1. Characteristics of the U.S. Health Care System

2. Learning Objectives
Understand the importance of health and health care to American life
Identify and analyze defining characteristics of the US health care system
Identify major issues and concerns with the current system

3. The Importance of Health and Healthcare to American Life
Good health care is an essential foundation for being able to function in society and to enjoy life
Millions of Americans work in health care delivery and depending of the healthcare industry for jobs
Equipment suppliers
Pharmaceuticals
Supplies
Construction industry
Kitchen workers, Drivers and delivery workers, Computer specialists
Accountants, lawyers, maintenance and laundry personnel, security staff

4. Historical Perspective

5. 1912: Teddy Roosevelt promises national health insurance coverage
History of Healthcare in the U.S.: 1912 – 1953… Laying the Groundwork
1921: Sheppard-Towner Act is passed to provide state matching funds for prenatal and child health centers
1915: Draft of first bill for mandatory health insurance
1912: Teddy Roosevelt promises national health insurance coverage
1929: Baylor hospital creates pre-paid hospital insurance for a group of teachers (forerunner of Blue Cross plans)
1939: Department of Health & Human Services is born as the Federal Security Agency
1934: FDR forms working groups to discuss national health insurance, but no legislation considered
1945: Harry Truman continues push for compulsory coverage… Hill-Burton Act to fund construction of hospitals passes
1944: FDR establishes “economic bill of rights” including right to adequate medical care
1947: Truman continues push… Wagner-Murray-Dingell bill and Taft bill both reintroduced
1952: Federal Security Agency proposes enactment of health insurance for Social Security beneficiaries
1949: Supreme Court upholds National Labor Relations Board decision to allow benefits to be included in collective bargaining
1951: Joint Commission on the Accreditation of Hospitals formed to improve quality of care 5 5

6. History of Healthcare Reform: 1954 – 1989… Creating the Framework
1960: Federal Employees Health Benefit Plan (FEHBP) initiated to provide health insurance coverage to federal workers
1960: Kerr-Mills Act passes, using federal funds to support state programs providing medical care to the poor and elderly; a precursor to the Medicaid program
1954: Revenue Act of 1954 excludes employers' contributions to employee's health plans from taxable income
1962: Kennedy’s plan stalls in Congress with the help of powerful lobbying by the medical industry
1971: Richard Nixon backs a proposal requiring employers to provide a minimal level of insurance to employees... Senator Edward Kennedy counters with single-payer plan
1965: Medicare and Medicaid programs are signed into law by Lyndon Johnson
1973: Nixon signs the Health Maintenance Organization Act, setting aside $375 million to finance demonstration projects
1976: Jimmy Carter is elected president and calls for a “comprehensive national health insurance system with universal and mandatory coverage
1972: Supplemental Security Income (SSI) program begins providing cash assistance to elderly and disabled
1986: Emergency Medical Treatment and Active Labor Act (EMTALA) is enacted requiring hospitals participating in Medicare to treat all ER patients regardless of ability to pay
1986: COBRA enacted to provide coverage for up to 18 months for employees who lose their jobs
1983: DRGs are introduced as a prospective payment system for hospitals 6 6

7. History of Healthcare Reform: 1990 – Present… Filling the Gaps
1996: HIPAA is enacted to restrict use of pre-existing conditions as determinant in coverage
1997: SCHIP is enacted as part of Balanced Budget Act
1993: Bill Clinton convenes White House Task Force on Health Reform within first week in office, and appoints First Lady Hillary Clinton as chair
2003: George W. Bush signs the Medicare Drug, Improvement, and Modernization Act (MMA), creating a voluntary, subsidized prescription drug benefit under Medicare, administered exclusively through private plans
2007: Bush announces health reform plan that would replace the current tax preference for employer-sponsored insurance with a standard health care deduction
2008: Presidential campaign focuses early on national health reform
2009: Barack Obama establishes Office of Health Reform to coordinate administrative efforts on national health reform
2009: Senator Kennedy issues Health Care Bill proposing that all Americans have access to “essential health benefits”
2009: The Children's Health Insurance Program (CHIP) is reauthorized 7 7

8. Providers Patients Employers Payers
Who Are the Stakeholders in Healthcare Who Constrain or Propel Change?
Providers
Patients
In Healthcare, the definition of quality can be complex and controversial because of the different views of the various stakeholders
Employers
Payers 8

9. Following the Money: Who Pays for Healthcare?
Payers
(Insurance Companies and Government)
Pharmaceutical Companies $ $ $
Employers / Tax Payers
Providers
(Doctors, Clinics and Hospitals) $
Medical Technology Companies $ $
Patients
Other HC Service Providers $

10. So What’s Next? Identifying Key Issues and Solutions
Paying for Reform
Reducing Medical Costs and Waste
Healthcare Reform: The Discussion Continues
Mandates and Tort Reform
Improving Quality and Access
Public Option
Aligning Stakeholder Incentives
Insurance Market Rules and Reform

11. Major Issues and Concerns Facing the Health Sector
Improving quality – medical errors; substance abuse, mental health, asthma, diabetics receive ineffective care
Improving access and coverage million American lacked insurance coverage in 2009 and millions more had inadequate coverage.
Slowing the growth of health care costs – health care costs are growing much more rapidly than the rest of the economy.
Encouraging healthy behavior – health behavior can help people avoid diseases and injury or prevent disease or disability from worsening.
Improving the coordination, transparency, and accountability of local system of care – problems of quality, cost, and access are largely attributable to the fragmentation and lack of coordination with the system.
Health disparities – inequalities in health status among various income groups, social classes, and ethnic groups

12. Defining Characteristics of the U.S. Health Care System
The first defining characteristic of the health care system is the line between activities directed at keeping people healthy and those directed at restoring health once a disease or injury occurs.
Additional defining features of the U.S. health care system:
The importance of institutions in delivering care
The roles of professionals in running the system
Medical technology, electronic communication, and new drugs that fuel change in health care delivery
Tension between “the free market” and “government control.”
The dysfunctional financing and payment system
How we pay health care providers does not provide adequate incentives to emphasize quality, value, and efficiency

13. Defining Characteristics of the U.S. Health Care System
No central governing agency and little integration and coordination
Technology-driven deliver system focusing on acute care
High in cost, unequal in access, and average in outcome
Delivery of health care under imperfect market conditions
Government as subsidiary to the private sector
Fusion of market justice and social justice
Multiple players and balance of power
Quest for integration and accountability
Access to health care services selectively based on insurance coverage
Legal risks influence practice behaviors

14. Defining Characteristics of the U.S. Health Care System
No central governing agency and little integration and coordination
U.S. is not centrally controlled
Financed both publicly and privately; variety of of payment, insurance, and delivery mechanisms
Private payers account for 54%; Gov’t 46%
Centrally controlled healthcare systems are less complex; less costly

15. Defining Characteristics of the U.S. Health Care System
Technology-driven deliver system focusing on acute care
U.S. research and innovation in new technology creates a demand for new services
The latest innovations are believed to provide the best care
Many physicians want to try the latest innovations
Technology causes competition between hospitals
Legal risks for providers play a role in the reluctance to deny new technology.

16. Defining Characteristics of the U.S. Health Care System
High in cost, unequal in access, and average in outcome
U.S. spends more money than any other country on healthcare
Many residents still do not have access to care
Access is restricted to:
Having health insurance
Those covered under government programs
Those who can afford to buy insurance
Those able to pay privately
Those who can obtain services through safety net providers

17. So How Much Are We Spending?
The cost of healthcare services continues to rise at a rate much faster than inflation
Rising healthcare costs have resulted in considerable increases in health insurance premiums for employers and out-of-pocket costs for patients
Americans with employer-based insurance paid 79% more in 2003 than in 1996, while employers paid 89% more
Source: National Health Statistics Group

18. Defining Characteristics of the U.S. Health Care System
Delivery of health care under imperfect market conditions
In U.S. healthcare is only partially govern by free markets; hence the quasi market or imperfect market
Payors set the price of healthcare, not the patient
There is restrain competition among providers on the basis of price and quality.
Patients are not always aware of choices involving technology, pharmaceuticals, diagnostic methods
Current pricing methods for healthcare make it difficult to gauge expense

19. Defining Characteristics of the U.S. Health Care System
Government as subsidiary to the private sector
In the U.S., the private sector plays the dominant role; the government the lesser role
American wants less government intervention

20. Defining Characteristics of the U.S. Health Care System
Legal risks influence practice behaviors
Americans are quick to engage in lawsuits
Patients are persuaded easily to go to court if harm is perceived to have incurred
Provider engage in defensive medicine that can lead to higher cost

21. Defining Characteristics of the U.S. Health Care System
No central governing agency and little integration and coordination
Technology-driven deliver system focusing on acute care
High in cost, unequal in access, and average in outcome
Delivery of health care under imperfect market conditions
Government as subsidiary to the private sector
Fusion of market justice and social justice
Multiple players and balance of power
Quest for integration and accountability
Access to health care services selectively based on insurance coverage
Legal risks influence practice behaviors

22. Defining Characteristics of the U.S. Health Care System
No central governing agency and little integration and coordination
Technology-driven deliver system focusing on acute care
High in cost, unequal in access, and average in outcome
Delivery of health care under imperfect market conditions
Government as subsidiary to the private sector
Fusion of market justice and social justice
Multiple players and balance of power
Quest for integration and accountability
Access to health care services selectively based on insurance coverage
Legal risks influence practice behaviors

23. Defining Characteristics of the U.S. Health Care System
No central governing agency and little integration and coordination
Technology-driven deliver system focusing on acute care
High in cost, unequal in access, and average in outcome
Delivery of health care under imperfect market conditions
Government as subsidiary to the private sector
Fusion of market justice and social justice
Multiple players and balance of power
Quest for integration and accountability
Access to health care services selectively based on insurance coverage
Legal risks influence practice behaviors

24. Defining Characteristics of the U.S. Health Care System
No central governing agency and little integration and coordination
Technology-driven deliver system focusing on acute care
High in cost, unequal in access, and average in outcome
Delivery of health care under imperfect market conditions
Government as subsidiary to the private sector
Fusion of market justice and social justice
Multiple players and balance of power
Quest for integration and accountability
Access to health care services selectively based on insurance coverage
Legal risks influence practice behaviors

25. Group Discussion Topics