Chapter 2

Chapter 2Benchmark Developments in U.S. Health CareChapter ObjectivesAcquire knowledge of major legislative, economic, organizational and professional influences in health care delivery system evolution including major features and implementation timetable of the Patient Protection and Affordable Care Act of 2010Understand how benchmark developments continue to affect medical education, scientific advancement , costs and consumer expectations

Health Care Industry TransformationUntil 1940s (pre-insurance), industry dominated by physicians, hospitalsPatient/MD relationships sacred; treatments, payments confidentialMostly personal paymentsNo third party must be permitted to come between patient and physician in any medical matter. AMA, 1934Shift from Personal Payment to Insurance PaymentDramatic alteration in physician/patient relationshipDistanced patients from awareness of costs & responsibility for decisionsCreated business of medicine

Health Insurance Historical Highlights (1)1800s: some employer sickness insurance, fraternal orders, unions; fixed sums replaced lost wages.1915: drive for compulsory insurance begun on European modelsProtect workers from lost income due to accidentsHealth Insurance Historical Highlights (2)Metropolitan & Prudential industrial policies ($.10-25 /wk., paid $50-100 on death.)WWI interrupted drive for compulsory insuranceAMA officially opposed compulsory insurance (1919) believing insurance would decrease incomes based on experience with arbitrary fees paid by accident insurance.

Great Depression: Genesis of Hospital Insurance PlansHospitals experimented with insurance as financial woes depressed admissionsBaylor University Plan: birth of the Blue Cross Model; public school teacher paid $ .50/month for guarantee of 21 paid hospital daysBy 1937, 26 plans with 600,000 enrolled with physician and hospital endorsement

No Socialized MedicineAMA continued aggressive protest against government involvement in insuranceAll insurance plans served hospital, physician interests.

Growth of Private InsurancePost WWII: Government exempted health insurance benefits from wage/price controls and exempted workers health insurance contributions from taxable income. Insurance companies raised premiums without pressure to control costsAttention focused on avoiding infringement on physicians and hospitals freedom to set pricesDominant Influence of Government (1)Social Security Act of 1935- most significant U.S. social initiative in U.S. history:Federal aid to states for public health, welfare, maternal/child health, crippled childrenLegislative basis for most subsequent health and welfare programs including Medicare & Medicaid.

Dominant Influence of Government (2)Post WWII: categorical programs addressed needs unmet by states, local government, private sectorFederal subsidies for hospital construction, research, professional educationGovernment programs now almost 50% of total U.S. health care expendituresGovernment Financial InvolvementPhysician, other professional training subsidies50%+ of all research funds, National Institutes of HealthBuilding, expanding hospitals: 1940s-1970sStudent supportHealth planning, regulationConsumer protection-related agencies (e.g. FDA, OSHA)Political Values Shape Health Care (1)Kennedy-Johnson Era: Creative FederalismFederal grants increased from $7 to $24 million between 1961-1968Health Professions Educational Assistance Act; Nurse Training Act; Economic Opportunity Act for neighborhood health centers1965 Medicare & MedicaidMany other access related policiesPolitical Values Shape Health Care (2)Nixon-Ford Era: New FederalismDeleted categorical programs, shifted to state block grantsHMO Act of 1973Decentralized, shifted support from public health, social programsLegislation: Unintended EffectsMedicare, Medicaid to improve access: skyrocketed costs with underestimations of aged population growth, technology costs and service utilization Hill-Burton Act of 1946 to increase hospital capacity led to vast over-capacityHMO Act of 1973 to control costs: raised many access and quality issuesThree Major Health Care ConcernsCost, quality and access are a generations-long conundrum of U.S. health care deliveryAttempts to control each result in problems with the others: e.g. cost controls raise quality and access issues; increasing access raises cost concerns; improving quality raises cost concerns

Efforts at Planning and Quality ControlFederal government attempts to address costs, quality and access met with powerful industry influences to preserve the status quo.Federal efforts included:Regional Medical Program (1965); Comprehensive Health Planning Act (1966); National Health Planning and Resources Development Act creating Health Systems Agencies (1974)Managed Care Organizations1973 Health Maintenance Organization Act funded federal demonstration projects to:Link service delivery and financing with prepaid fixed fees; expected to hold down costs Comprehensive services emphasizing preventionBy 1999 managed care organizations insured the majority of all privately insured individualsMajor backlashes by consumers and providersUnsuccessful in containing costs

The Reagan Administration1981-1989: Reductions in government involvement and fundingBlock grants to statesReductions in social program supportProspective Medicare hospital reimbursement (DRGs) became the model for hospital reimbursementNew resource-based physician payment to contain physician fees is a model in use till todayBio-medical AdvancesDramatic technology advances of 1960s and 1970s: Sabin polio vaccinesTranquilizers, anti-depressants-librium and valiumBirth control pillsHeart-lung machinesImproved general anesthesiaComputed tomography scannersTechnological Advances: New ProblemsExtending life versus the individuals right to dieEqual access to technology regardless of ability to payProfit-motivated overuse of technology with no patient benefitTechnology availability causes overuse due to fears of litigation

Problems of Technological Advances: Private and Government Attempts at SolutionsAMA: established Diagnostic and Therapeutic Technology Assessment Program; the Council on Scientific Affairs; AMA Drug EvaluationsFederal Government: 1972 Technology Assessment Act created Office of Technology Assessment (shut down in 1995); Agency for Health Care Policy and Research created in 1989 renamed Agency for Healthcare Policy and Quality current research on health outcomesRoles of Medical Education & SpecializationMedical schools, teaching hospitals: conduct advanced research, form values and skills of physicians, nurses, other professionalsTeachers as role models reinforce values to new professionalsTradition, narrow faculty expertise: obstacles to educational reforms related to population-based health careIssues persist about workforce needs and future planning for physician supplyInfluence of Interest GroupsMany problems arise from division between governments, private health care industry both seeking to protect the interests of their stakeholdersTax-funded proposals spawn well-financed lobbying by providers, insurers, consumers, business, labor unionsAmerican Medical AssociationAMA: est. 1847 to improve medical education217,000 members, about 17% of physicians and medical studentsHistory of opposition to government controls & advocacy for physician autonomy; supported the ACA; cost containment, malpractice reform, autonomy remain contentious

Insurance CompaniesPolitical efforts viewed as self-serving by eliminating high-risk consumers from insurance pools and premium rate increasesHealth Insurance Association of American waged highly successful media campaign to influence failure of Clinton PlanVigorously opposed ACA public option that would have curtailed company profitsConsumer GroupsInformed and assertive citizens exert increasing influence on legislative decisions.AARP- 40 million membersPatients Coalition ( 50+ not-for-profit organizations) Numerous other consumer advocacy organizations lobby individually or as coalitions on health care issues

Business and Labor (1)Business groups and coalitions as the primary purchasers of health care for their employees, lobby intensively on health care issues:National Federation of Independent Businesses: 350,000 individual members representing small firms (sued for relief from the ACA)National Association Manufacturers- large employers with 11,000 members.U.S. Chamber of Commerce: 3 M businesses of all sizes

Business and Labor (2)Labor unions have strong interests in health care benefits of members:American Federation of Labor and Congress of Industrial Organization (AFL-CIO), 13 M membersService Employees International Union (SEIU) 2.1 M members with 1.1 M in health carePharmaceutical IndustryOne of the most well-funded and influential lobbying organizations in health careAnticipated increased drug use by older population and gains from participation in Medicare prescription drug programSucceeded in strongly influencing the Medicare Part D prescription drug plan by prohibiting the federal government and Medicare from negotiating volume price discounts with drug companies

Public Health Focus on PreventionPublic health organizations advocate for health promotion, disease prevention and needs of underserved populationsHistorically, negative perceptions result from linking public health with government bureaucracy or socialismAmerican Public Health Association maintains 30,000 members and significant lobbying activities.Economic Influences of Rising CostsGrowth in health spending and insurance premiums rising much faster than U.S. economic growthHigh costs are the major impetus for reformsNumbers of uninsured reached a high of 49 M, an increase of 12 M, since Clintons health reform failure in 1994.Uninsured numbers vary as function of employment status, premium costs and Medicaid eligibility Health Insurance Portability & Accountability Act of 1996Ensured coverage renewal for workers changing jobsRegulated insurers coverage of pre-existing conditionsMandated medical record computerization and privacy (implementation in process) Office of National Coordinator of Health Information Technology (Bush- 2004) and American Recovery and Reinvestment Act (Obama-2009) that provided $ 20.8 to incentivize adoption of electronic health records

Aging of AmericaMany needs for system adaptations to care for frail older personsSocial & family changes limit opportunities for informal care-givingInadequate caregiver supportsInstitutional system offers little to fill gapsHigh costs of institutional care tax personal and Medicaid resourcesOregon Death with Dignity Act of 1994Also known as Physician-Assisted Suicide ActTerminally ill may request lethal medication Stringent legal guidelines to prevent abuseWashington State implemented similar law in 2009Montana State Supreme Court upheld law protecting physicians aiding death of terminally ill in 2009.Internet and Health CareVast consumer resources of health and wellness information: communication with others about similar health concerns; data about institutions and providers. Physicians, other providers access for latest clinical informationSmartphone apps benefit consumers and providersInformation ranges from professionally reliable to questionable and is essentially unregulated

Landmark Legislation: the Patient Protection and ACA of 2010Political backgroundObamas pledge: Universal health care enacted in first term Some in administration opposed health reform due to attention required for crises in banks and auto industries, education reform and other needsDrivers: rising medical costs for families and corporations, federal deficit, volume vs. value issues, numbers of un- and underinsured

Judicial Challenges to the ACA (1)State of Florida: federal district court lawsuit challenging constitutionality of individual coverage and Medicaid expansion mandates25 additional states, National Federation of Independent Businesses and others also filed Florida suit.Virginia filed separate lawsuit challenging the individual mandate.Judicial Challenges to the ACA (2)Issues of contentionCongressional authority to mandate individual coverage with non-compliance penalties under either its power to regulate interstate commerce or impose taxesCongressional authority to make all of a states existing Medicaid funding contingent on compliance with the ACAs Medicaid expansion provisionsJudicial Challenges to the ACA (3)Supreme Court decisions (2012)Upheld individual mandate with non-compliance penalties treated as legitimate taxesRuled Medicaid expansion as unconstitutionally coercive of states with the remedy of prohibiting the federal government from making existing state Medicaid funding contingent upon participation in the expansionThe ACA Implementation ProvisionsImplementation timeline: 2010-2019Major goalsProviding new consumer protectionsImproving quality and lowering costsIncreasing access to affordable careHolding insurance companies accountableNew Consumer Protections (1)Online insurance policy comparisonsProhibit coverage denial due to pre-existing medical conditions Eliminate annual and lifetime limits on coverageEnhance venues for appealing coverage denialsNew Consumer Protections (2)Support states assistance to consumers in navigating the reformed systemProhibit insurance companies from rescinding coverage or denying payment due to technical or other errors in a subscribers original application for coverage

Improving Quality and Lowering Costs(1)Provide small business tax credits for employee premiumsProvide one-time rebate, then 50% discount for seniors uncovered prescription drug costsRequire all new insurance plans and Medicare to provide specified free preventive services$ 15 B Prevention and Public Health Fund for proven public health programs

Improving Quality and Lowering Costs(2)Enhance federal anti-fraud, waste, abuse initiatives in Medicare, Medicaid and CHIPNew Center for Medicare & Medicaid Innovation to test care improvements and continuityNew Community Care Transitions Program for seniors transition from hospital to homeNew Independent Payment Advisory Board

Improving Quality and Lowering Costs(3)New Medicare Value-based Purchasing Program with hospital financial incentives Accountable Care Organizations to improve Medicare service coordination across the service spectrumFederal programs must collect, report data to identify and help reduce health disparities

Improving Quality and Lowering Costs(4)Enhanced state funding for Medicaid preventive servicesNew pilot, Bundled Payments for Care Improvement focused on total episode of patient care rather than individual servicesTax credits for individuals within specified income limits, applicable to insurance premium costsImproving Quality and Lowering Costs(5)Health Insurance Marketplace offers choice of plans meeting specified benefits and cost criteria for individuals and small businessesPhysician payment adjustments based on qualityExcise tax on high-cost insurance plans to support coverage for uninsured and discourage use of most expensive plansIncreasing Access to Affordable Care (1)Access to insurance for individuals with pre-existing conditionsYoung adults coverage up to 26 years on parents insurance plans$ 5B to cover early retirees in employment-based plansExpand primary care workforce in shortage areas through scholarships and loan repayments for physicians and nursesIncreasing Access to Affordable Care (2)Incentivize states to regulate insurance premium increases and bar companies with excessive premiums from participation in new health insurance exchangesAdditional matching funds for states expanding Medicaid enrollmentNew funds to attract and retain rural health care providersIncreasing Access to Affordable Care (3)Funds to expand community health centers to serve 20 million additional patientNew Community First Choice Option for states Medicaid home-based services to reduce institutional careIncrease Medicaid payments to 100% of Medicare payments for primary physiciansIncreasing Access to Affordable Care (4)Support for states coverage of non-Medicaid eligible children through the CHIPSupport for states Medicaid enrollment of individuals earning less than 133% of the federal poverty level incomeRequire all who can afford it to purchase health insurance or pay a fee (tax)

Increasing Access to Affordable Care (5)Health Care Choice Compacts to increase competition by allowing insurance sales across state lines

Holding Insurance Companies Accountable (1)Require that 85% of premiums for large employers and 80% for small employers are spent on health care services or improvements; require rebates to subscribers for non-complianceEliminates costs from Medicare Advantage plans and bonuses plans for high quality careSummary (1)CBO estimate of ACA 2012-2021 net cost for 32 M new insured: ~$ 1.1 trillion; new revenues from taxes, penalties and other sources: $ 510 B.Budget projects are speculative and will evolve over succeeding yearsLobbying is underway to alter financial provisionsMajor questions in turnover of existing federal administration in 2016Summary (2)ACA includes new programs, grants, demonstration projects, guidance documents and regulations with scores of new rules to be issued throughout the implementation period.Outcomes of the ACA will be impacted by numerous factors including the national economy, political environment, provider and consumer reactions.