Health Care Law Outline

HEALTH CARE LAW

GATTER

SUMMER 2014

CHAPTER 1: Cost, Quality, Access, & Choice

– Introduction

– Cost, quality, access, and choice are the chief concerns of the health care system.

– It is possible that the total costs of health insurance is lowered by avoiding the facility generated injuries or infections or by providing timely care that avoids extraordinary costs incurred as a medical condition or disease moves to later stages untreated.

– However, enhancing one value truly may diminish another.

– Political strength, economic power, and culture/tradition all influence how we view the relative advantages and disadvantages of particular proposals and how we ultimately design our system.

– Public understanding of the Patient Protection and Affordable Care Act (ACA) centers on the tentative adoption of the principle that providing access to some form of basic medical care is important to the health and flourishing of society as a whole.

– The value is individual choice, and is reflected in the oft-stated mantra expressed in the campaign to gain public support for the ACA: “No one will make you change your coverage; if you like it, you can keep it”.

– The goal is to develop a system that provides quality health care to more people at a lower cost.

– Spreading the Risks of Illness

– The Role of Insurance

– While private health insurance exists in almost every nation, most countries rely on a public health insurance financing system to ensure universal access to health care.

– In some nations (England, Canada, the Scandinavian Countries, and the Iberian and Mediterranean countries) the government finances health insurance directly through general revenue funds.

– Other countries (France, Germany, Austria, Belgium, and Japan) have social insurance systems in which quasi-public social insurance funds pay for health care contracts with providers, financed largely by employer and employee contributions.

– Switzerland and the Netherlands finance care through private insurance companies where everyone is required to be insured and insurance is financed in part through public funds.

– The U.S. is unique in that it does not attempt to make health care universally available.

– The U.S. has cobbled together a system of private and public insurance that covers most Americans, but still leaves many without health insurance.

– About 55% are covered by insurance received from their job.

– 31% (primarily the elderly, disabled, and poor children) are covered through public programs. – 10% are covered by other private insurance (often purchased themselves)

– 16% are uninsured.

– The uninsured 16% have a right to obtain emergency care, whether or not they can pay for it, but do not have a right to nonemergency care.

– There is a great deal of evidence that the uninsured get less care and get it later and when it is ineffective, resulting in worse health status and early death.

– The Affordable Care Act dramatically expands access to health care, but will not achieve universal coverage, leaving 10% of Americans uninsured.

– The ACA also requires Americans who can afford health insurance to purchase it or pay a penalty, and penalizes large employers who do not offer their employees adequate, affordable insurance.

– The ACA prohibits insurers from discriminating against applicants or enrollees with medical conditions requiring care.

– Insurance exists to spread the financial risk of needing medical care from individuals to all members of a group.

– Social insurance, based on the principle of social solidarity, distributes risks among the broadest possible group, the entire citizenry.

– Actuarial fairness: the price that individuals pay for insurance varies based on an estimate of their individual health risks.

– This is a method of organizing mutual aid by fragmenting communities into even smaller groups; a method that leads ultimately to the destruction of mutual aid.

– This fragmentation must be accomplished by fostering in people a sense of their differences, rather than their commonalities and their responsibility if for themselves only, rather than their interdependence.

– The private insurance industry is organized around a principle of mutual aid.

– Notes and Questions:

– Actuarial fairness implies that fairness requires that individuals pay premiums based on an estimate of the likelihood that they will need medical care.

– The ACA rejects the notion of actuarial fairness in most respects.

– The ACA doesn’t embrace a vision of a universal right to health care of social solidarity and mutual aid.

– The ability to pay is not the only determinant of access to health care; even if an individual has health insurance that covers the needed treatment, they may not be able to get treatment or ay get a substandard level of treatment (such as consumers with pre-existing conditions).

– What Counts as a Health Care Cost?

– The U.S. spends far more on health care than any other nation in the world (and more than on anything else).

– How the Performance of the U.S. Health Care System Compares Internationally

– The U.S. health system is the most expensive in the world, but comparative analyses consistently show the U.S. underperforms relative to other countries on most dimensions of performance/access, patient safety, coordination, efficiency, and equity.

– Notes and Questions:

– The greater costs doesn’t necessarily buy better health or health care.

– One of the challenges in analyzing the costs of care, and targeting the cost containment strategies, is that health care costs are so easily shifting among entities within our health care system.

– Incentives for early discharge from hospitals shifted costs to nursing homes.

– The elderly goes from Medicare (which pays for most of the hospital care) to Medicaid (which pays for most of the nursing home stay).

– The Commonwealth Fund report measures quality by looking at aggregate outcomes.

– Regulation or Competition?

– The ultimate goal is that we want a health care system that delivers quality care at lower costs for more people but preserves appropriate choice for the individual.

– Health care is sometimes referred to as a “regulated industry”, which are subject to state and federal controls.

– A wide spectrum of regulations affect health care payment and delivery (pg 10).

– Over the past 30 years, the government has relied more on market competition rather than regulations.

– Much of healthcare is regulation is aimed at strengthening the impact of competition.

– The industry is subject to “market imperfections” that result in suboptimal performance for consumers.

– Market imperfections, including imperfect agency relations, information gaps, asymmetry, moral hazard, and monopoly are recognized as shortcomings that undermine consumer welfare in commercial markets for health care products and services.

– The failure of one or more of the competitive preconditions has as its most immediate and obvious consequence a reduction in welfare below that obtainable from existing resources and technology.

– Several of these market failures require special attention:

1.) Asymmetries in information, especially between patients and providers and uncertainty as to diagnosis, treatment, and outcome are critical to understanding the health care and marketplace.

– This may permit physicians to “induce demand” for their services or make referrals based on their own economic interest.

– At best it makes the information consumers need to shop in their own best interest hard to acquire; it is nearly impossible for consumers to learn the exact price for services in advance.

2.) Agency relationships, which pervade health markets, are highly influential in health care transactions.

– Most people purchase health care services with the assistance of multiple agents.

– These intermediaries are “imperfect agents”, they are subject to conflicts of interest of they do not fully understand the needs of their consumers.

3.) Health insurance markets exhibit conditions that give rise to market failures.

– Moral hazards refer to the overuse of medical care resulting from the fact that insurance lowers the cost of each purchase for insured individuals.

– Insurers have a strong incentive to engage in favorable risk selection which can cause the entire industry to spiral to inefficient performance.

4.) An important requirement of a competitive market is the presence of multiple buyers and sellers and ease of entry for new competitors.

– Appreciation of these characteristics helps explain why government regulation is needed in the health care sector.

– What is Illness?

– An understanding of the nature of sickness and health is required to determine what heal care society should provide the poor and how much society ought to spend on healthcare.

– The Constitution of the World Health Organization defines health as “a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity”.

– Health can be viewed in a more limited sense as the performance by each part of the body of its “natural” function

-Boorse writes:

– An illness must be, first, a reasonably serious disease with incapacitating effects that make it undesirable.

– Secondly, to call a disease an illness is to view its owner as deserving special treatment and diminished moral accountability.

– Illness is thus a socially constructed deviance; something more than a mere biological abnormality is needed.

– The sick role exempts one from normal social