Exam 1 (ch. 1-6)

Basic Court Structure

- U.S. Supreme Court (highest) - U.S. Court of Appeals, State Supreme Courts

Variations in State Capacity/Commitment

- Who gets what from federal grant programs depends on: - Governing Capacity (ability to formulate creative, coherent, responsible policy in response to a grant, and to implement it efficiently/accountibly - Fiscal Capacity (total taxable resources, and states formal right to use them for public purposes) - Policy Commitment (do the preferences of the dominant political coalition within a state support the letter/spirit of the federal grants goals)

What is Health Insurance?

- a way of protecting against risk - making sure there is money ready when you need it - Or paying for someone elses risk (if we deny people with pre-existing conditions healthy people font have to pay for them)

FDR (1933-1945)

- designed but didn't sponsor 1st national health insurance plan

Moral Hazard

- drives a lot of cost-sharing decisions - hazards like carelessness and fraud that can lead to losses and are the result of decisions by humans - the tendency for insurance against loss to reduce incentives to prevent or minimize the cost of loss - people with insurance take more health risks than people without - example: people who know their car insurance will pay for a wreck drive more recklessly)

Representational Federalism

- how/how much states can influence federal policy processes

Jimmy Carter (1977-1981)

- proposed hospital cost containment - proposed national health insurance - both failed

Harry Truman (1945-1953)

- proposed national health insurance twice - failed both times - became fierce advocate of the idea

Market Assumptions in Healthcare #3 (distribution of wealth is approved by society/individuals care only about their own resource)

- viewed as a mechanism for changing income distribution - as opposed to buying a car: we don't count on car sales to redistribute wealth from the wealthy to the poor

3 Branches of the Government

1. Legislative Branch 2. Executive Branch 3. Judicial Branch

WHO Definition of Health

A state of complete physical, mental, and social well being

Medical Definition of Health

absence of illness or disease

JFK (1961-1963)

fought for Medicare

Lyndon Johnson (1963-1969)

passed Medicare and Medicaid

Gerald Ford (1974-1977)

signed health planning legislation

1. Making the Law

- common law=judge made law (look to decisions by judges in earlier cases involving similar cases) - health related example: Canterbury vs. Spence, informed consent (judge looked to previous rulings on similar cases and public policy considerations)

Grant Programs

- intergovernmental grants prescribe what federalism looks like - grant mixes incentives with regulation - federal gov. promises to provide funding to states to get them to address some health problems

Ronald Reagan (1981-1989)

- introduced prospective payment to Medicare - won catastrophic coverage for Medicare - tax cuts changed political calculus

Efficiency Example: Cost In-effective TB Program

- 2 physicians troubled by large number of multi-drug resistant TB (MDR-TB) cases in Haiti/Peru - tried to interest the WHO in funding public health campaigns against MDR-TB - found out that WHO had deemed treating the disease in third world countries as not cost efficient - treating normal case of TB was cheaper - basically physicians were supposed to ignore patients with MDR-TB because they could cure more people by putting all their resources into treating those with normal TB - physicians determined to treat cases anyway, discovered priced of MDR-TB drugs were market dependent (not set) - persuaded some drug manufacturers to lower price of MDR-TB drugs, persuaded one to donate large amounts of their drug - prices dropped, cure rates rose - had to prove their was a market for (demand) MDR-TB drugs to convince manufacturers to produce generic versions - worked to get MDR-TB drugs on WHOs list of essential drugs (showing there is a demand/market)

Actuarial Fairness/Solidarity Principle in Policy

- ACA restrains use of actuarial fairness and strengthens solidarity principle - cannot actuarially rate people, except for age and tobacco use - cannot deny people based on pre-existing conditions - individual mandate (everyone has to have insurance)

Examples of Health Policies

- Affordable Care Act - Seatbelt laws - Nutrition facts on fast food menus - smoke free campus WVU

Blog post 1

- Do American expect too much from health insurance - people want 3 things from health insurance: 1. protection from unpredictable and significant financial risk from accidents or illness, 2. affordable coverage for pre-existing conditions, and 3. access to routine, low-cost services like checkups and preventative care - insurance is not necessarily the way to go about meeting these needs - insurers have no incentive to pay for preventive care - only works if everyone is required to pay in - ACA is trying to cover everything - there are other ways to do it

Why are Medical Costs so High?

- For profit industry (administrative costs) - Medical model of healthcare delivery (reactive vs. preventive) - Cost shifting

Efficiency Example: Million Dollar Cath lab

- Geisinger foundation in Minnesota, idea to do heart caths in one hospital to increase efficiency/save money - this would mean patients would have to travel from far away to get caths done - also means some would have to spend money to book hotel, or even take care of their kids, etc. (chain of consequences) - a fully efficient calculus has to take into account the points of view of all the people affected

Legislative Branch

- The Congress - includes House of Representatives, and the Senate - House and Senate can veto each other's bills - congress approves presidential nominations and controls the budget - it can pass laws over the presidents veto an can impeach the president/remove them from office - Senate confirms the presidents nominations for supreme court - congress can impeach judges/remove them from office

Judicial Branch

- The Courts - supreme court, courts of appeal, district courts - the court can declare laws unconstitutional - the court can declare presidential acts unconstitutional

Executive Branch

- The President - executive office of the president, executive and cabinet departments, independent government agencies - president can veto congressional legislation - president nominates judges to supreme court

Co-Insurance

- The percentage of costs of a covered health care service you pay (20%, for example) after you've paid your deductible. - Example: your health insurance plan's allowed amount for an office visit is $100 and your coinsurance is 20%. If you've paid your deductible: You pay 20% of $100, or $20.

Cost Sharing

- The share of costs covered by your insurance that you pay out of your own pocket. - Generally includes deductibles, coinsurance, and co-payments, or similar charges - doesn't include premiums, balance billing amounts for non-network providers, or the cost of non-covered services.

Efficiency Example: The Leaky Bladder

- To save money from home health care state department of social services in NY decided to create a system to define client needs (feeding, bathroom, bathing) then designate amount of time aide necessary to complete tasks - goal was to pay home aids only for the time necessary to do the needed tasks/cut out unproductive time (time talking/spending time with patient) - an elderly women with an incontinence problem, had a live in health worker but hours were reduced to 10.5 per week (meaning woman only got cleaned/cared for during that time) - hard to tell what efficiency is in healthcare, unknown what output really is (intangible qualities of good doctoring, things patients value, hard to define/measure/put a price on) - difficult to measure intangible values, often get omitted (even though they really matter)

George W. Bush (2001-2009)

- added prescription drug coverage to Medicare (largest expansion in programs history)

Congress and Health Reform

- almost every other industrial nation has universal health insurance - congress has killed every attempt at comprehensive health care reform trying to pass universal coverage - majority of public wants coverage regardless of income/social status

Bill Clinton (1993-2001)

- ambitious national health insurance plan failed - legalized SCHIP

Ex Post Moral Hazard

- behavior changes that occur after an insured event happens and make recovering from that event more expensive - example: my insurance covers it, so I prefer the most expensive option, even if I wouldn't be willing to buy it if I had to pay for the whole thing. - example: using expensive drugs over generics, or knee replacement surgery instead of using painkillers

Ex Ante Moral Hazard

- behavior changes that occur before an insured event happens and make that event more likely - example: if I know my insurance will cover my car accident, i'm more likely to drive recklessly

2. Law resolves disputes or conflicts

- between individuals, firms, public institutions - even if not directly taking place in a court, the law can play a role in how conflicts are informally resolved

Solidarity Principle

- certain agreed upon individual needs will be paid for by a community or a group - example: fraternities and sororities - social insurance is based on this (society decides in advance that certain needs are deserving of social aid/guarantees that need will be met for all of its members) - in social insurance, individuals entitled to receive whatever care they need, amounts they pay into the scheme are unrelated to the amount/cost of care they use - rests on the belief that medical care should be distributed according to medical need - limit influence of ability to pay - everyone pays into a risk pool, some people in the risk pool will get sick. Since only those who get sick receive a payout, the others basically pay to help them (we do it because we don't know when we first pay into the pool when we will be on the giving/receiving end, want to protect ourselves)

4. Judging the Law

- courts are ultimate arbiters of the constitutionality of legislation and administrative regulations - can find laws unconstitutional under: - conflicting with federal law - infringe on rights specifically protected by the constitution - violate due process clause by failing to provide adequate procedures to protect life, liberty, or property - violating equal protection clause of the 14th amendment - health example: Washington vs. Glucksberg; Vacco vs. Quill - challenged state laws prohibiting physician assisted suicide - due process clause protects the right to refuce unwanted lifesaving medical treatment, court reluctant to expand the concept of due process - liberty to choose how to die/death reformed into the right to commit suicide/assistance in doing so (no right to suicide in the constitution) - when patient refuses life saving treatment they die from underlying disease, but if they ingest lethal medication prescribed by a physician they are killed by the medication

Congress - Legislative Parties

- democratic and republic leaders often have trouble forcing individual members to support party positions, due to strong local ties

Adverse Selection

- drives a lot of insurance market decisions - those who are the most likely to need insurance (the sickest people), are the most likely to buy it - when only the sickest people purchase insurance, the insurance company has to spend more than it takes in - results in a "death spiral" (costs rapidly increase as a result of changes in the covered population)

2. Enforcing the Law

- enforcing criminal law (you're found not/guilty and are given a sentence - criminal law=if you break a law, government brings case against you - civil law= if you hurt someone else, another entity brings a case against you - health related example: U.S. vs. Gerber - Dr. Gerber owned a holter monitor company and paid drs. who used them an interpretation fee by billing medicare (drs. got around $65 a patient) - anti kickback statute - combat financial incentives to physicians for ordering particular services that patients did not require

Efficiency Example: Paycheck

- every paycheck is an expenditure to a hospital and a livelihood to an employee - depending on the point of view, a paycheck could be an input or an output - to a hospital CEO, a paycheck is an input (how much input does it take to produce an output), wants to write as few checks as possible/keep them as low as possible - to local community each paycheck is output, (means livelihood to employee/family, money from checks also means revenue to local businesses) - double bind: health care expenditures take up the countries GNP/raise costs, but every healthcare expenditure is income to someone employed in the health care sector

3. Law Establishes Institutions and procedures for governance

- example: DHHS was given the authority to interpret fraud/abuse laws -creating safe harbor rules describing what a health care provider can engage in without getting prosecuted

5. Law Articulate Values for a Society

- example: civil rights laws articulate a societal commitment to equality - example: supreme court's decisions on abortion or right to die laws tell us something about medical privacy, individual choice, and the sanctity of life

4. Law Governs the Distribution of Benefits and Privileges by the States

- example: professional licenses, certificates of need, goods/services/cash distribution (research funding, medicaid)

Waivers

- grant programs can be modified by waivers (congressional delegation of authority to the executive branch to permit selective deviations from the law) - Medicaid waivers are a major thing

Congress - Support Agencies

- help congress carry out its powers - some services also available to other branches and the public

The Political Operator

- how well does the president operate the political machinery of the government/how well do they get things done - must be able to master both congress (president less powerful each day in office) and the public (congress can't ignore public response)

Cool Attractive Policies

- identifiable benefits than can be broadly allocated and traced back to the vote/actions of individual legislators - costs must be widely diffused , without imposing significant burdens on targeted tax payers - example: Hill Burton Act increased the number of hospitals in the U.S., funded by federal-state match

Micro Regulation

- implies direct observation, and potentially control over the organization/individuals being regulated - U.S. relies on micro regulation that is carried out privately

Market Assumptions in Healthcare #2 (tastes for goods/services predetermined, cannot be influenced by others)

- information asymmetry - drs know more than we do, that gives them some power over us - they can induce demand (tell you that a procedure can save your life when you don't really need it) - as opposed to buying a car: you may think a type of car is ugly because that is your taste, doesn't matter what others think

Insurance Regulation

- insurance started with the blues (social solidarity) - then private insurance happened (actuarial fairness) - then employer based after WW11 - then federal gov. got involved: - ERISA barred states from regulating self funded health plans operated by large employers - COBRA and HIPPA: gave people with health insurance through their jobs more rights to continue coverage after severance from the employers, limited discrimination against workers due to health status in certain employer health plans

Congress - Organized Interests

- interest groups play a large role in shaping the views of legislators - large memberships, skilled lobbying, campaign contributions, public relations drives - example: the AMA is opposed to retail clinics - 2 Stated reasons= potential conflict of interest (person prescribing meds in a pharmacy), and potential jeopardized quality of care (more public/less private, NP's may not be delivering same quality of care as a Dr) - Unstated reasons= they are losing money, NPs are paid less than actual Drs

3. Interpreting the Law

- interpret statutes adopted by legislatures and regulations adopted by administrative agencies (discerning the meaning of the statute/regulation in the context of the problem at issue) - traditional vs. textual approach - health related example: Aetna Health Inc. vs. Davila - interpreted the Retirement Income Security Act (ERISA) - managed care plan requires you to have less care than needed - state vs. federal role in insurance lawsuits

Dwight Eisenhower (1953-1961)

- locked into place a tax break to encourage private employers to provide workers health insurance

Congress - The Legislators

- major political parties can play a significant role in candidate selection/promotion - congressional candidates/incumbents are usually independent agents who promote their individual political interests - both congressional campaigns and legislative decision making are especially responsive to local considerations even when the campaign issues are of national consequence

How to Limit Moral Hazard

- make patients pay more; expose them more to the actual cost of care, so they have incentive to shop around (coinsurance, co-payments, deductibles) - high deductible health plans: less expensive premiums, but you have to pay more toward your deductible

Federalism

- mixing of 2 different governments (state/federal)

Macro Regulation

- more indirect - setting the ground rules then stepping back, letting the organization/individuals chose how to respond - other developed countries rely on this more than the U.S. in regulating healthcare

Congress - Committees

- needed to manage the thousands of bills proposed - include standing, select, joint, and conference committees

Not Cool Unattractive Policies

- obscure benefits sometime in the relatively distant future - returns that aren't obvious for citizens but would still require costs - explicit redistribution of tax dollars of political engaged constituents (insured) to the benefit of the politically withdrawn (uninsured) - example: curbing healthcare costs

Actuarial Fairness and Politics of Exclusion

- over the decades insurance companies have tried to use applicants race, gender, sexual orientation, and pre existing conditions as ways to charge more or deny coverage all together

Congress - Staff

- personal staff for individual senators and representatives - committee staff work for particular committees

Presidential Paradox

- president is both limited/weak (checks/balances, and distrust of centralized power), and powerful - what makes some presidents strong and some weak depends on the individual, and the context - Individual: are they smart, do they have a vision, are they weak, are they skilled - Context: is their party in control of congress, is the party united, what is the economic/international situation, what's the mood of the country

The Individual (setting the national agenda)

- presidents chose their signature issues - reasons behind their choice (campaign promises, interest group pressure, popular opinion, crisis)

House of Representatives

- presiding officer= speaker of the house - qualifications= 25 years old, 7 year U.S. citizen, legal resident of the state where elected - term of office= 2 years - number of members= 435 voting representatives - annual salary= $150,000

Senate

- presiding officer= the vice president - qualifications= 30 years old, 9 year U.S. citizen, legal resident of the state where elected - term of office= 6 years - number of members= 100 (2 from each state) - annual salary= $154,700

Efficiency

- producing the most output for a given input - getting the most we can for a given cost - like a bargain - multiple vantage points (what is viewed as efficient for one person may not been for another)

1. Law provides social control

- provides rules that channel human behavior - health example: how do medical negligence laws influence provider behavior (encourages physicians to provide unnecessary medical care aka defensive medicine) - other forces that shape human behavior (social norms, religious beliefs, financial incentives/disincentives, personal morals)

Richard Nixon (1969-1974)

- pushed HMOs - rethought concept of national health care with government filling in gaps of private insurance companies

George H.W. Bush (1989-1992)

- repealed catastrophic coverage - new republican national health insurance proposal

Health Insurance vs. Sickness Insurance

- sickness insurance covers sick people - health insurance tries to weed out sick people and cover the healthy people only

Actuarial Fairness

- the idea of people paying for their actual risk - used by private insurance - requires insurers get detailed info on applicants (Medical underwriting) - insurers interested in factors that predict/affect a persons use of medical care (ex: hobbies, occupation, medical history, family medical history) - asses applicants risk by looking at their medical records - insurers establish premiums at a level consistent with risk represented by each individual policy holder - people who have diseases/serious risks to their health are getting a more valuable insurance policy than those with lesser risks, so they ought to pay more for the extra value

The Invisible Hand

- the self interested actions of individuals result in an "optimal" allocation of society's resources - OR unintended social benefits of individual self-interested actions - markets take care of themselves - example: like buying a car, company sets a reasonable price, people save/budget then buy the car) - people demand what they want most, suppliers produce only what is demanded by consumers, suppliers must use inputs as efficiently as possible to price their products low enough to attract buyers and people can buy those things they most desire - another example: an individual making a decision to buy coffee and a bagel to make them better off, that persons decision will make the economic society as a whole better off.

Traditional vs Textual Approach

- traditional approach to interpreting a statute/regulation = examine the legislative/administrative history of the disputed provision to determine the intent of the drafter - textual approach to interpreting a statute/regulation = attempting to discern for themselves what the statute means

Supply Side Policies

- tries to change how health services are offered - includes budgets, control of the diffusion of medical technologies, limits on the number of hospital beds/physicians, hospital/physician payment incentives (ex; readmission reduction programs), practice guidelines, utilization review - advantages: can be more effective than demand side policies, not regressive by nature - disadvantages: can result in longer waiting times when supply is reduced - supporters tend to believe in greater government control

Demand Side Policies

- tries to change patient behaviors - impact occurs through price mechanism (how much patients pay for care, aka cost sharing) - economists cite inefficiency in health care due to over-insurance (causes people to consume services they don't value) - society then incurs a welfare loss (costs exceed benefits when it comes to services used) - patient cost sharing can reduce welfare loss of over-insurance (if people have to pay more for services, they will demand only those services that are most beneficial/useful/profitable) - cost sharing helps lessen demand for services - high deductibles also make people think twice before using services - HSAs also make people think twice because they like the idea of having the savings accrue over time - disadvantages: favorable selection (healthier people joining, leaving sick people in risk pools of other plans leading to their premiums spinning out of control), consumers ability to make informed decision whether to seek services when they have a high deductible, lower income people less likely to be able to pay full cost for services before they pay off deductible

Social Justice

- views healthcare as a social resource - required government involvement - assumes government led position - ability to pay is not necessary - access is a right

Market Justice

- views healthcare as an economic good - free market position - market based demand for services - services provided on ability to pay - access is reward for personal effort

Efficiency Example: The Waiting Room

- wait time to see a dr. is only efficient from drs point of view - dr. doesn't know ahead of time how much time a patient will need, to make doctors time more efficient, multiple patients are always scheduled in the waiting room and a couple in exam rooms - this way the dr. is always seeing a patient, their time is used efficiently/never wasted - however, patients waste a lot of time waiting - to be able to say that the waiting room system produces the most medical care for the least expenditure of time, we would have to ignore the patients wasted time or value patients time less than the drs (or both)

Market Assumptions in Healthcare #1 (individuals are rational, know what goods/services are best for them, use info to make decisions)

- we don't know a lot, and cannot use info effectively - we don't know what we need - we don't understand health insurance - even if we do have info still make irrational decisions - as opposed to buying a car, we do know what we need (ex: price range, size for kids , environmentally friendly, good gas mileage)

Barack Obama (2009-2017)

- won affordable health care act - most ambitious health care initiative in U.S. history

ACA Impact on Federalism

1, Insurance Regulation: - ACA creates comprehensive federal regulatory regime for private health insurance (can't deny pre existing conditions, can't charge higher premiums to women, etc.) - individual mandate 2. Insurance Exchanges: - intended to promote more efficient/competitive markets for individuals and small employers - states can run their own, or federal gov. will run it for them 3. Medicaid Mandates: - states were supposed to expand medicaid - reverses long standing trend for states to have more medicaid discretion

3 Possible Types of Organizational Arrangements of Congress (structural characteristics)

1. Centralized: - majority party leadership makes the decisions (agenda, committee organization, staff resources, etc.) - opinions of minority not really heard 2. Decentralized: - power and resources distributed beyond the majority party's leadership - power is concentrated in committees - authority granted to standing committees, which provide review of all bills introduced in their areas of policy jurisdiction (ex: health, education, labor/pensions; homeland security) 3. Fragmented - power is dispersed even further (each individual makes decisions, no checks/balances) - extreme example: individual legislators given resources/access to bill amending process that allows them to influence the course/substance of legislation

3 Assumptions of a Market

1. Individuals are rational; they know what goods/services make them best off, and they can effectively use available info to achieve this best off position given their wealth 2. Individuals tastes for goods/services are predetermined and cannot be unduly influenced by others 3. The distribution of wealth is approved by society and individuals care only about their own resource (not those of others)

5 Types of Government Involvement (intervention in health care)

1. Provide information (least intrusive)** 2. Regulate (by setting rules for private providers) 3. Mandate (by stipulating private entities act in a certain manner) 4. Finance with public $$ 5. Provide services directly (most intrusive)** - example of 2/3: no denials for pre-existing conditions - example 4/5: replace private insurance market with government coverage

4 Main Functions of the Courts

1. making the law 2. enforcing the law 3. interpreting the law 4. judging the law

3 Faces of the Presidency

1. the individual (setting the national agenda) 2. the political operator 3. the policy maker

Barriers to Passage in Congress

3 dimensions that define the congressional setting at any point 1. Party = the percentage of seats held by the political party that generally favors the policy change 2. Cohesion = the level of unity/agreement among the members of that party (party+cohesion=reliable majority, when large/unified can expect majority vote in favor of the party's policy approaches when presented) 3. Structural Coherence = the degree to which the legislatures decision making authority is concentrated rather than dispersed, can be coordinated by the majority party

Co-Payments

A fixed amount you pay for a covered health care service after you've paid your deductible

Mental Health Definition

A state of well being in which every individual realizes his/her own potential, can cope with the normal stresses of life, can work productively and fruitfully, and is able to make a contribution to her/his community

Health Policy is..

Decisions, plans, and actions that are undertaken to achieve specific health care goals within a society (WHO) - goal: to achieve health

Pareto Optimality

It is impossible to make someone better off without making someone worse off

Anti-Kickback Statute

is a criminal statute that prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business.

Deductible

the amount that must be paid out of pocket by the policy holder before an insurance provider will pay any expenses.

Healthcare Markets vs. Other Markets

the market for healthcare is totally different from other markets (like for cars)

Types of Grants

- Project = states compete for limited pot of federal money to conduct a specific activity - Formula = allocate federal money to states according to specific formula, support activities of a continuing nature

The Policy Maker

- Runs the executive branch: - 3 major parts to oversee: white house staff, executive office of the president, cabinet members organizations) - administrative decisions can be silent/little publicity - executive orders (way to bypass congress) - Framing policies: - president is supposed to champion the major idea, then delegate details to others (committee, etc.) - need to enter office with plans ready