Lecture 11, Healthcare and Healthcare Reform
Exam: Dec 9 3:30
– Today's topic (more than one day) healthcare. Health care readings are posted: one long, very interesting one (two chapters by Jacobs-Shapiro) on
Clinton case. One short, on Obamacare.
Healthcare and health care reform
Discussion: what accounts for the big differences between the US and
Canada in healthcare systems? Values, interest groups, institutions?
Reasonable, but, quiz: where does US rank among 20 largest industrial democracies in percentage of public expenditure devoted to health?
Answer: first! 18 percent of all govt expenditure. Note that US total govt expenditure is a little lower than Canada and Western Europe. But still: US spends a lot on health care.
General argument: To a great extent, the difficulty of adopting reform, with universal coverage, is that the existing system—high cost, employer based, subsidized coverage for most employees—makes most people highly satisfied, and resistant to change. Lecture deals with health care in detail: very revealing
for how specific policy problems and health care institutions affect politics of policymaking. (Detailed notes; may go over parts of it quickly.)
Today: current features; main elements of reform
Pre-reform US System
i.e. prior to Obama health care reform – provisions are being phased in over several years. Still mostly historic system. Website disaster may delay the individual mandate. Some regulations and subsidies are in effect.)
Sources of Funds
Medicaid – means tested (i.e. for the poor); federal funding
(partial), state implementation. Many Medicaid patients see doctors very often—more than average! But limits on fees— results in lower quality.
Medicare: elderly (everyone over 65, regardless of income) and disabled. Limits on fees too, but less strict.
Veterans-- free healthcare provided by government.
Employer paid (employment benefit). Huge and important.
Individual paid (purchase insurance). E.g., self employed or work for small business: go to insurance agent; buy health insurance. Delivery types
Traditional fee-for-service (providers fees reimbursed by insurance)
-- relatively weak cost controls. 3rd party (insurance company) pays the bills. Doctor and patient don’t economize.
-- efforts at cost control
-- pre-approval requirements
-- denial of coverage
Prepaid group (health maintenance organizations, HMO)
-- providers are paid fixed amount for all your health care.
HMO controls costs.
Non-covered persons (!)
Two main categories:
Working people with low income: Many employers without health benefits. But not poor enough for Medicaid. Can’t afford health care. Healthy young people who don’t want to spend money on insurance.
(Exploiting the system. See below.)
What happens if they get sick:
Get treatment in hospital emergency rooms, other clinics
-- free, if unable to pay. Hospitals obliged to provide.
(Govt payments to hospitals for Medicare, Medicaid includes some estimate of extra costs. But it isn’t accurate.) -- pay out of pocket or have debt, if they have money.
Poor quality of care; hospitals may try to get rid of patients.
Performance and politically relevant features:
1. Sophisticated, highly convenient care for majority—employed and aged. People highly satisfied. Polls: Compare Canada and US levels of satisfaction: US citizens with health insurance highest satisfaction; US without coverage lowest; Canadian in between. But
Canadians are closer to US without coverage.
2. Total cost of system—highest in the world (17 percent of GDP;
Canada about 10 percent).
3. Health performance: for example, life expectancy; infant mortality, chronic illness: mediocre. US below average for wealthiest countries.
a) overeating (more obesity);
b) unnecessary tests and treatment, has minimal