Understanding Health Policy – Chapter Summaries

Chapter 1 - Changing US Healthcare System1. Deprivation

- 51 million (17% of pop.) uninsured (cause: shift from manufacturing economy with full benefits job to service economy with poor/no benefits) 1/4 of uninsured are in families with employed adults

- ¾ of uninsured are employed- not a prob. of the poor into middle class because of self-employment or in small companies- An epidemic45% of people who needed care did not get it because they couldn't afford the

bills2. Excess

- 20-30% of patients received inappropriate carei. seems to depend are where you live in the country

- overuse: ¼ of hospital stays; ¼ of procedures; 2/5 of meds- An estimated 50% of dollars spent on healthcare are wasted

3. Public View- US: least universal, most costly health care in industrialized world- 15% think system is working- 33% of americans are not filling a prescription or seeing a doctor because of cost

Chapter 2 – Paying for Health CareModes for paying for health care: out of pocket, private insurance (individual vs. employment based), govt.1. Out of pocket payments (mostly in 1st ½ of 20th century; financing = 12%)

-Pay physician with cash/barter-Simplest mode of financing – direct purchase of goods and services-Why isn’t health care purchased with out of pocket payments?

o Need v. luxury – we view health care as a need/right vs. luxury, so someone must pay for care of those who can’t afford it

o Unpredictability of need and cost –don’t know if/when we’ll be sick, so its hard to plan for these expenses (usu. exceed middle class income for severe illness)

o Patients rely on MD recommendations – we don’t know what kind of care to get and depend on what the physician thinks. The demand for health care is partially involuntary (in regards to the patient) and physician driven

- not viable b/c a) hard for consumers; b) not meeting hospital and MD needs to be paid2. Individual private insurance (financing = 3%; population = 5%)

o intro. 3rd party (insurance company)o 2 transactions: 1. Consumer pays premium to insurer/health plan 2. Insurer reimburse MDo Indemnity insurance – 3 transactions: 1. Consumer pays premium to insurer 2. consumer pays

MD 3. insurer reimburses consumero Began in Europe (est. benevolent societies for major illness) to US with the Metropolitan Life and

Prudential companieso pro: protects patients vs. unpredictable costs and protects MD from unpredictable reimbursement o not viable: huge administration costs in collecting premiums from individuals

3. Employment based private insurance (financing = 31%; population = 48%)-Driven by increasing effectiveness and rising costs of hospital care-History

o start during Great Depression b/c hospitals can’t attract customers; so hospital-centered private insurance provide care to employees in exchange for annual fee; but restrict to 1 hospital

o Blue Cross plan allow hospital choiceo Euro (consumer driven health insurance); US, MD pushed for insurance to ensure they would

get generously reimbursed for svcso WWII – employers started offering health insurance as a fringe benefit of employment due to

limits on wage control go from 12 mil in 1940 to 142 mil in 1988 on health insurance-Transaction: 1. Employer pays employees premium to insurer 2. Insurer pays providers

o Employer paid premiums is tax deductible, employee benefits are not taxable income

Page 1 of 6

o so govt. subsidizes employer sponsored health insurance o Experience rating : (commercial insurers soln to compete w/ Blue Cross) your likelihood of

getting sick determines your premium (higher premiums for sickest), regardless of ability to pay Within a group, the healthy pay premiums but never use the benefits, but the sick use

more health care but use the funds that the healthy contributed (ok to even out cost) Between groups, the higher spending of one groups is NOT subsidized by the lower

spending groups, so less redistribution of funds (no incentive to share) Discriminates against elderly people

o Community rating : (Blue Cross) an entire community is charged same premium, regardless of ability to pay or health status, in order to distribute cost of health care over the sick & healthy

Between groups, the higher spending of one groups balanced the lower spending in another groups

Beneficial for healthy young, who don’t want to pay to subsidize care of someone sicker than them

commercial insurers used experienced rating so that Blue Cross was left w/ elderly had to switch to experience rating in order to compete

o Private insurance (individual and employer) pro: increased access to care (whereas out of pocket often limited health care) con: Increased cost b/c a) more use of health care by consumers since no fiscal

worries; b) MD raise cost b/c paid by insurers no inclusion of: elderly (hurt by experience rating), poor, unemployed (no benefits)

4. Government Financing (financing = 47%; population = 30%)o 1965 enacted Medicare (for elderly) and Medicaid (for poor) to provide coverageo Medicare

o Plan A – Hospital insurance for elderly, financed by social security Eligibility – older than 65 and paid social security for at least 10 years, spouse

included. If not eligible, can pay a monthly premium to get Medicareo Plan B – Insures physician svcs, paid by fed taxes & monthly premiums

-Eligibility – those eligible for part A & pay the monthly premium for Plan Bo Plan D —Insures for prescription medications

-59% enroll in the voluntary programo Large deductibles, copays, & gaps in coverage most beneficiaries also enroll in a private

insurance company Most have supplemental insurance (Medigap premium, Medicaid); 19% overlap

Medicare/Medicaido Medicaid

o State run program, funded by state and federal taxes Pays for care of low income grps (families with children that meet certain income

level, or elderly, disabled, & blind who rcv SSI)o Expansions to Medicaid program

o Waiver program allows states to require recipients to enroll in managed care plans, to expand Medicaid eligibility, and change benefits

o State Children’s Health Insurance Program (SCHIP) – covers uninsured children in families 200% below FPL; 1997 expansion of Medicaid; 8 mil. enrolled by 2009

o Outcome: only receive benefits if made contributions; but contribution doesn’t translate to eligibilityo 2 kinds of subsidies – the healthy pay for the sick, and the wealthy pay for the poor.

o healthy working rich contribute more and benefit lesso sick unemployed poor contributes less and benefit more

o Pro: increased access for some groups (filled some gaps)o Con: increased cost compensate by a) forcing some pt. to lower cost HMOs; b) payment to MD

Burden of financing health careo Progressive – income, contributeo Regressive – income, contributiono Proportional – same contribution for allo What’s the best way to finance health care?

Page 2 of 6

o NOT regressive – the poor are usually unhealthiest. Don’t want to increase their costs reduce their disposable income and possibly worsen their health

o Out of pocket plans = regressive (same cost for wealthy/poor, but dif. proportions of income); but poor usu. pay more out of pocket

o Experience/community = regressive (worse for experience b/c poor usu. more ill)o Employer based private insurance = regressive (b/c someone w/ lower income will have higher

% of wages deducted for health insurance)o Government financing = part progressive (income tax)/part regressive (SSI/sales tax) avg.

to proportional tax burdeno 46% of health care is financed by out of pocket, individual private insurance, and employer

based private insurance (all regressive) + 47% government financed (proportional) = overall is regressive

o low-income spent more on healthcare than high-income THE BOTTOM LINE!1) less affordable to gain access to care b/c of lack of insurance2) disadv for unemployed, PT employees, retired3) deregulation of insurance companies experience rating access for poor/elderly

Page 3 of 6

Chapter 3: Access to Health CareAccess to health care = ability to get health svc when needed: financial or non-financial barriers (race/culture, where people live, providing care in a timely manner)

Financial Barriers to Health CareLack of Insurance- in 2009, 51 million uninsured (17%)- related to employment-based nature of health care financing

- employment doesn’t provide insurance- even if employed, can’t afford premiums- unemployment

Why People Lack Insurance- increasing insurance cost: insurance cost (caused by experience rating, admin cost), employer subsidy, stagnant wages employer-based coverage –insurance premiums increased 114% between 2000-2010- changes in workforce: in early 1990s: shift in work-force to low-wage, PT, nonunionized workers coverage; also hit w/ several recession cycles so lots of unemployment. Increase in service work (traditionally w/o health benefits) with corresponding decrease in manufacturing (traditionally w/ benefits).- countertrend: Medicaid coverage (but still not enough)- worsening trend: 2007-2008 = slowing of econ + healthcare cost coverage again!- disadv: serious illness; certain categories of jobs b/c considered risky; small business, insurance linked w/ instability of employment- hard to keep Medicaid: small family income don’t qualify for Medicaid, but still can’t afford premiums- < 10% of uninsured don’t want insurance Who are the Uninsured- uninsured in 1999,

- 12% whites- 21% African Americans- 17% Asian Americans- 32% Latinos

- income inversely prop. to uninsured; but < 50% of poor covered by Medicaid- more in poor health compared to insured - about 75% employed uninsured (have 1 working adult); 25% unemployed uninsured

Does Health Insurance Make a Difference?health services use: (vs. insured) = delay care (32%), regular source of medical care (56% w/o), MD visits w/ poor health, % of kids go w/o necessary care, sick newborn get more hospital svcs; many are refused care; more ER services w/ longer waits (inc. breast/cervical ca; HTN b/c lack screening)

- lack of insurance = MAIN BARRIER to health svchealth outcomes: avoidable hospitalizations; diagnosed at later stages of life-threatening illnesses; more ill when hospitalized; suffer higher overall mortality rate ( by 25%). Lack of insurance accounts for 18,000 deaths annually.

Does Medicaid Make a Difference?health svc use: access to medical care is intermediate b/w w/o insurance and private insurance

- Many private docs don’t accept Medicaid- use of preventive svc (vs. uninsured), later prenatal care (b/c hard to find OB

Medicaid); but worse when vs. private insurance health outcomes: there’s no diff. b/w Medicaid/uninsured pt.; but worse than private insurance. Compared to private insurance, Medicaid patients have lower rates of immunization, cancer screening, hypertension and diabetic control and timeliness of prenatal care.

Page 4 of 6

Underinsurance71% of privately insured people with low incomes and substantial medical expenditures were uninsured62 percent of bankruptcies lack of coverage for catastrophic expenses: insurance leave maj. expenses to pt. (31 mil.)svc not covered: ltd formulaies and copayments to cover expenses; many output Rx not coveredinsurance deductibles/copayments: barrier to MD visits (could be financial burden). Increased number of high deductible plans.gaps in Medicare coverage: covers only 48% of medical expenses; lots of out-of-pocket costs

- Rx drugs coverage under Medicare (covered by additional coverage but has limit on total amount and ask for copayment for Rx)

lack coverage for long-term care: Medicare pay 20%; private pay 8%; many qualify for Medicaid only after spending life savingsEffects: use of svc, worse outcomes, financial problems, epidemic b/c no immunization coverage

Non-financial Barriers to Health CareLack of Prompt Access- difficulty finding a PCP with Medicare (28% of individuals)- only 27% of adults with a PCP were able to easily contact their doctor- wait time to see a PCP increased from 17 days in 2005 to 31 days in 2008

Gender and Access to Health Care- male MD give unsatisfactory answers to patient questions when compared to female MD- women give dif. care (more Pap smears than male MD)- women more likely to leave MD and report problem w/ MD- women: Medicaid/underinsured; out of pocket cost; but coverage; problems w/ getting care- mil. of privately insured women have plans that exclude coverage for maternity care and preventive services - ltd area/MD for abortion svc (esp. in nonmetropolitan areas)- women also more likely to receive inappropriate care ( CAD procedures, kidney txpl, tranquilizers, unnecessary C-sections) but no diff. in mortality rates

Race and Access to Health Care- greater access prob for minorities: uninsured, has Medicaid coverage, or is poor- African Americans and Latinos: get physician visits, preventive svc, surgical procedures than whites

- not always b/c of financial & insurance coverage diff.- MD practice in communities w/ Af-Am or Latinos; but minorities tend to practice in underserved communities- what explains disparities in access to care across racial and ethnic groups?

- cultural differences in beliefs about value of medical care and attitudes toward seeking treatment- communication problems- racism/discrimination (cause for opening of black medical schools)

The Relationship Between Health Care and Health Status- access to health care does not = good health, also need employment, adequate income, decent housing, effective protection from environ. discomforts, support to public edu, end to discrimination, community activities, cultural/recreational developmentHealth Status and Income- impact on health of an indiv./pop. = broad SES > medical care (b/c low income have mortality rates)

Page 5 of 6

- way in which income is distributed within communities appears to influence overall health of population (social inequality toxic health effects due to psychosocial stresses)Health Status and Race- Afr-Am dramatically worse health than whites ( mortality/infant mortality rates)- deaths from AIDS and homicide higher among Af-Am, but most of xs mortality due to common “killers”- incidence of breast cancer in Af-Am women, but more likely to die from it b/c diagnosed at later stages- not genetic disposition, b/c this trend is found across all dx- xs burden of morbidity—more likely to have chronic illness that limits their activity- even compared with whites of same SES, African Americans have poorer health status

- possibly, social factors and stresses related to race itself may contribute to poorer health

- w/in Latino/Asian groups great variability b/c of dif. SES - Latinos have overall mortality rates vs. whites (despite lower SES)

- “health immigrant” effect: foreign-born people often have lower mortality rates than US-born

Access to Health Care and Health Status- SES is a strong predictor of health outcome- nations with universal healthcare still have disparities in health status among SES diff.- considerable evidence that socioeconomic status (income, education, and occupation) rather than access to health care may be dominant determinant of health status; access to care does not guarantee good health but is nonetheless essential

Page 6 of 6