1. Characteristics of Health Care Delivery in the U.S.

2. Learning Objectives Describe how healthcare is delivered in the US
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. Historical Perspective

4. 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 4 4

5. 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 5 5

6. 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 6 6

7. 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 7

8. Organization of Healthcare Delivery in the U.S.
U.S. healthcare system is actually not a “system”
Its massive and complex and loosely coordinated
Millions of Americans work in health care delivery and depending of the healthcare industry for jobs
Array of institutions: Hospitals (5,800); Nursing homes (16,000); Home health agencies (11,000); Mental Health facilities (2900)
Various types of schools: Medical, Dentistry, Pharmacy, Nursing, Osteopathic
Health Insurance
>1000 health insurance companiens
U.S. Government: Medicare and Medicaid
70 Blue Cross/Blue Shield plans
>450 MCOs

9. Organization of Healthcare Delivery in the U.S.
Managed Care
HMO or PPO
Military Medical Care
Medicare and Medicaid
Integrated Delivery Care Systems (IDS)
Medical Home
Long Term Care Delivery
Public Health System

10. Organization of Healthcare Delivery in the U.S.
Managed Care
Integrates the basic functions of health care delivery;
Employs mechanisms to control (manage) utilization of medical services;
Determines the price at which the services are purchased
How much the providers get paid
Government and Employer is the primary financier of the MCO system
HMO or PPO
Functions like an insurance company; provides services under a contracted plan

11. Organization of Healthcare Delivery in the U.S.
Military Medical Care
Free to Army, Navy, Air Force, Public Health Service, National Oceanographic, and Coast Guard personnel.
Integrates the basic functions of health care delivery;
Covers preventive and treatment services
Finance: U.S. Department of Defense, Veterans Administration

12. Organization of Healthcare Delivery in the U.S.
Military Medical Care
Free to Army, Navy, Air Force, Public Health Service, National Oceanographic, and Coast Guard personnel.
Integrates the basic functions of health care delivery;
Covers preventive and treatment services
Finance: U.S. Department of Defense, Veterans Administration

13. Organization of Healthcare Delivery in the U.S.
Medicare, Medicaid was enacted as a federal-state program in the 1960s to provide medical services for the indigent.
The elderly and the poor were among the most medically needy in society and were the least likely to be covered by an employer's health insurance plan.
Medicare has evolved into Original Medicare - provided by the government - and Medicare Advantage - provided by private insurance companies that contract with the government to provide this insurance to seniors.
By 2001, Medicare and Medicaid made up 32 percent of all healthcare expenditures in the United States.
The elderly and the poor were among the most medically needy in society and were the least likely to be covered by an employer's health insurance plan. To keep doctors from opposing a newly proposed legislation - which led to Medicare and Medicaid - legislators agreed that the government would reimburse doctors at their "usual, customary, and reasonable rate" for taking care of the elderly and the poor.
This means doctors stood to gain a great deal from Medicare. The bill was passed in 1965 and consisted of two parts:
Part A covered hospital services
Part B covered doctors' services
In addition to Medicare, Medicaid was enacted as a federal-state program to provide medical services for the indigent. Although both programs started small, expenditures in Medicare and Medicaid grew dramatically in the late 1960s as the programs began to gear up.
Since then, Medicare has evolved into Original Medicare - provided by the government - and Medicare Advantage - provided by private insurance companies that contract with the government to provide this insurance to seniors.
By 2001, Medicare and Medicaid made up 32 percent of all healthcare expenditures in the United States

14. Organization of Healthcare Delivery in the U.S.
The Medicare and Medicaid bill passed in 1965 consisted of two parts:
Part A covered hospital services
Part B covered doctors' services

15. 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 $

16. 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

17. 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

18. 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.

19. 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

20. 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

21. 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

22. 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

23. 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

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. 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

26. Learning Objectives Describe how healthcare is delivered in the US
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