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33 For the uninsured, what does health care cost?

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36 “People, for reasons of their own, often fail to do things that would be good for them or good for society.” —Chief Justice John Roberts

37 “Mr. President, this is a deal.” — Vice President Joe Biden

38 If you already have health insurance… You can add your adult children (up to age 26) to your existing health insurance plan. You can add your adult children (up to age 26) to your existing health insurance plan. Your insurance company can no long drop you if you become sick. Your insurance company can no long drop you if you become sick. It cannot limit the coverage you receive over your lifetime. It cannot limit the coverage you receive over your lifetime. You cannot be denied coverage if you have a pre- existing condition. You cannot be denied coverage if you have a pre- existing condition. Insurance companies must spent at least 80% of premium payments on medical service (instead of advertising and executive salaries). If they don’t, you will receive a rebate on the amount you paid. Insurance companies must spent at least 80% of premium payments on medical service (instead of advertising and executive salaries). If they don’t, you will receive a rebate on the amount you paid.

39 If you don’t have health insurance… By 2014, everyone will be required to have health insurance. This is called the INDIVIDUAL MANDATE. If you opt not to purchase insurance, you will pay eventually a penalty of as much as 2.5% of your income. Next year, just 1% of family income. By 2014, everyone will be required to have health insurance. This is called the INDIVIDUAL MANDATE. If you opt not to purchase insurance, you will pay eventually a penalty of as much as 2.5% of your income. Next year, just 1% of family income. You can buy insurance from a federal or state-run “exchange” that allows you to compare plans. You can buy insurance from a federal or state-run “exchange” that allows you to compare plans. You may qualify for Medicaid if you income is under 133% of the poverty threshold. Even if you don’t qualify for Medicaid, you may be eligible for a tax credit if you income is under 400% of the poverty threshold. You may qualify for Medicaid if you income is under 133% of the poverty threshold. Even if you don’t qualify for Medicaid, you may be eligible for a tax credit if you income is under 400% of the poverty threshold.

40 If you are a small business owner… Businesses with 50 employees or more are required to provide health insurance. If you have fewer than 100 employees, you can shop for insurance in state-run exchanges in 2014 that should provide cheaper alternatives than are available now. Businesses with 50 employees or more are required to provide health insurance. If you have fewer than 100 employees, you can shop for insurance in state-run exchanges in 2014 that should provide cheaper alternatives than are available now. If you refuse to provide insurance, you will be fined $2,000 per employee for all but the first 20 employees. If you refuse to provide insurance, you will be fined $2,000 per employee for all but the first 20 employees. Businesses with 25 employees or less who provide insurance can qualify for a tax credit (35% now, 50% in 2014). Businesses with 25 employees or less who provide insurance can qualify for a tax credit (35% now, 50% in 2014).

41 “If you like your health care plan, you will be able to keep your health care plan, period." — President Barack Obama Assuring that people can keep their current plan “makes reform more palatable politically,” but it “also makes it worse as policy.” — Jonathan Cohn

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43 The Health Care Reform Dilemma How well did Obama and the Democrats do? Require citizens to obtain insurance. Targets waste, fraud, and abuse. Extends coverage for low-income families, young adults, etc. ?

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45 A Summary: Citizens INDIVIDUAL MANDATE. In 2014, everyone must purchase health insurance or face a $695 annual fine for each uninsured family member. There are some exceptions for low-income people. HEALTH EXCHANGES. The uninsured and self-employed will be able to purchase insurance through competitive health exchanges with subsidies available to low-income individuals and their families. COVERAGE FOR PRE-EXISTING CONDITIONS. Insurance companies cannot deny children health insurance because of pre- existing conditions. A ban on that discrimination for adults will take effect in EXPANDING MEDICARE. Seniors will get a rebate to fill the so- called "donut hole" in Medicare drug coverage, which limits prescription medication coverage expenditures over $2,250. As of next year, 50 percent of the donut hole will be filled. EXPANDING MEDICARE. Seniors will get a rebate to fill the so- called "donut hole" in Medicare drug coverage, which limits prescription medication coverage expenditures over $2,250. As of next year, 50 percent of the donut hole will be filled. COVERAGE FOR YOUNG ADULTS. The cut-off age for young adults to continue to be covered by their parents’ health insurance rises to the age of 26.

46 The bill applies a 10% excise tax on indoor tanning services. “No, You Can’t.” — John Boehner (R-OH)

47 A Summary: Businesses TAX CREDITS. Businesses with fewer than 50 employees will get tax credits covering up to 50% of employee premiums. DISCLOSURE. Chain restaurants will be required to provide a "nutrient content disclosure statement" alongside their items. Expect to see calories listed both on in-store and drive-through menus of fast-food restaurants sometime soon. DISCLOSURE. Chain restaurants will be required to provide a "nutrient content disclosure statement" alongside their items. Expect to see calories listed both on in-store and drive-through menus of fast-food restaurants sometime soon.

48 A Summary: Insurance Companies Also, i NO CAPS ON COVERAGE. Lifetime caps on the amount of insurance an individual can have will be banned. Annual caps will be limited, and banned in Also, insurance companies can no longer cut someone when he or she gets sick. PREVENTATIVE CARE. New plans must cover checkups and other preventative care without co-pays. All plans will be affected by APPEALING CLAIMS. Any new plan must now implement an appeals process for coverage determinations and claims. ELIMINATING FRAUD AND WASTE. New screening procedures will be implemented to help eliminate health insurance fraud and waste.


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