Consumer Choice

Social Welfare and Health Policy

Christopher T. Erb

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351526265
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Social Policy
• Index: Politics & International Relations

"The United States health care system is unique among those of other developed economies--most significantly because health care is not a legal right in the United States. Instead, it is considered an employee benefit and a privilege, unless one is over age 65 or of low income. The United States is the only developed country without some form of universal health care.Contributors to this volume represent an interdisciplinary group of academics, practitioners, and service delivery providers. The volume begins with a general examination of the politics of health and social welfare in the United States. It then focuses on the importance and role of consumers in the U.S. economy, and dilemmas associated with promoting consumer choice. It explores policy issues and challenges in three specific areas: controlling health care costs and protecting choice with respect to health care, the major challenges to informed choice in health care, and barriers to effective health care service delivery. Contributors explore changes and reforms that have been introduced within public and privately financed systems over the past ten years.Consumer Choice examines in a timely and efficient manner critical social and health policy issues--nationally and internationally--and the major challenges that face informed choice in health care and social policy. Policymakers, health care officials, and medical personnel in the United States and other countries will find this volume highly informative."

Part 1

Challenges and Opportunities in American Health Care Policy

1

The Politics of Health and Social Welfare in the United States

Jack H. Knott and Robert F. Rich*

Introduction

Among OECD member states, the United States health care system stands out in three important ways. The first significant feature of the United States health care system is that health care is not a legal right of citizenship as it is in every other developed economy. Instead, it is considered to be an employee benefit and a privilege. Only for those over age 65 and those with very low incomes have we created a legal entitlement to health insurance. In other words, the United States system represents the only developed country without some form of universal health care. Instead, we rely on private providers with a mix of private and public insurance as well as extensive government regulatory intervention.

The second feature of this unique health care delivery system is that it devotes the largest share of Gross Domestic Product (GDP) to health care expenditures of any country in the Organization of Economic Cooperative and Development (OECD). In the middle of the twentieth century, less than 5 percent of GDP was devoted to health care. That percent had risen to nearly 14 percent by the end of the century. Yet, our system does not necessarily produce superior health outcomes (e.g., infant morality, life expectancy).

The third unique feature of the United States system is its complexity. Other systems tend to have a dominant form. Canada has a single payer system; the United Kingdom and Sweden have public systems; and Germany, France, and Japan have social insurance, employer mandated systems based on payroll taxes and sickness funds. The United States incorporates all of these elements in segments of its health and social welfare system into what might be considered a non-system, system. Parts of the American system are single payer, other parts are highly integrated, and the private sector is based on employer provided insurance. These structural characteristics also produce several classes of health care depending on the source of payment.

What explains these differences? Some of the difference is attributable to the demographic characteristics, size, and wealth of the United States. America has a more diverse population than smaller more homogeneous countries, and the size of the country adds to the complexity of the system. Large rural areas of low-density population, for example, provide unique challenges for delivering care. In addition, the wealth of Americans permits a significant portion of income to be spent on health care.

In this chapter we focus on a different explanation for the unique characteristics of the American health care system. We argue that public policy represents the codification of mainstream values. Consequently, as societal consensus changes over core values, laws and policy also change. Hence, the American health and social welfare system is reflective of the values and preferences of interest and professional groups in American society, interacting with expertise and political institutions. These political values and institutions determine who gets what, when and how and influence the pace and character of policy change. The private-public, segmented system of health and social welfare in the United States exists, therefore, because of the accumulated political choices we as a nation have made over time (e.g., considering health care as a privilege or benefit of employment as opposed to a right of citizenship). They are not just passive features of our demography and geography, over which we have little control. Understanding these political values and institutions helps us assess the strengths and weaknesses of the health care system and serves as a basis for recommending politically feasible options for reform in the future.

With rising health care costs squeezing profits and growing numbers of people without insurance pushing costs even higher, employers and employees alike are beginning to highlight health care costs and health care benefits as one of the most important issues to be addressed. In the 2004 presidential election campaign, health care policy has, once again, become a salient issue.

I. Government Reform and Policy Change

American politics involves a struggle for influence among key political actors. Central to the pluralist politics of the United States. are organized interest groups, which tend to be of two types. The most prevalent type is the economic interest group, which lobbies for laws and regulations favorable to its economic well-being. In health care, these groups include professional associations of physicians and nurses (e.g., the American Medical Association), hospitals (e.g., the American Hospital Association), medical technology producers, insurance companies, and lawyers. A second kind of interest group represents consumers and concerned citizens, including single-issue advocates, organizations dedicated to fight specific diseases, such as cancer or heart disease, non-profit advocates for children’s health and social welfare, disability, the elderly, poverty, and environmental health. Some of these groups are well organized and funded, such as the American Association of Retired Persons (AARP), while other consumer and social interests, especially those representing the interests of the poor, require the resources and advocacy efforts of middle income groups.

Each of these groups takes a different approach to gaining political influence. Economic interests typically keep out of the public spotlight and operate through legislative lobbying and campaign contributions. Single issue advocacy groups take the opposite approach. Their self-interest is best served through the attention of the news media, salience with the public and chief executives such as governors or the president, and inclusion in the platforms of the political parties.

In the United States, major government reform occurs in periodic windows of opportunity when these group interests, public opinion, and policy ideas converge (Baumgartner and Jones 1993; Kingdon 1984). In between these reform periods, policy change tends to take place in piecemeal and incremental fashion, influenced by the pluralist politics of economic interest groups, with public opinion remaining ignorant of policy issues. Economic interest groups thus play a dominant role in establishing the status quo health and welfare system against which reform is directed. Periodically, however, a particular policy issue gains enough saliency to play a significant role in the public’s and political parties’ perceptions of government performance. Often major events combined with news media coverage trigger public images that give the average citizen an interest in policy change, making public opinion a significant factor in the outcome of change (Schattschneider 1963).

The politics of government reform varies among policy areas. Allocation decisions on highway funds or military bases do not invoke the kind of partisan and ideological politics characteristic of issues that address core values in American democracy (Arnold 1979). Ideological politics are driven by ideas developed over time in think tanks and party organizations (Derthick and Quirk 1985), which converge with self-interest to give an impetus for reform and policy change. This kind of politics occurs with redistribution policies such as welfare reform, issues of freedom or individual liberty such as abortion or gun control, and entitlement rights such as public education and health care. Government reform in these areas rarely occurs through narrow economic interests alone. The coalition of interests that supports and opposes government reform includes moralists, self-interested economic groups, middle class taxpayers, party partisans, and policy experts/advocates (Knott and Miller 1987). These groups tend to disagree over core values, including individual rights, the role of government intervention, quality versus equality, and cost versus access. These differences are played out in politics at the national level, but they also are fought over at the state level and over which level of government should have responsibility and the capacity to intervene in the system.

As is shown in the next section, the history of health and social welfare in the United States is characterized by periods of allocation politics and incremental policy change responding to economic interests. These periods of allocation politics, however, are punctuated by active periods of government intervention and reform that have created a system of exceptions to the dominance of the private market system. Overall, no one system or group has prevailed, with the system representing an accumulated patchwork of government reform and private market developments. Over time, however, and especially since 1965, the public system has grown substantially to equal the private system of health and social welfare.

II. Government Reform and Health Care: The Politics of Exceptions—A Historical Perspective

For much of United States history, the role of government in setting health policy has been limited. This arena was controlled by providers, professional associations (e.g., the American Medical Association), insurance companies, employers, and the market in the form of consumer/provider interactions (Starr 1982). In the nineteenth- and early twentieth-century history, the role of the federal government in public health and safety was focused on relatively narrow questions of quarantine powers and immigration regulation.¹ The quarantine responsibilities led to the establishment of a network of “marine hospitals” that still exist today and to the establishment of the United States Public Health Service. Immigration regulation has also traditionally been closely linked with preventing the spread of communicable diseases. Public health, more generally, was (and is) in the jurisdiction of the states. It is the states that provide for public health education and the states that adopt and enforce regulations aimed at disease prevention.

Since the early 1900s, there have been several proposals for some form of national health insurance. These proposals were supported by parts of the American labor movement, and Presidents Franklin Roosevelt, Harry Truman, and John F. Kennedy. They were actively resisted by organized medicine, the business community, and other parts of the labor movement (Rich 2000).

Historically, government interventions could be accurately characterized as the “politics of exceptions” with government intervening in a proscribed, specific area (Litman and Robins 1991; Rich and White 1996), with the understanding that the regular health care system would be dominated by providers, employers, insurance companies, and professional associations. The “exceptions” to the normal practice were designed to preserve the sanctity of the doctor-patient relationship. The broad societal consensus was that there was no need for interference in any aspect of medical care. The “exceptions” were special groups who need special attention. The first exceptions were the merchant marines and members of the armed services (past, present, and future) who were to have all of their medical needs taken care of by government. The Marine Hospital Service Act (1898) codified this “exception” into law. This was followed by the creation of the Indian Health Service, which provided for cradle to grave health care. Congress also recognized several other important “exceptions” in the reform periods of the Great Depression in the 1930s and the Great Society legislation in the1960s: the permanently disabled were covered through the Social Security Act, Medicaid was passed to care for those in financial need, and the Medicare Program was instituted to support the elderly.

The Sheppard-Towner Act on Maternity and Infancy of 1921 was the first piece of major legislation that did not follow what had become a traditional pattern: either preserving non-government interference or creating an exception. This Act of Congress created a comprehensive program of grants-in-aid to states for the organization, financing, and delivery of services. This legislation, however, was allowed to die in 1929 largely through organized interests and the American Medical Association, in particular.

Over time, Congress has created two very different types of health care in the United States: the regular system and the system for the “exceptions”. These two systems make very different assumptions about the role of government in the organization, financing, and delivery of services. The “regular system” which covered most Americans was built on a foundation supported by several pillars. The first pillar was the sanctity of the fee-for-service system. The second was that most participants in the regular system would receive their health benefits through their place of employment. Those who were not covered by their employers would have the resources to purchase their own insurance. The few that “fell through the cracks” would be covered through volunteerism financed through cost-shifting. (In other words, there was not a problem of the medically indigent.) The third pillar was that government had a limited and focused role in the health care system.

The system for the “exceptions” was built on an entirely different foundation. This system was a single-payer system, like in Canada or the United Kingdom, with the U.S. federal government as the payer. Health care delivery was modelled after European systems of cradle-to-grave nationalized, managed care. The federal government’s involvement in health policy prior to 1965 was limited to veterans and other specialized groups and was actively resisted. After 1965, the national government adopted a leadership role with the enactment of Medicare and Medicaid² and fundamentally changed the way in which the job of government in health care was divided up. These program...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgements
• Glossary
• List of Tables and Figures
• Introduction: Consumer Choice and Health Care Policy Challenges
• Part 1 - Challenges and Opportunities in American Health Care Policy
• Part 2 - Consumer Choice Trends in Health Care Policy
• Part 3 - Consumer Choice in Perspective
• About the Authors
• Index