Transcript Document

Health Economics & Policy
2nd Edition
James W. Henderson
Chapter 16
Medical Care Reform in the
United States
Copyright 2002, South-Western, a division of Thomson Learning, James W. Henderson,
Health Economics and Policy, 2e
The Push for Reform


Polls show satisfaction and unease
Forces behind reform movement
– Advocates for elderly, poor, uninsured

Middle class
– Rising out-of-pocket cost
– Health insurance link with employment

Business
– Rising cost creates wedge between cost of
employment and salary paid
– Potential liability risk
The Moral Issues
Is medical care a right?
 What is a right?
 Difference between a right and an
entitlement

Goals of Reform
Who’s covered
 What’s covered
 Who pays and how much

Health Insurance in the
United States
Employer-based group plans
 Individual insurance
 Government entitlements

Market Access Problem
Uninsured find it difficult to find
willing providers
 Insured find themselves underinsured

Health Insurance
Regulations

Federal responsibility
– ERISA
– Federal mandates

States’ responsibilities
– Health insurance mandates
Economics of Mandates

Correct perceived deficiencies in health
insurance market
– Tendency to undervalue certain types of benefits


Mental health
Long-term care
– Adverse selection

Tendency for high-risk users to enroll in high benefit
plans and low-risk users to enroll in low benefit plans
Viewed by state policy makers as a low
cost way of improving access
 Empirical evidence

Types of Mandates
Benefits
 Providers
 Persons
 Processes

Benefit Mandates
Alcoholism treatment
 Drug abuse treatment
 Oral contraceptives
 Mammography screening
 Prostate cancer screening
 Well-child care

Provider Mandates
Chiropractors
 Dentists
 Nurse practitioners
 Psychologists

Covered Persons Mandates
Adopted children
 Newborns
 Handicapped children
 Dependent students

Process Mandates
Guaranteed issue
 Exclusions of preexisting conditions
 Premium caps
 Guaranteed renewable

U.S. Policy Alternatives
State-level experiments
 Federal involvement
 Market alternatives

State-level Experiments
Hawaii
 Oregon
 Minnesota
 Other states

Federal Involvement

Universal coverage
– Single-payer
– Employer mandate
– Individual mandate

Universal access
America’s Market
Orientation
Distrust of government
 Heterogeneous population
 Individualistic tradition
 Equal opportunity
 Philanthropic tradition

Conditions for Market
Response

Prerequisites
– Rank preferences
– Goods to buy
– Money to spend

Cost-conscious behavior
– When purchasing insurance plan
– When purchasing medical services
Market Alternatives
Managed competition
 Medical savings accounts

Immediate Prospects
Medicare reform
 Patients’ bill of rights
 Health care for the uninsured
 Pharmaceutical drug pricing
