Use the textbook and at least 4 reference  to respond to the question.  Answer all questions in part 1 and address the ‘aha moment’-part 2 for the week.  Each area should be addressed in a separate paragraphs. Total of 4 pages.  Be sure to cite and reference resources!

Part 1:

Question A:  Chapter 8: After reading this chapter, consider and discuss these questions: 

A) 150 words — What is the best use of insurance? For every little thing or only for the ‘big’ things?

B)  150 words — If health insurance does not cover low-cost and predictable events, should another resource be available to assist individuals or should people pay out of pocket for these healthcare needs? Explain:    

Question B: Chapter 9: 150 words — On page 177, Box 9-2. Read the discussion question at the top and then make your selections. List and defend your choices here for all 4 issues:  

Question C: Chapter 10: A) 150 words — Discuss the lessons that have been learned from all the attempts at health care reform.

B) 150 words — What are the pros and cons of having a public option on the issues of health care reform?

 Part 2:  200 words– How has access to health insurance impacted underserved population group such as disabled individuals and lower income population group use two evidence-based article to support your ideas ? 

Series Editor: Richard Riegelman
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and Law
Sara E. Wilensky, JD, PhD
Department of Health Policy and Management, Milken Institute
School of Public Health, The George Washington University
Joel B. Teitelbaum, JD, LLM
Department of Health Policy and Management, Milken Institute
School of Public Health, The George Washington University
Essentials of
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Title: Essentials of health policy and law / Sara E. Wilensky, Joel B. Teitelbaum.
Description: Fourth edition. | Burlington, Massachusetts: Jones & Bartlett Learning, [2020] |
Joel B. Teitelbaum’s name appears first in previous edition. | Includes bibliographical references and index.
Identifiers: LCCN 2018058317 | ISBN 9781284151619
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Prologue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii
About the Editor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xv
About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii
Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
PART I Setting the Stage:
An Overview of Health
Policy and Law 1
Chapter 1 Understanding the Role of
and Conceptualizing Health
Policy and Law . . . . . . . . . . . . . . . . . . 3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Role of Policy and Law in Health Care
and Public Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Conceptualizing Health Policy and Law . . . . . . . . . . . . . 5
The Three Broad Topical Domains of Health
Policy and Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Social, Political, and Economic Historical Context . . . . 6
Key Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chapter 2 Policy and the
Policymaking Process . . . . . . . . . . . 11
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Defining Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Identifying Public Problems . . . . . . . . . . . . . . . . . . . . . . . . 11
Structuring Policy Options . . . . . . . . . . . . . . . . . . . . . . . . . 12
Public Policymaking Structure and Process . . . . . . . . . 13
State-Level Policymaking . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Federal Legislative Branch . . . . . . . . . . . . . . . . . . . . . . 14
The Federal Executive Branch . . . . . . . . . . . . . . . . . . . . . . 21
The Health Bureaucracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Federal Government . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
State and Local Governments . . . . . . . . . . . . . . . . . . . . . . 28
Interest Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Chapter 3 Law and the Legal System . . . . . . . 33
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
The Role of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
The Definition and Sources of Law . . . . . . . . . . . . . . . . . 35
Defining “Law” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Sources of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Key Features of the Legal System . . . . . . . . . . . . . . . . . . 39
Separation of Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Federalism: Allocation of Federal
and State Legal Authority . . . . . . . . . . . . . . . . . . . . . . . . 40
The Role of Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Chapter 4 Overview of the
United States Healthcare
System . . . . . . . . . . . . . . . . . . . . . . . 49
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Healthcare Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Health Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Direct Services Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Healthcare Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
The Uninsured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
The Underinsured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Insurance Coverage Limitations . . . . . . . . . . . . . . . . . . . . 61
Safety Net Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Workforce Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Healthcare Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Key Areas of Quality Improvement . . . . . . . . . . . . . . . . . 68
Assessment of Efforts to Improve Quality . . . . . . . . . . . 71
Contents
iii

Comparative Health Systems . . . . . . . . . . . . . . . . . . . . . . 71
A National Health Insurance System: Canada . . . . . . . 71
A National Health System: Great Britain . . . . . . . . . . . . . 73
A Socialized Insurance System: Germany . . . . . . . . . . . 74
The Importance of Health Insurance Design . . . . . . . . 75
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Chapter 5 Public Health Institutions
and Systems . . . . . . . . . . . . . . . . . . . 81
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
What Are the Goals and Roles
of Governmental Public Health Agencies? . . . . . . . 81
What Are the 10 Essential Public Health Services? . . . 83
What Are the Roles of Local and State Public
Health Agencies? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
What Are the Roles of Federal Public Health
Agencies? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
What Are the Roles of Global Health
Organizations and Agencies? . . . . . . . . . . . . . . . . . . . . 90
How Can Public Health Agencies Work Together? . . . 91
What Other Government Agencies
Are Involved in Health Issues? . . . . . . . . . . . . . . . . . . . . 91
What Roles Do NGOs Play in Public Health? . . . . . . . . 92
Nongovernmental Organizations . . . . . . . . . . . . . . . . . . . 92
How Can Public Health Agencies Partner
With Health Care to Improve the Response
to Health Problems? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
How Can Public Health Take the Lead in
Mobilizing Community Partnerships
to Identify and Solve Health Problems? . . . . . . . . . . 95
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Further Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Other Sources Consulted . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Source for Political Affiliation of Senate . . . . . . . . . . . . 109
Source for Political Affiliation of the
House of Representatives . . . . . . . . . . . . . . . . . . . . . . . 109
PART II Essential Issues in Health
Policy and Law 111
Chapter 6 Individual Rights in Health Care
and Public Health . . . . . . . . . . . . . 113
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Individual Rights and Health Care: A Global
Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Individual Rights and the Healthcare System . . . . . 117
Rights Under Healthcare and Health
Financing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Rights Related to Freedom of Choice and
Freedom From Government Interference . . . . . . . 119
The Right to Be Free From Wrongful
Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Individual Rights in a Public Health Context . . . . . . 128
Overview of Police Powers . . . . . . . . . . . . . . . . . . . . . . . . 128
The Jacobson v. Massachusetts Decision . . . . . . . . . . . . 129
The “Negative Constitution” . . . . . . . . . . . . . . . . . . . . . . . 130
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Chapter 7 Social Determinants of Health
and the Role of Law in
Optimizing Health . . . . . . . . . . . . . 137
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Social Determinants of Health . . . . . . . . . . . . . . . . . . . 139
Defining Social Determinants of Health . . . . . . . . . . . 139
Types of SDH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
The Link Between Social Determinants and
Health Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Law as a Social Determinant of Health . . . . . . . . . . . 142
Right to Criminal Legal Representation
vs . Civil Legal Assistance . . . . . . . . . . . . . . . . . . . . . . . . 144
Combating Health-Harming Social Conditions
Through Medical-Legal Partnership . . . . . . . . . . . . 146
The Evolution of an “Upstream” Innovation . . . . . . . . 147
The Benefits of MLPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Chapter 8 Understanding Health 
Insurance . . . . . . . . . . . . . . . . . . . . 153
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
A Brief History of the Rise of Health
Insurance in the United States . . . . . . . . . . . . . . . . . 154
How Health Insurance Operates . . . . . . . . . . . . . . . . . 156
Basic Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Setting Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Medical Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
iv Contents

Managed Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Cost Containment and Utilization Tools . . . . . . . . . . . . 163
Utilization Control Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Common Managed Care Structures . . . . . . . . . . . . . . . 166
The Future of Managed Care . . . . . . . . . . . . . . . . . . . . . . 169
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Chapter 9 Health Economics in a
Health Policy Context . . . . . . . . . . 173
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
Health Economics Defined . . . . . . . . . . . . . . . . . . . . . . . 174
How Economists View Decision Making . . . . . . . . . . . 174
How Economists View Health Care . . . . . . . . . . . . . . . . 176
Economic Basics: Demand . . . . . . . . . . . . . . . . . . . . . . . 176
Demand Changers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
Health Insurance and Demand . . . . . . . . . . . . . . . . . . . . 179
Economic Basics: Supply . . . . . . . . . . . . . . . . . . . . . . . . . 180
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
Supply Changers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
Profit Maximization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
Health Insurance and Supply . . . . . . . . . . . . . . . . . . . . . . 181
Economic Basics: Markets . . . . . . . . . . . . . . . . . . . . . . . . 182
Health Insurance and Markets . . . . . . . . . . . . . . . . . . . . . 182
Market Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
Market Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Chapter 10 Health Reform in the
United States . . . . . . . . . . . . . . . . 189
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Difficulty Achieving Health Reform
in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
U .S . Political System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Interest Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Path Dependency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Unsuccessful Attempts to Pass 
National Health Insurance Reform . . . . . . . . . . . . . 194
The Stars Align (Barely): How the ACA
Became Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
Commitment and Leadership . . . . . . . . . . . . . . . . . . . . . 197
Lessons From Failed Health Reform Efforts . . . . . . . . . 199
Political Pragmatism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Overview of the ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Individual Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
State Health Insurance Exchanges/
Marketplaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Employer Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Changes to the Private Insurance Market . . . . . . . . . . 214
Financing Health Reform . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Public Health, Workforce, Prevention,
and Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
The U .S . Supreme Court’s Decision in the
Case of National Federation of Independent
Business v. Sebelius . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
States and Health Reform . . . . . . . . . . . . . . . . . . . . . . . . 218
Key Issues Going Forward . . . . . . . . . . . . . . . . . . . . . . . . 219
Congressional Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Insurance Plan Premium Rates . . . . . . . . . . . . . . . . . . . . 222
ACA Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Chapter 11 Government Health Insurance
Programs: Medicaid, CHIP,
and Medicare . . . . . . . . . . . . . . . . 231
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Program Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Amount, Duration, and Scope,
and Reasonableness Requirements . . . . . . . . . . . . . 241
Medicaid Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Medicaid Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Medicaid Provider Reimbursement . . . . . . . . . . . . . . . . 244
Medicaid Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
The Future of Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Children’s Health
Insurance Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
CHIP Structure and Financing . . . . . . . . . . . . . . . . . . . . . 249
CHIP Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
CHIP Benefits and Beneficiary Safeguards . . . . . . . . . . 251
CHIP and Private Insurance Coverage . . . . . . . . . . . . . . 252
CHIP Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
The Future of CHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Medicare Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Medicare Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
Medicare Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Medicare Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Medicare Provider Reimbursement . . . . . . . . . . . . . . . . 262
The Future of Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Contents v

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
Chapter 12 Healthcare Quality Policy
and Law . . . . . . . . . . . . . . . . . . . . 271
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Quality Control Through Licensure
and Accreditation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
Medical Errors as a Public
Health Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
Promoting Healthcare Quality Through the
Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
The Origins of the Standard of Care . . . . . . . . . . . . . . . . 275
The Evolution of the Standard of Care . . . . . . . . . . . . . 276
Tort Liability of Hospitals, Insurers, and MCOs . . . . 278
Hospital Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
Insurer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
Managed Care Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
Federal Preemption of State Liability
Laws Under ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Overview of ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
ERISA Preemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282
The Intersection of ERISA Preemption
and Managed Care Professional
Medical Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283
Measuring and Incentivizing Healthcare Quality . . . 284
Quality Measure Development . . . . . . . . . . . . . . . . . . . . 286
Quality Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Public Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Value-Based Purchasing . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
National Quality Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 288
Private Payer Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Role of Health Information Technology . . . . . . . . . . . . 289
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Chapter 13 Public Health Preparedness
Policy . . . . . . . . . . . . . . . . . . . . . . 293
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Defining Public Health Preparedness . . . . . . . . . . . . . 294
Threats to Public Health . . . . . . . . . . . . . . . . . . . . . . . . . 295
CBRN Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Naturally Occurring Disease Threats . . . . . . . . . . . . . . . 299
Natural Disasters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
Man-Made Environmental Disasters . . . . . . . . . . . . . . . 303
Public Health Preparedness Policy . . . . . . . . . . . . . . . 303
Federal Response Agencies and Offices . . . . . . . . . . . 303
Preparedness Statutes, Regulations,
and Policy Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Presidential Directives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
International Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 308
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
PART III Basic Skills in Health
Policy Analysis 315
CHAPTER 14 The Art of Structuring
and Writing a Health Policy
Analysis . . . . . . . . . . . . . . . . . . . . 317
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Policy Analysis Overview . . . . . . . . . . . . . . . . . . . . . . . . . 317
Client-Oriented Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Informed Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
Public Policy Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
Providing Options and a
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
Your Client’s Power and Values . . . . . . . . . . . . . . . . . . . . 318
Multiple Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Structuring a Policy Analysis . . . . . . . . . . . . . . . . . . . . . 319
Problem Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320
The Background Section . . . . . . . . . . . . . . . . . . . . . . . . . . 322
The Landscape Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
The Options Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
The Recommendation Section . . . . . . . . . . . . . . . . . . . . 330
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
vi Contents

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Prologue
The fourth edition of Essentials of Health Policy and
Law is a textbook that describes and analyzes the trans-
formations taking place across the healthcare delivery
and public health systems in the United States. Build-
ing on the core content and engaging style of earlier
editions, this edition is by necessity influenced by the
shifts (both proposed and actual) occurring as a result
of the 2016 election cycle, including of course the ways
in which the Patient Protection and Affordable Care
Act (commonly known as the ACA) is being inter-
preted and implemented.
Professors Sara Wilensky and Joel Teitelbaum are
both experienced in analyzing and communicating
about the ACA and many other aspects of health pol-
icy and law, and this edition benefits from their exper-
tise. Beyond the issue of national and state health
reform, Essentials of Health Policy and Law, Fourth
Edition takes a broad approach to the study of health
policy and law and provides a coherent framework for
grappling with important healthcare, public health,
and bioethical issues in the United States.
Health policies and laws are an inescapable and
critical component of our everyday lives. The acces-
sibility, cost, and quality of health care; the country’s
preparedness for natural and human-caused disasters;
the safety of the food, water, and medications we con-
sume; the right to make individual decisions about
one’s own health and well-being; and scores of other
important issues are at the heart of health policy and
law, and in turn at the heart of individual and commu-
nity health and well-being. Health policies and laws
have a strong and lasting effect on the quality of our
lives as individuals and on our safety and health as a
nation.
Professors Wilensky and Teitelbaum do a mar-
velous job of succinctly describing not only the
nation’s policy- and law-making machinery and the
always-evolving healthcare and public health sys-
tems, but also the ways in which policy and law affect
health care and public health, and vice versa. They
have a unique ability to make complex issues accessi-
ble to various readers, including those without a back-
ground in health care or public health. Their training
as policy analysts and lawyers shines through as they
systematically describe and analyze the complex field
of health policy and law and provide vivid examples to
help make sense of it all.
Equally apparent is their wealth of experience
teaching health policy and law at both the undergrad-
uate and graduate levels. Between them, they have
designed and taught many different health policy and/
or law courses, supplemented the content of health
policy and law by integrating writing and analytic
skills into their courses, designed and directed a bach-
elor of science degree program in public health, and
received teaching awards for their efforts. Readers of
this textbook are the beneficiaries of their experience,
enthusiasm, and commitment, as you will see in the
pages that follow.
Essentials of Health Policy and Law, Fourth Edition
stands on its own as a text. Even so, the accompanying
Essential Readings in Health Policy and Law provides
abundant illustrations of the development, influence,
and consequences of health policies and laws. The
carefully selected articles, legal opinions, and public
policy documents in the supplemental reader allow
students to delve deeper into the topics and issues
explored in this book.
I am pleased that Essentials of Health Policy and
Law is a part of the Essential Public Health series.
From the earliest stages of the series’ development,
Professors Wilensky and Teitelbaum have played a
central role. They have closely coordinated efforts with
other series authors to ensure that the series provides a
comprehensive approach with only intended overlap.
This is well illustrated by the numerous additions and
revisions that have taken place with the publication
of this Fourth Edition, a description of which can be
found in the Preface.
I am confident that you will enjoy reading and
greatly benefit from Essentials of Health Policy and
Law. Whether you are studying public health, public
policy, healthcare administration, or a field within the
clinical health professions, this textbook is a key com-
ponent of your education.
—Richard Riegelman, MD, MPH, PhD
Editor, Essential Public Health Series
vii

© Mary Terriberry/Shutterstock
About the Editor
Richard K. Riegelman, MD, MPH, PhD, is professor
of epidemiology-biostatistics, medicine, and health
policy, and founding dean of the George Washington
University Milken Institute School of Public Health
in Washington, DC. He has taken a lead role in
developing the Educated Citizen and Public Health
initiative, which has brought together arts and sci-
ences and public health education associations to
implement the Health and Medicine Division of
the National Academies’ recommendation that “all
undergraduates should have access to education in
public health.” Dr. Riegelman also led the develop-
ment of the George Washington University’s under-
graduate major and minor and currently teaches
Public Health 101 and Epidemiology 101 to under-
graduate students.
ix

© Mary Terriberry/Shutterstock
Preface
In the context of health care and public health, the dozen years since the first edition of this textbook was published can be summed up in a well-worn
phrase: change is the only constant. The first edition
of Essentials of Health Policy and Law did not even
include mention of the Patient Protection and Afford-
able Care Act—commonly known as the Affordable
Care Act or ACA—because it was still 3 years from
passage. Now hailed as the most important set of
changes to health insurance since the 1965 enactment
of Medicare and Medicaid, the ACA was signed into
law by President Barack Obama in March of 2010.
Since that time, the ACA itself has been on quite a
journey, given the policy shifts and legal challenges
it has undergone in a relatively short time. Broadly
speaking, the ACA represents two landmark achieve-
ments in health policy: major reform of the private
health insurance market and, relatedly, a redistribu-
tion of resources to groups and individuals who, by
virtue of indigence and/or illness, have historically
been excluded from the health insurance market and/
or healthcare system. Additionally, the law includes
dozens of other important reforms and programs
unrelated to insurance. For example, more efficient
and higher-quality health care, population health,
healthcare access, long-term care, the health work-
force, health disparities, community health centers,
healthcare fraud and abuse, comparative effectiveness
research, health information technology, and more all
receive attention by the ACA. Indeed, it is fair to say
that a fully implemented ACA would move the nation
toward a more affordable, equitable, and stable insur-
ance system, not only for the millions of individuals
who have and are expected to gain insurance, but also
for the tens of millions of people who no longer face
the threat of a loss or lapse of coverage.
▸ Implementation of the ACA
Yet, full implementation of the ACA is still just a
goal, as many federal and state policymakers and a
substantial bloc of the voting public continue their
efforts to undermine—if not totally destroy—the law.
To understand these efforts, readers must understand
that many ACA reforms required a reordering of
the relationships that lie at the heart of the nation’s
healthcare and public systems. Individuals, providers,
insurers, employers, governments, and others were
forced to alter once-normative behaviors in response
to the policy and legal decisions underpinning the
law. These types of major policy and legal shifts—
such as, in the case of the ACA, the creation of the
“individual insurance mandate,” new prohibitions
that prevent private insurers from using discrimina-
tory enrollment practices, the creation of new health
insurance “exchanges,” and the expansion of Medicaid
eligibility standards—are basically destined to create
backlash, given the very nature of how people respond
to change and the vast amounts of money that, for
some industries, are at stake. Add to this the fact that
(as described more fully in Chapter 10) the ACA bill
that eventually became law passed in Congress by
the slimmest of margins after months of rancorous
debate, and fully half the states in the United States
actively opposed the ACA’s implementation after its
passage. Even now, at the time of this writing, more
than 8 years since the ACA became law, courts across
the country have ACA-related cases on their dockets,
the Trump administration has made a habit of slowing
or reversing dozens of Obama-era ACA policy deci-
sions, and the ACA continues to be used as a cudgel
on the campaign trail. Needless to say, the outcomes
of these lawsuits and policy debates will no doubt be
discussed in both the national media and in the health
policy and law courses in which you register, and they
will be devoted space in the pages of this book in
future editions.
▸ Other Changes in the Health
Care and Public Health
Landscape
Of course, the ACA is not the only significant shift
in the healthcare/public health landscape since the
first edition of this book. Just as that edition did not
mention the ACA (for obvious reasons), neither did
xi

it include the term “social determinants of health,”
which is a growing focus of healthcare and public
health systems nationwide and now has an entire
chapter in this book to show for it. Furthermore, the
2007 edition included just a single reference to pub-
lic health emergency preparedness, a topic that also
is now rewarded with its own chapter. Back in 2005,
when the first outline of the first draft of this book
took shape, health informatics and health information
technology were, relatively speaking, fringe topics in
courses on medical care and public health. Not so
today. And finally, of course, the country experienced
a mainly unanticipated election at the very top of the
ticket in 2016, a result that injected many new poli-
cies and legal interpretations into an already complex,
costly, and oftentimes inequitable web of healthcare
services and public health protections.
▸ Shifts in Public Health
Education
Important shifts in public health education have taken
place since 2007, as well. One particular change that
is relevant to this textbook (and the entire Essentials
of Public Health series) is the effort undertaken by
the Association of American Colleges and Univer-
sities (AAC&U) and the Association of Schools and
Programs of Public Health (ASPPH) to develop the
Educated Citizen and Public Health Initiative. This
initiative seeks to integrate public health perspectives
into a comprehensive liberal education framework and
to develop and organize publications, presentations,
and resources to help faculty develop public health
curricula in the nation’s colleges and universities. As a
result, public health perspectives generally, and health
policy and law specifically, are increasingly being inte-
grated into courses as diverse as political science, his-
tory, sociology, public policy, and a range of courses
that prepare students for the health professions. We are
proud that this textbook has played a role in shaping
(and supplying) the market for health policy and law
education as part of a liberal education framework,
and we aim with this Fourth Edition to make the mate-
rial as accessible to these diverse audiences as possible.
▸ Addressing Health Policy
Challenges
On the topic of health system complexity, we offer four
factors for your consideration as you delve into the
chapters that follow. First, like most challenging public
policy problems, pressing health policy questions simul-
taneously implicate politics, law, ethics, and social mores,
all of which come with their own set of competing inter-
ests and advocates. Second, health policy debates often
involve deeply personal matters pertaining to one’s qual-
ity—or very definition—of life, philosophical questions
about whether health care should be a market commod-
ity or a social good, or profound questions about how
to appropriately balance population welfare with closely
guarded individual freedoms and liberties. Third, it is
often not abundantly clear how to begin tackling a par-
ticular health policy problem. For example, is it one best
handled by the medical care system, the public health
system, or both? Which level of government—federal or
state—has the authority or ability to take action? Should
the problem be handled legislatively or through regu-
latory channels? The final ingredient that makes health
policy problems such a complex stew is the rapid devel-
opments often experienced in the areas of healthcare
research, medical technology, and public health threats.
Generally speaking, this kind of rapid evolution is a con-
founding problem for the usually slow-moving Ameri-
can policy- and law-making machinery.
Furthermore, the range of topics fairly included
under the banner of “health policy and law” is breath-
taking. For example, what effect is healthcare spend-
ing having on national and state economies? How
should finite financial resources be allocated between
health care and public health? How can we ensure
that the trust funds established to account for Medi-
care’s income and disbursements remain solvent in
the future as an enormous group of baby boomers
becomes eligible for program benefits? What kind of
return (in terms of quality of individual care and the
overall health of the population) should we expect
from the staggering amount of money we collectively
spend on health? Should individuals have a legal enti-
tlement to health insurance? How should we attack
extant health disparities based on race, ethnicity, and
socioeconomic status? What policies will best pro-
tect the privacy of personal health information in an
increasingly electronic medical system? Can advanced
information technology systems improve the quality
of individual and population health? Should the right
to have an abortion continue to be protected under
the federal Constitution? Should physician assistance
in dying be promoted as a laudable social value? Will
mapping the human genome lead to discrimination
based on underlying health status? How prepared is
the country for natural and man-made catastrophes,
like pandemic influenza or bioterrorism attacks?
What effect will chronic diseases, such as diabetes and
xii Preface

obesity-related conditions, have on healthcare deliv-
ery and financing? How should we harness advancing
scientific findings for the benefit of the public’s health?
As seen from even this partial list of questions, the
breadth of issues encountered in the study of health
policy and law is virtually limitless, and we do not
grapple with all of the preceding questions in this book.
We do, however, introduce you to many of the policies
and laws that give rise to them, provide an intellectual
framework for thinking about how to address them
going forward, and direct you to additional relevant
readings. Given the prominent role played by policy
and law in the health of all Americans, and the fact
that the Health and Medicine Division of the National
Academies recommends that students of public health
and other interdisciplinary subjects (for example,
public policy or medicine) receive health policy and
law training, the aim of this book is to help you under-
stand the broad context of American health policy
and law, the essential issues impacting and flowing
out of the healthcare and public health systems, and
how health policies and laws are influenced and for-
mulated. Broadly speaking, the goal of health policy
is to promote and protect the health of individuals
and of populations bound by common circumstances.
Because the legal system provides the formal struc-
ture through which public policy—including health
policy—is debated, effected, and interpreted, law is an
indispensable component of the study of health pol-
icy. Indeed, law is inherent to the expression of public
policy: major changes to policies often demand the
creation, amendment, or rescission of laws. As such,
students studying policy must learn about policymak-
ing and the law, legal process, and legal concepts.
▸ About the Fourth Edition
As a result of the changes just described and also in
response to comments we received from users of pre-
vious editions of the textbook, this edition of Essen-
tials of Health Policy and Law has undergone updates
to many chapters, including revised and expanded
content; updated figures, tables, timelines, and discus-
sion questions; and updated references and readings.
Part I
Part I of this textbook includes five preparatory chap-
ters. Chapter 1 describes the influential role of policy
and law in health care and public health and intro-
duces various conceptual frameworks through which
the study of health policy and law can take place. The
chapter also illustrates why it is important to include
policy and law in the study of health care and public
health. However, an advanced exploration of health
policy and law in individual and population health
necessitates both a basic and practical comprehension
of policy and law in general—including the policymak-
ing process and the workings of the legal system—and
an understanding of the nation’s rather fragmented
healthcare and public health systems. Thus, Chapter 2
discusses both the meaning of policy and the policy-
making process, including the basic functions, struc-
tures, and powers of the legislative and executive
branches of government and the respective roles of
the federal and state governments in policymaking.
Chapter 3 then describes the meaning and sources of
law and several key features of the American legal sys-
tem, including the separation of powers doctrine, fed-
eralism, the role of courts, and due process. Chapter 4
provides an overview of the healthcare system, includ-
ing basic information on healthcare finance, access,
and quality, and examples of how the U.S. system dif-
fers from those in other developed nations. Part I closes
with an overview, in Chapter  5, of the public health
system, including its evolution and core functions.
Part II
Part II offers several chapters focusing on key sub-
stantive health policy and law issues. Chapter 6 exam-
ines the ways in which the law creates, protects, and
restricts individual rights in the contexts of health care
and public health, including a discussion of laws (such
as Medicaid and Medicare) that aim to level the play-
ing field where access to health care is concerned. The
chapter also introduces the “no- duty-to-treat” princi-
ple, which holds that there is no general legal duty on
the part of healthcare providers to render care and that
rests at the heart of the legal framework pertaining to
healthcare rights and duties. Chapter 7 describes how
social factors play a critical role in the attainment (or
not) of individual and population health, discusses the
ways in which law can both exacerbate and ameliorate
negative social determinants of health, and introduces
readers to the concept of medical-legal partnership.
Chapters 8 and 9 cover the fundamentals of health
insurance and health economics, respectively, and set
up a subsequent thematic discussion in Chapters 10
and 11. Specifically, Chapter 8 describes the function
of risk and uncertainty in health insurance, defines the
basic elements of health insurance, discusses import-
ant health policy issues relating to health insurance,
and more; Chapter 9 explains why it is important for
health policymakers to be familiar with basic economic
Preface xiii

concepts; the basic tenets of supply, demand, and mar-
kets; and the way in which health insurance affects
economic conditions.
The focus of Chapter 10 is on health reform,
including the ACA. The chapter discusses the reasons
why for decades the United States failed to achieve
national health reform prior to the ACA, how and why
the ACA passed given this history, and what the ACA
aims to achieve. Chapter 11 explains how federal
and state policymakers have created health insurance
programs for individuals and populations who oth-
erwise might go without health insurance coverage.
The basic structure, administration, financing, and
eligibility rules of the three main U.S. public health
insurance programs—Medicaid, the Children’s Health
Insurance Program, and Medicare—are discussed, as
are key health policy questions relating to each pro-
gram. Chapter 12 reflects on several important pol-
icy and legal aspects of healthcare quality, including
the advent of provider licensure and accreditation of
health facilities (both of which represent quality con-
trol through regulation), the evolution of the stan-
dard of care, tort liability for healthcare providers and
insurers, preventable medical errors, and, with the
ACA as the focal point, efforts to improve healthcare
quality through quality improvement and provider
incentive programs. Part II concludes with a chapter
on public health preparedness policy, including dis-
cussions about how to define preparedness, the types
of public health threats faced by the United States,
policy responses to these threats, and an assessment
of where the country stands in terms of preparedness.
Part III
The textbook concludes in Part III by teaching the
basic skills of health policy analysis. The substance
of health policy can be understood only as the prod-
uct of an infinite number of policy choices regarding
whether and how to intervene in many types of health
policy problems. As such, Chapter 14 explains how
to structure and write a short health policy analy-
sis, which is a tool frequently used by policy analysts
when they assess policy options and discuss rationales
for their health policy recommendations.
▸ New to this Edition
This Fourth Edition addresses the many changes
related to health reform; the health care system; the
ACA’s effect on Medicaid, Medicare, and CHIP; as
well as health care quality and private payer reform
efforts.
The chapter on Public Health Preparedness Policy
has been significantly revised, reflecting an increased
focus on natural disasters, controlling infectious dis-
eases, and military emergencies.
The chapter on writing a policy analysis has been
updated with new detailed examples.
For instructors, we offer thoroughly updated
PowerPoint lecture slides for classroom use, as well as
an updated Test Bank for each chapter.
The resources in the accompanying Navigate  2
Advantage platform have also been thoroughly
updated. These are available for either independent
student study or for use in an instructor-led, online
course. These materials include an interactive eBook
with personalization tools such as highlighting, book-
marking, notes, and end-of-chapter quizzes to assess
learning. Also included are Slides in PowerPoint for-
mat, an interactive glossary, practice quizzes, and
more. These materials are available by redeeming the
code found on the card inside this book.
xiv Preface

© Mary Terriberry/Shutterstock
Acknowledgments
We are grateful to the many people who generously
contributed their guidance, assistance, and encour-
agement to us during the writing of this book. At the
top of the list is Dr. Richard Riegelman, founding dean
of the Milken Institute School of Public Health at the
George Washington University (GW) and Professor of
Epidemiology and Biostatistics, Medicine, and Health
Policy. The Essential Public Health series was his
brainchild, and his stewardship of the project as Series
Editor made our involvement in it both enriching and
enjoyable. We are indebted to him for his guidance
and confidence.
We single out one other colleague for special
thanks. Sara Rosenbaum, the Harold and Jane Hirsh
Professor of Health Law and Policy and a past chair of
GW’s Department of Health Policy and Management,
has been a wonderful mentor, colleague, and friend
for decades. We are indebted to her for supporting
our initial decision to undertake the writing of this
textbook.
During the writing of the various editions of this
book, we have been blessed by the help of several
stellar research assistants. The First Edition could not
have been completed without V. Nelligan Coogan,
Mara B. McDermott, Sarah E. Mutinsky, Dana E.
Thomas, and Ramona Whittington; Brittany Plavchak
and Julia Roumm were essential to the completion of
the Second Edition; Jacob Alexander’s assistance was
key to the Third Edition; and Joanna Theiss was instru-
mental in updating the current edition. To all of them
we send our deep appreciation for their research assis-
tance and steady supply of good cheer.
Our gratitude extends also to Mike Brown, pub-
lisher for Jones & Bartlett Learning, for his guidance
and encouragement, and to his staff, for their patience
and technical expertise.
Finally, we wish to thank those closest to us.
Sara gives special thanks to Trish Manha—her wife,
cheerleader, reviewer, and constant supporter—and to
Sophia, and William, who make life fun, surprising,
and ever-changing. Joel sends special thanks to his
family: Laura Hoffman, Jared Teitelbaum, and Layna
Teitelbaum, his favorite people and unending sources
of joy and laughter.
xv

© Mary Terriberry/Shutterstock
About the Authors
Sara Wilensky, JD, PhD, is special services faculty for
undergraduate education in the Department of Health
Policy and Management at the Milken Institute School
of Public Health at the George Washington University
(GW) in Washington, DC. She is also the director of
the Undergraduate Program in Public Health.
Dr. Wilensky has taught a health policy analysis
course and health systems overview course required
of all students in the Master of Public Health–Health
Policy degree program, as well as the health policy
course required of all undergraduate students major-
ing in public health. She has been the principal inves-
tigator or co-principal investigator on numerous
health policy research projects relating to a variety of
topics, such as Medicaid coverage, access and financ-
ing, community health centers, childhood obesity,
HIV preventive services, financing of public hospitals,
and data sharing barriers and opportunities between
public health and Medicaid agencies.
As director of the Undergraduate Program in
Public Health, Dr. Wilensky is responsible for the day-
to-day management of the program, including imple-
mentation of the dual BS/MPH program. In addition,
she is responsible for faculty oversight, course schedul-
ing, new course development, and student satisfaction.
Dr. Wilensky is involved with several GW service
activities: she has taught a service learning in pub-
lic health course in the undergraduate program; she
has been heavily involved in making GW’s Writing
in the Disciplines program part of the undergradu-
ate major in public health; and she is the advisor to
students receiving a master in public policy or a mas-
ter in public administration with a focus on health
policy from GW’s School of Public Policy and Public
Administration.
Prior to joining GW, Dr. Wilensky was a law clerk
for federal Judge Harvey Bartle III in the Eastern Dis-
trict of Pennsylvania and worked as an associate at
the law firm of Cutler and Stanfield, LLP, in Denver,
Colorado.
Joel Teitelbaum, JD, LLM, is associate professor,
director of the Hirsh Health Law and Policy Program,
and co-director of the National Center for
Medical-Legal Partnership at the George Washington
University Milken Institute School of Public Health
in Washington, DC. He also carries a faculty appoint-
ment in the GW School of Law, and for 11  years
served as vice chair for academic affairs in the School
of Public Health’s Department of Health Policy and
Management, a role in which he provided oversight
of the Department’s graduate degree programs, cur-
riculum development, and faculty and student sup-
port services. As director of the Hirsh Health Law
and Policy Program, he oversees a program designed
to foster an interdisciplinary approach to the study
of health law, health policy, health care, and public
health through educational and research opportuni-
ties for law students, health professions students, and
practicing lawyers. In his role at the National Center
for Medical-Legal Partnership, he helps direct national
efforts to embed civil legal services into healthcare
delivery as a way of ameliorating social determinants
that negatively affect individual and population health.
Professor Teitelbaum has taught law, graduate, or
undergraduate courses on healthcare law, healthcare
civil rights, public health law, minority health policy,
and long-term care law and policy. In 2009 he became
the first member of the School of Public Health fac-
ulty to receive the University-wide Bender Teaching
Award. He is also a member of the GW Academy of
Distinguished Teachers and a Fellow in the Universi-
ty’s Cross-Disciplinary Cooperative; he has received
the School’s Excellence in Teaching Award and was an
inaugural member of the School’s Academy of Master
Teachers; he was inducted in 2007 into the ASPPH/
Pfizer Public Health Academy of Distinguished
Teachers; and he has been named one of the “Stars”
of undergraduate teaching at GW by an undergrad-
uate leadership group. He is regularly invited to lec-
ture at top universities and at national conferences
and meetings.
In addition to Essentials of Health Policy and
Law, Professor Teitelbaum is co-author of Essentials
of Health Justice (2019), also published by Jones &
Bartlett Learning. He has authored or co-authored
xvii

dozens of peer-reviewed articles and reports in addi-
tion to many book chapters, policy briefs, and blogs
on civil rights issues in health care, health reform
and its implementation, medical-legal partnership,
insurance law and policy, and behavioral healthcare
quality, and he has directed many health law and pol-
icy research projects. In 2000, he was co-recipient of
The Robert Wood Johnson Foundation Investigator
Award in Health Policy Research, which he used to
explore the creation of a new framework for applying
Title VI of the 1964 Civil Rights Act to the modern
healthcare system.
In 2016, during President Obama’s second term,
Professor Teitelbaum was named to the U.S. Depart-
ment of Health and Human Services Secretary’s
Advisory Committee on National Health Promotion
and Disease Prevention Objectives for 2030 (i.e.,
Healthy People 2030, the national agenda aimed at
improving the health of all Americans over a 10-year
span). He also serves as Special Advisor to the Ameri-
can Bar Association’s Commission on Veterans’ Legal
Services and as a member of the Board of Advisors
of PREPARE, a national advanced care planning
organization.
Professor Teitelbaum is a member of Delta Omega,
the national honor society recognizing excellence in
the field of public health; the American Constitution
Society for Law and Policy; the American Society of
Law, Medicine, and Ethics; and the Society for Amer-
ican Law Teachers.
xviii About the Authors

© Mary Terriberry/Shutterstock
Contributors
▸ Chapter 5: Public Health
Institutions and Systems
Richard Riegelman, MD, PhD, MPH
The George Washington University
Washington, DC
▸ Chapter 13: Public Health
Preparedness Policy
Rebecca Katz, PhD, and Claire Standley, PhD
Georgetown University
Washington, DC
xix

© Mary Terriberry/Shutterstock
1
PART I
Setting the Stage:
An Overview of
Health Policy
and Law
Part I of this textbook includes five contextual chapters aimed at preparing
you for the substantive health policy and law discussions in Chapters 6–13
and for the skills-based discussion of policy analysis in Chapter 14.
Chapter 1 describes generally the role of policy and law in health care and
public health and introduces conceptual frameworks for studying health
policy and law. Chapter 2 describes the meaning of policy and also the pol-
icymaking process itself. Chapter 3 provides an overview of the meaning
and sources of law and of several important features of the legal system.
Part I closes with overviews of the U.S. healthcare system (Chapter 4) and
public health system (Chapter 5).

CHAPTER 1
Understanding the Role of
and Conceptualizing Health
Policy and Law
LEARNING OBJECTIVES
By the end of this chapter you will be able to:
■ Describe generally the important role played by policy and law in the health of individuals and populations
■ Describe three ways to conceptualize health policy and law
▸ Introduction
In this chapter, we introduce the role played by pol-icy and law in the health of individuals and popula-tions and describe various conceptual frameworks
with which you can approach the study of health pol-
icy and law. In the chapters that follow, we build on
this introduction to provide clarity in areas of health
policy and law that are neither readily discernable—
even to those who use and work in the healthcare and
public health systems—nor easily reshaped by those
who make, apply, and interpret policy and law.
The goals of this chapter are to describe why it is
important to include policy and law in the study of
health care and public health and how you might con-
ceptualize health policy and law when undertaking
your studies. To achieve these goals, we first briefly
discuss the vast influence of policy and law in health
care and public health. You will have a much better
feel for how far policy and law reach into these areas
as you proceed through this text, but we dedicate a few
pages here to get you started. We then describe three
ways to conceptualize health policy and law which, as
you will discover, are interwoven, with no one frame-
work dominating the discussion.
▸ Role of Policy and Law in
Health Care and Public Health
The forceful influence of policy and law on the health
and well-being of individuals and populations is unde-
niable. Policy and law have always been fundamental
in shaping the behaviors of individuals and industries,
the practice of health care, and the environments
in which people live and work. They have also been
3
© Mary Terriberry/Shutterstock

vital in achieving both everyday and landmark public
health improvements.
For example, centuries-old legal principles have,
since this country’s inception, provided the bedrock
on which healthcare quality laws are built, and today
the healthcare industry is regulated in many differ-
ent ways. Indeed, federal and state policy and law
shape virtually all aspects of the healthcare system,
from structure and organization, to service delivery,
to financing, to administrative and judicial oversight.
Whether pertaining to the accreditation and certifica-
tion of individual or institutional healthcare providers,
requirements to provide care under certain circum-
stances, the creation of public insurance programs, the
regulation of private insurance systems, or any other
number of issues, policy and law drive the healthcare
system to a degree unknown by most people.
In fact, professional digests that survey and report
on the subjects of health policy and law typically include
in their pages information on topics like the advertis-
ing and marketing of health services and products,
the impact of health expenditures on federal and state
budgets, antitrust concerns, healthcare contracting,
employment issues, patents, taxation, healthcare dis-
crimination and disparities, consumer protection,
bioterrorism, health insurance, prescription drug
regulation, physician-assisted suicide, biotechnology,
human subject research, patient privacy and confi-
dentiality, organ availability and donation, and more.
Choices made by policymakers and decisions handed
down through the judicial system influence how we
approach, experience, analyze, and research all of these
and other specific aspects of the healthcare system.
Once you have read the next four preparatory chap-
ters—one on policy and the policymaking process, one
on law and the legal system, and one each covering the
structure and organization of the healthcare and pub-
lic health systems—and begin to digest the substantive
chapters that follow them, the full force of policy and
law in shaping the individual healthcare system will
unfold. For now, simply keep in the back of your mind
the fact that policy and law heavily influence the way
in which overall health and well-being are achieved
(or not), health care is accessed, medicine is practiced,
treatments are paid for, and much more.
The role of policy and law in public health is no
less important than in individual health care, but their
influence in the field of public health is frequently less
visible and articulated. In fact, policy and law have long
played a seminal role in everyday public health activi-
ties. Think, for example, of food establishment inspec-
tions, occupational safety standards, policies related
to health services for persons with chronic health
conditions such as diabetes, and policies and laws
affecting the extent to which public health agencies
are able to gauge whether individuals in a community
suffer from certain health conditions. Similarly, policy
and law have been key in many historic public health
accomplishments such as water and air purification,
reduction in the spread of communicable diseases
through compulsory immunization laws, reduction
in the number of automobile-related deaths through
seat belt and consumer safety laws, and several other
achievements.a Public health professionals and stu-
dents quickly learn to appreciate that combating pub-
lic health threats requires both vigorous policymaking
and adequate legal powers.
Additionally, in recent years, enhanced fears about
bioterrorism and newly emerging infectious diseases
have increased the public’s belief that policy and law
are important tools in creating an environment in
which people can achieve optimal health and safety.
Of course, policies and laws do not always cut in
favor of what many people believe to be in the best
interests of public health and welfare. A policy or law
might, for example, favor the economic interests of a
private, for-profit company over the personal interests
of residents of the community in which the company
is located.b Such situations occur because one main
focus of public health policy and law is on locating
the appropriate balance between public regulation of
private individuals and corporations and the ability of
those same parties to exercise rights that allow them to
function free of overly intrusive government interven-
tion. Achieving this balance is not easy for policymak-
ers, as stakeholders disagree on things like the extent
to which car makers should alter their operations to
reduce environmentally harmful vehicle emissions, or
the degree to which companies should be limited in
advertising cigarettes, or whether gun manufacturers
should be held liable in cases where injuries or killings
result from the negligent use of their products.
How do policymakers and the legal system reach
a (hopefully) satisfactory balance of public health and
private rights? The competing interests at the heart of
public health are mainly addressed through two types
of policies and laws: those that define the functions and
powers of public health agencies and those that aim to
directly protect and promote health.c State- level poli-
cymakers and public health officials create these types
of policies and laws through what are known as their
police powers. These powers represent the inherent
authority of state and local governments to regulate
individuals and private business in the name of public
health promotion and protection. The importance of
police powers cannot be overstated; it is fair to say that
4 Chapter 1 Understanding the Role of and Conceptualizing Health Policy and Law

they are the most critical aspect of the sovereignty that
states retained at the founding of the country, when
the colonies agreed to a governmental structure con-
sisting of a strong national government. Furthermore,
the reach of police powers should not be underesti-
mated: they give government officials the authority—
in the name of public health and welfare—to coerce
private parties to act (or refrain from acting) in certain
ways. However, states do not necessarily need to exer-
cise their police powers in order to affect or engage
in public health–related policymaking. Because the
public’s health is impacted by many social, economic,
and environmental factors, public health agencies also
conduct policy-relevant research, disseminate infor-
mation aimed at helping people engage in healthy
behaviors, and establish collaborative relationships
with healthcare providers and purchasers and with
other government policymaking agencies.
Federal policy and law also play a role in public
health. Although the word health does not appear in the
U.S. Constitution, the document confers powers on the
federal government—to tax and spend, for example—
that allow it to engage in public health promotion and
disease prevention activities. For example, the power
to tax (or establish exemptions from taxation) allows
Congress to incentivize healthy behaviors, as witnessed
by the heavy taxes levied on packages of cigarettes; the
power to spend enables Congress to establish executive
branch public health agencies and to allocate public-
health–specific funds to states and localities.
▸ Conceptualizing Health Policy
and Law
You have just read about the importance of taking pol-
icy and law into account when studying health care
and public health. The next step is to begin thinking
about how you might conceptually approach the study
of health policy and law.
There are multiple ways to conceptualize the many
important topics that fall under the umbrella of health
policy and law. We introduce three conceptual frame-
works in this section: one premised on the broad top-
ical domains of health policy and law, one based on
prevailing historical factors, and one focused on the
individuals and entities impacted by a particular pol-
icy or legal determination (BOX 1-1).
We draw on these frameworks to various degrees
in this text. For example, the topical domain approach
of Framework 1 is on display in the sections about
individual rights in health care and public health and
healthcare quality policy and law. Framework 2’s focus
on historical perspectives is highlighted in the chapters
on health reform and government health insurance
programs. Finally, Framework 3, which approaches
the study of health policy and law from the perspec-
tives of key stakeholders, is discussed in the policy and
policymaking process section and also in the chapter
dedicated to the social determinants of health. We
turn now to a description of each framework.
The Three Broad Topical Domains
of Health Policy and Law
One way to conceptualize health policy and law is as
consisting of three large topical domains. One domain
is reserved for policy and law concerns in the area
of health care, another for issues arising in the public
health arena, and the last for controversies in the field
of bioethics. As you contemplate these topical domains,
bear in mind that they are not individual silos whose
contents never spill over into the others. Indeed, spill-
age of one domain’s contents into another domain
is common (and, as noted, is one reason why fixing
health policy problems can be terribly complicated).
We briefly touch on each domain.
Conceptualizing Health Policy and Law 5
BOX 1-1 Three Conceptual Frameworks for Studying
Health Policy and Law
Framework 1. Study based on the broad topical
domains of:
a. Health care
b. Public health
c. Bioethics
Framework 2. Study based on historically dominant
social, political, and economic perspectives:
a. Professional autonomy
b. Social contract
c. Free market
Framework 3. Study based on the perspectives of
key stakeholders:
a. Individuals
b. The public
c. Healthcare professionals
d. Federal and state governments
e. Managed care and traditional insurance
companies
f. Employers
g. Healthcare industries (e.g., the pharmaceutical
industry)
h. The research community
i. Interest groups
j. Others

Healthcare Policy and Law
In the most general sense, this domain is concerned
with an individual’s access to care (e.g., What poli-
cies and laws impact an individual’s ability to access
needed care?), the quality of the care the person
receives (e.g., Is it appropriate, cost-effective, and non-
negligent?), and how the person’s care will be financed
(e.g., Is the person insured?). However, “access,” “qual-
ity,” and “financing” are themselves rather large sub-
domains, with their own sets of complex policy and
legal issues; in fact, it is common for students to take
semester-long policy and/or law courses focused on
just one of these subdomains.
Public Health Policy and Law
The second large topical domain is that of public health
policy and law. A central focus here is on why and how
the government regulates private individuals and cor-
porations in the name of protecting the health, safety,
and welfare of the general public. Imagine, for example,
that the federal government is considering a blanket
policy decision to vaccinate individuals across the coun-
try against the deadly smallpox disease, believing that
the decision is in the best interests of national security.
Would this decision be desirable from a national policy
perspective? Would it be legal? If the program’s desir-
ability and legality are not immediately clear, how would
you go about analyzing and assessing them? These are
the kinds of questions with which public health policy
and law practitioners and scholars grapple.
Bioethics
Finally, there is the bioethics domain to health policy
and law. Strictly speaking, the term bioethics is used to
describe ethical issues raised in the context of med-
ical practice or biomedical research. More compre-
hensively, bioethics can be thought of as the point at
which public policy, law, individual morals, societal
values, and medicine intersect. The bioethics domain
houses some of the most explosive questions in health
policy, including the morality and legality of abortion,
conflicting values around the meaning of death and
the rights of individuals nearing the end of life, and
the policy and legal consequences of mapping the
human genetic code.
Social, Political, and Economic
Historical Context
Dividing the substance of health policy and law into
broad topical categories is only one way to conceptual-
ize them. A second way to consider health policy and
law is in historical terms, based on the social, polit-
ical, and economic views that dominate a particular
era.d Considered this way, health policy and law have
been influenced over time by three perspectives, all of
which are technically active at any given time, but each
of which has eclipsed the others during specific peri-
ods in terms of political, policy, and legal outcomes.
These perspectives are termed professional autonomy,
social contract, and free market.e
Professional Autonomy Perspective
The first perspective, grounded in the notion that the
medical profession should have the authority to regu-
late itself, held sway from approximately 1880 to 1960,
making it the most dominant of the three perspectives
in terms of both the length of time it held favored sta-
tus and its effect in the actual shaping of health policy
and law. This model is premised on the idea that phy-
sicians’ scientific expertise in medical matters should
translate into legal authority to oversee essentially
all aspects of delivering health care to individuals; in
other words, according to proponents of the physi-
cian autonomy model, legal oversight of the practice
of medicine should be delegated to the medical pro-
fession itself. During the period that this perspective
remained dominant, policy- and lawmakers were gen-
erally willing to allow physicians to control the terms
and amount of payments for rendered healthcare
services, the standards under which medical licenses
would be granted, the types of patients they would
treat, the type and amount of information to disclose
to patients, and the determination as to whether their
colleagues in the medical profession were negligent in
the treatment of their patients.
Social Contract Perspective
The second perspective that informs a historical con-
ceptualization of health policy and law is that of the
“modestly egalitarian social contract” (Rosenblatt,
Law, & Rosenbaum, 1997, p. 2; the authors write that
the American social contract lags behind those of
other developed countries, and thus use the phrase
“modestly egalitarian” in describing it). This paradigm
overshadowed its competitors, and thus guided poli-
cymaking, from roughly 1960 to 1980, a time notable
in U.S. history for social progressiveness, civil rights,
and racial inclusion. At the center of this perspective
is the belief that complete physician autonomy over
the delivery and financing of health care is poten-
tially dangerous in terms of patient care and health-
care expenditures, and that public policy and law can
and sometimes should enforce a “social contract”
6 Chapter 1 Understanding the Role of and Conceptualizing Health Policy and Law

at the expense of physician control. Put differently,
this perspective sees physicians as just one of several
stakeholders (including but not limited to patients,
employers, and society more broadly) that lay claim to
important rights and interests in the operation of the
healthcare system. Health policies and laws borne of
the social contract era centered on enhancing access
to health care (e.g., through the Examination and
Treatment for Emergency Medical Conditions and
Women in Labor Act), creating new health insurance
programs (Medicare and Medicaid were established in
1965), and passing antidiscrimination laws (one of the
specific purposes of Title VI of the federal 1964 Civil
Rights Act was wiping out healthcare discrimination
based on race).
Free Market Perspective
The final historical perspective—grounded in the twin
notions of the freedom of the marketplace and of mar-
ket competition—became dominant in the 1990s and
continues with force today (though one could argue
that the Affordable Care Act evidences a curbing of the
free market perspective and an elevation, again, of the
social contract perspective). It contends that the mar-
kets for healthcare services and for health insurance
operate best in a deregulated environment, and that
commercial competition and consumer empower-
ment will lead to the most efficient healthcare system.
Regardless of the validity of this claim, this perspective
argues that the physician autonomy model is falsely
premised on the idea of scientific expertise, when in
fact most healthcare services deemed “necessary” by
physicians have never been subjected to rigorous sci-
entific validation (think of the typical treatments for
the common cold or a broken leg). It further argues
that even the modest version of the social contract
theory that heavily influenced health policy and law
during the civil rights generation is overly regulatory.
Furthermore, market competition proponents claim
that both other models are potentially inflationary: in
the first case, self-interest will lead autonomous physi-
cians to drive up the cost of their services, and in the
second instance, public insurance programs like Medi-
care would lead individuals to seek unnecessary care.
To tie a couple of these historical perspectives
together and examine (albeit in somewhat oversim-
plified fashion) how evolving social and economic
mores have influenced health policy and law, consider
the example of Medicaid, the joint federal–state health
insurance program for low-income individuals. In
1965, Medicaid was born out of the prevailing societal
mood that it was an important role of government to
expand legal rights for the poor and needy. Its creation
exemplified a social contract perspective, which in the
context of health promotes the view that individuals
and society as a whole are important stakeholders in
the healthcare and public health systems. Medicaid
entitled eligible individuals to a set of benefits that,
according to courts during the era under consider-
ation, was the type of legal entitlement that could be
enforced by beneficiaries when they believed their
rights under the program were infringed.
These societal expectations and legal rights and
protections withstood early challenges during the
1970s, as the costs associated with providing services
under Medicaid resulted in state efforts to roll back
program benefits. Then, in the 1980s, Medicaid costs
soared higher, as eligibility reforms nearly doubled the
program’s enrollment and some providers (e.g., com-
munity health centers) were given higher payments
for the Medicaid services they provided. Still, the
social contract perspective held firm, and the program
retained its essential egalitarian features.
As noted, however, the gravitational pull of the
social contract theory weakened as the 1980s drew
to a close. This, coupled with the fact that Medicaid
spending continued to increase in the 1990s, led to
an increase in the number of calls to terminate pro-
gram members’ legal entitlement to benefits.f Also in
the 1990s, federal and state policymakers dramatically
increased the role of private managed care companies
in both Medicaid and Medicare, an example of the
trend toward free market principles.
Key Stakeholders
A third way to conceptualize health policy and law
issues is in terms of the stakeholders whose interests
are impacted by certain policy choices or by the pas-
sage or interpretation of a law. For example, imag-
ine that in the context of interpreting a state statute
regulating physician licensing, your state’s highest
court ruled that it was permissible for a physician to
not treat a patient who was in urgent need of care,
even though the doctor had been serving as the
patient’s family physician. What stakeholders could be
impacted by this result? Certainly the patient, as well
as other patients whose treatment may be colored by
the court’s decision. Obviously the doctor and other
doctors practicing in the same state could be impacted
by the court’s conclusion. What about the state legis-
lature? Perhaps it unintentionally drafted the licensing
statute in ambiguous fashion, which led the court to
determine that the law conferred no legal responsibil-
ity on the physician to respond to a member of a fam-
ily that was part of the doctor’s patient load. Or maybe
the legislature is implicated in another way—maybe
Conceptualizing Health Policy and Law 7

it drafted the law with such clarity that no other out-
come was likely to result, but the citizenry of the state
was outraged because its elected officials have created
public policy out of step with constituents’ values.
Note how this last example draws in the perspective of
another key stakeholder—the broader public.
Of course, patients, healthcare providers, gov-
ernments, and the public are not the only key stake-
holders in important matters of health policy and law.
Managed care and traditional insurance companies,
employers, private healthcare industries, the research
community, interest groups, and others all may have a
strong interest in various policies or laws under debate.
▸ Conclusion
The preceding descriptions of the roles played by policy
and law in the health of individuals and populations,
and of the ways to conceptualize health policy and law,
were cursory by design. But what we hope is apparent
to you at this early stage is the fact that the study of
policy and law is essential to the study of both health
care and public health. Consider the short list of major
problems with the U.S. health system as described in a
book edited and written by a group of leading scholars:
the coverage and financing of health care, healthcare
quality, health disparities, and threats to population
health (Mechanic, Rogut, Colby, & Knickman, 2005,
p. 10). All of the responses and fixes to these prob-
lems—and to many other healthcare- and public
health–related concerns—will invariably and neces-
sarily involve creative policymaking and rigorous legal
reform (and indeed, the Affordable Care Act, about
which you will read in various sections, addressed
each of these topics to one degree or another). This fact
is neither surprising nor undesirable: policy and law
have long been used to effect positive social change,
and neither the healthcare nor public health field is
immune to it. Thus, going forward, there is little rea-
son to expect that policy and law will not be two of the
primary drivers of health-related reform.
Policy and legal considerations are not relevant
only in the context of major healthcare and public
health transformations, however—they are critical
to the daily functioning of the health system, and to
the health and safety of individuals and communities
across a range of everyday life events. Think about
pregnancy and childbirth, for example. There are
approximately 11,000 births each day in this coun-
try, and thus society views pregnancy and childbirth
as more or less normal and unremarkable events. In
fact, the process of becoming pregnant, accessing and
receiving high-quality prenatal health care, and expe-
riencing a successful delivery is crucial not only to the
physical, mental, and emotional health and well-being
of individuals and families, but to the long-term eco-
nomic and social health of the nation. It also implicates
a dizzying number of interesting and important policy
questions. Consider the following:
■ Should there be a legal right to health care in the
context of pregnancy, and, if so, should that right
begin at the point of planning to get pregnant, at
the moment of conception, at the point of labor,
or at some other point?
■ Regardless of legal rights to care, how should the
nation finance the cost of pregnancy care? Should
individuals and families be expected to save
enough money to pay out-of-pocket for what is
a predictable event? Should the government help
subsidize the cost of prenatal care? If so, in what
way? Should care be subsidized at the same rate
for everyone, or should subsidy levels be based on
financial need?
■ Regarding the quality of care, what is known
about the type of obstetrical care women should
receive, and how do we know they are getting that
care? Given the importance of this type of care,
what policy steps are taken to ensure that the care
is sound? What should the law’s response be when
a newborn or pregnant woman is harmed through
an act of negligence? When should clinician errors
be considered preventable and their commission
thus tied to a public policy response? And what
should the response be?
■ What should the legal and social response be to
prospective parents who act in ways risky to the
health of a fetus? Should there be no societal
response because the prospective parents’ actions
are purely a matter of individual right? Does it
depend on what the actions are?
■ Is it important to track pregnancy and birth
rates through public health surveillance systems?
Why or why not? If it is an important function,
should the data tracking be made compulsory or
voluntary?
■ How well does the public health system control
known risks to pregnancies, both in communities
and in the workplace?
■ Finally, who should answer these questions? The
federal government? States? Individuals? Should
courts play a role in answering some or all of
them, and, if so, which ones? Whose interests are
implicated in each question, and how do these
stakeholders affect the policymaking process?
8 Chapter 1 Understanding the Role of and Conceptualizing Health Policy and Law

There are scores of topics—pregnancy and child-
birth among them, as you can see—that implicate a
range of complex health policy questions, and these
are the types of questions this text prepares you to
ask and address. Before you turn your attention to
the essential principles, components, and issues of
health policy and law, however, you must understand
something about policy and law generally, and about
the organization and purposes of the healthcare and
public health systems. The next two chapters provide
a grounding in policy and law and supply the basic
information needed to study policy and law in a health
context. In those chapters, we define policy and law,
discuss the political and legal systems, introduce the
administrative agencies and functions at the heart of
the government’s role in health care and public health,
and more. With this information at your disposal, you
will be better equipped to think through some of the
threshold questions common to many policy debates,
including the following questions: Which sector—
public, private, or not-for-profit (or some combina-
tion of them)—should respond to the policy problem?
If government responds, at what level— federal or
state—should the problem be addressed? What branch
of government is best suited to address, or is more
attuned to, the policy issue? When the government
takes the lead in responding to a policy concern, what
is the appropriate role of the private and not-for-profit
sectors in also attacking the problem? What legal bar-
riers might there be to the type of policy change being
contemplated? Once you have the knowledge to crit-
ically assess these types of questions, you will be able
to focus more specifically on how the healthcare and
public health systems operate in the United States, and
on the application of policy and law to critical issues in
health care and public health.
References
Mechanic, D., Rogut, L. B., Colby D. C., & Knickman, J. R.
(Eds.). (2005). Policy challenges in modern health care. New
Brunswick, NY: Rutgers University Press.
Rosenblatt, R. E., Law, S. A., & Rosenbaum, S. (1997). Law and the
American health care system. Westbury, CT: The Foundation
Press.
▸ Endnotes
a. See, for example, Parmet W. E. (2006). Intro-
duction: The interdependency of law and pub-
lic health. In R. A. Goodman, R. E. Hoffman,
W. Lopez, G. W. Matthews, M. A. Rothstein, &
K. L. Foster (Eds.), Law in public health practice
(2nd  ed., pp. xxvii–xxvii). Oxford, England:
Oxford University Press.
b. For a nonfictional and utterly engrossing exam-
ple of the ways in which law and legal process
might stand in the way of effective public health
regulation, we recommend Harr, J. (1995). A
civil action. New York, NY: Vintage Books.
c. See, for example, Gostin, L. O., Thompson, F. E.,
& Grad, F. P. (2006). The law and the public’s
health: The foundations. In R. A. Goodman,
R. E. Hoffman, W. Lopez, G. W. Matthews, M. A.
Rothstein, & K. L. Foster (Eds.), Law in public
health practice (2nd ed., pp. 25–44). Oxford,
England: Oxford University Press.
d. The particular historical framework described
here was developed to apply to health care rather
than to public health. We do not mean to imply,
however, that it is impossible to consider public
health from a historical, or evolutionary, vantage
point. In fact, it is fair to say that public health
practice may have just entered its third histori-
cal phase. Throughout the 1800s and most of the
1900s, protection of the public’s health occurred
mainly through direct regulation of private
behavior. In the latter stages of the 20th cen-
tury, strict reliance on regulation gave way to an
approach that combined regulation with chronic
disease management and public health promo-
tion, an approach that necessitated a more active
collaboration between public health agencies
and healthcare providers and purchasers. Now,
it appears that public health professionals are
adding to this revised practice model another
strategic initiative: building collaborative rela-
tionships with policymaking agencies whose
responsibilities are not directly related to public
health—for example, agencies whose primary
fields are housing, transportation, or agriculture.
e. The discussion of these perspectives is guided
by Rosenblatt, R. E., Law, S. A., & Rosenbaum,
S. (1997). Law and the American health care sys-
tem (pp. 24–35). Westbury, CT: The Foundation
Press; Rosenblatt, R. E. (2004). The four ages
of health law. Health Matrix: Journal of Law-
Medicine, 14(1), 155–196.
f. By 2005, proponents of weakening Medicaid-
enrolled persons’ entitlement to program ben-
efits had made significant strides: Congress
passed a law called the Deficit Reduction Act
that, among other things, granted states the
ability to redefine the benefits and services to
which Medicaid beneficiaries are entitled.
Endnotes 9

CHAPTER 2
Policy and the Policymaking
Process
LEARNING OBJECTIVES
By the end of this chapter you will be able to:
■ Describe the concepts of policy and policymaking
■ Describe the basic function, structure, and powers of the legislative branch of government
■ Describe the basic function, structure, and powers of the executive branch of government
■ Explain the role of federal and state governments in the policymaking process
■ Explain the role of interest groups in the policymaking process
▸ Introduction
The first steps for any student of health policy are to understand what policy is generally and to learn about the policymaking process. It is
vital to consider policy questions in the particular
context in which they arise, both in terms of the gen-
eral politics of the issue and the values and powers of
the policymaker. As you will discover, there is no sin-
gle definition of policy. Even so, this chapter arms you
with the information needed to know what issues to
consider when thinking about a public policy prob-
lem, how to account for a variety of competing policy
views, and what policy options are possible given the
political process in the United States.
The chapter first defines what policy is and then
moves to a discussion of the policymaking process by
examining the roles and powers of two of the politi-
cal branches of government—the legislative and exec-
utive branches. As part of this discussion, we intro-
duce you to federal and state agencies that make up
the healthcare and public health bureaucracy. We
conclude with a discussion about the roles of interest
groups in policymaking and the influence they wield
in the policymaking process.
▸ Defining Policy
In this section we consider various aspects of what we
mean by the term policy. Before delving into the policy-
making process, we identify which issues fall within the
realm of a public policy decision and, generally, what
kinds of decisions might be made by policymakers.
Identifying Public Problems
Scholars have defined policy in many different ways.
Consider a few of them:
■ Authoritative decisions made in the legislative, exec-
utive, or judicial branches of government that are
11
© Mary Terriberry/Shutterstock

intended to direct or influence the actions, behav-
iors, and decisions of others (Longest, 2016, p. 10).
■ A course of action adopted and pursued by a gov-
ernment, party, statesman, or other individual or
organization (Subcommittee on Health and Envi-
ronment, 1976, p. 124).
■ Authoritative decisions and guidelines that direct
human behavior toward specific goals either in the
private or the public sector (Hanley, 1999, p. 125).
The differences in these definitions raise several
important issues. The first question to consider is
whether private actors make policy or whether poli-
cymaking is an activity for the government only. The
first definition refers only to governmental policy-
makers, the second definition allows for both public
and private policymakers, and the third definition
is unclear on this issue. Of course, the government
is a key player in any policy field, and it is certainly
true that decisions by government entities represent
public policy. However, in this text we also focus on
private actors who make policy, such as commercial
insurance companies, private employers, influential
individuals, and others who can all be part of health
policy. For example, when a major health insurance
company decides to cover obesity prevention mea-
sures, or when the Bill and Melinda Gates Founda-
tion provides grants to develop crops that are high in
essential vitamins and minerals to improve the nutri-
tion of people in developing countries, they are mak-
ing health policy decisions.
Regardless of whether the policymaker is a public
or private figure, it is necessary that the decision being
made is an authoritative decision. These are decisions
made by an individual or group with the power to
implement the decision, and there are a variety of lev-
els where these kinds of decisions can take place. For
example, within government, authoritative decisions
may be made by the president, cabinet officials, agency
heads, members of Congress, governors, state legisla-
tures, public health commissioners, and many others.
But all decisions by public and private individuals
or entities are not necessarily policy decisions. The key
issue to determining whether a “decision” represents
a “policy” is whether the question at hand is an indi-
vidual concern or a public policy problem. A public
policy problem goes beyond the individual sphere
and affects the greater community. Whereas an indi-
vidual might decide to take advantage of employer-
sponsored health insurance, a public policy question
is whether all employers should be required to offer
health insurance to their employees. Whereas an indi-
vidual might decide to purchase a generic (as opposed
to a brand name) drug to save money, a public policy
question is whether patients should be induced to buy
less expensive generic drugs. When deciding whether
something is a public policy decision, the focus is not
only on who is making a decision, but also on what
kind of decision is being made.
Furthermore, just because a problem is identified
as a public policy problem does not necessarily mean
the only solution involves government intervention.
For example, consider the problem of an influenza
vaccine shortage. Although there are government-
oriented solutions to this problem, such as expanding
public research and development or creating pro-
duction incentives (through tax cuts or subsidies) to
encourage private manufacturers to produce more
vaccine, other solutions may rely solely on private
actors. Private companies may decide to invest in the
research and development of new ways to produce
vaccines, or to build new plants to increase produc-
tion capacity, because they believe they can make a
profit in the long run. Just as private individuals and
entities can make policy decisions for their own ben-
efit, they can also play a central role in solving public
policy problems. A lengthier discussion about options
for solving public policy problems and arguments for
and against government intervention is found in a
review of health economics.
Structuring Policy Options
Considered broadly, there are different ways to
approach public policy problems. For example, some
policy options are voluntary, whereas others are man-
datory. It is important to recognize that authoritative
decisions do not always require others to act or refrain
from acting in a certain way. Some of the most import-
ant and effective policies are those that provide incen-
tives to others to change their behavior. Indeed, the
power of persuasion is very important to public offi-
cials, particularly those working for the federal gov-
ernment, which is limited in its ability to force states
and individuals to take certain actions. This limitation
stems from the fact that the 10th Amendment of the
U.S. Constitution limits Congress and the executive
branch to specific powers and reserves all other pow-
ers for the states. However, members of the federal
government may use their enumerated powers, such
as those to tax and spend, to persuade states and oth-
ers to act in desired ways.
For example, the Constitution does not give the
legislative or executive branches the power to protect
the public’s health, meaning that the area is primarily
within the purview of states to regulate. As a result,
Congress and the president cannot require states to
create emergency preparedness plans. Yet, Congress
12 Chapter 2 Policy and the Policymaking Process

may provide incentives to states to do so by offering
them federal money in return for state preparedness
plans that meet certain criteria established by the fed-
eral government.
In addition, it is important to remember that
inaction can also be a policy decision. Deciding to do
nothing may be a decision to keep a prior decision
in place or not to engage in a new issue. For exam-
ple, a governor could decide against trying to change
a restrictive abortion law, or a state legislature could
choose not to pass a law expanding the allowable
scope of practice for nurse practitioners. Both of these
inactions result in important policy decisions that will
affect the choices and opportunities available to indi-
viduals, advocacy organizations, and others.
This brief discussion about policy has raised sev-
eral important issues to consider when identifying
policy options. The next section provides a detailed
discussion of the policymaking process, providing you
with the background knowledge necessary to identify
and understand the roles and powers of various poli-
cymakers.
▸ Public Policymaking Structure
and Process
The public policymaking structure refers to the vari-
ous branches of government and the individuals and
entities within each branch that play a role in making
and implementing policy decisions. In this section,
we review the structure, powers, and constituency of
these branches, with a focus on the U.S. House of Rep-
resentatives, the U.S. Senate, and various commissions
and agencies that assist Congress, the president, White
House staff, and federal executive branch administra-
tive agencies. In addition to reviewing the policymak-
ing structure, we discuss the processes used by these
various individuals and entities for making public pol-
icy decisions.
State-Level Policymaking
The federal government does not have a monopoly
on policymaking. Indeed, important policy decisions
are regularly made at the state level as well, espe-
cially in the healthcare arena. However, because state
governments are similar to the federal government in
many ways, the policymaking duties and powers pre-
sented in the following discussion can often be applied
to a state-level analysis. At the same time, there is a
significant amount of variation in how states structure
their legislative and executive branches, agencies, and
offices, and it is not possible to review the differences
that exist among all 50 states. Accordingly, after a brief
discussion of state-level policymaking, this chapter
focuses primarily on the federal policymaking struc-
ture and process.
Like the federal government, each state has three
branches of government. State legislatures pass laws,
appropriate money within the state, and conduct over-
sight of state programs and agencies. States also have
their own judiciary with trial and appellate courts.
The governor is the head of the state executive branch
and can set policy, appoint cabinet members, and use
state administrative agencies to issue regulations that
implement state laws. Although there are limits to a
state’s power to regulate healthcare issues, state regula-
tion is an extremely important aspect of health policy.
Just a few examples of the healthcare matters states
can regulate include provider licensing, accreditation,
some aspects of health insurance, and most public
health concerns.
While state governments share these general
characteristics, it is important to realize that all state
governments are not exactly alike. The governor has
more power in some states than in others, agencies
are combined in different ways among the states, state
legislatures may meet annually or biannually, state leg-
islators may be full-time or part-time employees, and
so on. Because these differences exist, it is essential for
policy analysts to understand the specific structure of
the state in which their client resides.
Furthermore, there are important differences
between the federal government and the states.
Unlike the federal government, almost all states are
required to have a balanced budget, and most states
cannot borrow money for operating expenses. These
rules mean that states must act to raise revenue or
cut programs if they project that their budget will be
in deficit by the end of the fiscal year. In addition, in
2010, 30 states had at least one tax and expenditure
limit rule that restricted the growth of government
revenues or spending to a fixed numerical target,
sometimes using changes in population level or the
inflation rate as guideposts. Further, 15 states require
a legislative supermajority or voter approval to raise
taxes (a supermajority means that more than a simple
majority—over 50%—is required; for example, a two-
thirds majority vote could be required) (Waisanen,
2010). As a result, state officials may be more likely
than federal officials to make the difficult choice to
either limit programs or cut resources from one pro-
gram to fund another.
As is evident from this brief discussion, state-level
policymaking is both a rich area for discussion and a
difficult area to make generalizations about because
each state is unique. Having highlighted some of the
Public Policymaking Structure and Process 13

key differences and similarities among the states and
between the state and the federal governments, we
now turn to the legislative and executive branches of
the federal government.
The Federal Legislative Branch
Article I of the U.S. Constitution makes Congress
the lawmaking body of the federal government by
granting it “All legislative Powers” and the right to
enact “ necessary and proper laws” to effect its prerog-
atives (U.S. Const. art. I, § 1; U.S. Const. art. I, § 8).
Congressional responsibilities are fulfilled by the two
chambers of Congress, the Senate and the House of
Representatives (“the House”). The Constitution grants
specific powers to Congress, including but not limited
to the power to levy taxes, collect revenue, pay debts,
provide for the general welfare, regulate interstate and
foreign commerce, establish federal courts inferior to
the Supreme Court, and declare war (U.S. Const. art. I,
§ 1). The Senate has the specific power to ratify treaties
and confirm nominations of public officials.
The Senate consists of 2 elected officials from
each state, for a total of 100 senators.a Each senator is
elected in a statewide vote for a 6-year term, whereas
representatives in the House sit for 2-year terms. Due
to the lengthy term of its members, the Senate is con-
sidered less volatile and more concerned with long-
term issues than the House. A senator must be at least
30 years old, a U.S. citizen for at least 9 years, and a
resident of the state he or she is seeking to represent
(U.S. Const. art. I, § 3).
The House includes 435 members allocated pro-
portionally based on the population of the 50 states,
with each state guaranteed at least 1 representative.b
For example, in 2018, California was allotted 53 rep-
resentatives, while Vermont had only 1. Due to the
proportionality rule, members from larger states
dominate the House and often hold leadership posi-
tions. Members of the House are elected by voters in
congressional districts and serve 2-year terms. They
must be at least 25 years old, a U.S. citizen for at least
7 years, and a resident of the state where the election
takes place (U.S. Const. art. I, § 2).
Leadership Positions
Leadership roles in Congress are determined by polit-
ical party affiliation, with the party in the majority
gaining many advantages. The vice president of the
United States is also the president of the Senate and
presides over its proceedings. In the vice president’s
absence, which is common given the other obliga-
tions of the office, the president pro tempore, a mostly
ceremonial position, presides over the Senate. In most
cases the vice president is not a major player in Senate
voting, but with the power to break a tie vote, the vice
president wields an important power. The Speaker of
the House (“Speaker”) presides over that chamber and
has the authority to prioritize and schedule bills, refer
bills to committees, and name members of joint and
conference committees. Other than the vice presi-
dent’s senatorial role, leadership positions in Congress
are not elected by the voters, but determined by the
members from the party who have been elected to
Congress. Other key Congressional leadership posi-
tions include the following:
■ Senate majority leader: Speaks on behalf of the
majority party, schedules floor action and bills,
works on committees, directs strategy, and tries to
keep the party united.
■ House majority leader: Works with the Speaker
to direct party strategy and set the legislative
schedule.
■ House and senate minority leaders: Speak on
behalf of the minority party, direct strategy, and
try to maintain party unity; as members of the
minority, they do not have the legislative duties of
the majority leader/Speaker.
■ House and senate majority and minority whips:
Track important legislation, mobilize members to
support leadership positions, keep a count of how
party members are planning to vote, and generally
assist their leaders in managing their party’s legis-
lative priorities.
Committees
Committees have been referred to as the “workhorses”
of Congress; they are where many key decisions are
made and legislative drafting takes place. Given the
vast array of issues that Congress contends with in
any given legislative session, it is impossible for every
member to develop expertise on every issue. Although
members vote on bills that cover a wide range of issues,
members often concentrate on the areas relevant to
the committees on which they serve.
Committees have a variety of important roles,
including drafting and amending legislation; educat-
ing members on key issues; shepherding the commit-
tee’s legislation on the floor when it goes before a vote
by all the members of one chamber; working with the
president, his administration, and lobbyists to gain
support for a bill; holding hearings; and conducting
oversight of executive branch departments, agencies,
commissions, and programs within their purview.
Committee members often gain expertise in the areas
14 Chapter 2 Policy and the Policymaking Process

covered by their committees, and other members often
rely on their advice when making voting decisions.
Standing committees are generally permanent com-
mittees with specified duties and powers. There are 20
standing committees in the House and 16 in the Senate.
House committees tend to be larger than those in the
Senate, with about 40 members per committee. Some
committees have authorization jurisdiction, allowing
them to create programs and agencies. Other commit-
tees have appropriation authority, meaning they are
responsible for funding various programs and agen-
cies. Standing committees also have oversight authority,
meaning they monitor how programs are run and funds
are spent. Each chamber of Congress has established
specific oversight committees for some programs and
issues that cut across committee jurisdiction, as well as
committees that review the efficiency and economy of
government actions (Heitshusen, 2018).
Not surprisingly, some of the most powerful and
popular committees are those that deal with appropri-
ating money. These include the following:
■ House Ways and Means and Senate Finance
committees: These committees have jurisdiction
over legislation concerning taxes, tariffs, and other
revenue-generating measures, and over entitle-
ment programs such as Medicare and Social Secu-
rity. The Constitution requires all taxation and
appropriations bills to originate in the House, and
House rules require all tax bills to go through the
Ways and Means committee.
■ House and Senate Appropriations committees:
These committees have responsibility for writing
federal spending bills.
■ House and Senate Budget committees: These
committees are tasked with creating the overall
budget plan that helps guide tax and appropria-
tion committee work.
■ House Rules committee: This committee has
jurisdiction over the rules and order of business
in the House, including rules for the floor debates,
amendments, and voting procedures. Unlike in
the Senate, all House bills must go to the House
Rules committee before reaching the House floor
for a vote by all representatives.
TABLE 2-1 identifies the key health committees and
subcommittees and their health-related jurisdictions.
Committee/Subcommittee Health-Related Jurisdiction
Senate Finance Committee
■ Subcommittee on Health Care  ■ Department of Health and Human Services
• Centers for Medicare and Medicaid Services (includes
Children’s Health Insurance Program [CHIP])
• Administration for Children and Families
■ Department of the Treasury
• Group health plans under the Employee Retirement
Income Security Act (ERISA)
Senate Appropriations Committee
■ Subcommittee on Labor, Health, Human
Services, Education, and Related Agencies
■ Department of Health and Human Services
• All areas except Food and Drug Administration, Indian
Health, and construction activities
■ Subcommittee on Agriculture, Rural
Development, Food and Drug Administration,
and Related Agencies
■ U.S. Agricultural Department (except Forest Service)
• Includes child nutrition programs; food safety and
inspections; nutrition program administration; special
supplemental nutrition program for Women, Infants,
Children (WIC); Supplemental Nutrition Assistance
Program (SNAP)
■ Food and Drug Administration
(continues)
TABLE 2-1 Key Health Committees and Subcommittees
Public Policymaking Structure and Process 15

Committee/Subcommittee Health-Related Jurisdiction
■ Subcommittee on Interior, Environment, and
Related Agencies
■ Department of Health and Human Services
• Indian Health Services
• Agency for Toxic Substances and Disease Registry
Senate Health, Education, Labor, and Pensions Committee
■ Subcommittee on Children and Families
■ Subcommittee on Primary Health and
Retirement Security
■ Occupational safety and health, public health, Health
Resources Services Act, substance abuse and mental
health, oral health, healthcare disparities, ERISA
Senate Committee on Agriculture, Nutrition, and Forestry
■ Subcommittee on Nutrition, Specialty Crops,
and Agricultural Research
■ Food from fresh waters; SNAP; human nutrition; inspection
of livestock, meat, and agricultural products; pests and
pesticides; school nutrition programs; other matters related
to food, nutrition, and hunger
Senate Committee on Environment and Public Works
■ Subcommittee on Clean Air and Nuclear Safety ■ Air pollution, environmental policy, research and
development, noise pollution, water pollution, nonmilitary
control of nuclear energy, solid waste disposal and recycling
House Committee on Ways and Means
■ Subcommittee on Health ■ Programs providing payments for health care, health
delivery systems, and health research
■ Social Security Act
■ Maternal and Child Health Block Grant
■ Medicare
■ Medicaid
■ Peer review of utilization and quality control of healthcare
organizations
■ Tax credit and deduction provisions of the Internal Revenue
Service relating to health insurance premiums and
healthcare costs
■ Subcommittee on Human Resources ■ Social Security Act
• Public assistance provisions
• Supplemental Security Income provisions
• Mental health grants to states
House Committee on Appropriations
■ Subcommittee on Labor, Health and Human
Services, Education, and Related Agencies
■ Department of Health and Human Services
• Administration for Children and Families
• Administration for Community Living
• Agency for Healthcare Research and Quality
• Centers for Disease Control and Prevention
• Centers for Medicare and Medicaid Services
TABLE 2-1 Key Health Committees and Subcommittees
16 Chapter 2 Policy and the Policymaking Process
(continued)

• Health Resources Services Administration
• National Institutes of Health
• Substance Abuse and Mental Health Services
• Federal Mine Safety and Health Review Commission
• Medicaid and CHIP Payment and Access Commission
• Medicare Payment Advisory Committee
• National Council on Disability
• Occupational Safety and Health Review Commission
• Social Security Administration
■ Subcommittee on Agriculture, Rural
Development, Food and Drug Administration,
and Related Agencies
■ Food and Drug Administration
■ Department of Agriculture (except Forestry)
■ Subcommittee on Energy, Water Development,
and Related Agencies
■ Department of Energy
• National Nuclear Strategy Administration
• Federal Energy Regulatory Commission
■ Department of Interior
■ Bureau of Reclamation
■ Defense Nuclear Facilities Safety Board
■ Nuclear Regulatory Commission
■ Subcommittee on Interior, Environment, and
Related Agencies
■ Department of Interior
■ Environmental Protection Agency
■ Indian Health Service
■ National Institute of Environmental Health Sciences
■ Chemical Safety and Hazards Investigation Board
House Committee on Agriculture
■ Subcommittee on Nutrition ■ Nutrition programs, including SNAP
■ Subcommittee on Biotechnology, Horticulture,
and Research
■ Policies and statutes relating to horticulture, bees, organic
agriculture, pest and disease management, bioterrorism,
biotechnology
■ Subcommittee on Livestock and Foreign
Agriculture
■ Policies and statutes relating to inspections of livestock,
dairy, poultry, and seafood; aquaculture; animal welfare
Congressional Commissions
and Staff Agencies
Although the committee system helps members of
Congress focus on particular areas, members often
need assistance with in-depth research and policy
analysis. Commissions and staff agencies provide
members with information they might not otherwise
have the time to gather and analyze. There are too
many commissions and agencies to list here, but a few
key ones include the following:
■ Congressional Budget Office: An agency that
provides Congress with cost estimates of bills and
federal mandates to state and local governments,
as well as forecasts economic trends and spending
levels.
■ Government Accountability Office: An indepen-
dent, nonpartisan agency that studies how federal
tax dollars are spent and advises Congress and
executive agencies about more efficient and effec-
tive ways to use federal resources.
■ Congressional Research Service: The public pol-
icy research service that conducts nonpartisan,
objective research on legislative issues.
■ Medicare Payment Advisory Commission: An
independent federal commission that gives Congress
advice on issues relating to the Medicare program,
including payment, access to care, and quality of care.
Public Policymaking Structure and Process 17

How Laws Are Made
One way that members of Congress indicate their pol-
icy preferences is by passing laws that embody their
values and the values of their constituents. This is a
lengthy process, with many steps along the way that
could derail a bill (FIGURE 2-1).
Before a committee considers a bill, it must be
introduced by a member of Congress. Once this occurs,
the Speaker refers the bill to one or more committees in
the House, and the majority leader does the same in the
Senate. The bill may die in committee if there is not suf-
ficient support for it, although there are rarely invoked
procedures that allow a bill to be reported to the full
chamber even without committee approval. While the
bill is in committee, members may hold hearings on it
or “mark up” the bill by changing or deleting language
in the proposed bill or by adding amendments to it. If
a majority of the committee members approves a bill, it
FIGURE 2-1 How a Bill Becomes a Law
18 Chapter 2 Policy and the Policymaking Process
Representative introduces bill
in the House
Senator introduces bill
in the Senate
Bill is read in the House and
assigned to a committee by the
Speaker
Bill is read in the Senate and
assigned to a committee by the
majority leader
Bill leaves committee,
is scheduled for floor
consideration and debate,
may be amended
Bill leaves committee,
is scheduled for floor
consideration and debate,
may be amended
House passes bill Senate passes bill
Bill is sent to Senate Bill is sent to House
A conference committee is created to resolve differences if both chambers do not pass an identical bill
Identical bill is passed by both House and Senate OR one branch agrees to the other branch’s version
OR bill is amended and both branches vote again and pass amended version
Bill is presented to the
President, who has four options
Option 1:
President
signs bill
into law
Option 2:
During congressional
session, bill becomes law
after 10 days without
presidential signature
Option 3:
When not in session, bill
does not become law
without presidential
signature
Option 4:
President vetoes bill.
Two-thirds vote in
House and Senate
can override veto

goes to the full chamber (House or Senate, depending
on where the bill originated).
The full House or Senate then debates the mer-
its of the bill and puts it to a vote. If a majority does
not support the bill, it dies on the chamber floor. If a
majority supports the bill, it is sent to the other cham-
ber for consideration. The second chamber may pass
the exact same bill or a different version of the bill. If
the second chamber does not pass any version of the
bill, it dies on the chamber floor and no version of
the bill moves forward. If the second chamber passes
an identical bill, it goes directly to the president for
consideration.
If there are differences in the bills passed by the
House and Senate, the two chambers must reach a con-
sensus through an exchange of amendments for the bill
to have a chance of becoming law. Consensus building
is facilitated by a “conference committee” made up of
members from both chambers. If the committee can-
not reach a consensus, the bill dies. If the committee
reaches a consensus, the bill is sent back to each cham-
ber for a vote on the new version of the bill. If either
chamber does not approve it, the bill dies at that point.
If both the House and the Senate pass the new version,
it is sent to the president for consideration.
The president may choose to sign the bill into law,
or the president may choose to veto the bill. If the
president chooses not to sign the bill while Congress
is in session, the bill becomes law after 10 days; if
Congress is not in session and the bill goes unsigned,
the bill dies (this is referred to as a “pocket veto”).
If the president vetoes the bill, Congress may over-
ride the veto with approval of a two-thirds majority
in each chamber.
Congressional Budget
and Appropriations Process
Although the budget and appropriations process may
sound dry, it is about much more than numbers and
charts. If you take a close look at budget documents,
they include narratives that discuss why certain pro-
grams are being funded and what the government hopes
to achieve by doing so. In many ways, this process is a
key policy tool for members of Congress and the pres-
ident; they are able to show which programs and issues
have their support through their funding decisions.
Given both the amount of money involved in
running the United States ($4 trillion in 2017) and
the various jurisdictions of congressional commit-
tees, it is not surprising that the federal budget pro-
cess is fairly complex. The Congressional Budget
and Impoundment Control Act of 1974 (“Budget
Act”) and subsequent amendments were passed by
Congress to create a process that brings together the
numerous committees involved in crafting an over-
all budget plan. The budget process works in concert
with the appropriations process, which involves con-
gressional passage of bills from each of the appropria-
tions committees to distribute the funds provided for
in the overall budget (House Committee on the Bud-
get Majority Caucus, 2001; Senate Committee on the
Budget, 1998).
The president is required to submit a budget pro-
posal to Congress by the first Monday in February.
This proposal is the administration’s request; it is not
binding on Congress. Each chamber then passes a
budget resolution, identifying how the chamber would
spend federal money delineated by different catego-
ries of spending (e.g., defense, agriculture, transpor-
tation). Members from each chamber then meet to
develop a single conference report reflecting a consen-
sus agreement on the overall budget. Congress then
passes a concurrent budget resolution, which is binding
upon the House and Senate as a blueprint for revenue
collection and spending. However, it is not a law and
the president is not bound by the budget resolution.
Over the 6 weeks subsequent to the passage of
the concurrent budget resolution, the House and Sen-
ate budget committees hold hearings to discuss the
budget, and other committees review the budget as
it pertains to their jurisdiction. The latter committees
provide the budget committees with their “views and
estimates” of appropriate spending and/or revenue
levels for the upcoming year. In addition, the Con-
gressional Budget Office provides the budget commit-
tees with its budget and economic outlook reports and
provides the budget and appropriations committees
with its analysis of the president’s proposal.
In March, the House and Senate budget commit-
tees each craft a budget plan during public meetings
known as “markups.” When the markups are com-
plete, each committee sends a budget resolution to its
respective chamber. The budget resolution contains
a budget total, spending breakdown, reconciliation
instructions, budget enforcement mechanisms, and
statements of budget policy. Budget totals are pro-
vided as aggregates and as committee allocations.
The federal budget includes two types of spending:
discretionary and mandatory. Discretionary spending
refers to money that is set aside for programs that
must be funded annually in order to continue. If the
programs are not funded by Congress, they will not
receive federal dollars to continue their operations.
For example, the Head Start program, which provides
early childhood education services, is a discretionary
program that relies on annual appropriations. Manda-
tory spending refers to spending on entitlement and
Public Policymaking Structure and Process 19

other programs that must be funded as a matter of law.
For example, the Medicaid program is an entitlement
that provides health insurance to eligible low-income
individuals. The authorizing legislation (the law that
created the program) for Medicaid includes eligibility
rules and benefits. Because Medicaid is an entitlement
program, Congress must provide enough money so
the Medicaid agency can meet the obligations found
in the authorizing legislation.
The appropriations committees write bills to cover
discretionary spending. These committees make their
decisions based on the amount of funds available
and any reconciliation instructions, which direct the
appropriate authorizing committee to make changes
in the law for mandatory spending programs to meet
budgetary goals. Appropriations bills and reconcilia-
tion instructions must be signed by the president to
become law.
Members of the House and Senate have the
opportunity to make changes to the work of the bud-
get committees. Once the House and Senate pass their
own versions of the budget resolution, they establish a
conference committee to resolve any differences. Once
the differences are resolved, each full chamber votes
on the compromise budget.
Congress often does not meet Budget Act dead-
lines (shown in TABLE 2-2). If the appropriations bills
are not passed by every October 1—the beginning
of the fiscal year—Congress may pass a continuing
resolution that allows the government to continue to
spend money. If Congress does not pass a continuing
resolution or if the president vetoes it, all nonessential
activities of federal agencies must stop until additional
funds are provided.
Constituents of Legislative Branch
With the wide array of issues they take on, members of
Congress may have an equally wide array of constitu-
ents to be concerned about when making policy deci-
sions. Clearly, members are concerned about pleasing
the voters who elect them. Even though there may be
a variety of policy views to consider, members often
prioritize their home constituents. In addition to court-
ing their home-state voters, members often try to court
independents or voters from the opposing party in their
home state to strengthen their appeal. High approval
ratings deter challengers from trying to take an incum-
bent’s congressional seat and allow members of Con-
gress more leeway to pursue their goals and policies.
TABLE 2-2 Federal Budget Process Timeline
First Monday in February President submits budget proposal to Congress.
March House completes its budget resolution.
April Senate completes its budget resolution.
April 15 House and Senate complete concurrent budget resolution.
May Authorizing committees develop reconciliation language when necessary and report
legislation to budget committees. House and Senate develop conference report on
reconciliation, which is voted on by each chamber.
June 10 House concludes reporting annual House appropriations bills.
June 15 If necessary, Congress completes reconciliation legislation.
June 30 House completes its appropriations bills.
September 30 Senate completes its appropriations bills. House and Senate complete appropriations
conference reports and vote separately on the final bills.
October 1 Fiscal year begins.
Modified from House Committee on the Budget Majority Caucus, Basics of the Budget Process, 107th Cong. Briefing Paper, 2001.
20 Chapter 2 Policy and the Policymaking Process

Although concern for their home-state base may
be their first priority, representatives and senators often
need to be concerned about supporting their party’s
position on issues. Today, elected federal politicians
are usually affiliated with the Democratic or Republi-
can Party, and voters may be influenced by the party’s
stance on issues. Also, if the balance of power between
the two parties is close in Congress, the parties usually
cannot afford to have members defect from their par-
ty’s positions. Members’ concern regarding keeping
their party strong is magnified if they hold leadership
positions in Congress or are considering running for
national office.
Finally, the views of the president may be import-
ant for members to consider, depending on whether
the member and the president share the same party,
the particular issue involved, and the president’s pop-
ularity. Members who are in the same party as the
sitting president have incentive to help the president
remain popular because they will likely advance many
of the same policies. In addition, presidents are often
prodigious fundraisers and campaigners who may be
able to assist members during election season. Even
when members disagree with the president, the presi-
dent’s power to affect their influence in Congress may
be a deterrent to opposing the president. Of course,
if the president is exceedingly popular, it is difficult
for members of either party to oppose presidential
policy goals.
The Federal Executive Branch
Article II of the U.S. Constitution establishes the
executive branch and vests executive power in the
most well-known member of the branch, the presi-
dent (U.S. Const. art. II, § 1). Of course, the president
does not act alone in running the executive branch.
Presidents rely on Executive Office agencies and
staff such as the Council of Economic Advisors and
Office of Management and Budget, as well as policy
development offices such as the National Security
Council and Domestic Policy Council (see BOX 2-1
for a description of one such office). In addition,
there are 15 cabinet departments led by individuals
selected by the president (subject to Senate confir-
mation) and additional non– cabinet-level agencies,
all of which are responsible for, among other duties,
interpreting and implementing the laws passed by
Congress. All of these advisors identify issues to be
addressed and formulate policy options for the pres-
ident to consider. In theory, all of these parts of the
executive branch work in furtherance of the goals set
by the president.
The Presidency
The president is the head of the federal executive
branch. As powerful as that may sound, the coun-
try’s founders created three distinct branches of gov-
ernment and limited the president’s power in order
to ensure that no single individual gained too much
control over the nation. As you will see, in some ways
the president is very powerful, and in other ways his
power is quite limited.
Although there have been third-party candidates
for president in the past, generally speaking the United
States operates with a two-party system, with the Dem-
ocratic and Republican parties as the major parties.
Each party selects a candidate for president who rep-
resents the party in the election. Presidents (and their
vice presidents) are elected through a nationwide vote
to serve a 4-year term. An individual is limited to serv-
ing two 4-year terms as president, which may or may
not be consecutive (U.S. Const. amend. XXII, §  1).c
To be eligible for election, candidates must be at least
35 years old, a natural-born citizen of the United States,
and a resident of the country for at least 14 years.
Presidents have many roles. As the unofficial Chief of
State, the president is seen as the symbol of the country
and its citizens (H.R. Doc. No. 106–216, 2000, p. 40). As
the official Chief Executive Officer, the president man-
ages the cabinet and executive branch. The president also
holds the position of Commander in Chief of the Armed
Forces, and as such is the top-ranking military official
in the country. The U.S. Constitution vests the president
BOX 2-1 Office of Management and Budget
The Office of Management and Budget (OMB) reports
directly to the president and plays an important role
in policy decisions. OMB is responsible for preparing
the presidential budget proposal, which includes
reviewing agency requests, coordinating agency
requests with presidential priorities, working with
Congress to draft appropriation and authorization bills,
and working with agencies to make budget cuts when
needed. In addition to these budgetary functions,
OMB provides an estimate of the cost of regulations,
approves agency requests to collect information,
plays a role in coordinating domestic policy, and
may act as a political intermediary on behalf of the
president. OMB also has an oversight and evaluation
function over select federal agencies as a result of
the Government Performance and Results Act, which
requires agencies to set performance goals and have
their performance evaluated.
Public Policymaking Structure and Process 21

with other powers, such as the ability to appoint judges
to the federal courts, sign treaties with foreign nations,
and appoint ambassadors as liaisons to other countries.
These powers are all subject to the advice and consent of
the Senate (H.R. Doc. No. 106–216, 2000, p. 41).
Agenda Setting. A key tool of the presidency is the
ability to put issues on the national agenda and offer
a recommended course of action: “Framing agendas
is what the presidency is all about” (Davidson, 1984,
p. 371). Presidents help set the national agenda because
of the role of the president as the country’s leader and
the amount of media attention given to presiden-
tial actions, decisions, and policy recommendations.
Unlike many other politicians or interest groups, the
president does not have to work hard to receive media
coverage. Whether it is the annual State of the Union
address, release of the president’s budget proposal, a
major speech, a press conference, a photo shoot with a
foreign leader, or the release of a report, the president’s
message is continually publicized. In addition, the
president’s message can be delivered by the vice pres-
ident, cabinet officers, and party leaders in Congress.
The notion of appealing directly to the country’s
citizens to focus on a particular issue and to influence
legislative debates is referred to as “going public.” In
going public, presidents try to use support from the
American people to gain the attention of Congress
and sway votes on policy decisions. Because mem-
bers of Congress are highly concerned about pleasing
their constituency to improve their chance for reelec-
tion, “the president seeks the aid of a third party—the
public—to force other politicians to accept his prefer-
ences” (Kernell, 1997, p. 3).
Sometimes it may be advantageous for the pres-
ident to place an item on the policy agenda in a less
public manner. For example, if a policy is controver-
sial with the general public or if members of the pres-
ident’s party disagree with a proposal, it may be more
effective to promote a policy behind the scenes. The
president, either directly or through intermediaries,
can carefully let members of Congress know which
policies are favored. Using combinations of prom-
ises of favors and threats to members’ interests, the
president may be able to influence the outcome of pol-
icy debates in Congress even without going public.
In addition to deciding whether to approach Con-
gress publicly or behind the scenes, the president must
choose whether to present a preferred policy decision
with more or less detail. A policy can be presented
broadly through principles or general guidelines, or
specifically through proposed legislation that is pre-
sented to Congress. Each method for conveying the
president’s goals has pros and cons. If a policy choice is
presented in a broad manner, Congress may interpret
the policy in a way that the president dislikes. How-
ever, if the president presents Congress with a specific
proposal or draft legislation, Congressional members
may view the president as infringing upon their role as
the legislative body and resist working with him.
Whether presidents are successful in placing pol-
icy issues on the national agenda and having them
resolved in accordance with their preferences depends
in part on how much “political capital” a president has
available. Political capital is defined as the strength of
the president’s popularity and of his party, in Congress
and in other contexts. Members of Congress are more
likely to support a popular president who has the abil-
ity to mobilize the public’s support, improve members’
standing by association with the president and the
president’s party, and raise money for their campaigns.
Even the most popular president cannot always
dictate what issues are on the national agenda, how-
ever. Events and decisions outside the president’s
control often influence what topics most concern the
nation. The terrorist attacks of September 11, 2001,
the subsequent anthrax scare, and the subway and bus
bombings in London and Madrid all served to place
combating terrorism at the top of the policy and politi-
cal agenda during the George W. Bush administration.
Concerns about an avian flu epidemic and numerous
food recalls put public health and food safety issues
on the national agenda. The devastation wrought by
the BP oil spill in the Gulf of Mexico made improved
responses to environmental disasters a high priority
for a short time. Thus, even the most popular presi-
dents must be responsive to national and international
events that may be beyond their control.
Presidential Powers. As noted earlier, if Congress
passes legislation the president dislikes, he has the
power to veto it, thereby rejecting the bill. However,
the president does not have to actually use the veto to
shape policy. The president may be able to persuade
Congress to change a piece of legislation simply by
threatening to veto it, especially if it is a law that is
expected to pass by only a slim majority. In general,
vetoes are used infrequently, with presidents vetoing
only 3% of all legislation since George Washington
was president (H.R. Doc. No. 106–216, p. 43).
Presidents also have the power to issue executive
orders. These are legally binding orders that the presi-
dent gives to federal administrative agencies under the
control of the Executive Office. In general, these orders
are used to direct federal agencies and their officials in
how they implement specific laws. Executive orders are
controversial because under our system of government,
Congress, not the executive, is tasked with making
22 Chapter 2 Policy and the Policymaking Process

laws. In addition, significant policy decisions can be
accomplished by using executive orders. For example,
an executive order was used by President Truman to
integrate the armed forces, by President Eisenhower
to desegregate schools, by President Clinton to desig-
nate 1.7 million acres in southern Utah as a national
monument, and by President George W. Bush to create
the federal Office of Homeland Security (which subse-
quently became a cabinet-level department when Con-
gress established it through legislation). As is discussed
in the Health Reform in the United States chapter, Pres-
ident Trump issued several executive orders intended
to undermine the Affordable Care Act after Congress
was unable to pass a bill to repeal and replace it.
If Congress believes an executive order is contrary
to congressional intent, it has two avenues of recourse.
It can amend the law at issue to clarify its intent and
effectively stamp out the executive order that is now
clearly contrary to the law. (Bear in mind that because
the president may veto any bill, in effect it takes a two-
thirds majority of Congress to override an executive
order.) As an alternative, Congress may challenge the
executive order in court, claiming that the president’s
actions exceed his constitutional powers.
Constituents of the Executive Branch. From this
description of the presidency, it is evident that pres-
idents have several layers of constituents to consider
when making policy choices. Certainly, the president
represents every citizen and the country as a whole
as the only nationally elected official (along with the
vice president) in the nation. However, the president
is also a representative of a particular political party
and therefore must consider the views of that party
when making policies. The party’s views may be evi-
dent from the party platform, policies supported by
party leadership in Congress, and voters who identify
themselves as party members. In  addition, the pres-
ident must keep in mind the foreign policy duties of
the office. Depending on the issue, it may be import-
ant for the president to take into account the views of
other nations or international organizations, such as
the United Nations or the World Health Organization.
How does the president decide which policies to
pursue? Presidents are driven by multiple goals. They
want “their policies to be adopted, they want the poli-
cies they put in place to last, and they want to feel they
helped solve the problems facing the country” (Weis-
sert & Weissert, 2002, p. 82). In addition, presidents
often speak of wanting to leave a legacy or ensure their
place in history when they leave office.
Given the vast array of constituents that presidents
must consider, the president’s policy decision-making
process involves several layers. As shown in FIGURE 2-2,
presidents consult their agency staff to identify prob-
lems, decide which problems are priorities, determine
what solutions are available to address those problems,
and choose the policy option that is the preferred
course of action. In addition, the president’s staff inter-
acts with members of Congress and other political
FIGURE 2-2 Executive Agency Policymaking
Source: Courtesy of Jeff Levi, Professor of Health Policy, George Washington University.
Public Policymaking Structure and Process 23
Should this be
on the agenda?
Agency Staff
What are the
options?
Is there a
problem?
What is
recommended to
decision-maker?
Congress
Media
White House
CONSUMERS, CITIZENS, &
CONSTITUENCY GROUPS
Political
Players

players to gauge their support for or opposition to
various policies. Of course, how the media portrays
both the problems and the potential solutions can be
an important ingredient in whether politicians and the
general public support the president’s initiatives.
In addition, which policies presidents choose to
promote may depend in part on when policy decisions
are made. First-term presidents must satisfy their con-
stituents if they hope to be reelected. Although all
presidents want to see their favored policies imple-
mented throughout their time in office, second-term
presidents may be more willing to support more con-
troversial goals because they cannot run for reelection.
Yet, second-term presidents may also be constrained
by the desire to keep their party in power, even though
another individual will hold the presidential office.
Administrative Agencies
When studying the structure of our government, it is
common to review Congress, the presidency, and the
court system. Administrative agencies, however, are
often overlooked despite the power they wield over
the way our country is run.
Structurally, almost all administrative agencies
are part of the executive branch and, thus, are under
the power and control of the president. Practically,
administrative agencies often work out of the public’s
eye to implement the laws passed by Congress and the
executive orders signed by the president.
Federal agencies fall into two main categories:
executive department agencies and independent
agencies. Executive department agencies are under
the direct control of the president, and department
heads serve at the pleasure of the president. These
departments include the 15 cabinet-level departments
and their subunits; some of the more well-known
executive departments are the Department of Health
and Human Services, the Department of Education,
the Treasury Department, the Department of State,
the Department of Defense, and the Department of
Homeland Security. Independent agency heads are
appointed by the president and confirmed by the Sen-
ate. They serve a fixed term and may be removed only
“for cause,” meaning there must be a legitimate rea-
son to fire them. Examples of independent agencies
include the Securities and Exchange Commission,
the U.S. Postal Service, and the National Labor Rela-
tions Board.
Overall, the president fills approximately 4,000
federal jobs (Yoder, 2016). In general, these political
appointees have short tenures, lasting an average of
2 years (Weissert & Weissert, 2002, p. 161). When the
administration changes hands after an election, new
appointees are usually selected to run the agencies. The
daily operations of agencies are run by career civil ser-
vants, public employees who do not necessarily come
and go with each administration but who often remain
at an agency for years, gaining expertise and institu-
tional knowledge about the agencies in which they
work. Frequently, there may be tension between the
goals of the political appointee and those of the career
bureaucrat, who may have the advantage of familiar-
ity with members of Congress and who knows that the
political appointee is likely to be replaced in a few years.
Administrative agencies can be created by statute,
internal department reorganization, or presidential
directive (H.R. Doc. No. 106-216, 2000, p. 50). How-
ever they are initially created, agencies must have
statutory authority in order to receive appropriations
from Congress and act with the force of law. This stat-
utory authority, or enabling statute, outlines the agen-
cy’s responsibilities and powers.
Agency Powers. By necessity, statutes are usually
written broadly. Congress does not have the time or
expertise to include every detail about how a new pro-
gram should operate or how a new department will be
structured. It is up to the executive branch agency to
fill in the details, and it does so by issuing policy state-
ments, developing rules, and promulgating regulations.
The Affordable Care Act (ACA) is a classic
example. Although the statute itself is lengthy (over
2,400 pages), the regulations needed to implement
the law have been even more extensive—with some
estimates putting the total page number at 20,000.
To give just one example for now (a detailed dis-
cussion of the ACA occurs in the Health Reform in
the United States chapter), the ACA includes a list
of essential health benefits that must be provided by
health insurance plans offered in state exchanges.
The statute outlines numerous such services, includ-
ing mental health services, maternity and newborn
care services, prevention and wellness services, and
chronic disease management services. Even with this
level of detail, many unanswered questions remain
regarding which services must be covered. Do mental
health services include inpatient and outpatient ser-
vices? Do prevention and wellness services include
contraceptive coverage? Does chronic disease man-
agement include all chronic disease management
models? These (and many other) questions must be
answered through regulations. The ACA includes
numerous provisions that require the relevant agen-
cies to issue detailed regulations necessary to imple-
menting the law.
24 Chapter 2 Policy and the Policymaking Process

In addition, agencies must follow the require-
ments set forth in the Administrative Procedure Act
of 1946 (APA). The APA contains detailed require-
ments compelling agencies to issue a notice of their
intent to issue a new rule or change an existing rule,
and provide for and respond to public comments on
the proposed rule. Some agencies are also required
to hold hearings and develop rules based on the evi-
dence presented in those hearings (Weissert & Weis-
sert, 2002, p. 172). It is important to know that the
APA creates procedural standards that require an
agency to follow a particular process when promul-
gating regulations, but that the APA does not relate to
the substance of the regulations. As long as an agency
follows the necessary notice and comment require-
ments of the APA, it has wide latitude to issue rules
within its scope of power, even if many of the public
comments opposed the proposed rules. If an agency
does not follow the APA requirements, interested
parties may sue the agency in court to force compli-
ance with the law.
Constituents of Agencies. Agency heads, because
they are not elected, do not have constituents in the
same way that the president and members of Con-
gress do. In theory, as members of the executive
branch, agency heads should be concerned only with
the wishes of the president. In reality, however, that is
not always the case. Some presidents have firmer con-
trol of their departments than others. If the president
gives the departments and agencies broad discretion
to make policy decisions, the agencies may have few
policy constraints. Practically, however, agency heads
want their operation to run smoothly, which includes
having a good working relationship with the individ-
uals or entities regulated by that agency. If an agency
antagonizes the people or groups being regulated, they
might reach out to their congressional representa-
tives to try to change or limit the agency’s personnel
or authority. In addition, because Congress appropri-
ates funds to and maintains oversight of many agen-
cies, agency heads are well served by taking Congress’s
interests into account.
TABLE 2-3 summarizes the general public poli-
cymaking machinery. We next turn our attention to
the specific parts of the government bureaucracy that
operate in the health arena.
▸ The Health Bureaucracy
The Federal Government
Although several federal agencies have healthcare-
related responsibilities, three significant health agen-
cies include the Department of Health and Human
Services (HHS), the Department of Defense (DoD),
and the Department of Veterans Affairs (VA). HHS
houses many of the major public health insurance
programs and health services that provide care, infor-
mation, and more to millions of U.S. residents; the
DoD and VA operate health insurance programs spe-
cifically for military personnel and their families.
TABLE 2-3 Summary of Public Policymaking Entities
Congress President Administrative Agencies
Main function Legislative body Chief executive of the country Implement statutes through
rule making
Main tools/
powers
Support/oppose/pass
legislation
Appropriations
Oversight
Agenda setting
Persuasion
Propose solutions
Budget proposals
Executive orders
Sign legislation into law
Create regulations
Provide information
Constituents Voters in state or district
Voters in nation if in leadership
role or have national
aspirations
Party
President
Nation (all voters)
Public who voted for the
president
Party
Other nations
International organizations
President
Congress
Individuals and entities
regulated or served by the
agency
The Health Bureaucracy 25

Department of Health and Human
Services
HHS includes hundreds of programs that cover activ-
ities as varied as medical and social science research,
preschool education services, substance abuse and pre-
vention services, and health insurance programs, just
to name a few. As shown in FIGURE 2-3, the department
has 11 operating divisions. The main purpose of each
agency is described in TABLE 2-4.
Each operating division has numerous bureaus or
divisions that operate health programs. For example,
the HIV/AIDS Bureau (HAB) is one of five bureaus
in the Health Resources and Services Administration.
The HIV/AIDs Bureau implements the Ryan White
CARE Act of 1990, which provides health care to
FIGURE 2-3 Department of Health and Human Services Organizational Chart
Source: Reproduced from: the U.S. Department of Health and Human Services. HHS Organizational Chart. Retrieved from https://www.hhs.gov/about/agencies/orgchart/index.html#
26 Chapter 2 Policy and the Policymaking Process
Secretary
Deputy Secretary
Chief of Staff
The Executive
Secretariat (ES)
Office of Health Reform
(OHR)
Office of the Secretary
Office of the Assistant Secretary for
Administration (ASA)
Administration for Children and
Families (ACF)
Administration for Community Living
(ACL)
Agency for Healthcare Research and
Quality (AHRQ)
Agency for Toxic Substances and
Disease Registry (ATSDR)
Centers for Disease Control and
Prevention (CDC)*
Centers for Medicare & Medicaid
Services (CMS)
Food and Drug Administration (FDA)*
Health Resources and Services
Administration (HRSA)*
Indian Health Service (IHS)*
National Institutes of Health (NIH)*
Substance Abuse and Mental Health
Services Administration (SAMHSA)*
Office of the Assistant Secretary for
Financial Resources (ASFR)
Office of the Assistant Secretary for
Health (OASH)
Office of the Assistant Secretary for
Legislation (ASL)
Office of the Assistant Secretary for
Planning and Evaluation (ASPE)
Office of the Assistant Secretary for
Preparedness and Response (ASPR)*
Office of the Assistant Secretary for
Public Affairs (ASPA)
Center for Faith-Based and
Neighborhood Partnerships (CFBNP)
Office for Civil Rights (OCR)
Departmental Appeals Board (DAB)
Office of the General Counsel (OGC)
Office of Global Affairs (OGA)*
Office of Inspector General (OIG)
Office of Medicare Hearings and
Appeals (OMHA)
Office of the National Coordinator for
Health Information Technology (ONC)
*denotes the components of the Public Health Service
Operating Divisions
Office of
Intergovenmental and
External Affairs (IEA)

https://www.hhs.gov/about/agencies/orgchart/index.html#

TABLE 2-4 Department of Health and Human Services Agencies
Agency Main Purpose of Agency
Administration for Children and
Families (ACF)
To promote economic and social well-being of families, children,
individuals, and communities through educational and supportive
programs
Administration for Community
Living (ACL)
To increase access to community support and resources for older adults
and people with disabilities
Agency for Healthcare Research and
Quality (AHRQ)
To produce evidence to make health care safer, high quality, more
accessible, and affordable, and to work with HHS and other partners to
make sure the evidence is understood and used
Agency for Toxic Substances and
Disease Registry (ATSDR)
To prevent exposure to toxic substances and reduce the adverse health
effects associated with such exposure
Centers for Disease Control and
Prevention (CDC)
To protect the nation’s health by providing leadership in the prevention and
control of diseases and other preventable conditions, and to respond the
public health emergencies
Center for Medicare and Medicaid
Services (CMS)
To provide oversight of Medicare, the federal portions of Medicaid and CHIP,
and the Health Insurance Marketplace, and to engage in quality assurance
activities
Food and Drug Administration (FDA) To assure the safety of human and veterinary drugs, biological products,
and medical devices, and to ensure the safety and security of the nation’s
food supply and products that emit radiation
Health Resources and Services
Administration (HRSA)
To provide health care to populations that are geographically isolated, or
economically or medically vulnerable
Indian Health Services (IHS) To provide American Indians and Alaska Natives with comprehensive health
services
National Institutes of Health (NIH) To support and conduct biomedical and behavioral research, to train
promising young researchers, and to promote collecting and sharing
knowledge
Substance Abuse and Mental Health
Services Administration (SAMHSA)
To improve access to and reduce barriers to high-quality, effective programs
for individuals who suffer from addictive or mental disorders, and for their
families and communities
Department of Health and Human Services (2015).
Source: Department of Health and Human Services. (2015). HHS agencies and offices. Retrieved from https://www.hhs.gov/about/agencies/hhs-agencies-and-offices/index.html
individuals with HIV and AIDS. Similarly, the Food
and Drug Administration has several offices or cen-
ters; the one whose job is perhaps best known to the
general public is the Center for Drug Evaluation and
Research, which is responsible for testing and approv-
ing new drugs before they can be sold to the public.
These are just two examples of the many subagency
units that perform vital functions in our federal
healthcare bureaucracy.
HHS also includes numerous offices that assist
the Secretary of HHS in running the department. The
Office of the Assistant Secretary of Health (OASH) is
the principal advisor to the HHS secretary on pub-
lic health matters. Through the Office of the Surgeon
General, OASH oversees the U.S. Public Health Service
(PHS), the Commissioned Corps (health profession-
als used for both emergency responses and as health
promoters), and the Office of Disease Prevention and
The Health Bureaucracy 27

https://www.hhs.gov/about/agencies/hhs-agencies-and-offices/index.html

Health Promotion. The PHS employs both commis-
sioned corps members and civilians to run its public
health programs.
Nine of the offices and agencies within HHS are
part of the PHS. In addition, the PHS employees also
work in the Bureau of Prisons, U.S. Coast Guard,
National Oceanic and Atmospheric Administration,
Environmental Protection Agency (EPA), Division of
Immigration Health Services, and U.S. Marshal Ser-
vices. HHS also has divisions concerned with planning
and evaluation, legislation, administration and man-
agement, budget and finance, program support, pub-
lic affairs, and global health affairs. Offices concerned
with the legality and efficiency of the department’s
activities include those of the General Counsel and
Inspector General, and the Office of Civil Rights.
As a result of the focus on preventing terrorism,
HHS includes an Assistant Secretary for Prepared-
ness and Response. This individual is the principal
advisor to the Secretary of HHS on matters relating
to bioterrorism and other public health emergencies
and helps coordinate efforts in these areas at all levels
of government. Other federal departments also have
a role in public health emergency preparedness. The
Department of Homeland Security (DHS), which
includes the Federal Emergency Management Agency
(FEMA), is tasked with preparing for and coordinat-
ing the federal response to emergencies, whether due
to natural or human-made disasters. The CDC houses
the Strategic National Stockpile of emergency phar-
maceutical supplies. Other agencies, such as the EPA,
DoD, and VA, play significant roles in emergency pre-
paredness and response.
Department of Veterans Affairs and
Department of Defense
Any veteran who does not receive a dishonorable dis-
charge is potentially eligible for healthcare services
through the Veterans Health Administration (VHA).
The VHA is the largest healthcare delivery system in
the country, with hundreds of medical centers, nurs-
ing homes, and outpatient clinics that serve over
9 million patients each year (Department of Veterans
Affairs, n.d.).
VHA-sponsored health plans offer a wide array of
preventive, ambulatory, and hospital services as well as
medications and medical and surgical supplies. VHA
providers are organized into integrated networks aimed
at providing cost-effective services based on local need.
There are no premiums (monthly payments) for the
plan, but veterans have to make co-payments (a charge
per visit) unless they are exempt based on disability or
income level. Unlike most healthcare plans, the VHA
system is completely portable, meaning veterans can
access VHA facilities anywhere in the country.
Veterans who wish to receive care through the
VHA must enroll in the program. Because the VHA
receives an annual appropriation from Congress, it
may not have sufficient funds to pay for all of the care
demanded by eligible veterans. For that reason, the
VHA uses a priority system to ensure that veterans
who are low-income or have service-related disabili-
ties can be enrolled into a plan. Other veterans may
have to wait to be enrolled if there are insufficient
funds. In addition, priority in accessing care is given
to enrolled veterans who need care for service-related
disabilities or have a sufficiently severe service-related
disability and need care for any health concern. Veter-
ans not in a priority group may have to wait to see an
appropriate provider once they are enrolled.
Although veterans may receive care through the
VHA, they are not required to do so. If eligible, they
may choose to obtain services through other public
or private healthcare programs or health insurance
plans. They may also choose to receive some ser-
vices through the VHA and others from non-VHA
programs or plans. As a result of scandals pertain-
ing to excessive wait times and falsified patient logs,
Congress passed several bills to improve the medical
care veterans receive. For example, the bipartisan VA
Mission Act of 2018 is intended to streamline various
VA programs that allow veterans to access care in the
private sector and improve payment systems for pro-
viders (Rein, 2018).
The VHA does not provide coverage to veterans’
family members, but the DoD does through its TRI-
CARE program. TRICARE provides healthcare ser-
vices to current and retired military personnel and
their families. TRICARE offers a variety of plans with
various eligibility requirements and costs to the patient.
State and Local Governments
As discussed earlier, the Constitution gives states
primary responsibility for protecting the public’s
health. States have health-related agencies that deal
with health financing, aging, behavioral health,
environmental health, children and family services,
veterans, facility licensing and standards, provider
credentialing, and more. Although all states have
agencies that generally cover the same functions,
their structure, responsibilities, and lines of author-
ity vary greatly.
With the variation among state agencies, it is not
surprising that there are significant differences across
the states in terms of their approach to public health
and health services needs. All states have agencies to
28 Chapter 2 Policy and the Policymaking Process

run their Medicaid and CHIP programs, as well as
other state-specific health services programs. Local
health departments (LHDs) carry out the public
health functions of the state. Most commonly, LHDs
are formed by, managed by, and report to a local gov-
ernment, such as a county commission or local board
of health. This structure provides LHDs with signif-
icant latitude to interpret and implement state stat-
utes. In some states, the state and local governments
jointly oversee the LHD. LHDs may provide services
directly or, as is increasingly common, may contract
or provide support to others who perform the ser-
vices. The services provided by LHDs vary consid-
erably, though there is an emphasis on addressing
communicable diseases, environmental health, and
children’s health issues. LHDs often provide services
such as immunizations; infectious disease investi-
gations, epidemiology, and surveillance; food safety
and inspections; nutrition services; and environ-
mental health services. Some also provide diabetes
care, glaucoma screening, substance abuse treatment,
mental health services, and more (Turnock, 2016,
pp. 235–239). (A more detailed discussion of various
public health agencies is found in the Public Health
Institutions and Systems chapter.)
Interest Groups
Before leaving the discussion of policy, the policy-
making process, and the health bureaucracy, we must
say a few words about interest groups. Interest group
is a general term used for a wide variety of organi-
zations that are created around a particular issue or
population and have the goal of influencing policy
and educating others about their views and concerns
(Weissert & Weissert, 2002, p. 117). Interest groups
are different from most of the other stakeholders that
have been discussed because interest groups do not
have the power to make policy. Although members
of the executive and legislative branches of govern-
ment have a key role in determining which policies
are adopted, interest groups have the limited, but still
significant, role of trying to influence the decisions of
policymakers.
There are many types of interest groups, includ-
ing trade associations, think tanks, advocacy groups,
and lobbying firms. A few examples include the Phar-
maceutical Research and Manufacturers of America
(n.d), whose mission is to “conduct effective advocacy
for public policies that encourage discovery of import-
ant new medicines for patients by pharmaceutical and
biotechnology research companies” (Our Mission
section, para. 1); America’s Essential Hospitals (n.d),
which “champions excellence in health care for all,
regardless of social or economic circumstance, and
advances the work of hospitals and health systems
committed to ensuring access to care and optimal
health for America’s most vulnerable people” (Mission
and Service section, para. 2); the Center on Budget
and Policy Priorities (n.d.), which conducts nonpar-
tisan research and pursues “federal and state policies
designed both to reduce poverty and inequality and
to restore fiscal responsibility in equitable and effec-
tive ways” (About the Center section, para. 1); and the
Heritage Foundation (n.d.), which strives to “formu-
late and promote conservative public policies based
on the principles of free enterprise, limited govern-
ment, individual freedom, traditional American val-
ues, and a strong national defense” (About Heritage
section, para. 1).
Just as members of Congress do not have the
time or ability to become experts in every issue that
comes before them, the same is true for the average
citizen. Many people do not have the time and ability
to learn about all of the issues that are important to
them, develop proposals, rally public support for their
positions, monitor current activity, lobby to add or
remove issues from the agenda, and reach out to pol-
iticians who make policy decisions. Instead, interest
groups take on those duties: “Their job is to make the
case for their constituents before government, plying
the halls of Congress, the executive branch, the courts,
and the offices of other interest groups to provide a
linkage between citizens and government” (Weissert
& Weissert, 2002, p. 119)
Interest Group Powers
Interest groups do not have the power to pass laws.
However, they can influence policy in a variety of ways
throughout the policymaking process. For example,
recall all the steps it takes for a bill to become a law.
Anywhere along that continuum is an opportunity for
interest groups to make their case. The first step for
interest groups is often to commission research that
they use to support their position. This can be most
important in the early stages of policy development,
when politicians might have an open mind about var-
ious proposals (Weissert & Weissert, 2002, p. 131).
However, it does not matter how much information
a group has if it is not able to gain access to the deci-
sion makers. Even a few minutes with a politician may
be a few more minutes than the opposition has to
make its case directly to a decision maker (Weissert &
Weissert, 2002, p. 131). Finally, interest groups need
to develop a persuasive argument, a way to frame the
issue that convinces politicians to agree with their
view of a policy matter.
The Health Bureaucracy 29

Interest groups have a variety of tools at their dis-
posal when developing strategies for lobbying. They may
initiate a grassroots campaign, asking their members to
contact their representatives with a particular message.
Because interest group members are the voters with the
power to reelect public officials, strong grassroots cam-
paigns can be quite effective. Or, they may try a grass-
tops strategy and harness the influence of community
leaders and other prominent individuals (Weissert &
Weissert, 2002, p. 1319), or, they may join with other
interest groups to create coalitions and strengthen their
influence through numbers. Interest groups may start
a media campaign to align public sentiment with their
goals. Of course, providing candidates with money, often
through political action committees, is a time-honored
way to try to influence the outcome of policy debates.
Whatever methodology they use, interest groups
are an important part of the policymaking process.
According to Lindbloom (1980), interest groups are
an “indispensable” (p. 85) part of making policy deci-
sions. They provide a way to give a voice to their mem-
bers, who may not otherwise feel able to participate
effectively in the policymaking process.
▸ Conclusion
This journey through the policymaking process in the
United States was intended to provide you with an
understanding of policy and a context for your discus-
sions and analysis of health policy issues. It is vital that
you become familiar with both the nature of policy
and the institutions that make and influence policy.
As you have seen, the definition of policy is subject to
much debate, yet it is necessary to define what policy
means before attempting to engage in policy analysis.
We have also walked through the specific duties and
powers of the executive and legislative branches of the
federal government and included key points about
state-level policymaking as well. Finally, all policy
students must be aware of and understand the influ-
ence of interest groups. They have and use numerous
opportunities to influence the policymaking process,
and their strength and concerns must be accounted
for when analyzing policy issues. As you move further
into health policy study, use the information provided
in this overview to help you think about and frame
your own policy positions.
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https://www.washingtonpost.com/politics/congress-sends-massive-veterans-bill-to-trump-opening-door-to-more-private-health-care/2018/05/23/48e91220-5ea8-11e8-a4a4-c070ef53f315_story.html?noredirect=on&utm_term=.6661a7a87de9

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noredirect=on&utm_term=.4e8c427f5046
▸ Endnotes
a. Under Article 1 of the Constitution, Congress
has jurisdiction over the District of Columbia.
Both the Senate and the House have commit-
tees that oversee some governmental functions
of the District. The District elects two “shadow
senators” who are allowed to lobby Congress on
issues but who do not have voting rights. In terms
of representation, this places the District in a
position similar to other political bodies admin-
istered by the United States, such as Puerto Rico,
the U.S. Virgin Islands, and American Samoa.
The District’s shadow senators (and a shadow
representative in the House) were created by
the citizens of the District in anticipation of the
passage of the 1978 District of Columbia Voting
Rights amendment to the U.S. Constitution,
which would have granted the District the same
voting rights as the states. The amendment never
passed, but the District government has main-
tained the shadow positions nonetheless.
b. In addition to the 435 representatives, Puerto
Rico has a resident commissioner, and the
District of Columbia, Guam, the U.S. Virgin
Islands, and American Samoa each has a del-
egate who is allowed to sponsor legislation
and vote in committees, but may not vote on
the House floor. The citizens of the District of
Columbia also elect a nonvoting shadow repre-
sentative.
c. In circumstances where the president serves
2 years or less of the term of another president,
that president may hold office for 10 years.
Endnotes 31

https://www.washingtonpost.com/news/powerpost/wp/2016/11/09/trump-and-the-federal-workforce-five-key-issues/?noredirect=on&utm_term=.4e8c427f5046

https://www.washingtonpost.com/news/powerpost/wp/2016/11/09/trump-and-the-federal-workforce-five-key-issues/?noredirect=on&utm_term=.4e8c427f5046

https://www.washingtonpost.com/news/powerpost/wp/2016/11/09/trump-and-the-federal-workforce-five-key-issues/?noredirect=on&utm_term=.4e8c427f5046

https://www.washingtonpost.com/news/powerpost/wp/2016/11/09/trump-and-the-federal-workforce-five-key-issues/?noredirect=on&utm_term=.4e8c427f5046

CHAPTER 3
Law and the Legal System
LEARNING OBJECTIVES
By the end of this chapter you will be able to:
■ Describe the role of law in everyday life
■ Define the term “law”
■ Identify the various sources of law
■ Describe key features of the legal system
“It is perfectly proper to regard and study the law simply as a great anthropological document.”
—Former U.S. Supreme Court Justice Oliver Wendell Holmes (1899, p. 444).
▸ Introduction
The importance and complexity of law and the legal system in the United States cannot be overstated. Law’s importance stems from its
primary purpose: to function as the main tool with
which we organize ourselves as an advanced, demo-
cratic society. The complexity of law and the legal pro-
cess is a function of the multiple sources of law that
may apply to any one of the millions of actions and
interactions that occur daily in society, the division of
legal authority between the federal and state govern-
ments and among the branches within them, the lan-
guage the law and its players use to express themselves,
and more. For all its complexity, however, there is also
an undeniable pervasiveness and openness when it
comes to law. We are not left to wonder where it comes
from or how it is made. Generally speaking, we are
privy to lawmakers’ rationales for the laws they write
and to judges’ reasoning for their legal opinions, just
as we are generally privy to the process by which law
is made, and once made, laws are not hidden from us;
to the contrary, they are discussed in the media and
catalogued in books and online services available for
public consumption. (Indeed, one is expected to know
what the law is, since its violation can have potentially
severe consequences.) If you want to know more about
law than the average person, you can study it formally
in law and other schools, or you can consult with one
of the million or so lawyers in practice today. In other
words, although law is complicated, it is equally acces-
sible in a way that may not be clear at first blush.
Furthermore, beyond the law’s sheer pervasive-
ness lies another simplicity: as the quotation at the
outset of this chapter implies, the study of law is in
essence the study of human beings, particularly their
evolving customs, beliefs, and value systems. Because
law is the key tool with which we regulate social behav-
ior, it stands to reason that it also reflects our foremost
values and normative standards. Indeed, law “takes an
33
© Mary Terriberry/Shutterstock

understanding, a norm, an attitude, and hardens it into
muscle and bone” (Friedman, 2002, p. 29); however,
this is subject to change, for as our society evolves, so
too does our law. A relevant example of legal evolu-
tion can be seen in the updating of state public health
laws, which before the tragic events of September 11,
2001, and the subsequent anthrax scare had not been
updated in most states for over a century. Soon after
the 2001 attacks, however, many states, concerned
about new risks to the public’s health, reviewed and
overhauled these laws (Ziskin & Harris, 2007).
This chapter begins by briefly considering the role
law plays in everyday life, and then turns to defin-
ing law and describing its multiple sources. It then
discusses several key features of the legal system,
including the separation of powers among branches of
government, federalism (i.e., the separate sovereignty
and authority of the federal and state governments),
the role of courts, due process, and more.
For some, reading this chapter may bring to mind
a course you have taken or a book you have read on
civics or government. In this case, the chapter should
serve as a helpful refresher. For those of you new to the
study of law, consider the following pages a condensed
but important introduction to one of the most criti-
cal and influential aspects of the society in which you
live. In either event, this chapter is designed to better
position you to understand the law’s application to the
specific fields of health care and public health and to
digest the health policy and legal concepts discussed
in this textbook.
▸ The Role of Law
The law reaches into nearly every corner of American
life. Its impact is inescapable from the moment you
wake up to the time you go back to sleep at night (and
perhaps beyond, if your community has a curfew or
other means of controlling activity and noise after
dark). Have you ever stopped to think about the regu-
lations pertaining to the flammability of the mattress
you sleep on, or the safety of the water you shower
with, cook with, and drink? How about the consumer
protection laws regulating the quality of the food you
eat throughout the day, and the quality of the estab-
lishments that serve it? Then there are the laws per-
taining to the safety of the cars, buses, and subways
you travel in each day, and the traffic laws that control
their movement. You encounter laws daily pertaining
to the environment, property ownership, the work-
place, civil rights, copyright, energy, banking, and
much more. And these are just the laws implicated
by the relatively mundane actions of day-to-day life.
Steering into activities that are not as common—say,
international travel, or adoption, or being admitted to
a hospital—you encounter the law swiftly and notice-
ably. If you need final proof of the ubiquitous nature of
law, pick up today’s newspaper and count how many
stories have some sort of legal angle to them. Then do
it tomorrow and the next day. What you will almost
certainly find is that a great majority of the stories
concern law or legal process.
The law’s pervasive nature is no surprise, given
the important societal role we assign to it—namely, to
serve as the tool with which we govern our relation-
ships with one another, our government, and society at
large. A society as sprawling and complex as ours needs
formal, enforceable rules of law to provide a measure
of control (for example, the need to regulate entities or
actions that are potentially dangerous or invidious—a
polluting power plant, or acts of discrimination based
on race or gender). Furthermore, many people believe
that law should be used not just to organize and con-
trol the society in which we live, but to achieve a more
just society; in other words, according to this view, the
country’s key organizing principle should not simply
be grounded in law, but rather grounded in a legal sys-
tem designed to affirmatively produce outcomes based
on fairness, justice, and equality (Smith, 1991).
The main way the law governs the many kinds of
relationships in society is to recognize and establish
enforceable legal rights and responsibilities that guide
those relationships, and to create the institutions nec-
essary to define and enforce them. Take constitutional
law, for example. Constitutions are charters establish-
ing governments and delineating certain individual
and governmental rights and obligations. However,
constitutional provisions are triggered only when one
party to a relationship works for or on behalf of the gov-
ernment, whether federal or state. Thus, constitutional
law governs the relationship between individuals and
their government—not, for example, the relationship
between two private parties, even when one party’s
actions are clearly discriminatory or wrongful. Thus,
it takes affirmative action by a governmental actor
to trigger constitutional protections. So, although it
would be a violation of a public school student’s First
Amendment right to be forced by his principal to pray
in class, forced prayer in private schools passes consti-
tutional muster.
A legal right (constitutional or otherwise) denotes
a power or privilege that has been guaranteed to an
individual under the law, not merely something that
is claimed as an interest or something that is a matter
of governmental discretion. Conceptually, legal rights
derive from the fact that the government sometimes
creates what are called individual “property rights”—a
34 Chapter 3 Law and the Legal System

generic term referring to an entitlement to personal
or real property—for specified groups of persons
(Reich, 1964). Importantly, legal rights also presup-
pose that their enforcement can be achieved through
public institutions, including state and federal courts,
because a person’s ability to secure a remedy when a
legal right is denied, reduced, or terminated goes to the
very heart of what it means to be “entitled” to some-
thing. Indeed, whether particular healthcare benefits
rise to the level of being a legal “right” and whether
the healthcare right can be enforced in court are two
of the most fundamental legal questions in the area
of healthcare law. For example, the federal Medicare
program for the aged and disabled confers on eligible
individuals not only the right to healthcare services,
but also the ability to enforce their right to benefits
when program violations occur.
▸ The Definition and Sources
of Law
Defining “Law”
Although many legal scholars agree on the general
function of law in society, there is far less consensus
on how to define “the law.” As with many legal terms,
there are several plausible interpretations of what is
meant by the law, and thus there is no single way to
correctly define it. For example, Black’s Law Dictionary
includes the following definitions in its primary entry:
That which is laid down, ordained, or estab-
lished. A rule or method according to which
phenomena or actions co-exist or follow each
other. Law, in its generic sense, is a body of
rules of action or conduct prescribed by con-
trolling authority, and having binding legal
force. That which must be obeyed and fol-
lowed by citizens subject to sanctions or legal
consequences is a law. (Garner, 2014, p. 884)
However, even these commonly accepted defi-
nitions are not entirely satisfactory, because “a body
of rules” that “must be obeyed” in the face of “sanc-
tions or legal consequences” necessarily envisions a
process by which the rules are created, disseminated,
enforced, violated, disputed, interpreted, applied,
revised, and so on. Considered in this way, “the law”
essentially amounts to a “legal system”—and a system,
by definition, entails regularly interacting or interde-
pendent parts and subparts coming together to form a
functional, unified whole. As you read this text, think
of “the law” not just as words on a page (e.g., codified
statutes or regulations), but as the many interacting
parts that are involved in drafting those words in the
first place, and in bringing them to life once they have
been enacted as laws. Note that this broad conceptu-
alization of law as a system squares nicely with the
primary purpose of law described previously, because
there must, by necessity, be a sizeable system in place
if law is going to carry out its role as the primary orga-
nizing tool in society. This broad definition of law also
encompasses key legal doctrines, like separation of
powers and federalism, described later in this chapter.
Sources of Law
Regardless of the breadth of the definition attached
to the term law, at the core of the nation’s expansive
legal system lies a body of enforceable written rules
meant to maintain order, define the outer limits of our
interactions with one another and with our govern-
ments, and delineate legal rights and responsibilities.
These rules derive from several sources, which collec-
tively are called primary sources of law. The sources
of primary legal authority include constitutions, stat-
utes, regulations, and common (i.e., judge-made) law.
There are also secondary sources of law, which are not
laws in the technical sense, but rather are a collection
of treatises, law review articles, reports, legal encyclo-
pedias, and more that analyze, interpret, and critique
primary laws. This section discusses each of the four
types of primary sources of law.
Constitutions
A constitution is a charter that both establishes a gov-
ernment and delineates fundamental rights and obli-
gations of that government and of individuals who fall
within the territory covered by the constitution. In this
country, there is a federal constitution and separate
constitutions in each of the 50 states. The Constitution
of the United States, completed in 1787 and subse-
quently ratified in each of the original 13 states, took
effect in 1789. It provided for a federal union of sov-
ereign states, and a federal government divided into
three branches (legislative, executive, and judicial) to
operate the union. This governmental structure was
not easily agreed upon. Prior to the creation of the fed-
eral Constitution, the colonies of the American War
of Independence first adopted, in 1777, the Articles
of Confederation, which represented the first formal
governing document of the United States and which
were ratified in 1781. However, a defining feature of
the Articles was a weak national government; fairly
quickly, a movement for a stronger central govern-
ment took hold, the colonies elected to throw out their
original plan, and the Constitutional Convention—
and with it the Constitution—was born.
The Definition and Sources of Law 35

The federal Constitution is rather short and, for
the most part, quite general. One explanation for this
is that the framers of the Constitution viewed it as a
“document for the ages” that needed to include endur-
ing principles to serve a growing, evolving society that
has certainly proved to be more complex than it was at
the time of the Constitution’s ratification. In the words
of former U.S. Supreme Court Justice Robert Jackson,
the Constitution is a compilation of “majestic general-
ities” that collect meaning over a span of many years
(Fay v. New York, 1947).
But the fact that some of the most important con-
stitutional provisions are written in broad terms leads
to many thorny legal controversies, because there are
many competing approaches and theories as to how
courts should interpret ambiguous constitutional
phrases. Broadly speaking, the leading approaches
to constitutional interpretation include the “living
constitution,” the “moral constitution,” “originalism,”
and “strict constructionism.” The living constitu-
tion model reflects a belief that the broadly written
Constitution should be interpreted to reflect current
moral, political, and cultural values in society, not the
values that were predominant at the time of the Con-
stitution’s ratification. Under this view, the meaning
of the Constitution is not fixed, but instead evolves
along with society. Moral constitutionalists infuse
their interpretation of constitutional law with princi-
ples of moral philosophy. Originalism, technically, is
an umbrella term referring to a small group of con-
stitutional interpretation theories, all of which share
a common belief that constitutional provisions have a
fixed and knowable meaning. For example, “original
intent,” one well-known theory under the originalism
umbrella, adheres to the position that constitutional
interpretation should be consistent with the intent
of the Constitution’s original drafters. Finally, strict
constructionists limit their interpretation to the Con-
stitution’s actual words and phrases, and decline to
consider contextual factors such as shifts in societal
values or the commentaries or intent of the framers.
The most well-known interpretational controversy in
the area of health pertains to the breadth and reach
of the due process clause of the federal Constitution’s
14th Amendment, which prohibits states from depriv-
ing “any person of life, liberty, or property, without
due process of law” (U.S. Const. amend. XIV, § 1). This
provision rests at the heart of the Supreme Court’s
“right to privacy” jurisprudence, including the right to
obtain an abortion. For readers interested in theories
of constitutional interpretation, there is a vast body of
literature at your disposal (Baker, 2004; Fallon, 1999).
One of the general principles underpinning the
Constitution is that citizens should not be subjected to
arbitrary and oppressive government. Given that the
Constitution was drafted on the heels of the Revolu-
tionary War, this is no surprise. But one consequence
of the prevailing mood of the framers toward the
reach of a national government is that they drafted the
Constitution with an eye toward limiting federal gov-
ernment, as opposed to viewing the Constitution as a
vehicle for extending benefits to the public—in other
words, that “the men who wrote the Bill of Rights were
not concerned that government might do too little for
the people but that it might do too much to them”
(Jackson v. City of Joliet, 1983). This logic helps explain
why several key constitutional provisions were drafted
in “negative” terms—the First Amendment prohibits
government from abridging free speech, the Fourth
Amendment makes unreasonable searches illegal—
rather than as conferring positive rights, like a gener-
alized right to receive healthcare services. At the same
time, the First and Fourth Amendments, along with
eight others, make up the Bill of Rights, a series of
important, specifically guaranteed rights in the Con-
stitution the framers believed to be inalienable.b
In addition to the federal Constitution, each state
has its own constitution. All state constitutions are like
the federal one in that they provide for the organiza-
tional structure of the particular state’s government,
and all contain some measure of a state bill of rights.
Here the similarities can end, however. Although state
constitutions cannot limit or take away rights con-
ferred by the U.S. Constitution (or by federal statutes),
some state constitutions go further than federal law in
conferring rights or extending protections. For exam-
ple, under current U.S. Supreme Court case law, the
death penalty does not always violate the federal Con-
stitution, but the Massachusetts Supreme Court has
ruled that the death penalty is prohibited under the
state’s constitution in every instance. Maryland’s con-
stitution requires that a jury be unanimous in order
to convict a person of a crime, a standard that differs
from federal criminal law. Furthermore, state consti-
tutions are amended much more easily and frequently
than is their federal counterpart. While state constitu-
tions have been amended, on average, 150 times per
state (Dinan, 2018, p. 23), the language of the federal
Constitution has not been dramatically altered since
its inception; there have been just 27 amendments,
and the 10 that make up the Bill of Rights were all
added by 1791.
Statutes
Statutes are laws written by legislative bodies at all
levels of government (federal, state, county, city) that,
generally speaking, command or prohibit something.
36 Chapter 3 Law and the Legal System

It is the fact of their being legislatively created that
sets them apart from other sources of law, because
legislatures are understood as creating laws that are
forward-looking and apply to large numbers of peo-
ple. Indeed, the two hallmarks of statutes are their
prospectivity and generality. These hallmarks result
mainly from the fact that legislatures are in the “reg-
ulation business” across an enormous array of issues,
and as a result, legislators often lack both the time
and the substantive expertise to regulate other than in
broad fashion.
Because statutes tend to be written as broad policy
statements (and because words on a page can never
communicate intent with absolute accuracy), there
are few statutes that are utterly unambiguous. This,
coupled with the fact that our evolving society con-
tinuously presents situations that may not have been
foreseeable at the time a statute was written, results
in the need for courts to interpret and apply general
statutes to millions of specific legal cases or contro-
versies. This practice is called “statutory construction.”
Although it is a tenet of the separation of powers doc-
trine (discussed later under Key Features of the Legal
System) that legislatures represent the law-making
branch of government and the judiciary’s role is to
interpret law, it is commonly understood that judges
and courts “make” law as well through statutory con-
struction, because the continual interpretation and
application of broad policy statements (i.e., statutes)
can put a “gloss” on the original product, potentially
altering its meaning over time.
As discussed more fully later in the section on
federalism, state legislatures have greater ability than
does Congress to use statutes to regulate across a broad
range of issues, pursuant to states’ plenary authority
under the Constitution. For instance, the number of
state statutes regarding population health and safety
(e.g., disease control and prevention, the creation
of public health agencies, the ability of governors to
classify public health emergencies) far exceeds con-
gressional output on the same topic. Notwithstanding
states’ broader regulatory power, however, federal stat-
utes have primacy over state statutes.
Administrative Regulations
The fact that statutes are written in broad generali-
ties has another consequence beyond their need to
be interpreted and applied in vast numbers of unique
instances: specific regulations must be written to assist
with the implementation of statutory directives and
to promote statutes’ underlying policy goals. This is
where administrative agencies of the executive branch
of government come in. Because these federal and
state agencies—the U.S. Department of Health and
Human Services, the U.S. Department of Labor, the
California Department of Social Services, the Wiscon-
sin Department of Commerce, and so on—are orga-
nized and created to deal with specific policy subject
matters, they have more time and expertise than Con-
gress or state legislatures have to enforce statutes and
promulgate regulations, rules, and orders necessary to
carry out statutory prerogatives. It is important to note
that assuming the process for creating the regulations
was itself legal, and provided that the regulations do
not stray beyond the intent of the enacted statute, reg-
ulations have the full force of law.
Administrative law is crucial in the area of health
policy and law.c For example, consider the Medicaid
program, which functions primarily as a health insur-
ance program for low-income individuals. The Medic-
aid statute embodies Congress’s intentions in passing
the law, including standards pertaining to program
eligibility, benefits, and payments to participating
healthcare providers. Yet there are literally thousands
of administrative regulations and rules pertaining to
Medicaid, which over the past 50 years have become
the real battleground over the stability and scope of the
program. In a very real sense, the Medicaid regulations
passed by the federal Department of Health and Human
Services and state-level agencies are what bring the
program to life and give it vitality. This “operationaliz-
ing” function of administrative law can be seen across
a wide spectrum of important health issues, including
the reporting of infectious diseases, the development
of sanitation standards, and the enforcement of envi-
ronmental laws (Mensah et al., 2004). In order to be
lawful, regulations must be proposed and established
in a way that conforms to the requirements of the
federal Administrative Procedure Act of 1946 (APA),
which provides procedural restrictions for agency rule
making and adjudication. Compared to state admin-
istrative procedure acts, which tend to be technical
and detailed, the APA is broad and sweeping, thus
relatively more ambiguous and open to various inter-
pretations by federal courts.d Once Congress delegates
rule- making authority to an executive branch agency
via a statute (known as the “enabling statute”), the APA
dictates how the agency must go about promulgating
specific rules and regulations, unless the statute itself
specifies the procedure an agency must follow. If the
enabling statute dictates a formal rule-making process,
the APA requires the agency to follow cumbersome
procedures, and it can adopt rules only after a trial-
like hearing on the proposed rule. If Congress does
not specify in an enabling statute how an agency must
adopt rules, the APA permits the agency to follow a
more informal rule-making process. This requires the
The Definition and Sources of Law 37

agency to publish the proposed rule in the Federal Reg-
ister (the official daily publication for rules, proposed
rules, and notices of federal agencies) and provide an
opportunity for the public to comment on the pro-
posed rule. The agency must take the comments under
consideration (though it need not revise the proposed
rule in response to them), and once it settles on a final
rule, it must be published in the Code of Federal Reg-
ulations (which houses permanent federal regulations
under 50 separate titles representing broad areas sub-
ject to federal oversight).
In delegating authority to an agency through an
enabling statute, Congress must provide an “intelligi-
ble principle” that the agency can (and must) follow.
That said, the amount of direction and discretion given
to agencies varies widely. For example, the enabling
statute for the Occupational Health and Safety Admin-
istration provides broad discretion by delegating the
authority to create and enforce workplace safety stan-
dards (Occupational Health and Safety Act of 1970).
Contrast this with the Americans With Disabilities
Act, which has very specific provisions and does not
allow agencies much discretion when implementing
and enforcing the statutory language.
In addition to the power of rule making, Congress
may also delegate adjudicatory and enforcement pow-
ers to administrative agencies. Adjudicatory power
refers to claims of public rights, which are claims that
involve private persons as one party and the govern-
ment as the other party (excluding criminal cases).
Congress may set up a court, known as an administra-
tive court, within an agency to adjudicate these claims.
Because these courts are located in the executive,
rather than judicial, branch of government, they are
not subject to the same rules and procedures as tradi-
tional courts, although they still must provide for the
rights and protections prescribed by the Bill of Rights
(e.g., the right to legal counsel). Administrative hear-
ings are often much less formal than judicial trials:
there are no juries, and although some evidence may
be gathered through witness testimony, the majority
of evidence derives from written reports. Decisions
by administrative law judges (known as ALJs) often
do not represent the final word on the matter being
adjudicated, as these decisions are subject to approval
or rejection by the agency’s lead official or by a tra-
ditional (judicial branch) federal court. At the same
time, federal courts generally apply a deferential stan-
dard of review to administrative decisions, reviewing
only to see whether an agency has acted in an “arbi-
trary and capricious” manner.
The third type of authority granted to agencies
by Congress is that of enforcement. As this author-
ity already inherently resides in the executive branch
under the federal Constitution, Congress uses its
power to specify which agencies have authority to
enforce certain statutes and substantive areas of law.
Once Congress grants power to agencies to pro-
mulgate rules, adjudicate claims, and enforce stat-
ues, its ability to constrain agency action is limited.
Because agencies are located in the executive branch
and thus are under the control of the president, Con-
gress is limited to passing a new statute overturning
the questioned agency action or investigating agency
action for impropriety.
Common Law
In each of the prior discussions about constitutions,
statutes, and administrative regulations, we pointed
out the generality and ambiguity of much of law, and
the corresponding responsibility of courts to interpret
and apply law to specific cases. It is via the common
law—essay-like opinions written by appellate courts
articulating the bases for their decisions in individual
cases—that courts carry out this responsibility. Com-
mon law is also referred to as case law, judge-made
law, or decisional law.
Common law is central to legal systems in many
countries, particularly those that were territories or
colonies of England, which is how the United States
came to rely on common law as part of its legal sys-
tem. Both historically and in modern times, case law
is premised on the traditions and customs of society,
the idea being that courts could continuously (and
relatively efficiently, compared to the legislative pro-
cess) interpret and apply law in such a way as to match
the values of a society undergoing constant evolution.
At the same time, the common law is heavily influ-
enced by legal precedent and the doctrine of stare
decisis, which refers to the legal principle that prior
case law decisions should be accorded great deference
and should not be frequently overturned. The impor-
tance and function of stare decisis in American law is
discussed later in the section detailing the role courts
play in maintaining stability in the law.
Although courts are expected to overturn their
own prior decisions only in rare circumstances and
lower courts can never overturn decisions by higher
courts that have jurisdiction over them, legislatures
can modify or even overturn common law decisions
interpreting statutes and regulations. Imagine that the
U.S. Supreme Court interpreted a federal civil rights
statute as protecting individuals from intentional acts
of race discrimination, but not from conduct that
has the unintended effect of discriminating against
racial minorities. If Congress disagreed with the
court’s interpretation of the statute, it could effectively
38 Chapter 3 Law and the Legal System

overturn the court’s decision by amending the statute
to make it clear that the law was intended to prohibit
intentional discrimination and presumably neutral
acts that nonetheless resulted in unintended discrimi-
nation. However, because the judicial branch has final
authority to determine whether statutes violate the
federal Constitution, Congress would be powerless to
overturn a federal court decision that ruled the same
civil rights statute unconstitutional.
Notice the “checks and balances” at play in this
example, with one branch of government acting as a
restraint on another. In the next section, we discuss the
separation of powers doctrine—including checks and
balances—and other key features of the legal system.
But first, see TABLE 3-1, which provides a summary of
the sources of law.
▸ Key Features of the
Legal System
Recall the earlier description of the law as something
more than just words on a page, something more than
statutes and constitutional provisions. Although the
laws themselves are obviously critical, they are just
one component of a complex, interacting legal system
that creates the laws in the first instance and brings
them to life after they hit the pages of legal code books,
texts, and treatises.
All legal systems rest on unique principles, tradi-
tions, and customs. This section describes a handful
of the most important features and principles of the
U.S. legal system, including the separation of powers
doctrine, federalism, the role and structure of federal
and state courts, judicial review, due process, and con-
stitutional standards of review.
Separation of Powers
This country’s government, both federal and state, has
an underpinning structure of three independent and
equally powerful branches, a fact that sets it apart from
parliamentary systems of government—such as those
found in Canada, Germany, the United Kingdom,
and many other countries—in which the legislature
appoints the executive. The legal doctrine that sup-
ports the arrangement of shared governance among
multiple branches is the separation of powers doctrine.
This doctrine is considered one of the most important
Key Features of the Legal System 39
TABLE 3-1 Summary of the Primary Sources of American Law
Source of Law Key Points
Constitutions ■ Establish governments and delineate fundamental rights and obligations of government
and individuals.
■ There is a federal constitution and separate constitutions in each state.
■ The federal constitution restrains government more than it confers individual rights;
however, the Bill of Rights specifically guarantees several important individual rights.
■ The Supreme Court has the final word on the constitutionality of laws created by the
political branches of government.
Statutes ■ Created by legislatures at all levels of government.
■ Two hallmarks: prospectivity and generality.
■ As broad policy statements, statutes are often ambiguous as applied to specific cases
or controversies, requiring courts to interpret them through the practice of statutory
construction.
■ State legislatures can use statutes to regulate across a broader range of issues than can
Congress; however, federal statutes have primacy over conflicting state statutes.
Regulations ■ Created by executive branch administrative agencies to implement statutes and clarify
their ambiguities.
■ Play a particularly critical role in health policy and law.
Common law ■ Court opinions interpreting and applying law to specific cases.
■ Also referred to as case law, judge-made law, or decisional law.
■ Based on the traditions and customs of society, yet heavily influenced by legal precedent
and the doctrine of stare decisis.

aspects of both federal and state constitutional design.
The framers of the U.S. Constitution were well aware
that nothing was more likely to foster tyrannical gov-
ernment than the concentration of governing powers
in one person or political party. To guard against a
concentration of political power, the framers did two
related things: they divided governmental powers and
responsibilities among separate, coequal branches,
and they structured the elections of officials for the
two political branches of government (legislative and
executive) so that they would take place at different
intervals and through different mechanisms (e.g., the
president is elected through the electoral college sys-
tem, whereas members of Congress are not).
Inherent in the separation of powers doctrine
is the important concept of checks and balances.
“Checks” refers to the ability and responsibility of one
branch of government to closely monitor the actions
of the other two, including when one branch grasps
at an amount of power not envisioned by the Con-
stitution. The “balance” at work in the separation of
powers framework prevents one branch from exerting
power in an area of responsibility that is the province
of another branch.
The constitutional doctrine of separation of pow-
ers represents, in the words of one legal scholar, an
“invitation to struggle for the privilege” of governing
the country (Corwin, 1957, p. 171). Alexis de Tocque-
ville, a French philosopher and political theorist who
studied American government in the 1830s, viewed the
concept of checks and balances in much starker terms:
The president, who exercises a limited power,
may err without causing great mischief in
the state. Congress may decide amiss with-
out destroying the union, because the elec-
toral body in which the Congress originates
may cause it to retract its decision by chang-
ing its members. But if the Supreme Court is
ever composed of imprudent or bad men, the
union may be plunged into anarchy or civil
war. (de Tocqueville, 1835, p. 152)
For example, a fairly common separation of
powers debate between Congress and a president
concerns the nation’s soaring debt and the appropri-
ateness of raising the debt ceiling. Some policymak-
ers (and many presidents) maintain that the president
can act unilaterally to raise the debt ceiling and allow
the federal government to borrow more money, while
others argue that such a move is solely within the
purview of Congress and beyond the scope of pres-
idential power.
Throughout this text, there are health policy and
law questions that distinctly highlight our government’s
divided powers. For instance, how will the struggle
between the executive branch and some members of
Congress over implementation of the Affordable Care
Act (ACA)—the former attempting to thwart imple-
mentation through fiscal, policy, and legal channels,
while those in Congress who supported the ACA aim
to keep the ACA functioning as fully and efficiently as
possible—play out? And how has the Supreme Court
applied its constitutional right to privacy jurispru-
dence to the matter of abortion in response to federal
and state legislative enactments? As you consider these
and other health policy and law questions from a sep-
aration of powers angle, consider the peculiar roles of
each branch of government, taking into account their
duties, powers, and limitations. Through this prism,
continually reflect on which governmental body is
best equipped to effectively respond to health policy
problems.e
Federalism: Allocation of Federal
and State Legal Authority
In the legal system, the powers to govern, make and
apply law, and effect policy choices are not just appor-
tioned among three governmental branches at both the
federal and state levels; they are also divided between
the federal government and the governments of the
various states. This division of authority—which also
plays a key role in the development of health policies
and laws—is referred to as federalism. Like the separa-
tion of powers doctrine, federalism derives from the
U.S. Constitution.
Under the Constitution, the federal government
is one of limited powers, while the states more or less
retain all powers not expressly given to the federal
government. In essence, this was the deal consented
to by the states at the time our federal republic was
formed: they agreed to surrender certain enumerated
powers (like foreign affairs) to the federal government
in exchange for retaining many aspects of sovereignty.
The Constitution’s 10th Amendment states that
“the powers not delegated to the United States by the
Constitution . . . are reserved to the States respec-
tively.” For example, because the Constitution does
not explicitly define the protection and promotion of
the public’s health as a power of the federal govern-
ment, public health powers are primarily held by the
states. (In fact, compared to the federal government,
the states handle the vast majority of all legal matters
in this country. Consider just a sampling of typical
legal affairs overseen by state government: marriages,
40 Chapter 3 Law and the Legal System

divorces, and adoptions; law enforcement and crim-
inal trials; schooling; driving, hunting, medical, and
many other licenses; consumer protection; and much
more [Adelson, 2003, pp. 481–488]. Furthermore, the
vast majority of all litigation that takes place occurs
in state, rather than federal, courts [Refo, 2004, p. 3].)
As a result, all states regulate the area of public health
through what are known as their “police powers,” which
allow state and local governments to (among other
things) legislate to protect the common good. Exam-
ples of the kinds of laws passed under this authority
include childhood immunization standards, infectious
disease data collection mandates, and environmental
hazard regulations. Moreover, under the 10th Amend-
ment, states historically have had the power to regulate
the practice of medicine and the licensing of hospitals
and other healthcare institutions.
Recall, however, that the federal government
also plays a role in regulating health care and public
health. The national government’s enumerated powers
include the ability to tax, spend, and regulate interstate
commerce, all of which have been utilized in ways
to improve health care and promote public health.
For example, Congress has used its taxing power to
increase the cost of cigarettes (in the hopes of driv-
ing down the number of smokers) and to generate
funds for programs such as Medicare, and congres-
sional spending powers are the legal cornerstone for
federal health programs like Medicaid. Furthermore,
the sharing of power under the 10th Amendment
notwithstanding, the Constitution’s supremacy clause
declares that federal laws—the Constitution, statutes,
and treaties—are the “supreme” law of the land, and
thus preempt state laws that conflict with them (U.S.
Const. art. VI, para. 2).
While federalism is built solidly into the nation’s
political branches through separate federal and state
legislatures and executives, it is also on display in the
structure of U.S. courts. There are both federal and
state court systems, and each has unique authority and
jurisdiction: federal courts are limited to ruling only
in certain kinds of cases, including those involving
federal constitutional or statutory law, those in which
the United States is a party to the lawsuit, and those
specified by statutory law; state courts, by contrast,
have jurisdiction to hear just about any case (unless
explicitly precluded from doing so by federal statute),
including those over which federal courts also have
jurisdiction. State court jurisdiction includes cases
implicating state statutory and regulatory law, the state
constitution, and the U.S. Constitution.
Over the years, defining the boundaries of feder-
alism (i.e., defining the federal government’s sphere
of authority and determining the scope of state sov-
ereignty) has been a contentious legal and political
issue. At the dawn of the country’s independence,
after the colonies scrapped the Articles of Confeder-
ation in favor of a stronger central government, the
Supreme Court decided federalism cases with a nod
toward expansive national powers (much to the dislike
of some states). Two famous cases make the point. In
the 1819 case of McCulloch v. Maryland, the Supreme
Court enhanced the power of the U.S. government by
establishing the principle that federal governmental
powers are not strictly limited to those expressly pro-
vided for in the Constitution. At issue in the case was
whether Congress had the power to charter a national
bank to help the federal government shoulder war-
time debt. In 1824, the court for the first time had the
opportunity to review the Constitution’s commerce
clause (which grants Congress the authority to reg-
ulate interstate commerce) in the case of Gibbons v.
Ogden (1824), which resulted from a decision by the
state of New York to grant a monopoly to a steam-
boat operator for a ferry between New York and New
Jersey. Again, the court ruled broadly in favor of the
federal government, stating that the commerce clause
reserved exclusively to Congress the power to regulate
interstate navigation.
By the mid-1800s, however, this approach to
defining the relative power of the federal and state gov-
ernments gave way to one that was more deferential
to states and more willing to balance their sovereign
interests against the interests of the federal govern-
ment. This approach, in turn, lost ground during the
New Deal and civil rights eras, both of which were
marked by an acceptance of federal authority to pro-
vide social services and regulate the economy. The
arrival of Ronald Reagan’s presidency in 1981 marked
yet another turning point in the evolution of federal-
ism. For 8 years, the Reagan administration acted to
restrict national authority over the states, a process that
took on even more force after the Republican Party
took control of Congress in the mid-1990s. Indeed,
since the early 1980s, a defining feature of federalism
has been the purposeful devolution of authority and
governance over social and economic policy from the
federal government to state legislators and regulators.
The Role of Courts
Elsewhere, we have discussed the structure and pow-
ers of two of the political branches of government: the
legislative and executive branches. The third branch is
that of the judiciary, made up of justices, judges, mag-
istrates, and other “adjudicators” in two separate court
Key Features of the Legal System 41

systems—one federal, one state. Although the fed-
eral and state court systems have critically distinctive
authority, they do not look very different structurally.
The federal court system has three tiers, with cases
proceeding from the lowest-level court (a trial court)
to two separate, higher-level courts (appellate courts).
Federal trial courts are called district courts, and they
exist in varying numbers in each state, with the size of
the state determining the actual number of “districts,”
and thus the number of federal trial courts. In total,
there are nearly 100 federal district courts. After a
district court renders a decision, the losing party to
a lawsuit is entitled to appeal the decision to a federal
circuit court of appeals. There are 13 U.S. circuit courts
of appeals—12 with jurisdiction over designated mul-
tistate geographic regions, or “circuits,” and a court of
appeals for the federal circuit (residing in Washington,
DC), which has nationwide appellate jurisdiction over
certain kinds of cases, such as patent and international
trade disputes. For many individuals, losing a case in a
federal circuit court represents the end of the line for
their case, since litigants have no entitlement to have
their case heard by the U.S. Supreme Court, the high-
est court in the country. Although parties have a right
to petition the Supreme Court to hear their case, at
least four of the nine justices on the court must agree
to grant the petition. Although the Supreme Court is
undeniably the most important court in the country
in terms of its authority, it by no means renders the
most decisions. Out of approximately 8,000 petitions
annually, the Supreme Court typically accepts only 70
to 80, whereas the 13 circuit courts collectively decide
approximately 61,000 cases each year. This fact is
more than trivial; it effectively means that in the huge
majority of federal cases, lower appellate courts, and
not the Supreme Court, have final say over the scope
and meaning of federal law.
As mentioned, each state also has its own court
system, most of which are organized like the federal
system: one trial court, followed by two separate appel-
late courts (generally termed “[name of state] court of
appeals” and “[name of state] supreme court”). How-
ever, some state systems provide for only one appellate
court. State systems also tend to include courts that are
“inferior” even to their general trial courts; these han-
dle relatively minor disputes (think of the small claims
courts frequently shown on daytime television). Fur-
thermore, state trial courts are sometimes divided by
specialty, so that certain courts hear cases that involve
only family matters, juvenile matters, and the like.
Within the federal and state court system hier-
archy, appellate courts have two powers unavailable
to trial courts: reviewing lower court decisions to
determine whether there were errors of law made
during the trial that necessitate a new one, and estab-
lishing legal precedents that lower courts are bound
to follow. But appellate courts lack trial courts’ pow-
ers to actually conduct trials, including empanelling
juries, hearing testimony from witnesses, reviewing
evidence, and the like. Instead, appellate reviews are
generally limited to the written record created at trial
by the lower court.
Adjudication refers to the legal process of resolv-
ing disputes. It is in the context of resolving specific
legal disputes that the judiciary interprets and applies
the law, and also indirectly “makes” law under its
common law authority. The results of adjudication are
the common law decisions described earlier. Because
U.S. courts are generally not permitted to issue advi-
sory opinions, courts in this country effectively only
act in response to a specific “case or controversy” that
is brought to them by parties to a lawsuit. (Where
permitted, advisory opinions are released by courts
not in response to a particular legal dispute, but in
response to a request from another branch of govern-
ment regarding the interpretation or permissibility of
a particular law. Federal courts are bound from issu-
ing advisory opinions because the Supreme Court has
ruled that constitutional provisions establishing the
federal courts prevent them from reviewing hypothet-
ical or moot disputes. Although a couple exceptions
exist, state courts are likewise prohibited from issuing
advisory opinions.) This limitation essentially means
that in order for a court to rule in a particular case, an
individual initiating a lawsuit must assert an enforce-
able legal right, a measurable violation of that right,
actual damage or harm, and a court-fashioned remedy
that could appropriately respond to the lawsuit.
Courts play a vital role in the legal system. This
role stems in large part from their responsibility to
determine what, ultimately, the Constitution means,
permits, and prohibits. In discharging this responsi-
bility, courts are asked to protect and enforce indi-
vidual legal rights, determine whether the political
branches of government have acted in a way that vio-
lates the Constitution, and maintain stability in the
law through the application of legal precedent. The
judicial branch is viewed as uniquely able to fulfill
these key responsibilities, at least at the federal level,
because it is the branch of government most insu-
lated (theoretically) from politics: federal judges are
appointed, not elected, and granted life tenure under
the Constitution to (theoretically) shield them from
political influences that might otherwise interfere
with their impartiality.f Most state judges, however,
are now subject to popular election, either at the time
42 Chapter 3 Law and the Legal System

of initial selection or subsequently, when it is deter-
mined whether they will be retained as judges (Bren-
nan Center for Justice, 2015).g
Enforcing Legal Rights
As described earlier, two main functions of the legal
system are to establish legal rights and to create insti-
tutions to enforce those rights. The primary enforc-
ers of individual legal rights, and those in the best
position to create remedies for their violation, are
the courts. For example, the federal courts (and the
Supreme Court in particular) were critical to the suc-
cess of the civil rights movement, during which time
federal judges expansively interpreted civil rights laws
and maintained close oversight of the implementa-
tion of their rulings. At the same time, however, the
Supreme Court has not often been at the forefront of
advancing individual rights. Certainly, there have been
times when the court has played an enormous role in
advancing societal expectations with respect to indi-
vidual equality—Brown v. Board of Education (1954)
being the most obvious example—but this decision,
and a few others, are actually quite anomalous, and the
court has been more a follower of evolving attitudes
and expectations.
Among the most important rights courts are
expected to uphold and enforce is the constitutional
right to due process, which protects individuals from
arbitrary and unfair treatment at the hands of govern-
ment. Both the 5th and 14th Amendments to the Con-
stitution make clear that no person can be deprived
of “life, liberty, or property, without due process of
law,” with the 5th Amendment applying to the federal
government and the 14th applying to the states. An
important component of due process is the principle
that when government establishes a legal right or enti-
tlement for individuals, it may not then decide to deny
the right or entitlement unfairly.
When courts consider due process claims, they
are often thought of as reviewing how laws operate
and why laws have been established in the first place.
This results from the fact that the due process clause
has been interpreted by the Supreme Court as includ-
ing procedural due process (the “how”) and substan-
tive due process (the “why”). Procedural due process
requires that laws be enacted and applied fairly and
equitably, including procedural fairness when individ-
uals challenge government infringements on their life,
liberty, or property. Thus, due process requirements
might be triggered if a law is too vague or is applied
unevenly, if government threatens to withdraw a pre-
viously granted license, or if an individual’s public
benefits are withheld. For example, before a physician
can lose his state-granted license to practice medicine,
the state must provide the physician advance notice
of the termination and a formal hearing before an
impartial examiner with all the usual legal trappings
(right to legal representation, right to present evidence
in one’s defense, right to appeal the examiner’s deci-
sion, etc.). Similarly, Medicaid beneficiaries must be
given notice of, and an opportunity to challenge, ben-
efit coverage denials made by a managed care com-
pany participating in the Medicaid program. And the
courts’ most well-known jurisprudence in the area of
health-related due process rights concerns abortion,
specifically whether federal and state laws impermis-
sibly infringe on the right to terminate a pregnancy,
which is part of the right to “liberty” under the due
process clause.
But that clause has been interpreted by courts to
require more than just procedural fairness when a law
deprives an individual of life, liberty, or property; it
also requires that government provide a sound reason
for having invaded personal freedoms in the first place.
This form of due process, which is termed substantive
due process, serves as a proscription against arbitrary
government activity. For instance, when states have
been unable to adequately explain the reasoning behind
statutes requiring involuntary confinement of mentally
ill individuals who were not dangerous to themselves
or others, courts ruled the laws unconstitutional on
substantive due process grounds. Substantive due pro-
cess is unquestionably more controversial than its pro-
cedural counterpart, because many critics argue that
the former gives courts unrestrained power to inval-
idate, on constitutional grounds, government actions
with which they simply disagree. In other words, some
view this form of due process “as a potentially limitless
warrant for judges to impose their personal values on
the Constitution” (Lazarus, 1999, p. 474).
Reviewing the Actions of the Political
Branches
An important piece of the separation of powers puz-
zle, and one that grants the courts wide authority to
enforce individual legal rights in this country, is the
doctrine of judicial review. Judicial review refers to the
power of the courts to declare laws unconstitutional
and to determine whether the actions of the legislative
and executive branches of government are lawful. The
theory behind judicial review is that, as the branch of
government most independent of the political pro-
cess, courts can pass judgment on the actions of the
political branches free of partisanship.
Key Features of the Legal System 43

Judicial review has its roots in the famous 1803
case of Marbury v. Madison, in which the Supreme
Court ruled that it had the power to review acts of
Congress and determine their constitutionality. The
facts of the case are fascinating. In 1800, Thomas Jef-
ferson won the presidential election, besting incum-
bent John Adams. In the final days of President
Adams’s term, the Federalist-controlled Congress
passed, and Adams signed into law, a statute called the
Judiciary Act of 1801. Among other things, the law
created several new judgeships, and the idea was to fill
the new judicial posts with Federalists before Jeffer-
son assumed the presidency. Among the new judicial
appointments made by Adams and approved by the
Senate before Jefferson took office were 42 justices of
the peace, including one for William Marbury. Prior
to Jefferson’s taking office, Marbury’s commission
was signed by Adams and by John Marshall—who
at the time was Secretary of State under Adams—but
not delivered. After his inauguration, Jefferson ruled
that Marbury’s commission (and those of several
other Adams-appointed justices of the peace) were
invalid because they had not been delivered during
the Adams presidency, and therefore directed his new
Secretary of State, James Madison, to withhold deliv-
ery. Marbury sued to force delivery of his commission,
petitioning the Supreme Court directly to issue a writ
of mandamus, which is an order by a court compelling
a government officer to perform his duties. Marbury
was able to ask the court directly for the writ because
the recently enacted Judiciary Act also authorized the
Supreme Court to issue writs of mandamus.
The Supreme Court’s decision in Marbury v. Mad-
isonh first established the important principle that for
every violation of a legal right, there must be a corre-
sponding legal remedy. With this principle in place,
the court ruled that Marbury was in fact entitled to
his commission and to a legal remedy for Jefferson’s
decision to withhold it,
since [Marbury’s] commission was signed by
the President, and sealed by the secretary of
state . . . and the law creating the office, gave
the officer a right to hold for five years, inde-
pendent of the executive, the appointment. . . .
To withhold his commission, therefore, is an
act deemed by the court not warranted by law,
but violative of a vested legal right.
The Marbury court then did something monu-
mental: it established and justified the power of judi-
cial review. This outcome flowed from the fact that
Marbury had filed his legal petition directly with the
Supreme Court, and the court needed to determine
whether Congress acted constitutionally in grant-
ing the court power under the Judiciary Act to issue
writs of mandamus as a matter of “original jurisdic-
tion.” (Original jurisdiction refers to cases on which a
court rules before any other court does so, contrasted
with situations in which a court reviews a decision of
a lower court, which is called “appellate jurisdiction.”)
It was not apparent that the mandamus com-
ponent of the new Judiciary Act was constitutional
because Article III of the Constitution—which estab-
lished the judicial branch of the federal government,
including the Supreme Court—says,
In all Cases affecting Ambassadors, other
public Ministers and Consuls, and those in
which a State shall be a Party, the Supreme
Court shall have original Jurisdiction. In all
the other Cases [subject to Supreme Court
jurisdiction], the Supreme Court shall have
appellate Jurisdiction, both as to Law and
Fact, with such Exceptions, and under such
Regulations as the Congress shall make. (U.S.
Const. art. III, § 2, clause 2)
Interpreting this clause, Chief Justice Marshall
determined the court could issue a writ of manda-
mus under the Constitution only as an exercise of
appellate—but not original—jurisdiction, and that
Congress had no power to modify the court’s original
jurisdiction. As a result, the court held that the Judi-
ciary Act of 1801 was in conflict with Article III, and
thus unconstitutional.
Marbury represented the first time the Supreme
Court exercised the power of judicial review and
declared unconstitutional a law passed by Congress.
Over the years, the court has exercised this power
sparingly, explaining in 1867 that although it clearly
had the authority to strike down congressional legis-
lation repugnant to the Constitution, this “duty is one
of great delicacy, and only to be performed where the
repugnancy is clear, and the conflict unreconcilable”
(Mayor v. Cooper, 1867).
For example, the Supreme Court invalidated few
congressional acts in the first 50 years after Marbury,
although the pace picked up somewhat after that, to
an average of about one invalidation every 2 years.
During William Rehnquist’s term as chief justice
(1986–2005), however, the court ruled unconstitu-
tional more than 30 laws or statutory provisions, with
most of these decisions occurring between 1995 and
2005. This uptick in the court’s use of its most power-
ful judicial review tool has led to a discussion about
the court’s proper place in the separation of powers
framework. As stated in one opinion piece,
44 Chapter 3 Law and the Legal System

Declaring an act of Congress unconstitutional
is the boldest thing a judge can do. That’s
because Congress, as an elected legislative
body representing the entire nation, makes
decisions that can be presumed to possess a
high degree of democratic legitimacy. (Ger-
witz & Golder, 2005, p. A19)
When determining whether a statute violates the
Constitution, courts necessarily take into account
the subject of the regulation and Congress’s purpose
in regulating. Certain kinds of laws—say, affirmative
action laws, or a law that classifies people on the basis
of their gender—require a greater level of governmen-
tal justification and thus are held to a higher constitu-
tional standard of review. In other words, these laws are
scrutinized more closely by the court and thus stand a
greater chance of failing the constitutionality test.
By way of example, the Supreme Court has devel-
oped a tiered standard of review framework for equal
protection jurisprudence. Under the Constitution’s
equal protection clause, states are prohibited from
denying “to any person within its jurisdiction the equal
protection of the laws” (U.S. Const. amend. XIV, § 1).
The Court employs one of three standards when
it reviews whether a particular law satisfies this con-
stitutional mandate. The first, termed rational basis or
rational relations review, is applied to everyday legis-
lation pertaining to things like public safety, tax rates,
and consumer protection and thus is the review stan-
dard most frequently used. It is nearly impossible for
a law to run afoul of this standard, because as long as
the challenged statute is rationally related to any legiti-
mate government purpose in passing the law, it will be
upheld as constitutional.
The second standard is that of intermediate
review. This is the court’s choice when the measure
under review classifies individuals or groups on, for
example, the basis of gender. The assumption here—
and the point of the heightened review standard—is
that when politicians legislate with gender (or another
potentially baseless characteristic) in mind, there is
a greater likelihood they are doing so for nefarious
reasons. In order to pass constitutional muster under
intermediate review, a statute must serve an import-
ant government objective and be substantially related
to that objective. A good deal of legislation reviewed
under this standard is found to be unconstitutional.
Finally, the court has at its disposal in equal pro-
tection lawsuits a review standard known as strict
scrutiny. The court reserves this standard for laws
that tread on fundamental constitutional rights
(defined in part as those that are firmly established
in American tradition), including an individual’s
right to be free of governmental discrimination on
the basis of race. In theory, otherwise discriminatory
laws that are necessary to achieve a compelling gov-
ernment interest—meaning that the law in question
is the least discriminatory way to meet the legisla-
ture’s compelling objective—can survive this intense
form of scrutiny. However, of all the equal protection
claims measured against this standard, only one sur-
vivor emerged—when the Supreme Court permit-
ted the federal government to intern individuals of
Japanese descent during World War II (Korematsu v.
United States, 1944)—and this almost universally vil-
ified decision was finally condemned (if not formally
overruled) by the Supreme Court in 2018 (Trump v.
Hawaii, 2018).i
Maintaining Stability in the Law
In addition to enforcing legal rights and passing on
the constitutionality of actions of the two political
branches of government, courts are expected to main-
tain a measure of stability, continuity, and predict-
ability in the law. This expectation derives from the
idea that those subject to the law should not have to
contend with continuous swings in the direction law
takes. In theory, the relatively nonpolitical judicial
branch of government is in the best position to bring
this expectation to fruition.
The way courts implement their responsibility to
maintain legal stability is through application of stare
decisis, a Latin legal term meaning “let it stand.” Stare
decisis is a policy of the courts to stand by existing
legal precedent; that is, where rules of law have been
established in prior judicial decisions, these decisions
should be adhered to in subsequent cases where the
questions of law and fact are substantially similar to
those in the original case. Stability in the law is consid-
ered so important that stare decisis is usually applied,
and the original judicial decision given deference,
even when the original decision is subsequently deter-
mined to be wrongly decided or not legally sound. This
is especially true where the original decision is an old
one on which society has come to rest, as opposed to a
relatively young decision with few deep roots in terms
of societal expectations. The role of legal precedent
has been described in this way:
Legal doctrines are shaped like family trees.
Each generation of decisions is derived from
ones that came before as, over time, each
branch of the law grows and spreads or, occa-
sionally, withers and dies away. The most recent
decisions almost always draw their strength
by tracing back through an ancestral line,
Key Features of the Legal System 45

choosing among parents, uncles, and cousins
according to the aptness of their bloodlines.
Rarely, a branch of doctrine is disowned, repu-
diated, and left vestigial until perhaps revived
in another legal era. (Lazarus, 1999, p. 77)
At the same time, legal precedent is not com-
pletely sacred, and prior decisions are sometimes
reconsidered and, on occasion, overturned. For
instance, changes in societal values might outweigh
strict application of stare decisis, as was the case with
the Supreme Court’s 1954 decision in Brown v. Board
of Education to overturn the invidious idea of “sepa-
rate but equal” from the court’s 1896 decision in Plessy
v. Ferguson. Stare decisis is, however, generally under-
stood to trump mere changes in a court’s makeup. In
other words, courts are expected to remain anchored
to precedential rules of law even when current indi-
vidual members may not be.j Indeed, in a well-known
Supreme Court case, former Justice John Marshall
Harlan II wrote:
A basic change in the law upon a ground
no firmer than a change in our membership
invites the popular misconception that this
institution is little different from the two polit-
ical branches of the Government. No miscon-
ception could do more lasting injury to this
Court and to the system which it is our abid-
ing mission to serve. (Mapp v. Ohio, 1961)
▸ Conclusion
This chapter led you on a short journey through the
complex world of the legal system. Along the way,
you visited several of its essential elements and doc-
trines: legal rights, the various types of law, separation
of powers, federalism, judicial review, and more. To
be sure, the trip was abbreviated and in some cases
concepts were oversimplified in an effort to concisely
cover a complex and expansive topic.
As you encounter myriad health policy and law
topics and concepts that are complex in their own
right, bearing in mind a few important details about
law might help you achieve a greater measure of clar-
ity. First, law’s primary purpose is to organize and
control an ever-changing, ever-expanding, ever-more-
complex society, and it does this in part by regulating
a variety of relationships among parties with often-
times competing interests (e.g., individual citizen and
government; patient and physician; beneficiary and
public program or private insurance company; phy-
sician and managed care organization; individual and
her family). This function of law helps explain why
in the context of a specific relationship, one party has
a legal right and the other party has a legal respon-
sibility to refrain from acting in a way that infringes
that legal right. It also helps explain why an individ-
ual can justifiably claim a particular legal right in the
context of one specific relationship, but not in others
(for example, a patient who believes that he has been
treated negligently might have a legitimate legal claim
against the physician who provided his care, but not
against the hospital where the care was provided).
A second detail worth reflecting on periodically
is that law is established, enforced, interpreted, and
applied by human beings, and thus one must accept
that law and the legal process comprise a certain
amount of imperfection. This characteristic of law
helps explain why statutes and regulations are some-
times difficult to understand, why laws are sometimes
enforced sporadically or not at all, why reasonable
jurists can disagree about the intended meaning of
statutory and constitutional provisions, and why law
is too often applied unevenly or inequitably.
Finally, bear in mind the fact that laws and the
broader legal system are reflective of the beliefs and
values of the society from which they flow. This fait
accompli, perhaps more than anything else, provides
an object lesson in the role of law across a wide range
of subjects, including matters related to health care
and public health.
References
Adelson, R. G. (2003). The enumerated powers of states. Nevada
Law Journal, 3, 469–494.
Administrative Procedure Act of 1946. 5 U.S.C. § 551 et seq.
Baker T. E. (2004). Constitutional theory in a nutshell. William
and Mary Bill of Rights Journal, 13(1), 57–123.
Brennan Center for Justice. (2015). Judicial selection: Significant
figures. Retrieved from https://www.brennancenter.org
/rethinking-judicial-selection/significant-figures
Brown v. Board of Ed., 347 U.S. 483 (1954).
Corwin, E. S. (1957). The president: Office and powers, 1787–1957.
New York, NY: New York University Press.
de Tocqueville, A. (1835). Democracy in America (H. Reeve,
Trans.). New York, NY: Vintage Books; 1990.
Dinan, J. (2018). State constitutional policies: Governing by
amendment in the United States. Chicago, IL: University of
Chicago Press.
Fallon, R. H., Jr. (1999). How to choose a constitutional theory.
California Law Review, 87(3), 535–579.
46 Chapter 3 Law and the Legal System

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Fay v. New York, 332 U.S. 261 (1947).
Friedman, L. M. (1964). Law and its language. George Washington
University Law Review, 33, 563–579.
Friedman, L. M. (2002). Law in America: A short history. New
York, NY: The Modern Library.
Garner, B. (2014). Black’s law dictionary (10th ed.). Eagan, MN:
Thomson West.
Gewirtz, P., & Golder, C. (2005, July 6). So who are the activists?
The New York Times. Retrieved from https://www.nytimes
.com/2005/07/06/opinion/so-who-are-the-activists.html
Gibbons v. Ogden, 25 U.S. (9 Wheat.) 1 (1824).
Holmes, O. W. (1899). Law in science and science in law. Harvard
Law Review, 12(7), 443–463.
Jackson v. City of Joliet, 715 F.2d 1203 (7th Cir. 1983).
Korematsu v. United States, 323 U.S. 214 (1944).
Lazarus, E. (1999). Closed chambers: The rise, fall, and future of the
modern Supreme Court. New York, NY: Penguin Books.
Mapp v. Ohio, 367 U.S. 643 (1961).
Marbury v. Madison, 1 Cranch (5 U.S.) 137 (1803).
Mayor v. Cooper, 73 U.S. 247 (1867).
McCullough v. Maryland, 17 U.S. (4 Wheat.) 316 (1819).
Mensah, G. A., Goodman, R. A., Zaza, S., Moulton, A. D., Kocher,
P. L., Dietz, W. H., . . . Marks, J. S. (2004). Law as a tool for
preventing chronic diseases: Expanding the spectrum of
effective public health strategies. Preventing Chronic Disease:
Public Health Research, Practice, and Policy, 1(2), 1–6.
Occupational Health and Safety Act of 1970. 29 U.S.C. § 655.
Plessy v. Ferguson, 163 U.S. 537 (1896).
Refo, P. L. (2004). The vanishing trial. Litigation Online, 30(2), 1–4.
Reich, C. A. (1964). The new property. The Yale Law Journal, 73(5),
733–787.
Smith, S. D. (1991). Reductionism in legal thought. Columbia Law
Review, 91(1), 68–109.
Trump v. Hawaii, 138 S. Ct. 923 (2018).
U.S. Const. amend. XIV, § 1.
U.S. Const. art. III, § 2, clause 2.
U.S. Const. art. VI, para. 2.
Ziskin, L. Z., & Harris, D. A. (2007). State health policy for
terrorism preparedness. American Journal of Public Health,
97(9), 1583–1588.
▸ Endnotes
The language of the law is ever-changing
as the courts, Congress, state legislatures,
and administrative agencies continue to
define, redefine and expand legal words
and terms. Furthermore, many legal
terms are subject to variations from state
to state and again can differ under fed-
eral laws. (Garner, 2014, p. iv)
b. For an overview of the Bill of Rights in a public
health context, see Gostin, L. O. (2000). Public
health law: Power, duty, restraint (pp. 62–65).
Berkeley, CA: University of California Press.
c. For a full description of the intertwined nature
of administrative and health law, see Jost, T. S.
(2004). Health law and administrative law: A
marriage most convenient. Saint Louis Univer-
sity Law Journal, 49, 1–34.
d. For an in-depth discussion of the relationship
between the APA and state administrative pro-
cedures, see Bonfield, A. E. (1986). The federal
APA and state administrative law. Virginia Law
Review, 72(2), 297–336.
e. For a full discussion of each of the govern-
ment branches’ role in health policymaking, see
Gostin, L. O. (1995). The formulation of health
policy by the three branches of government.
In R. E. Bulger, E. M. Bobby, & H. V. Fineberg
(Eds.), Society’s choices: Social and ethical deci-
sion making in biomedicine (pp. 335–357).
Washington, DC: National Academy Press.
a. Although the important role that language plays
in law is not a topic we delve into in this chapter,
it is, particularly for students new to the study
of law, one worth thinking about. Words are the
basic and most important tool of the law and
of lawyers. Without them, how could one draft
a law, legal brief, contract, or judicial opinion?
Or engage in oral advocacy on behalf of a client,
or conduct a negotiation? Or make one’s wishes
known with respect to personal matters near the
end of life? As one renowned legal scholar puts
it, “law is primarily a verbal art, its skills verbal
skills” (Friedman, 1964, p. 567).
Of course, one problem with the language
of law is that it is full of legal jargon, making it
difficult sometimes for laypeople to understand
and apply to their own particular situation. For
example, if government regulation is to be effec-
tive, the language used to do the regulating must
be understandable to those being regulated.
Another problem relates to the interpretation of
words and terms used in the law, because both
ambiguity (where language is reasonably capa-
ble of being understood in two or more ways)
and vagueness (where language is not fairly
capable of being understood) are common to
laws, leaving those subject to them and those
responsible for applying them unsure about
their true meaning. Furthermore, as the preface
to Black’s Law Dictionary, under the heading “A
Final Word of Caution,” states:
Endnotes 47

f. However, since the 1980s, the selection (by the
president) and approval (by the U.S. Senate)
process for federal judges has become highly
politicized. There is an extensive body of lit-
erature on this topic, as evidenced by a simple
Internet search.
g. The potential implications of increasingly
injecting politics into the court system are very
troubling, and there is likewise extensive litera-
ture on this topic.
h. The decision was written, as it turned out, by
Chief Justice John Marshall—the very same per-
son who, as Secretary of State, signed Marbury’s
commission. Marshall was sworn in as Chief
Justice of the United States just before Jefferson
took office.
i. For a fuller discussion of how the equal protec-
tion standards of review operate, see Lazarus,
2004, pp. 293–294.
j. This understanding is often put to the test, how-
ever, as seen in the national discussion of the
right to abortion that takes place each time a
new U.S. Supreme Court nominee is announced
whose political stripes seem to clash with the
prevailing law that abortion is a constitutionally
protected right.
48 Chapter 3 Law and the Legal System

CHAPTER 4
Overview of the United States
Healthcare System
LEARNING OBJECTIVES
By the end of this chapter you will be able to:
■ Identify the key players who provide and finance health care in the United States
■ Identify common characteristics of the uninsured
■ Understand the effect of insurance on access to care and on health status
■ Identify barriers to accessing health care
■ Understand concerns regarding the quality of health care provided in the United States
■ Describe differences in how health care is delivered in various countries
▸ Introduction
Coordinated. Efficient. Cost-effective. Goal oriented. These are words one might use to describe a well- functioning system. Unfortu-
nately, they are not words that are often used when
discussing how healthcare services are delivered
in the United States. Unlike most other developed
nations, the United States does not have a unified
healthcare system. Even with the passage of the
Patient Protection and Affordable Care Act of 2010
(ACA), the first major health reform law passed in
this country in nearly 50 years, the United States will
continue to provide healthcare services through a
patchwork of public and private insurance plans; fed-
eral, state, and local governments; and institutions
and individual providers who are often unconnected
to one other.
The United States has never been accused of provid-
ing healthcare services in an efficient or cost-effective
manner. On average, this country spends over twice
as much on health care per person as other developed
countries (Organization for Economic Cooperation
and Development [OECD], 2017, p. 133). While the
U.S. healthcare system does some things well, it ranks
at or near the bottom on important health outcome
measures such as life expectancy, infant mortality,
and adult obesity rates (OECD, 2017, pp. 47–81).
Even though the federal government establishes the
nation’s healthcare goals through initiatives such as
Healthy People 2020, the lack of coordination within
the healthcare system means that all parts of the sys-
tem are not working together to achieve these goals
(Office of Disease Prevention and Health Promotion,
n.d.). The lack of a unified healthcare system makes it
difficult to provide a straightforward overview of how
49
© Mary Terriberry/Shutterstock

healthcare services are delivered and financed. For
example, the following are some of the various players
in the provision and delivery of health care:
■ Educational institutions such as medical, dental,
nursing, and physician assistant programs
■ Research organizations including private entities,
public agencies, and nonprofit foundations
■ Private suppliers of goods and services such as
hospital equipment manufacturers, home health
agencies, and uniform suppliers
■ Private health insurance provided through
employers, on the individual market, and through
state health exchanges
■ Public health insurance programs such as Medic-
aid, Medicare, and TRICARE (the Department of
Defense healthcare program for members of the
uniformed services and their families)
■ Individual providers such as physicians, dentists,
pharmacists, and physical therapists
■ Institutional providers such as hospitals, commu-
nity health centers, and skilled nursing facilities
■ Private trade associations representing providers
(e.g., the American Medical Association, which
represents physicians), institutions (e.g., the
National Association of Community Health Cen-
ters), and industries (e.g., PhRMA, which rep-
resents the pharmaceutical industry)
■ Private accreditation agencies that provide quality
certifications to healthcare institutions
■ Consumers of healthcare goods and services
■ Local, state, and federal government agencies
that have roles in delivering care, financing care,
setting health policy, developing laws and regula-
tions, and conducting and funding research
In the absence of a unified system or single govern-
ment program to describe, it is easiest to understand
the provision of U.S. health care through the concepts
of finance (How do individuals pay for health care,
and how are providers reimbursed for their services?),
access (How do individuals access healthcare services,
and what barriers to access exist?), and quality (What
is the quality of healthcare services that are provided,
and what can be done to improve the quality of care?).
It is also helpful to consider the health system choices
made by this country against those made by other
developed countries. This chapter begins with a dis-
cussion of the concepts of finance, access, and quality
and then turns to a comparative overview of how other
countries have designed their healthcare systems.
▸ Healthcare Finance
In 2016, the United States spent $3.3 trillion on aggre-
gate healthcare spending, the equivalent of $10,348 per
person and 17.9% of the nation’s gross domestic prod-
uct (GDP) (FIGURE 4-1). This total represents a 4.3%
increase over 2015 spending (Hartman, Martin, Espi-
nosa, Catlin, & National Health Expenditures Accounts
Team, 2018). Healthcare spending grew slowly during
the Great Recession of 2007–2009 and the period
FIGURE 4-1 National Health Expenditures as a Share of Gross Domestic Product, 1987–2016
50 Chapter 4 Overview of the United States Healthcare System
Source: Reproduced from: Centers for Medicare and Medicaid Services, Office of the Actuary. (n.d.). National Health Care Spending in 2016. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports
/NationalHealthExpendData/Downloads/NHE-Presentation-Slides
10.0
P
e
rc
e
n
t
o
f
G
D
P
Calendar Years
17.9%
19
8
7
19
8
8
19
8
9
19
9
0
19
9
1
19
9
2
19
9
3
19
9
4
19
9
5
19
9
6
19
9
7
19
9
8
19
9
9
2
0
0
0
2
0
01
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
01
0
2
01
1
2
01
2
2
01
3
2
01
4
2
01
5
2
01
6
12.0
14.0
16.0
18.0
July 1990–
March 1991
recession
20.0
December 2007–
June 2009
recession
March 2001–
November
2001
recession
The Share of GDP Devoted to Health Expenditures Was 17.9% in 2016

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shortly thereafter. The implementation of the ACA led
to 19 million newly insured individuals from 2014 to
2015. This reduction in the uninsured rate combined
with strong prescription drug spending (due, in large
part, to increased spending on a new drug for hep-
atitis C) resulted in robust spending growth in 2014
and 2015, though growth slowed in 2016. As shown in
FIGURE 4-2, spending growth was due to higher medical
prices and increased use of health services by newly
insured individuals (Hartman et al., 2018).
National health expenditures are expected to
average 5.6% growth from 2017 to 2026 and reach
19.7% of the GDP by 2026 (Cuckler et al., 2018). This
growth is expected to be driven by an increase in
prices for medical goods and services, and increases
in Medicare and Medicaid spending due to the aging
Baby Boomer population (Cuckler et  al., 2018). Put
differently, come 2026, one-fifth of the nation’s econ-
omy will be consumed by healthcare spending. This is
nothing short of staggering. As shown in FIGURE 4-3,
the largest portion of national healthcare spending in
2016 was on hospital services, followed by physician
and clinical services.
Health Insurance
Having health insurance reduces the risk of financial
ruin when expensive health services are needed and
often provides coverage for preventive services at low
or no cost. As discussed in the upcoming section on
healthcare access, individuals without health insur-
ance must pay for services themselves, find services
provided at no cost, or go without care. While most
people in the United States have health insurance, one
of the main goals of the ACA is to decrease the num-
ber of uninsured people.
The ACA includes a number of provisions designed
to reduce the uninsured rate in this country. While these
provisions, as well as the changes that have taken place
since the ACA was signed into law, will be discussed in
detail in the chapter on health reform, a brief overview is
useful here. The ACA attempts to reduce the number of
uninsured through three main strategies. First, the law
includes mandates on individuals to purchase insurance
and on (many) employers to provide insurance. Second,
the law expands Medicaid, the federal–state program
for the poor, to the poorest uninsured individuals across
the country. Third, the ACA created state health insur-
ance exchanges, which are aimed at individuals and
small businesses that are not able to obtain affordable
health insurance through other means.
When President Obama signed the ACA into
law in 2010, the uninsured rate was 16.3%, or 49.9
million individuals (U.S. Census Bureau, 2011,
pp. 22–23). The ACA was effective in reducing the
uninsured rate; by 2016 it had dropped to 8.8%, or
28.1 million individuals (U.S. Census Bureau, 2017).
A number of legal and policy developments since the
FIGURE 4-2 Factors Accounting for Growth in per Capita National Health Expenditures, Selected Calendar Years, 2004–2016
Healthcare Finance 51
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
0.0%
2004–2007
A
n
n
u
a
l P
e
rc
e
n
t
C
h
a
n
g
e
Per Capita Health Spending Grew 3.5% in 2016
5.8%
3.0%
4.3%
5.0%
3.5%
2008–2013 2014 2015 2016
1.0%
0.5%
2.0%
1.5%
2.5%
Age and sex factors
Medical prices
Residual use and intensity
Notes: Medical price growth, which includes economy-wide and excess
medical-specific price growth (or changes in medical-specific prices in excess of
economy-wide inflation), is calculated using the chain-weighted national health
expenditures (NHE) deflator for NHE. “Residual use and intensity” is calculated by
removing the effects of population, age and sex factors, and price growth from the
nominal expenditure level.
Source: Reproduced from: Centers for Medicare and Medicaid Services, Office of the Actuary. (n.d.). National Health Care Spending in 2016. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports
/NationalHealthExpendData/Downloads/NHE-Presentation-Slides

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2016 election have reduced the ACA’s effectiveness.
As a result, the Congressional Budget Office (CBO)
estimates that the number of individuals younger than
65 years without insurance will increase to 35 million
(13%) by 2028 (CBO, 2018). According to the CBO,
one of the main reasons for this increase is the 2018
repeal of the penalty associated with the individual
mandate. The elimination of this penalty is projected
to increase the uninsured rate by 4 million in 2019 and
another 3 million by 2021. This is a result of individ-
uals choosing not to purchase health insurance while
they remain in good health, do not face a penalty for
going without coverage, or cannot afford the higher
premiums that are expected due to the repeal of the
individual mandate penalty (CBO, 2018).
As shown in FIGURE 4-4, most people in the
United States are privately insured and obtain
their health insurance through their employer.
Employer-sponsored insurance plans may be self-
funded (meaning employers set aside funds to pay
for their employees’ health insurance claims instead
of paying a premium to a health insurance carrier)
or fully insured (meaning employers pay a premium
to a private health insurance company to administer
employees’ plans and pay the healthcare claims of the
employees). Another significant portion of the popu-
lation is publicly insured through Medicaid, the Chil-
dren’s Health Insurance Program (CHIP), Medicare,
the Veteran’s Administration, and the Department of
Defense. Public programs are funded and run by fed-
eral and/or state government agencies, depending on
the program.
FIGURE 4-5 illustrates how health insurers act as an
intermediary between consumers (sometimes referred
to as “insureds”) and providers (which refers to both
individual providers, such as physicians or nurses, and
institutions, such as hospitals and community health
centers). The specifics regarding eligibility for a partic-
ular insurance plan, choice of plans, how much a plan
costs to enroll in or use, what benefits are covered, and
how much providers are reimbursed vary by plan or
government program. In some circumstances, providers
may accept insurance from only a single plan, but often
providers will accept patients from a variety of plans.
FIGURE 4-3 The Nation’s Health Dollar, Calendar Year 2016: Where it Went
FIGURE 4-4 Healthcare Coverage in the United States,
March 2016
52 Chapter 4 Overview of the United States Healthcare System
Note: “Other spending” includes dental services, other professional services, home health care,
durable medical equipment, other nondurable medical products, government public health
activities, and investment.
Hospital care,
32%
Physician and clinical
services,
20%Nursing care facilities
and continuing care
retirement communities,
5%
Prescription drugs,
10%
Government
administration and net
cost of health insurance,
8%
Other health, residential,
and personal care,
5%
Other
spending,
20%
Source: Reproduced from: Centers for Medicare and Medicaid Services, Office of the Actuary. (n.d.). National Health Care Spending in 2016. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports
/NationalHealthExpendData/Downloads/NHE-Presentation-Slides
Employer,
153 million
(47.3%)
Medicare,
55.5 (17.2%)
Medicaid,
49 (15.2%)
Medicaid/CHIP
23.6 (7.3%)
Affordable Care Act
9.1 (2.9%)
Other
4 (1.2%)
Total U.S. population
323.2 million
Uninsured
29 (9%)
Source: Hiltzik, M. (2016, March 29). Where America gets its health coverage: Everything you wanted to know in one handy chart. L.A.
Times. Retrieved June 11, 2018 from http://www.latimes.com/business/hiltzik/la-fi-hiltzik-gaba-20160329-snap-htmlstory.html

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/NHE-Presentation-Slides

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Consumers interact with health insurance com-
panies or government programs by enrolling into an
insurance plan by which they are accepted (in the case
of private plans) or for which they are eligible (in the
case of public programs), providing payments to the
insurance plan for being enrolled (either directly or
through a payroll deduction), choosing which pro-
vider to see based on plan restrictions or incentives,
and working with the plan if they have questions or
complaints. Providers that agree to be part of a plan’s
“network” (i.e., the group of providers who will see
patients insured by the plan) are reimbursed a con-
tractually agreed-upon amount from the insurance
company and/or the patient for providing services
covered under the plan, may accept consumers who
are enrolled in the plan, may be subject to plan quali-
ty-control measures, and will participate as necessary
in plan appeals processes.
Direct Services Programs
In addition to providing publicly funded health
insurance to certain populations through programs
such as Medicare and Medicaid, federal, state, and
local governments also fund numerous programs
that directly provide healthcare services to vul-
nerable populations. Many of these programs also
receive private funding and donations to support
their operations. Direct service programs generally
exist to fill gaps in the private healthcare delivery
system. Examples of these types of programs include
the following:
■ Federally qualified health centers (FQHCs):
These centers are located in medically under-
served areas and provide primary care services
to individuals on a sliding fee scale (meaning that
how much one pays for services depends on the
individual’s income level). While anyone may
use an FQHC, the health center patient popula-
tion is made up of mostly uninsured and pub-
licly insured patients. Funding for health centers
usually comes from the federal and state govern-
ments, and sometimes from local governments
and private donations.
■ HIV/AIDS services: The Ryan White HIV/AIDS
Program works with states, cities, and local organi-
zations to provide services to patients with human
immunodeficiency virus (HIV) or acquired
immunodeficiency syndrome (AIDS) who do not
have health insurance coverage or the financial
resources to pay for needed care. The program is
federally funded and provides grants to state agen-
cies that deliver care to patients. The Ryan White
program includes the state AIDS Drug Assistance
Program (ADAP), which provides medications to
low-income individuals with HIV. A supplemen-
tary ADAP for high-need states includes federal
funding and a state matching requirement. States
often supplement federal funding with state-
funded HIV prevention and treatment programs.
Some local public health departments provide
HIV testing and counseling services and help
individuals access treatment. Many programs also
accept private donations.
FIGURE 4-5 Insurance Company–Consumer–Provider Interaction
Healthcare Finance 53
Insurance Company
Consumer
Accepts payment
Accepts rules
Sets reimbursement rates
Sets quality control requirements
Enroll in plan
Pays plan
Questions
Appeals
Sets plan rules
Covers some consumer costs
Provider
Accepts patient
Provides services
May accept payment
Chooses provider
Receives services
May pay provider

■ Family planning services: Title X of the Public
Health Service Act provides federal funding for
family planning services offered to women who
do not qualify for Medicaid, maintains family
planning centers, and establishes standards for
providing family planning services (although fed-
eral dollars may not be used to support abortion
services except in the case of rape, incest, or dan-
ger to the life of the pregnant woman). In addition,
states also fund family planning services. Services
provided vary by state but may include contracep-
tion, cervical cancer screening, tubal sterilization,
sexually transmitted disease screening, HIV test-
ing, and abstinence counseling. State laws vary
on the use of state funds for abortion services.
Local health departments may also offer some of
these services as well as help people access family
planning services from private providers. Private
donations provide revenue to many family plan-
ning clinics.
▸ Healthcare Access
Access to care refers to the ability to obtain needed
health services. There are a variety of factors that can
hinder access to care. Barriers may exist if individuals
are underinsured and cannot afford the cost sharing
required by their health insurance policy, if needed
services are not covered by health insurance, if pro-
viders will not take a particular insurance plan, or if
providers are not available in certain geographic areas.
Access problems are exacerbated by provider short-
ages, especially in primary care fields (e.g., internal
medicine and pediatrics). Many areas of the coun-
try already experience workforce shortages, and the
influx of newly insured individuals as a result of health
reform will make this problem even more pronounced
in the years to come.
Of course, one important factor relating to
access is lack of health insurance. Individuals with-
out health insurance have to pay more for compara-
ble services because they do not have the advantage
of sharing costs as part of a pool of consumers.
Because many individuals without health insurance
are low-income, they may be unable to pay for the
cost of needed care, and providers are often unwill-
ing to accept uninsured patients because of the risk
of not being paid for their services. Some provid-
ers, referred to as “safety net” providers, focus on
providing care to uninsured patients, but gaining
access to needed care remains a significant issue for
this population.
As noted previously, many changes that took place
in 2014 as part of ACA implementation are intended
to reduce the number of uninsured people. Even so,
it is important to understand the healthcare prob-
lems faced by the uninsured due to the uncertainty
surrounding the ACA’s future. Furthermore, millions
would remain uninsured even with a fully imple-
mented ACA. The ACA did not help almost half the
uninsured in 2017 because their state did not expand
Medicaid, their income was too high to allow them to
obtain subsidies, or they were ineligible for insurance
or assistance due to immigration restrictions (Foutz,
Damico, Squires, & Garfield, 2017). Many of those who
could be assisted by the ACA’s provisions also remain
uninsured. A 2016 survey conducted by the Common-
wealth Fund found that only about half (52%) of the
uninsured knew they could look for coverage in a state
marketplace, and two-thirds of uninsured adults who
knew about state exchanges did not think they could
find affordable coverage (Commonwealth Fund, n.d.).
The Uninsured
Characteristics of the Uninsured
There are many myths relating to the uninsured. It is
often assumed that the uninsured do not work or simply
choose not to purchase health insurance even though it
is available and affordable. Although this assumption
may be true in some cases, in most instances it is not.
Furthermore, many people believe that all employers
offer insurance or that those individuals without private
insurance are always eligible for public programs. As
you will see, these and other assumptions are also false.
Income Level While the poor saw significant gains
in insurance coverage under the ACA, the primary
reason people do not have health insurance is still
financial—available coverage is simply too expensive
(FIGURES 4-6 and 4-7). There was an increase of 17 mil-
lion Medicaid and CHIP enrollees from September
2013 to June 2017, accounting for much of the decrease
in the uninsured rate among the poor. Not surpris-
ingly, between 2013 and 2016, the uninsured rate for
nonelderly adults dropped more significantly in states
that expanded Medicaid (9.2% decrease) than in states
that did not (4.8% decrease) (Foutz et  al., 2017). In
addition, another 10 million individuals received pre-
mium subsidies to purchase health insurance in a state
exchange. These subsidies are available to individu-
als whose income is between 100% and 400% of the
federal poverty level (FPL) ($20,160 to $80,640 for a
family of three in 2016) (Foutz et al., 2017).
54 Chapter 4 Overview of the United States Healthcare System

Race, Ethnicity, and Immigrant Status Prior to the
ACA, the uninsured rate was much higher for His-
panics (30.7%) and Blacks (20.8%) than for non-His-
panic Whites (11.7%) (U.S. Census Bureau, 2011,
pp. 22–23). As shown in Figure 4-6 and FIGURE 4-8,
minority populations experienced significant coverage
gains in the early years of the ACA, although Whites
continued to have the lowest uninsured rate (U.S.
Census Bureau, 2017). These differences are due to a
variety of factors, such as language barriers, income
level, work status, state of residence, and immigration
status (Foutz et al., 2017).
In 2016, noncitizens were three times as likely
to be uninsured as were citizens (Foutz et  al., 2017).
Restrictive eligibility rules pertaining to immigrants
in public programs make it difficult for non-natives
to obtain public coverage. While legal immigrants
may obtain subsidies to assist with purchasing health
insurance through the state exchanges under the ACA,
undocumented immigrants are not eligible for federal
subsidies and are prohibited from purchasing insur-
ance through an exchange, even at full cost.
Employment Status While over half (57%) of
employers offered health insurance coverage in
2013, this number has declined significantly since
66% of employers provided this benefit in 1999
(Foutz et  al., 2017). Most of the decrease is due to
small businesses dropping coverage. As shown in
FIGURE 4-9, premium costs nearly doubled while
wages and inflation grew at a much slower pace,
meaning coverage became less affordable even for
those employees who were offered coverage (Foutz
et  al., 2017). While the ACA includes an employer
mandate that requires medium and large employers
FIGURE 4-6 Percentage Point Change in Uninsured Rate Among the Nonelderly Population by Selected Characteristics,
2013–2016
FIGURE 4-7 Reasons for Being Uninsured Among Uninsured
Nonelderly Adults, 2016
Healthcare Access 55
<1 00 % F P L 10 0 to 1 99 % F P L ≥2 00 % F P L W hi te B la ck H is pa ni c A si an C hi ld re n 0– 17 N on el de rly ad ul ts 1 8– 64 Y ou ng a du lts 19 –2 5 0.0% –9.5% –3.6% –4.8% –7.4% –7.3% –1.4% –8.2% –12.8% –11.1%–11.3% –2.0% –4.0% –6.0% –8.0% –10.0% –14.0% Notes: Includes nonelderly individuals ages 0–64. –12.0% Poverty level Race/ethnicity Age Source: Foutz et al., 2017, Figure 4; Kaiser Family Foundation analysis of the 2013 and 2016 National Health Interview Survey. 0 5 10 15 20 25 30 35 40 45 Share who say they are uninsured because: Co st is to o hi gh Lo st jo b or c ha ng ed em pl oy er s Lo st m ed ica id Em pl oy er d oe s no t o ffe r o r in el ig ib le fo r c ov er ag e Fa m ily s ta tu s ch an ge No n ee d fo r h ea lth co ve ra ge 4 5 % 23% 12% 10% 9% 2% Notes: Includes nonelderly adults ages 18–64. Respondents can select multiple reasons. Status change includes marital status change, death of spouse or parent, or ineligible due to age or leaving school. Source: Kaiser Family Foundation. (n.d.). Key facts about the uninsured population. Retrieved from https://www.kff.org /uninsured/fact-sheet/key-facts-about-the-uninsured-population/ https://www.kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population/ https://www.kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population/ (those with over 50 full-time- equivalent employ- ees) to provide coverage, the percentage of employ- ers offering health insurance coverage, the number of employees eligible for coverage, and the take-up rate by employees choosing to purchase coverage did not change significantly after the ACA was implemented (Foutz et  al., 2017). This is not sur- prising since medium and large businesses were the most likely to offer coverage before the ACA and concerns about affordability remain the primary obstacle for individuals obtaining insurance. As shown in FIGURE 4-10, most of the uninsured work or are in families with at least one full-time worker, and many more have part-time workers in the family. In 2017, 74% of nonelderly uninsured workers were not offered health insurance by their employer, and over 40% of uninsured workers were employed by small businesses who were not subject to the ACA’s employer mandate (Foutz et  al., 2017). Most uninsured workers are low-income and/or work in blue-collar fields such as agriculture, construction, and the service industry. FIGURE 4-8 After 3 Years of the ACA, Uninsured Rates for Blacks, Latinos, and Whites Have Declined Significantly, but Large Numbers of Immigrant Latinos Remain Uninsured FIGURE 4-9 Cumulative Increase in Family Premiums, Worker Contribution to Premiums, and Worker Earnings, 1999–2017 56 Chapter 4 Overview of the United States Healthcare System 0 White P e rc e n t A d u lts A g e s 19 – 6 4 U n in su re d 16 21 13 36 29 24 47 43 14 9 Black Latino (total) Latino (U.S.-born) Latino (foreign-born) 20 10 50 40 30 July-Sept. 2013 Feb.-April 2016 Source: Reproduced from Foutz et al., 2017; The Commonwealth Fund Affordable Care Act Tracking Surveys. July–September 2015 and February–April 2016. Source: Kaiser/HRET Survey of Employer-Sponsered Health Benefits, 1999-2017; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2017; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2017 (April to April). 1999 0% 38% 38% 29% 24% 109% 113% 47% 172% 180% 270% 224% 64% 47% 38% 8% 11% 50% 100% 150% 200% 250% 300% C u m u la tiv e G ro w th 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Overall inflation Worker earnings Family premiums Worker contributions Age Because Medicaid and CHIP provide extensive coverage to low-income children and Medicare cov- ers older adults, working-age adults between 19 and 64 years are the age group most likely to be uninsured. In 2016, 98.8% of adults older than 65 years and 94.6% of children younger than 19 years were insured, com- pared to 87.9% of working-age adults (U.S. Census Bureau, 2017). Even though many young adults (ages 26–34 years) gained insurance under the ACA, 15.7% of them were still uninsured in 2016. As young adults transition from school to the workforce, they may become ineligible for their fam- ily’s coverage for the first time, may have entry-level jobs earning too little income to afford a policy, or may work for an employer that does not offer health insurance. The ACA addresses part of this problem by requiring insurers to cover dependents (someone who relies on the primary insured for support) until age 26 years. Although some young adults do not consider health insurance a priority expense because they are relatively healthy, studies have shown that cost is the primary determinant of whether people in this age bracket obtain coverage (Institute of Medicine [IOM], 2001a, pp. 73–74). While adults 55 to 64 years of age are more likely to be insured than are younger adults, the uninsured who fall into this age group are a cause for concern because they are medically high risk and often have declining incomes (IOM, 2001a, p. 72). The disability provisions of Medicaid and Medicare and the availability of employer-based insurance keep the number of uninsured in this group relatively small, which is important because it is very expensive for individuals in this demographic to purchase individ- ual insurance policies in the private market. Education Level Education level is also an important factor in insurance status because it is easier, for exam- ple, for college graduates to earn higher incomes and obtain jobs that provide affordable employment-based insurance as compared to less-educated individuals (IOM, 2001a, p. 74). The higher the education level, the more likely one is to be insured. In 2016, the uninsured rate was 6.8% for working adults with a bachelor’s degree, compared to 15.2% for high school graduates and 27.3% for those without a high school diploma (U.S. Census Bureau, 2017). Geography As shown in FIGURE 4-11, residents of the South and West are more likely to be uninsured than are residents of the North and Midwest. There are vari- ations in the uninsured rate from state to state. These differences are based on numerous factors, including racial/ethnic composition, other population charac- teristics, public program eligibility, and employment rates and sectors (Kaiser Family Foundation (KFF) 2017). This trend is likely to continue, at least in the short run, with many states in the South opting not to expand Medicaid coverage under the ACA. Uninsurance is a particular problem among the 16% of the population who live in rural areas. They are more likely to be poorer, unemployed, or employed in blue-collar jobs and are less likely to have access to employer coverage than are their urban counterparts (Newkirk & Damico, 2014). In addition, rural residents have relatively high healthcare needs—they tend to be older, poorer, and less healthy than urban residents— and there is often a provider shortage in these areas. Because many rural residents live in states that have not chosen to expand Medicaid and also have incomes FIGURE 4-10 Characteristics of the Nonelderly Uninsured, 2016 Healthcare Access 57 100–199% FPL 25% 200–399% FPL 31% 400%+ FPL 20% <100% FPL 24% Total = 27.5 Million Nonelderly Uninsured Family work status Family income (%FPL) Race One or more full-time workers 75% No workers 15%11% Part-time workers White 44% Black 15% Hispanic 33% Asian/Native Hawaiian or Pacific Islander 5% Other 3% Notes: Includes nonelderly individuals ages 0–64. The U.S. Census Bureau’s poverty threshold for a family with two adults and one child was $19,318 in 2016. Data may not total 100% due to rounding. Persons of Hispanic origin may be of any race; all other race/ethnicity groups are non-Hispanic. Source: Kaiser Family Foundation analysis of the March 2017 Current Population Survey, Annual Social and Economic Supplement. too low to qualify for premium subsidies, insurance is more likely to be unaffordable for them than for urban residents (Newkirk & Damico, 2014). The Importance of Health Insurance Coverage to Health Status Having health insurance provides tangible health ben- efits. For a variety of reasons discussed in this section, having health insurance increases access to care and positively affects health outcomes. Conversely, the uninsured, who do not enjoy the benefits of health insurance, are more likely to experience adverse health events and a diminished health-related quality of life and are less likely to receive care in appropriate set- tings or receive the professionally accepted standard of care (Foutz et al., 2017). Health insurance is an important factor in whether someone has a “medical home,” or consistent source of care. Having a consistent source of care is positively associated with better and timelier access to care, bet- ter chronic disease management, fewer emergency department (ED) visits, fewer lawsuits against EDs, and increased cancer screenings for women (Foutz et  al., 2017; Lambrew, DeFriese, Carey, Ricketts, & Biddle, 1996; Starfield & Shi, 2004). Unfortunately, the uninsured are much less likely to have a usual source of care than are insured individuals (FIGURE 4-12). The uninsured are also less likely to follow treat- ment recommendations and more likely to forgo care due to concerns about cost (Foutz et  al., 2017). In addition, the uninsured are less likely to receive pre- ventive care and appropriate routine care for chronic conditions (Foutz et  al., 2017). One result of these conditions is that children without insurance are more likely to have developmental delays, often leading to difficulties in education and employment. Also, qual- ity of life may be lower for the uninsured due to their lower health status and anxiety about both monetary and medical problems. FIGURE 4-11 Uninsured Rates Among the Nonelderly by State, 2016 Source: Reproduced from Centers for Disease Control and Prevention, MMWR 1996;45: 526–528. 58 Chapter 4 Overview of the United States Healthcare System AK HI WA ID MT WY CO ND MN IA MO AR LA MS AL GA FL NJ DE MD DC SC NC TN KY INIL WI MI OH PA WV VA NY ME VT NH MA CT RI SD NE KS OK TX NMAZ UT NV OR CA Notes: Includes nonelduals individuals ages 0–64. <7% (11 states including DC) 7–12% (28 states) >12% (12 states)
Source: Kaiser Family Foundation analysis of the March 2017 Current Population Survey, Annual Social and Economic Supplement.
BOX 4-1 Discussion Questions
From a policy perspective, are the characteristics just
described interrelated, or should they be addressed
separately? If you are trying to reduce the number
of uninsured, do you believe the focus should be on
altering insurance programs or changing the effect of
having one or more of these characteristics? Whose
responsibility is it to reduce the number of uninsured?
Government? The private sector? Individuals?
BOX 4-2 Discussion Questions
The ACA made it a priority to reduce the number of
uninsured. At what point, if any, should the government
step in to provide individuals with assistance to
purchase insurance coverage? Do you think such
assistance should be a federal or a state responsibility?

Because the uninsured are less likely to obtain pre-
ventive care or treatment for specific conditions, they
have a higher mortality rate overall, have a higher in-
hospital mortality rate, and are more likely to be hospi-
talized for avoidable health problems (Foutz et al., 2017).
Of course, without regular access to care, it is less likely
that a disease will be detected early when treatment may
be cheaper and more effective. For example, uninsured
cancer patients are diagnosed at later stages of the dis-
ease and die earlier than insured cancer patients.
Ways to Assess the Cost of Being
Uninsured
There are several ways to think about the costs of being
uninsured. These costs include the health status costs
to the uninsured individual, as discussed previously;
financial cost to the uninsured individual; financial
cost to state and federal governments and to private
insurers; financial cost to providers; productivity costs
from lost work time due to illness; costs to other pub-
lic priorities that cannot be funded because of the
resources spent on providing care to the uninsured;
and costs to the health status and patient satisfaction
of insured individuals.
The financial burden of being uninsured is sig-
nificant. Although on average the uninsured spend
fewer dollars on health care than the insured, those
without insurance spend a greater proportion of their
overall income on medical needs. Furthermore, when
the uninsured receive care, it is often more expen-
sive because the uninsured are not receiving care as
part of an insurance pool with leverage to negotiate
lower rates from providers. In fact, the uninsured are
charged rates two to four times higher than the rates
paid by insurance companies or public programs
(Foutz et al., 2017). The uninsured are less likely to be
able to pay for healthcare needs because the average
uninsured household does not have net assets and half
of the uninsured living under the 200% poverty level
have no savings (Foutz et al., 2017). Not surprisingly,
the uninsured are much more likely to be concerned
about being able to pay their medical bills than are
their insured counterparts (FIGURE 4-13).
Costs of medical care provided by, but not fully
reimbursed to, health professionals are referred to as
uncompensated care costs. In 2013, it was estimated
that uncompensated care costs surpassed $84 billion in
the United States, with federal, state, and local spend-
ing covering most of the tab, primarily through “dis-
proportionate share” (DSH) payments to hospitals that
serve many uninsured individuals and Medicaid bene-
ficiaries (Foutz et al., 2017). Under the ACA, however,
DSH payments are set to be reduced drastically—a
$43 billion reduction between 2018 and 2025 (Foutz
et  al., 2017). Although hospitals provide about 60%
of all uncompensated care services and receive signif-
icant government assistance, most of the uncompen-
sated care provided by nonhospital physicians is not
subsidized (Foutz et  al., 2017). Every dollar spent by
providers, governments, and communities to cover
uncompensated care costs is a dollar that is not spent
on another public need. There are a variety of high-
cost public health needs, such as battling infectious
FIGURE 4-12 Barriers to Health Care Among Nonelderly Adults by Insurance Status, 2016
Healthcare Access 59
0
No usual source
of care
Postponed seeking
care due to cost
Note: Includes nonelderly adults ages 18–64. Includes barriers experienced in past 12 months.
Respondents who said usual source of care was the emergency room were included among those not
having a usual source of care. All differences between uninsured and insurance groups are statistically
significant (p < 0.05). 49% 12% 12% 23% 9% 6% 20% 8% 18% 14% 6% 3% Went without needed care due to cost Postponed or did not get needed prescription drug due to cost 10 5 25 30 35 40 45 50 20 15 Uninsured Medicaid/other public Employer/other private Source: Foutz et al., 2017; Kaiser Family Foundation analysis of the 2016 National Health Interview Survey. diseases like tuberculosis, engaging in emergency pre- paredness planning, and promoting healthy behaviors. Public and private funds used to cover uncompen- sated care, especially when the care is more expensive than necessary because of the lack of preventive care or early interventions, are resources that are no longer available to meet the country’s other health needs. An additional cost associated with the uninsured is the cost of lower productivity. This cost refers to the reduced productivity in the workforce stemming from the lower health status associated with being uninsured. Productivity may be reduced when workers are absent or when they are not functioning at their highest level due to illness. In addition, several studies show that pro- viding health insurance helps employers recruit better employees and that workers with health insurance are less likely to change jobs, reducing the costs of hiring and training new employees (Families USA, 2005). Finally, there is a “spillover” effect of uninsurance for insured individuals. In communities with high rates of uninsured, even insured individuals are less likely to have a usual source of care, schedule an office visit, be satisfied with the quality of care they receive, and obtain needed care (Gresenz & Escarce, 2011; Pauly & Pagán, 2007). This spillover occurs because providers in communities with high uninsured rates may earn less revenue relative to costs. Insured indi- viduals may suffer if subsidies are not available to pro- viders to allow for higher revenue or if government spending on subsidies for the uninsured crowd out spending on services that might benefit the insured (Pauly & Pagán, 2007). In addition, physicians in com- munities with high uninsurance rates may choose to provide fewer types of services or fewer office hours due to profitability concerns. Finally, the insured may suffer if their provider treats them the same as uninsured patients, who may demand and receive fewer services or lower-quality services from their providers (Gresenz & Escarce, 2011). The Underinsured While there are disagreements about how to mea- sure the underinsured, in general being underinsured means individuals do not have the financial means to cover the gap between what their insurance coverage pays for and the total cost of their medical bills. As a result, they spend a high proportion of their income on healthcare services. A July 2014 survey found that 23% (31 million) of adults ages 19 to 64 years were under- insured (Collins, Rasmussen, Beutel, & Doty, 2015). Of particular concern are the 45% of underinsured adults younger than 65 years who are on Medicare, because they were the sickest population in the survey. Ninety-one percent of them are in fair or poor health or are disabled, and they are the second-poorest popu- lation after Medicaid beneficiaries (Collins et al., 2015). The underinsured problem is exacerbated during a recession when more individuals cannot afford to pay their deductibles and co-payments. Insurance status is clearly linked to the decision to delay care due to cost. In the 2014 survey, 57% of uninsured individuals and 44% of underinsured respondents reported avoiding care due to cost, compared to 23% of insured individ- uals (Collins et al., 2015). In addition, over half (51%) of underinsured adults indicated they had problems paying medical bills or were currently paying off med- ical debt, which is twice the rate of other insured adults who are not underinsured (Collins et al., 2015). As a result, everyone ends up paying for the underinsured. Providers attempt to shift the cost associated with the underinsured and uninsured to others who can afford FIGURE 4-13 Problems Paying Medical Bills by Insurance Status, 2016 60 Chapter 4 Overview of the United States Healthcare System 0 Problems paying or unable to pay medical bills Worried about being able to pay costs for normal care Note: Includes nonelderly adults ages 18–64. All differences between uninsured and insured groups are statistically significant (p < 0.05). 29% 14% 63% 26% 76% 44% 30% 24% Worried about paying medical bills if get sick Medical bills being paid off over time 20 10 50 60 70 80 40 30 Uninsured Insured Source: Foutz et al., 2017; Kaiser Family Foundation analysis of the 2016 National Health Interview Survey. to pay, including the government and insured individ- uals. Institutions such as hospitals may try to negotiate higher reimbursement for their services, which leads insurers to charge higher premiums to their clients to cover the additional costs. Insurance Coverage Limitations Even individuals with insurance coverage may face healthcare access problems due to coverage limita- tions. These limitations could include high levels of cost sharing, reimbursement and visit caps for specific services, and service exclusions. (Another problem— annual and lifetime dollar limits on coverage—was eliminated by the ACA.) Cost Sharing A typical insurance plan includes premiums, deduct- ibles, and co-payments (the latter can also be designed as co-insurance). A premium is an annual cost, typ- ically charged monthly, for enrolling in a plan. For those with health insurance through their employer, the premium is often split between employer and employee. The average annual premium for a single coverage was $6,690 in 2017, although individuals in high-deductible plans averaged somewhat less in pre- miums ($6,024) (KFF & Health Research Educational Trust [HRET], 2017). Figure 4-9 and FIGURE 4-14 show the increase in monthly premiums over the last decade and also how much faster premiums have FIGURE 4-14 Average Annual Premiums for Single and Family Coverage, 1999–2017 Healthcare Access 61 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 $0 $6,000 $8,000 $10,000 $12,000 $18,000 $20,000 $16,000 $14,000 $4,000 $2,000 $ 3 ,3 8 3 * $ 9 ,0 6 8 * $ 3 ,6 9 5 * $ 9 ,9 5 0 * $ 4 ,0 2 4 * $ 1 0 ,8 8 0 * $ 4 ,2 4 2 * $ 1 1 ,4 8 0 * $ 4 ,4 7 9 * $ 1 2 ,1 0 6 * $ 4 ,7 0 4 * $ 1 2 ,6 8 0 * $ 5 ,0 4 9 * $ 1 3 ,7 7 0 * $ 5 ,4 2 9 * $ 1 5 ,0 7 3 * $ 5 ,8 8 4 * $ 1 6 ,3 5 1 * $ 6 ,4 3 5 $ 1 8 ,1 4 2 * $ 6 ,6 9 0 * $ 1 8 ,7 6 4 * $ 6 ,2 5 1 * $ 1 7 ,5 4 5 * $ 6 ,0 2 5 $ 1 6 ,8 3 4 * $ 5 ,6 1 5 * $ 1 5 ,7 4 5 * $ 4 ,8 2 4 $ 1 3 ,3 7 5 * $ 2 ,6 8 9 * $ 7 ,0 6 1 * $ 2 ,4 7 1 * $ 6 ,4 3 8 * $ 2 ,1 9 6 $ 5 ,7 9 1 $ 3 ,0 8 3 * $ 8 ,0 0 3 * Single coverage Family coverage *Estimate is statistically different from estimate for the previous year shown (p < 0.05). Source: Kaiser/HRET Survey of Employer-Sponsered Health Benefits, 1999–2017. risen relative to wages and inflation. A deductible is an amount the insured pays out-of-pocket before the insurance plan assists with the costs of health- care services. There may be an annual deductible for the plan overall or separate deductibles for different types of services covered by the plan, such as inpatient care, outpatient care, and prescription drug coverage. Co-payments refer to a specific dollar amount that patients pay when they receive services or drugs. For example, one might have a $15 co-payment to see a primary care provider for an office visit. Co-insurance refers to a percentage of service cost that patients pay when they receive services or drugs. For example, an insured might have a 20% co-insurance requirement to see a primary care provider for an office visit. If the visit cost $150, a 20% co-insurance requirement would cost $30. Co- payment and co-insurance amounts may vary depending on the service received. Cost-sharing requirements can vary widely by plan and plan type. Some plans do not have general deductibles, and for those with general deductibles, the amount varies significantly. For example, in 2017 the average deductible for a single worker was $1,505, though deductibles vary by plan type and employer size. Preferred provider organizations (PPOs) had the lowest average deductible ($1,046), while high- deductible health plans averaged $2,304 for single workers. Coverage for single workers in small firms is much higher ($1,594) than it is for those in large firms ($856) (KFF & HRET, 2017). A significant number of plans have deductibles of $1,000 or more (FIGURE 4-15). Variation also exists for service-specific costs. It is rare for private plans to have separate deductibles for hospital admissions, outpatient surgery, or ED visits, but patients generally have cost-sharing arrangements for these services. For example, in private plans the average co-payment for ED visits is $180 and the aver- age co-payment for outpatient surgery is $231 (KFF & HRET, 2017). Medicare, on the other hand, charged a $1,340 deductible for the first 60 days of hospital- ization in 2018. Medicare beneficiaries do not pay a per diem for the first 60 days in a hospital, but they then pay $335 per day for the next 3 months. This fee increases for longer stays (Centers for Medicare and Medicaid Services, 2017). Reimbursement and Visit Caps Insurance plans may limit the amount they will reim- burse for a specific service during the year, with patients responsible for costs that exceed dollar amount limits. In addition, plans may limit the number of times a patient may see a certain type of provider during the year. Visit caps vary by insurance plan. For example, a plan might limit a member to 90 physical therapy vis- its per year per injury, or to 20 visits per calendar year FIGURE 4-15 Percentage of Covered Workers Enrolled in a Plan With a General Annual Deductible of $1,000 or More for Single Coverage, by Firm Size, 2009–2017 62 Chapter 4 Overview of the United States Healthcare System 80% 40% 30% 20% 10% 0% 50% P e rc e n ta g e o f C o ve re d W o rk e rs 60% 70% 2012 2013 2014 2016 20172015201120102009 40% 46% 50% 49% 58%* 61% 63% 65% 58% 51% 48% 51% 45% 46% 39%* 41% 32% 38% 28% 34% 26% 31% 22%* 27%* 17% 22% 13% *Estimate is statistically different from estimate for the previous year shown (p < 0.05). Note: These estimates include workers enrolled in HDHP/SOs and other plan types. Average general annual health plan deductibles for PPOs, POS plans, and HDHP/SOs are for in-network services. All small �rms (3–199 Workers) ALL FIRMS All large �rms (200 or more workers) Source: “2017 Employer Health Benefits Survey,” 2017. for acupuncture. Once a patient reaches these limits, the insurance plan will not cover additional visits and the patient would have to pay the entire cost of a visit out-of-pocket. Service Exclusions Health insurance plans may also partially or fully exclude certain types of services from coverage alto- gether. For example, a plan might cover high-dose chemotherapy associated with bone marrow trans- plants for only specified organ and tissue transplants and home health services only if certain conditions are met. Examples of services not covered at all by a plan include nonrigid orthopedic or prosthetic devices such as wigs or elastic stockings, eyeglasses, hearing aids, exercise programs, assisted reproductive tech- nology, or physical exams for obtaining or continuing employment. Coverage for abortion and family planning ser- vices is also limited in many instances. Federal funds may be used for abortion services only in cases of rape or incest or to save the life of the pregnant woman. The ACA does not include abortion services as part of its essential health benefits package, and any cov- erage of abortion services must be paid with private dollars, not with federal subsidies. As of June 2018, 11 states have enacted laws that restrict abortion cover- age in all private plans in the state, 25 states restrict abortion coverage in private plans offered through their exchange, and 21 states restrict abortion cover- age in public employee plans (Guttmacher Institute, n.d., 2018a). Regarding contraceptive coverage, the ACA requires most health insurance plans to cover all con- traceptive methods approved by the Food and Drug Administration and related counseling services with- out cost-sharing. Federal regulations exempt religious organizations from having to provide contraceptive coverage and make an accommodation for certain other employers with religious objections to avoid pay- ing for or arranging contraceptive coverage, while still allowing employees to obtain coverage through their health insurance plan (Guttmacher Institute, 2018b). In October 2017, the Trump administration issued regulations that expand the ability of organizations to refuse to provide contraceptive coverage due to reli- gious or moral objections, but these regulations are, at the time of this writing, blocked by court rulings. Due to concerns that federal guarantees for contracep- tive coverage may be limited in the future, many states have passed laws protecting coverage. As of June 2018, 29 states require insurance plans to cover the full range of contraceptive drugs, 9 states prohibit cost-sharing for contraceptives, and 5 states prohibit other restric- tions and delays by insurers. At the same time, 21 states exempt select employers and insurers from providing contraceptive coverage based on religious objections (Guttmacher Institute, 2018b). Given the litigation relating to contraceptive coverage requirements and exemptions/accommodations, it is not yet clear what requirements, if any, plans will have to follow regard- ing contraceptive coverage in the future. Safety Net Providers Securing access to care can be difficult for those without comprehensive private insurance. For the uninsured, the high cost of care is often a deterrent to seeking care. For those with public coverage, it is often difficult to find a provider willing to accept their insurance due to the low reimbursement rates and administrative burdens associated with participating in these programs. For these patients and the under- insured, the “healthcare safety net” exists. The healthcare safety net refers to providers who serve disproportionately high numbers of uninsured, underinsured, and publicly insured patients. Although there is no formal designation indicating that one is a safety net provider, the Health and Medicine Division (HMD) of the National Academy of Sciences (for- merly the Institute of Medicine [IOM]) defines the healthcare safety net as “those providers that organize and deliver a significant level of health care and other related services to uninsured, Medicaid, and other vulnerable populations” (IOM, 2000a, p. 21). “Core” safety net providers are those who serve vulnerable populations and have a policy of providing services regardless of patients’ ability to pay. Some safety net providers have a legal requirement to provide care to the underserved, while others do so as a matter of principle (IOM, 2000a, p. 21). Who are safety net providers? It is a difficult ques- tion to answer because there is no true safety net “sys- tem.” Safety net providers can be anyone or any entity providing health care to the uninsured and other vul- nerable populations, whether community or teaching hospitals, private health professionals, school-based health clinics, or others. Those providers that fit the narrower definition of “core” safety net providers include some public and private hospitals, commu- nity health centers, family planning clinics, and public health agencies that have a mission to provide access to care for vulnerable populations. Safety net provider patient loads are mostly composed of people who are poor, on Medicaid, or uninsured, and are members of racial and ethnic minority groups. For example, in 2016, 92% of federally qualified community health Healthcare Access 63 center (FQHC) patients had incomes at or below 200% FPL, 72% were on Medicaid or uninsured, 23% were African American, and 35% were Hispanic/ Latino (National Association of Community Health Centers [NACHC], 2018a). Of the America’s Essential Hospitals (formerly National Association of Public Hospitals and Health Systems) member hospital inpa- tient discharges, in 2016, about 46% were covered by Medicaid or uninsured, and 68% were racial or ethnic minorities (America’s Essential Hospitals, 2018). FQHCs provide comprehensive primary medical care services, culturally sensitive care, and enabling services such as transportation, outreach, and trans- lation that make it easier for patients to access ser- vices. Many health centers also provide dental, mental health, and pharmacy services. Because health cen- ters are not focused on specialty care, public hospitals are often the sole source of specialty care for unin- sured and underserved populations (Makaroun et al., 2017). In addition, public hospitals provide traditional healthcare services, diagnostic services, outpatient pharmacies, and highly specialized trauma care, burn care, and emergency services (America’s Essential Hospitals, 2018). Although not all local government health departments provide direct care, many do. Local health departments often specialize in caring for specific populations, such as individuals with HIV or drug dependency, as compared to public hospitals and health centers, which provide a wider range of services (IOM, 2000a, pp. 63–65). Safety net providers receive funding from a vari- ety of sources, but they often struggle financially. Medicaid is the single largest funding stream for health centers, accounting for 43% of their revenue (NACHC, 2018b). Due to low Medicaid reimburse- ment, Medicaid revenue accounts for only 80% of the cost of providing care to Medicaid patients served by health centers (NACHC, 2018a). Federal grants to health centers are intended to cover the cost of car- ing for the uninsured; however, this grant funding has not kept pace with the cost of provided care. Due to low federal reimbursement, health centers incurred a $1 billion gap in the cost of care for treating the unin- sured in 2016 (NACHC, 2018a). In addition, payment from private insurance is unreliable due to the high- cost-sharing plans held by many privately insured, low-income individuals. Furthermore, Medicare payments to health centers are capped under federal law at an amount that does not match the growth in healthcare spending. Public hospitals face a similarly difficult eco- nomic picture. Many public hospital services are not fully reimbursed because payments made by indi- viduals or insurers do not match the cost of care. In 2016, Essential Hospitals members provided almost $5.5 billion in uncompensated care, which equals almost 14% of all the uncompensated care provided nationally (America’s Essential Hospitals, 2018). Like health centers, public hospitals receive funds to cover low- income patients, including Medicaid DSH pay- ments, state and local subsidies, and other revenues such as sales tax and tobacco settlement funds. In 2016, Essential Hospitals had an average aggregate operating margin of 4%, compared to 7.8% for all U.S. hospitals. Without DSH payments, Essential Hospitals’ aggre- gate operating margin would dip to –1.4% ( America’s Essential Hospitals, 2018). Thus, the reduction in DSH payments that occurred as part of health reform is particularly concerning for safety net hospitals. For all the positive work accomplished by safety net providers, they cannot solve all healthcare prob- lems for vulnerable populations. Safety net patients may lack continuity of care, whether because they cannot see the same provider at each visit or because they have to go to numerous sites or through vari- ous programs to receive all the care they need. Even though safety net providers serve millions of patients every year, there are not enough providers in enough places to satisfy the need for their services. While the ACA included an infusion of funds to safety net pro- viders, they also will serve an influx of newly insured patients. Health centers received $11 billion under the ACA and increased their patient population by 10% over 2 years, to serve 24 million patients in 2015 (Rosenbaum et al., 2017). And, as noted earlier, many safety net providers are underfunded and constantly struggling to meet the complex needs of their patient population. The problems facing the uninsured and the stress- ors on the healthcare safety net highlight the inade- quacies of the current “system” of providing health care, and many of these problems will remain even after the ACA is implemented. Given the country’s patchwork of programs and plans, decisions made in one area can significantly affect another. For example, if Medicaid reimbursement rates are cut or program eligibility is reduced, safety net providers will have a difficult time keeping their doors open while, simul- taneously, more patients will become uninsured and seek care from safety net providers. If more people choose high-deductible private insurance plans that they cannot easily afford, individuals may go without needed services or safety net providers will end up providing an increasing amount of uncompensated care. If employers decide to reduce or end coverage or increase employee cost sharing, previously insured people may fall into the ranks of the uninsured. As  a result, safety net providers and their patients 64 Chapter 4 Overview of the United States Healthcare System are affected by many policies that are not directed at them, but still greatly impact their ability to provide or access care. Workforce Issues Problems accessing care may also occur due to pro- vider shortages and an uneven distribution of provid- ers throughout the country. This problem affects both the uninsured and the insured alike. If a provider is not available to take you as a patient, it matters little if you have an insurance plan that would cover the cost of your care. Of course, if a provider shortage is so great that those with insurance are turned away, the unin- sured will have an even harder time accessing care. There are a variety of estimates regarding a future healthcare workforce shortage. For example, the Asso- ciation of American Medical Colleges estimates a phy- sician shortfall between 42,600 and 121,300 by 2030 (Dall, West, Chakrabarti, Reynolds, & Iacobucci, 2018). On the other hand, if healthcare delivery approaches that rely heavily on nonphysician providers are used more often in the future, the estimates for physician shortages decline significantly. Two such models are the patient-centered medical home (PCMH), which relies on a team of providers to supply and coordinate care, and the nurse-managed health center (NMHC), which is a clinic with nurse practitioners (NPs) as the primary caregiver (Auerbach et al., 2013). One study estimated that increased use of PCMHs or NMHCs alone would reduce a primary care physician shortage from 45,000 to 35,000. Used together, the combination of approaches could cut the physician shortage in half (Auerbach et al., 2013). One of the main concerns with the healthcare workforce is a shortage of primary care providers. It is expected that there will be between 14,800 and 49,300 fewer primary care physicians than are needed to meet demand by 2030 (Dall et al., 2018). More providers are choosing specialty care over primary care. About 30% of physicians practice primary care today, as opposed to 70% 50 years ago (Mitra, 2016). Midlevel provider career choices have followed a similar pattern. From 1974 to 2012, the percentage of physician assistants (PAs) working in primary care declined from 70% to 34% (Dunker, Krofah, & Isasi, 2014). NPs and PAs are more likely to work in hospitals or specialty care offices than to provide services in office-based primary care (Colwill, Cultice, & Kruse, 2008). The long work hours, increased demands (particularly administra- tive demands associated with insurance companies), lack of respect, and comparatively low pay for pri- mary care providers are sending future practitioners to other fields (Castellucci, 2016). For example, one study showed that, over a lifetime, a cardiologist will make $2.7 million more than a primary care physician (Vaughn, DeVrieze, Reed, & Schulman, 2010). While fewer graduates are turning to primary care, demand for primary care services is expected to increase in the next several years. Most of the increased demand will be due to population growth and aging, with the remaining uptick in demand based on the increase of insured individuals under the ACA (Dall et al., 2018). The U.S. population is aging, with individuals older than 65 years projected to increase from 15% in 2017 to 21% in 2030 (U.S. Cen- sus Bureau, 2018). These older patients are heavy users of healthcare services. Even though older patients made up about 12% of the population in 2008, they accounted for over 45% of all primary care office visits that year (Centers for Disease Control and Prevention [CDC], 2010). Furthermore, geriatric training is lack- ing among primary care providers. An IOM report on aging and the healthcare workforce found medical school curricula on geriatric medicine to be “inade- quate” (IOM, 2008, p. 129). Physicians agree: in a 2002 survey, only half of all responding physicians thought their colleagues could adequately treat a geriatric condition (IOM, 2008, pp. 128–129), and in a 2007 study, only 23% of medical school graduates indicated they received expert geriatric training (Association of American Medical Colleges, 2012). In addition to provider shortages, access prob- lems may exist because providers are not distributed as needed throughout the country (FIGURES 4-16 through 4-18). In 2013, 29 states had a primary care physician shortage, with Texas and Florida expe- riencing the greatest deficits (over 1,000 full-time- equivalent [FTE] providers). By 2025, it is estimated that 37 states will have a primary care physician shortage, with 12 states experiencing a deficit of 1,000 FTE providers or more (Health Resources Services Administration [HRSA], 2016). In contrast, Massa- chusetts has a primary care physician surplus that it BOX 4-3 Discussion Questions Safety net providers mostly serve uninsured and publicly insured low-income patients. Many of the safety net provider features you just read about are in place to assist these patients in accessing health care. Instead of pursuing universal coverage, would it be an equally good strategy to expand the number of safety net providers? Are there reasons for both safety net providers and health insurance to exist? How does having insurance relate to accessing care? Healthcare Access 65 expects to maintain through 2025. Similarly, primary care NP and PA shortages vary across the country. In 2013, 23 states had a primary care NP shortage, but no states are projected to have a shortfall by 2025 (HRSA, 2016). Regarding primary care PAs, 22 states had a shortage in 2013. In 2025, 9 states are expected to have a PA shortage, while 5 states (New York, North Carolina, Texas, California, and Colorado) are projected to have a surplus of more than 1,000 FTE (HRSA, 2016). AK HI WA ID MT WY CO ND MN IA MO AR LA MS AL GA FL SC NC TN KY INIL WI MI OH PA WV VA NYSD NE KS OK TX NMAZ UT NV OR CA *Note: Estimates in states with an RSE > 20% should be used with caution because of large
sampling error.
902–4,032
4,033–7,017
7,018–13,986
13,987–26,841
26,842–94,385
RSE 20–29%*
DC
Total number
NJ
DE
MD
ME
VT
NH
MA
CT
RIWY
ND
FIGURE 4-16 Number of Physicians by State, 2008–2010
Source: See Figure 2 from The US Health Workforce Chartbook, HRSA, 2013, retrieved from https://bhw.hrsa.gov/sites/default/files/bhw/nchwa/chartbookpart1
AK
HI
WA
ID
MT
WY
CO
ND
MN
IA
MO
AR
LA
MS AL GA
FL
NC
TN
INIL
WI
MI
OH
PA
WV
VA
NYSD
NE
OK
TX
NMAZAZ
UT
NV
OR
CA
*Note: Estimates in states with an RSE > 20% should be used with caution because of large
sampling error.
**Data are not reported at the state level, because the RSE ≥ 30%; estimate does not meet
standards of reliability.
597–763
764–1,394
1,394–2,204
Not reportable**
2,205–3,649
3,650–10,198
RSE 20–29%*
DC
Total number
NJ
DE
MD
ME
VT
NH
MA
CT
RI
ID
MS
WV
NE
OK
NV
KYKY
KS
SCSC
KS
LA
IA
FIGURE 4-17 Number of Physician Assistants by State, 2008–2010
Source: See Figure 7 from The US Health Workforce Chartbook, HRSA, 2013, retrieved from https://bhw.hrsa.gov/sites/default/files/bhw/nchwa/chartbookpart1
66 Chapter 4 Overview of the United States Healthcare System

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Rural areas are particularly susceptible to pro-
vider shortages. This is an especially pressing problem
because individuals who live in rural areas are more
likely to be sicker, older, and poorer than their urban
counterparts. Compared to urban dwellers, rural
residents are more likely to lack access to a primary
care physician, have higher rates of chronic diseases
and teen pregnancies, and engage in more unhealthy
behaviors such as smoking (National Conference of
State Legislatures, 2017).
In 2017, 59% of designated Health Professional
Shortage Areas were in rural areas (National Confer-
ence of State Legislatures, 2017). The number of spe-
cialists in rural areas is only 30 per 100,000 people,
compared to 263 per 100,000 in urban areas (National
Rural Health Association [NRHA], n.d.). While the
gap is not as prominent for primary care physicians,
they also prefer urban locations. The patient–primary
care physician ratio in rural areas is 39.8 per 100,000,
compared to 53.3 per 100,000 in urban areas (NRHA,
n.d.). Primary care providers are vital to the health-
care workforce in rural areas. While family physicians
comprise only 15% of outpatient physicians in the
country, they provide 42% of services in rural areas
(NRHA, n.d.).
Rural areas are more likely to attract NPs and PAs
than physicians, suggesting that alternative care mod-
els that focus on nonphysician providers may be partic-
ularly useful in addressing access issues in rural areas
(Graves et  al., 2016). FQHCs have already embraced
this model, hiring NPs, PAs, and nurse–midwives at a
faster rate than physicians (Proser, Bysshe, Weaver, &
Yee, 2015).
Shortages also exist within the public health work-
force. The public health workforce has been defined
to include anyone who is providing 1 of the 10 essen-
tial public health functions (discussed in the Public
Health Institutions and Systems chapter), regardless
of whether their employer is a government agency,
not-for-profit organization, private for-profit entity, or
some other type of organization (Center of Excellence,
2013). The public health workforce includes profes-
sions such as public health physicians and nurses, epi-
demiologists, health educators, and administrators.
It is difficult to count everyone involved in the public
health workforce, given the wide array of jobs and the
numerous data sources needed to compile the infor-
mation. In 2012, the public health field was estimated
to include between 310,000 and 342,000 workers.
This represents a worker-to-population ratio of 99 to
110  per 100,000 people, which is substantially lower
than the earlier estimates in 1980 (220 per 100,000
people) and 2000 (158 per 100,000 people) (Center of
Excellence, 2013).
The ACA contains a number of provisions, intended
to address some of the more pressing healthcare and
public health workforce issues, which could accomplish
the following goals:
■ Increase funding for community health centers
■ Increase funding for the National Health Service
Corps, which provides scholarships and loan
AK
HI
WA
ID
MT
WY
CO
ND
MN
IA
MO
AR
LA
MS AL GA
FL
SC
NC
TN
KY
INIL
WI
MI
OH
PA
WV
VA
NYSD
NE
KS
OK
TX
NMAZ
UT
NV
OR
CA
4,296–22,260
Total number
22,261–50,861
50,842–90,663
90,664–167,476
167,477–274,722
DC
NJ
DE
MD
ME
VT
NH
MA
CT
RI
FIGURE 4-18 Number of Nurse Practitioners by State, 2008–2010
Source: See Figure 21 from The US Health Workforce Chartbook, HRSA, 2013, retrieved from https://bhw.hrsa.gov/sites/default/files/bhw/nchwa/chartbookpart1
Healthcare Access 67

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repayments to students who agree to become pri-
mary care providers and work in medically under-
served communities
■ Increase funding for PA and NP training
■ Provide new funding to establish NP-led clinics
■ Provide new funding for states to plan and imple-
ment innovative strategies to boost their primary
care workforce
■ Establish a National Health Care Workforce Com-
mission to coordinate federal workforce efforts
and bolster data collection and analysis
■ Establish teaching health centers
■ Provide payments for primary care residencies in
community-based ambulatory care centers
■ Increase the number of Graduate Medical Educa-
tion slots available to primary providers by redis-
tributing unused slots
■ Promote residency training in outpatient settings
■ Provide grants to training institutions to promote
careers in the healthcare sector
■ Increase reimbursement for primary care provid-
ers under Medicare and Medicaid
Given the uncertain political future of the ACA, it
remains to be seen whether these provisions will be
implemented or funded in the years to come.
▸ Healthcare Quality
As noted earlier in this chapter, the United States
spends more on health care than most other devel-
oped countries, yet frequently the care provided does
not result in good health outcomes. Researchers and
policymakers have highlighted the need to improve
the quality of care provided in this country. A 2003
landmark study raised many quality concerns, includ-
ing findings that patients received the appropriate
medical care only 55% of the time and that patients
were much more likely not to receive appropriate
services than to receive potentially harmful care
(McGlynn, Asch, & Adams, 2003). The lack of appro-
priate care was seen across medical conditions, simi-
larly affecting treatments relating to preventive care,
acute care, and chronic diseases (McGlynn et al., 2003,
p. 2641). The degree to which patients received appro-
priate care varied greatly. For example, only 10% of
patients with alcohol dependence received the stan-
dard of care, as opposed to 78% of those with senile
cataracts (McGlynn et al., 2003, p. 2641). In addition,
many adults do not receive all of the recommended
preventive measures. A 2015 study found that only 8%
of respondents age 35 years and older reported receiv-
ing all of the recommended preventive measures,
and only 20% reported receiving most (75%) of them
(Borsky et al., 2018). On the other hand, 5% reported
receiving none of the recommended preventive mea-
sures (Borsky et al., 2018).
Key Areas of Quality Improvement
In 2001, the IOM (again, now the HMD) released
Crossing the Quality Chasm: A New Health System for
the 21st Century, which represented nothing less than
an urgent call to redesign the healthcare system to
improve the quality of care provided (IOM, 2001b).
The IOM attributes our inability to provide consistent,
high-quality health care to a number of factors, includ-
ing the growing complexity of health care, including
quickly developing technological advancements; an
inability to meet rapid changes; shortcomings in safely
using new technology and applying new knowledge to
practice; increased longevity among the population,
which carries concerns relating to treating chronic
conditions in a system better designed to address epi-
sodic, acute care needs; and a fragmented delivery
system that lacks coordination, leading to poor use of
information and gaps in care (IOM, 2001b, pp. 2–4).
In its call to redesign the healthcare system to improve
quality, the IOM focuses on six areas of improvement:
safety, efficacy, patient-centeredness, timeliness, effi-
ciency, and equity (IOM, 2001b, p. 43).
Safety
In a safe healthcare system, patients should not be
endangered when receiving care that is intended
to help them, and healthcare workers should not be
harmed by their chosen profession (IOM, 2001b,
p. 44). In an earlier report, To Err Is Human, the IOM
found that deaths due to medical errors in hospitals
could be as high as 98,000 annually and cost up to
$29 billion, over half of which is attributable to health-
care costs (IOM, 2000b, pp. 1–2). A safe healthcare
system also means that standards of care should not
decline at different times of the day or week or when a
patient is transferred from one provider to another. In
addition, safety requires that patients and their fami-
lies are fully informed and participate in their care to
the extent they wish to do so (IOM, 2001b, p. 45).
Efficacy
While scientific evidence regarding a particular treat-
ment’s effectiveness is not always available, an effective
healthcare system should use evidence-based treat-
ments whenever possible. This effort includes avoid-
ing the underuse of effective care and the overuse of
68 Chapter 4 Overview of the United States Healthcare System

ineffective care (IOM, 2001b, p. 47). Evidence-based
medicine is not limited to findings from random-
ized clinical trials, but may use results from a vari-
ety of research designs. To promote the use of
evidenced-based medicine, healthcare providers and
institutions should improve their data collection and
analysis capabilities so it is possible to monitor results
of care provided (IOM, 2001b, p. 48).
Patient-Centeredness
A patient-centered healthcare system is sensitive to
the needs, values, and preferences of each patient,
includes smooth transitions and close coordination
among providers, provides complete information and
education at a level and in a language patients can
understand, involves the patient’s family and friends
according to the patient’s wishes, and, to the extent
possible, reduces physical discomfort experienced by
patients during care (IOM, 2001b, pp. 49–50). A lan-
guage or cultural barrier may be a significant hurdle
to receiving high-quality and patient-centered care. In
2013, one in five Americans spoke a language other
than English at home (Camarota & Zeigler, 2014).
Individuals with language barriers are less likely to
adhere to medication regimens, have a usual source
of care, and understand their diagnosis and treat-
ment, and are more likely to leave a hospital against
a provider’s advice and miss follow-up appointments
(Speaking Together, 2007). While use of interpreters
can improve a patient’s quality of care, when friends or
family members serve as interpreters, there is greater
risk that the interpreter will misunderstand or omit a
provider’s questions and that the patient will not dis-
close embarrassing symptoms (Speaking Together,
2007). Similarly, cultural differences between pro-
vider and patient can result in patients receiving less
than optimal care. Cultural differences can define how
healthcare information is received, whether a problem
is perceived as a healthcare issue, how patients express
symptoms and concerns, and what type of treatment
is most appropriate. As a result, healthcare organiza-
tions should ensure that patients receive care that is
both linguistically and culturally appropriate (Office
of Minority Health, n.d.).
Timeliness
A high-quality healthcare system will provide care in
a timely manner. Currently, U.S. patients experience
long waits when making appointments, sitting in
doctors’ offices, standing in hallways before receiving
procedures, waiting for test results, seeking care at
EDs, and appealing billing errors (IOM, 2001b, p. 51).
These delays can take an emotional as well as physical
toll if medical problems would have been caught ear-
lier with more timely care. Timeliness problems also
affect providers because of difficulties in obtaining
vital information and delays that result when consult-
ing specialists. In addition, lengthy waits are the result
of a system that is not efficient and does not respect
the needs of its consumers (IOM, 2001b, p. 51).
Efficiency
An efficient healthcare system makes the best use of
its resources and obtains the most value per dollar
spent on healthcare goods and services. The uncoor-
dinated and fragmented U.S. system is wasteful when
it provides low-quality care and creates higher than
necessary administrative and production costs (IOM,
2001b, p. 52). As indicated previously, the high level
of spending and poor outcomes relating to prevent-
able conditions, the number of patients who do not
receive appropriate care, and the high number of med-
ical errors make it clear that the quality of healthcare
services provided can be improved.
In addition, significant geographic variations in
the provision of healthcare services suggest a lack of
efficiency in the system; however, this is a complicated
issue to understand and solve. For example, the Dart-
mouth Atlas Project has studied regional variations in
healthcare practices and spending for several decades.
Even after controlling for level of illness and prices
paid for services, researchers have found a two-fold
difference in Medicare spending in the country.
Furthermore, higher spending areas are not asso-
ciated with better quality of care, more patient satis-
faction, better access to care, more effective care, or
improved outcomes (Fisher, Goodman, Skinner, &
BOX 4-4 Discussion Questions
Unfortunately, evidence is not available to support the
effectiveness or cost–benefit of every procedure or
drug. How should policymakers and providers make
decisions when faced with a dearth of evidence?
Do you prefer a more cautious approach that does
not approve procedures or drugs until evidence
is available or a more aggressive approach that
encourages experimentation and use of treatments
that appear to be effective? What about medical care
for children, who are generally excluded from clinical
and research trials for ethical reasons? When, if ever, is
it appropriate for insurers to cover or the government
to pay for treatments that are not proven effective?
Healthcare Quality 69

Bronner, 2009). Instead, both health system capac-
ity and local practice styles appear to be key factors
in geographic variations in cost. An IOM report
addressing this issue also found that health status,
demographics, insurance plan coverage, and market
factors did not explain the variation (IOM, 2013). The
report highlighted the use of post-acute care and acute
care services as a key concern and noted that other
factors, such as patient preference and provider dis-
cretion, are not included in the data analyzed. In the
end, the IOM concluded, “an overall explanation for
geographic variation remains elusive” (IOM, 2013).
As policymakers try to improve quality of care in the
United States, they will have to continue to untangle
difficult questions of why some parts of the country
spend more on services than others.
The nation also spends close to one-quarter of
healthcare expenditures on administration, which is
more than twice what the country spends on cardio-
vascular disease and three times the amount it spends
on cancer (Cutler, 2018). As shown in FIGURE 4-19,
this high level of administrative spending dwarfs
that of other countries (Bodenheimer, 2005, p. 934;
Papanicolas, Woskie, & Jha, 2018). Extensive use of
private insurers, who often have high administrative
costs relative to public insurance programs, as well as
the use of multiple insurers instead of a single-payer
system, result in high administrative costs in the
United States.
Equity
An equitable healthcare system provides essential
health benefits to all people and includes universal
access to care. Equity can be considered on an indi-
vidual level and on a population level (IOM, 2001b,
p. 53). While the ACA should improve individual
access to services by reducing the number of unin-
sured, insurance alone is not sufficient to ensure access
to care. The care itself still must be accessible (provid-
ers are willing to accept you as a patient), affordable,
and available (sufficient providers are available).
Population-level equity refers to reducing health-
care disparities among subgroups. In the United
States, racial and ethnic minority groups often receive
lower-quality care and fewer routine preventive pro-
cedures than White people. A 2003 IOM report found
that African Americans were less likely than Whites
to receive appropriate cardiac medication, undergo
necessary artery bypass surgery, and use dialysis or
receive a kidney transplant even when controlling for
factors such as age, insurance status, income level, and
comorbidities. Not surprisingly, African Americans
also had higher mortality rates than their White coun-
terparts (IOM, 2003, pp. 2–3).
These trends continue. In 2014, African Americans
were still more likely than Whites to have asthma,
diabetes, cardiovascular disease and AIDS. African
American men have the shortest life expectancy
*Or nearest year; data from 2014 for Australia and Canada. No recent data for New Zealand (since 2007).
Data reflect current spending on governance and health system and financing administration, in current
prices, current PPPs. ‘OECD median’ reflects the median of 34 OECD countries.
34
89 90
123 141
206
255 272
286
787
0
100
200
300
400
500
600
700
800
900
Un
ite
d
St
at
es
Sw
itz
er
la
nd
Fr
an
ce
G
er
m
an
y
Ne
th
er
la
nd
s
Ca
na
da
Au
st
ra
lia
Un
ite
d
Ki
ng
do
m
Sw
ed
en
No
rw
ay
Dollars ($US)
OECD
MEDIAN
Adjusted for Differences in Cost of Living
FIGURE 4-19 Spending on Health Insurance Administration per Capita, 2015
Source: Retrieved from https://www.commonwealthfund.org/publications/publication/2017/nov/multinational-comparisons-health-systems-data-2017
70 Chapter 4 Overview of the United States Healthcare System

https://www.commonwealthfund.org/publications/publication/2017/nov/multinational-comparisons-health-systems-data-2017

(Orgera & Artiga, 2016). As compared to Whites, His-
panics were more likely to be diabetic, experience peri-
odontitis, be HIV positive, and be uninsured, and less
likely to be screened for colorectal cancer or receive
the flu vaccine as an infant (CDC, 2013). Hispanics are
more likely than Whites to have asthma, liver disease,
tuberculosis, and diabetes, and to die from cervical can-
cer, HIV, and end-stage renal disease (Families USA,
2014). In 2016, the Agency for Healthcare Quality and
Research (AHQR) found access to care was worse for
African Americans on 50% of their measures and for
Hispanics on 75% of their measures (AHQR, 2016).
While this country continues to struggle with
health disparities, the ACA has made a positive differ-
ence. From 2013 to 2015, racial disparities narrowed
in terms of percentage of working adults who were
uninsured, who skipped care due to cost, and who
lacked a usual source of care (Hayes, Riley, Radley, &
McCarthy, 2017).
Assessment of Efforts to Improve Quality
The IOM has called for sweeping changes to the health-
care system to address the numerous ways in which the
quality of care could be improved. In 2015, the Depart-
ment of Health and Human Services (HHS) issued a
progress report on its Action Plan to Reduce Racial and
Ethnic Health Disparities, which included a number of
activities HHS had already taken and goals for future
activities (HHS, 2015). While the ACA makes signifi-
cant changes to the healthcare system, the law is focused
more on improving access than improving quality or the
delivery system. Many of the law’s quality improvement
provisions are pilot programs and demonstration proj-
ects that may eventually result in significant changes—
or fall to the wayside once they expire.
None of the quality improvement tasks the IOM
calls for will be simple to achieve, and, at times, they
seem to have conflicting goals. For example, making
the healthcare system patient-centered may not always
result in enhanced efficiency. Furthermore, the IOM’s
proposed changes would require increased resources
at a time when the United States is facing record defi-
cits and unsustainable healthcare spending levels.
Improving the quality of the healthcare system is an
enormous challenge and one that is likely to remain
on the nation’s agenda for years to come.
▸ Comparative Health Systems
A review of the U.S. healthcare system and a discus-
sion of its flaws often leads one to ask, how do other
countries deliver health care, and do they do a better
job? Because the United States spends more overall
and more per person on health care comparatively
speaking and yet often lags in many quality and out-
come indicators, perhaps there are lessons to learn
from other countries (FIGURE 4-20). While there are
many problems with healthcare delivery in the United
States, it is also true that each type of healthcare sys-
tem has its advantages and drawbacks.
There are three types of healthcare systems often
found in other countries: (1) a national health insur-
ance system that is publicly financed, but in which
care is provided by private practitioners (e.g., Canada);
(2) a national health system that is publicly financed
and where care is provided by government employees
or contractors (e.g., Great Britain); and (3) a socialized
insurance system that is financed through mandatory
contributions by employers and employees and in
which care is delivered by private practitioners (e.g.,
Germany) (Shi & Singh, 2019, p. 22). Of course, varia-
tions exist within these types of systems in terms of the
role of the central government, the presence of private
insurance, the way the healthcare system is financed,
and how care is administered by providers and
accessed by patients. While comparing the systems in
the three countries used as examples does not cover all
possible permutations of how healthcare systems are
designed, it provides an overview of the choices made
by policymakers in different countries (TABLE 4-1).
A National Health Insurance System:
Canada
Canada’s healthcare system is called Medicare. Prior
to establishing the Medicare program in 1966, Canada
provided insurance in a manner that was similar to the
U.S. method, with private plans offering coverage to
many, even while millions remained uninsured. Incre-
mental changes were made to the Canadian healthcare
system until the Medical Care Act of 1966 established
Medicare’s framework; it was later modified through
the Canadian Health Act of 1984. The Canadian
Health Act established five principles for health care
delivery: (1) public administration, (2) comprehen-
sive coverage, (3) universality, (4) portability across
Canada, and (5) uniform and reasonable access to care
(Johnson, Stoskopf, & Shi, 2018).
Canada’s healthcare system is largely decentralized,
with Canada’s provinces and territories responsible for
setting up their own delivery system. As such, Canada’s
Medicare system is a collection of single-payer systems
governed by the provinces and territories, with the cen-
tral government taking a more limited role. The prov-
inces and territories set their own policies regarding
Comparative Health Systems 71

0
2
4
6
8
10
12
14
16
18
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
P
e
rc
e
n
ta
g
e
United States (16.6%)
Switzerland (11.4%)
Sweden (11.2%)
France (11.1%)
Germany (11.0%)
Netherlands (10.9%)
Canada (10.0%)
United Kingdom (9.9%)
New Zealand (9.4%)
Norway (9.3%)
Australia (9.0%)
GDP refers to gross domestic product. Data in legend are for 2014.
FIGURE 4-20 Healthcare Spending as a Percentage of Gross Domestic Product, 1980–2014
Source: Retrieved from https://www.commonwealthfund.org/chart/2017/health-care-spending-percentage-gdp-1980-2014
TABLE 4-1 Comparison of Health Systems Across Four Countries
United States Canada Great Britain Germany
System type No unified system National health
insurance
National
health system
Socialized health insurance
Universal
coverage
Near universal if ACA
fully implemented
Yes Yes Yes
Role of private
insurance
Significant Supplemental to
Medicare, two-thirds
purchase
Minimal Minimal
Financing Private payments and
tax revenue
Mostly tax revenue
(federal, provincial,
territorial)
All federal
income tax
revenue
Mandatory employer and
employee contributions to
national health fund
Hospital
reimbursement
Varies by payer (DRGa,
FFSb, capitation,
per diem)
Global budget Global
budget
DRGa
Physician
reimbursement
Fee schedule or
capitation
Negotiated fees with
provinces/ territories
Salary or
capitation
Negotiated fees with funds
DRGa = diagnostic-related group (payment based on bundle of services needed for diagnosis). FFSb = fee for service (payment per service rendered).
72 Chapter 4 Overview of the United States Healthcare System

https://www.commonwealthfund.org/chart/2017/health-care-spending-percentage-gdp-1980-2014

many healthcare and other social issues, administer
their own individual single-payer systems, reimburse
hospitals directly or through regional health authori-
ties, and negotiate physician fees schedules with pro-
vincial medical associations. Provinces and territories
use regional health authorities as their primary payer
of healthcare services. While funding methods vary
by location, regional health authorities have the abil-
ity to tailor funds in a way that best serves the needs
of their population. In addition to paying for care,
regional health authorities also organize the delivery
of care. They hire staff at most acute care facilities and
contract for some ambulatory care services. General
practitioners and specialists mostly work on a fee-for-
service arrangement and in private practice (Allin &
Rudoler, n.d.). The federal government has respon-
sibility for specific health areas such as prescription
drugs, public health, and health research, as well as for
providing care to certain populations (e.g., veterans,
indigenous peoples) (Allin & Rudoler, n.d.).
Financing for health benefits varies by benefit
type. Hospital services, physician services, and public
health services are financed through public taxation.
Hospitals mostly operate under global budgets they
negotiate with a ministry of health or regional health
authority, although a few provinces are considering
activity-based funding (Allin & Rudoler, n.d.). Cer-
tain services, including prescription drugs, home care,
and institutional care, are financed through a combi-
nation of public taxation and private insurance cov-
erage. Other goods and services, such as dental and
vision care, over-the-counter drugs, and alternative
medicines are covered only through private insurance.
Approximately two-thirds of Canadians purchase pri-
vate insurance, which is used to cover goods and ser-
vices not provided by Medicare (Allin & Rudoler, n.d.).
Tax revenue from the provincial, territorial, and
federal governments pays for 70% of total Medicare
expenditures, while private insurance reimbursement
accounts for 12% of costs, patient out-of-pocket pay-
ments cover 14%, and various sources account for the
remaining amount (Allin & Rudoler, n.d.). Healthcare
spending is expected to reach C$242 billion in 2017
(Canadian Institute for Health Information [CIHI],
“How much,” n.d.). Healthcare spending varies con-
siderably across the country. For example, Alberta
spends C$7,329 per person, compared to Yukon’s
C$11,222 per-person costs (CIHI, “How does,” n.d.).
A National Health System: Great Britain
Great Britain’s healthcare system was designed by
Sir William Beveridge as part of a social reconstruc-
tion plan after World War II. The National Health
Services Act of 1946 created the National Health Ser-
vice (NHS), a centrally run healthcare system that
provides universal insurance coverage to all residents
of Great Britain. It was designed based on the princi-
ple that the government is responsible for providing
equal access to comprehensive health care that is gen-
erally free at the point of service (Johnson et al., 2018,
pp. 174–176).
The Health and Social Care Act of 2012 intro-
duced significant changes to the NHS system. In the
prior system, health care was delivered through a
variety of trusts that covered services such as primary
care, mental health care, acute care, and ambulance
services (Johnson et al., pp. 178–179). In the new sys-
tem, Primary Care Trusts were replaced with Clinical
Commissioning Groups (CCGs), which are led by cli-
nicians. CCGs are bodies that consist of general prac-
titioners in their service area, and they are responsible
for providing urgent and emergency care, elective hos-
pital care, community health services that go beyond
general practitioner services, maternity and newborn
services, and mental health and learning disability
services. The 2012 legislation also created an inde-
pendent organization called NHS England to focus
on improving health outcomes and quality of care.
NHS England provides national leadership, supervises
CCGs, allocates resources to CCGs, and commissions
primary care, certain specialty care, military care, and
offender care (Thorlby, Arora, & Nuffield Trust, n.d.).
The NHS is the largest publicly financed national
health system in the world. The 2017–2018 budget
is £124.7 billion, with only a 1.2% growth rate pro-
jected from 2010 to 2021. This is far below the needed
growth rate, which is expected to exceed 4% (King’s
Fund, 2018). Due to this discrepancy, NHS projects
a $6 billion deficit by 2021 (Thorlby et al., n.d.). NHS
is using a number of cost containment strategies to
address its budgetary concerns, including freezing
wages, increasing use of generic drugs, reducing hos-
pital payments, lowering administrative costs, and
improving hospital management (Thorlby et al., n.d.).
The NHS is financed primarily through general
tax revenues. It is NHS England’s responsibility to
identify necessary healthcare services and Monitor’s
(England’s regulatory body for health care) role to set
prices for those services. While most residents receive
their care through the NHS, private insurance is also
available. Approximately 10.5% of residents have pri-
vate health insurance, which provides the same bene-
fits as the NHS but allows for reduced waiting times,
more convenient care, and greater access to specialists
(Johnson et al., 2018, p. 182; Thorlby et al., n.d.).
NHS services are provided by provider organiza-
tions that are classified as NHS foundation trusts or
Comparative Health Systems 73

NHS trusts. NHS foundation trusts are not directed by
the government and are free to make financial deci-
sions based on a framework established by law and
regulation. NHS trusts are directed by the government
and are financially accountable to the government
(Johnson et al., 2018, p. 181; Thorlby et al., n.d.). Most
general practice physicians and nurses are private
practitioners who work for the NHS as independent
contractors, not salaried employees, while the NHS
owns the hospitals and the hospital staff are salaried
employees. Patients select a general practitioner in
their service area, and this provider is the gateway to
NHS services. Almost everyone has a registered gen-
eral practitioner, and most patient contact is with this
provider (Thorlby et  al., n.d.). Services are provided
free of charge, except for specific services designated
by law.
The Health and Social Care Act also renewed focus
on public health needs. Public Health England was
created in 2013 as an autonomous executive agency
of the Department of Health. Its role is to protect the
public’s health, reduce health disparities, promote
health knowledge and information, and ensure that
high-quality healthcare services are delivered to the
public. In addition, local Health and Wellbeing Boards
were created to improve the public’s health and reduce
disparities through local government action (Public
Health England, n.d.).
In 2014, NHS unveiled the Five Year Forward plan
to address challenges to the healthcare system, with
a focus on improving early identification of high-risk
patients and exploring new payment models. Based on
the plan, 50 “vanguards,” or pilot programs, have been
established to test ideas such as “scaled-up primary
care, enhanced health care in long-term care homes,
vertically integrated hospital and community care,
and networks to improve emergency care” (Thorlby
et  al., n.d.). In addition, the plan includes a diabetes
initiative, a commitment to 7-day workweeks by 2020,
and “footprints” that bring together purchasers and
providers in a local community to provide services
under a consolidated budget (Thorlby et al., n.d.).
A Socialized Insurance System: Germany
In 1883, Germany’s Otto von Bismarck created the first
healthcare system in the world. He viewed a strong
health and pension system as a way to build a superior
nation, earn support from Germany’s working class,
and undermine any attempts by Germany’s socialist
party to gain power. The central government is respon-
sible for setting health policy and regulating the Social
Health Insurance System (SHIS). German healthcare
policy emphasizes solidarity, the idea that all should
have equal access to health care regardless of ability
to pay (Johnson et al., 2018, pp. 217–223). Germany’s
legislature passed several major health reform bills in
recent years. These reforms include integration of inpa-
tient and ambulatory care, premium payment changes,
an insurance mandate, and revised long-term care pol-
icies (Johnson et al., 2018, pp. 230–31).
SHIS is composed of a collection of nonprofit
regional sickness funds with a standard benefit
package that includes inpatient services, outpatient
services, medications, rehabilitation therapy, and
dental benefits. The funds are organized around
industry or geography and are responsible for man-
aging healthcare services. Germans must enroll in
sickness funds or obtain coverage through private
insurance (Blümel & Busse, n.d.). Some populations
are required to be under SHIS, including individu-
als who earn less than $60,000 per year or are pen-
sioners, students, unemployed, disabled, poor, or
homeless. Funds may not refuse to cover these indi-
viduals, and physicians may not refuse to treat them.
Germans who earn more than $60,000 per year for
3 consecutive years or who are self-employed may
choose to opt out of SHIS and purchase private cov-
erage. Exempt citizens and individuals choosing
to opt out of SHIS may purchase private substitu-
tive private health insurance (PHI). In 2015, almost
9  million people—often young, wealthy workers
who could secure a low-premium plan—enrolled in
substitutive PHI (Blümel & Busse, n.d.).
Health care is provided in the public and private
sectors. SHIS ambulatory care physicians generally
work in private practice and are members of regional
associations that negotiate a fee schedule with sick-
ness funds. Fee schedules are also used by private
insurers, but often at a higher rate than the SHIS fee
schedule. Hospitals are split between public, private
nonprofit, and private for-profit institutions, with
the latter increasing its share of the market in recent
years. Hospitals are staffed by salaried providers and
reimbursed based on a diagnostic-related group
methodology (Blümel & Busse, n.d.; Johnson et  al.,
2018, p. 235).
Sickness funds are financed through employer
and employee contributions. As of 2016, employer and
employees split the 14.6% of gross wage contribution.
In addition, there is a supplementary contribution
based on income that is set by each sickness fund. The
sickness fund contributions are pooled and then real-
located to individuals based on a risk-adjusted formula
that accounts for age, sex, and morbidity (Blümel &
Busse, n.d.). In 2014, Germany spent $492 billion in
74 Chapter 4 Overview of the United States Healthcare System

concerns and how different residents fared within a
system varied by country ( FIGURES 4-21 through 4-25).
While affordability was a key concern in the
United States, Americans reported fewer access prob-
lems than residents in many other countries. Of those
surveyed, a third of U.S. residents went without care
due to cost, as compared to 7% of respondents in
England and Germany (Osborne et  al., 2016). Cost
barriers to accessing dental care were a much big-
ger concern for American and Canadian respon-
dents than for those living in England or Germany.
Low-income adults reported worse health and more
cost concerns than wealthier individuals across all of
the countries surveyed, with the United States hav-
ing the highest rate of low-income respondents indi-
cating that cost was a barrier to care. England was
the only country where low-income adults did not
report greater access problems due to cost (Osborne
et  al., 2016). In terms of same-day or next-day
appointments, Canadians (53%) and Germans (47%)
reported more problems than American (42%) and
British (41%) respondents (Osborne et  al., 2016).
In addition, about 30% of Canadian adults and 19%
of British adults reported having to wait at least 2
months for a specialty appointment, compared to less
than 10% of adults in Germany and the United States.
Germans obtained care through EDs at a much lower
rate (11%) than residents of other countries, with
Canadians (41%) and Americans (35%) reporting
much higher use of emergency care.
BOX 4-5 Discussion Questions
Do you prefer one of these health systems to the
others? Why or why not? Are there features that you
think should be incorporated into the U.S. healthcare
system? Are there reasons why certain features might be
difficult to incorporate into the U.S. healthcare system?
FIGURE 4-21 Cost-Related Access Barriers in the Past Year
Source: Retrieved from https://www.commonwealthfund.org/publications/surveys/2016/nov/2016-commonwealth-fund-international-health-policy-survey-adults
health expenditures, mostly through SHIS (Johnson
et al., 2018, p. 234).
The Importance of Health
Insurance Design
Reviewing the healthcare systems of four countries—
the United States, Canada, Great Britain, and
Germany—shows how varied healthcare systems are
around the world. Differences exist regarding the role
of government, the ability to purchase private insur-
ance, cost-sharing requirements, and how the sys-
tem is financed. Even countries that share the same
general type of system have variations based on their
specific culture, politics, and needs. How a system is
designed matters in terms of access to care, financing,
and patient satisfaction. A 2016 survey in 11 coun-
tries asked residents about their experience with their
country’s healthcare system (Obsorne, Squires, Doty,
Sarnak, & Schneider, 2016). What issues were primary
Comparative Health Systems 75
7 7 8 8
10
14
16 17
18
22
33
0
20
40
60
Un
ite
d
Ki
ng
do
m
G
er
m
an
y
Ne
th
er
la
nd
s
Sw
ed
en
No
rw
ay
Au
st
ra
lia
Ca
na
da
Fr
an
ce
Ne
w
Ze
al
an
d
Sw
itz
er
la
nd
Un
ite
d
St
at
es
P
e
rc
e
n
ta
g
e
*
*Had a medical problem but did not visit doctor; skipped medical test, treatment, or follow-up
recommended by doctor; and/or did not fill prescription or skipped doses

https://www.commonwealthfund.org/publications/surveys/2016/nov/2016-commonwealth-fund-international-health-policy-survey-adults

▸ Conclusion
This wide-ranging review of the U.S. healthcare sys-
tem was intended to provide readers with a general
sense of how health care is accessed, financed, and
administered in this country. Understanding the var-
ious players in the healthcare system, from providers
to researchers to policymakers, is crucial to being able
to participate in debates over current issues in health
policy and law. While the U.S. system excels on many
fronts, it falls short in many areas relating to access,
quality, and efficiency. Perhaps policymakers in this
country could learn lessons from successes abroad,
but the United States has a unique political environ-
ment and it is clear there is no silver bullet that will
solve all the problems we face. Specific health policy
and law concerns will be described in much greater
detail elsewhere, providing a foundation to tackle the
many problems that will confront the country in the
years ahead.
FIGURE 4-23 Waited 2 Months or Longer for a Specialist Appointment
Source: Retrieved from https://www.commonwealthfund.org/publications/surveys/2016/nov/2016-commonwealth-fund-international-health-policy-survey-adults
FIGURE 4-22 Did Not Get Same or Next-Day Appointment Last Time You Needed Care
Source: Retrieved from https://www.commonwealthfund.org/publications/surveys/2016/nov/2016-commonwealth-fund-international-health-policy-survey-adults
76 Chapter 4 Overview of the United States Healthcare System
19
22
31
41 41 42 43
44
47
50
53
0
20
40
60
80
100
P
e
rc
e
n
t
Base: Excludes adults who did not need to make an appointment to see a doctor or nurse
Un
ite
d
Ki
ng
do
m
G
er
m
an
y
Ne
th
er
la
nd
s
Sw
ed
en
No
rw
ay
Au
st
ra
lia
Ca
na
da
Fr
an
ce
Ne
w
Ze
al
an
d
Sw
itz
er
la
nd
Un
ite
d
St
at
es
3 4
6 7
9
13
19 19 20
28 30
0
20
40
60
80
100
P
e
rc
e
n
t
Base: Saw or needed to see specialist in past 2 years
Sw
itz
er
la
nd
Ne
w
Ze
al
an
d
G
er
m
an
y
Ne
th
er
la
nd
s
No
rw
ay
Un
ite
d
St
at
es
Ca
na
da
Un
ite
d
Ki
ng
do
m
Fr
an
ce
Sw
ed
en
Au
st
ra
lia

https://www.commonwealthfund.org/publications/surveys/2016/nov/2016-commonwealth-fund-international-health-policy-survey-adults

https://www.commonwealthfund.org/publications/surveys/2016/nov/2016-commonwealth-fund-international-health-policy-survey-adults

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11
20 22
23 24
26
30
33 35
37
41
0
20
40
60
80
100
P
e
rc
e
n
t
Un
ite
d
Ki
ng
do
m
Un
ite
d
St
at
es
G
er
m
an
y
Ne
w
Ze
al
an
d
Sw
ed
en
Au
st
ra
lia
Ca
na
da
Fr
an
ce
Ne
th
er
la
nd
s
Sw
itz
er
la
nd
No
rw
ay
FIGURE 4-24 Used the ED in the Last 2 Years
Source: Retrieved from https://www.commonwealthfund.org/publications/surveys/2016/nov/2016-commonwealth-fund-international-health-policy-survey-adults
8
16 16
20
23 24
28 30 30
31
43
7 6 7 8 7
13
18
14 13
22
32
0
20
40
60
80
100
Low income adults
All other adults
P
e
rc
e
n
t
*Indicates differences are significant at p<0.05. Note: “Low income” defined as household income less than 50% the country median. Sample sizes are small (n<100) in the Netherlands and UK. 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Health Affairs, 29(5), 933–940. doi:10.1377/hlthaff.2009.0675 80 Chapter 4 Overview of the United States Healthcare System https://aspe.hhs.gov/basic-report/hhs-action-plan-reduce-racial-and-ethnic-health-disparities-implementation-progress-report-2011-2014 https://aspe.hhs.gov/basic-report/hhs-action-plan-reduce-racial-and-ethnic-health-disparities-implementation-progress-report-2011-2014 https://aspe.hhs.gov/basic-report/hhs-action-plan-reduce-racial-and-ethnic-health-disparities-implementation-progress-report-2011-2014 81 © Mary Terriberry/Shutterstock CHAPTER 5 Public Health Institutions and Systems Richard Riegelman LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Identify goals of governmental public health ■ Identify the 10 essential services of public health ■ Describe basic features of local, state, and federal public health agencies in the United States ■ Identify global public health organizations and agencies and describe their basic roles ■ Identify roles in public health for federal agencies not identified as health agencies ■ Illustrate the need for collaboration by governmental public health agencies with other governmental and nongovernmental organizations ■ Describe approaches to connecting public health and the healthcare system ▸ Introduction The cases in BOX 5-1 all reflect the responsibilities of public health agencies at the local, federal, and global levels. While they illustrate public health working the way it is supposed to work, this is of course not always the case. Let us start by taking a look at the goals and roles of public health agencies. ▸ What Are the Goals and Roles of Governmental Public Health Agencies? Public health is often equated with the work of gov- ernmental agencies. The role of government is only a portion of what we mean by “public health,” but it is an important component. It is so important, in fact, that we often define the roles of other components in terms of how they relate to the work of governmental public health agencies. That is, we may refer to them as nongovernmental public health. In 1994, the U.S. Public Health Service put forth the Public Health in America statement, which pro- vided the framework that continues to define the goals and services of governmental public health agencies (Centers for Disease Control and Prevention [CDC], 2018): ■ To prevent epidemics and the spread of disease ■ To protect against environmental hazards ■ To prevent injuries ■ To promote and encourage healthy behaviors 82 Chapter 5 Public Health Institutions and Systems BOX 5-1 Vignette A young man in your dormitory is diagnosed with tuberculosis. The health department works with the student health service to test everyone in the dorm, as well as in his classes, with a tuberculosis skin test. Those who are positive for the first time are advised to take a course of a medicine called INH. You ask, is this standard operating procedure? You go to a public health meeting and learn that many of the speakers are not from public health agencies, but from the Departments of Labor, Commerce, Housing, and Education. You ask, what do these departments have to do with health? You hear that a new childhood vaccine was developed by the National Institutes of Health (NIH), approved by the Food and Drug Administration (FDA), endorsed for federal payment by the Centers for Disease Control and Prevention (CDC), and recommended for use by the American Academy of Pediatrics. You ask, do all these agencies and organizations always work so well together? A major flood in Asia leads to disease and starvation. Some say it is due to global warming, others to bad luck. Coordinated efforts by global health agencies, assisted by nongovernmental organizations (NGOs) and individual donors, help get the country back on its feet. You ask, what types of cooperation are needed to make all of this happen? A local community health center identifies childhood obesity as a problem in the community. The center collects data demonstrating that the problem begins as early as elementary school. They develop a plan that includes clinical interventions at the health center and also at the elementary school. They ask the health department to help them organize an educational campaign and assist in evaluating the results. Working together, they are able to reduce the obesity rate among elementary school children by 50%. This seems like a new way to practice public health, you conclude. What type of approach is this? Source: © maxstockphoto/ShutterStock, Inc. ■ To respond to disasters and assist communities in recovery ■ To ensure the quality and accessibility of health services These are ambitious and complicated goals to achieve. To achieve them, it is important to further define the roles that governmental public health agen- cies themselves play and, by implication, the roles that other governmental agencies and NGOs need to play. The Public Health in America statement built upon a 1988 report by the Institute of Medicine (IOM; now called the Health and Medicine Division [HMD]) called The Future of Public Health. The IOM defined three core public health functions that governmental public health agencies need to perform. The concept of “core function” implies that the job cannot be del- egated to other agencies or to NGOs. It also implies that the governmental public health agencies will work together to accomplish these functions, because as a group, they are responsible for public health as a whole; that is, no one agency at the local, state, or fed- eral level is specifically or exclusively responsible for accomplishing the essential public health services.a What Are the 10 Essential Public Health Services? 83 The core functions defined by the IOM are (1) assessment, (2) policy development, and (3) assurance (Institute of Medicine [IOM], 1988). ■ Assessment includes obtaining data that define the health of the overall population and specific groups within the population, including defining the nature of new and persisting health problems. ■ Policy development includes developing evidence- based recommendations and other analyses of options, such as health policy analysis, to guide implementation, including efforts to educate and mobilize community partnerships. ■ Assurance includes governmental public health’s oversight responsibility for ensuring that key compo- nents of an effective health system, including health care and public health, are in place even though the implementation will often be performed by others. The three core functions, while useful in provid- ing a delineation of responsibilities and an intellectual framework for the work of governmental public health TABLE 5-1 10 Essential Public Health Services Essential Service Meaning of Essential Service Examples Core function: assessment 1. Monitor health status to identify and solve community health problems This service includes accurate diagnosis of the community’s health status; identification of threats to health and assessment of health service needs; timely collection, analysis, and publication of information on access, utilization, costs, and outcomes of personal health services; attention to the vital statistics and health status of specific groups that are at a higher risk than the total population; and collaboration to manage integrated information systems with private providers and health benefit plans. Vital statistics Health surveys Surveillance, including reportable diseases 2. Diagnose and investigate health problems and health hazards in the community This service includes epidemiologic identification of emerging health threats; public health laboratory capability using modern technology to conduct rapid screening and high-volume testing; active communicable disease epidemiology programs; and technical capacity for epidemiologic investigation of disease outbreaks and patterns of chronic disease and injury. Epidemic investigations CDC–Epidemic Intelligence Service State public health laboratories Core function: policy development 3. Inform, educate, and empower people about health issues This service includes social marketing and media communications; providing accessible health information resources at community levels; active collaboration with personal healthcare providers to reinforce health promotion messages and programs; and joint health education programs with schools, churches, and worksites. Health education campaigns, such as comprehensive state tobacco programs agencies, were not tangible enough to provide a clear understanding or definition of the work of public health agencies. Thus, in addition to the goals of public health, the Public Health in America statement defined a series of 10 essential public health services that build upon the IOM’s core functions, guide day-to-day responsibilities, and provide a mechanism for evaluating whether the core functions are fulfilled. These 10 services have come to define the responsibilities of the combined local, state, and federal governmental public health system. ▸ What Are the 10 Essential Public Health Services? TABLE 5-1 outlines the 10 essential public health ser- vices and organizes them according to which IOM core function they aim to fulfill (CDC, 2018). A description of each service is presented in column 2, and exam- ples of these essential services are listed in column 3. (continues) 84 Chapter 5 Public Health Institutions and Systems Essential Service Meaning of Essential Service Examples 4. Mobilize community partnerships and action to identify and solve health problems This service includes convening and facilitating community groups and associations, including those not typically considered to be health-related, in undertaking defined preventive, screening, rehabilitation, and support programs; and skilled coalition-building to draw upon the full range of potential human and material resources in the cause of community health. Lead control programs: testing and follow-up of children, reduction of lead exposure, educational follow-up, and addressing underlying causes 5. Develop policies and plans that support individual and community health efforts This service requires leadership development at all levels of public health; systematic community and state-level planning for health improvement in all jurisdictions; tracking of measurable health objectives as a part of continuous quality improvement strategies; joint evaluation with the medical/healthcare system to define consistent policy regarding prevention and treatment services; and development of codes, regulations, and legislation to guide public health practice. Newborn screening and follow-up programs for PKU and other genetic and congenital diseases Core function: assurance 6. Enforce laws and regulations that protect health and ensure safety This service involves full enforcement of sanitary codes, especially in the food industry; full protection of drinking water supplies; enforcement of clean air standards; timely follow-up of hazards, preventable injuries, and exposure-related diseases identified in occupational and community settings; monitoring quality of medical services (e.g., laboratory, nursing home, home health care); and timely review of new drug, biologic, and medical device applications. Local: Fluoridation and chlorination of water State: Regulation of nursing homes Federal: FDA drug approval and food safety 7. Link people to needed personal health services and ensure the provision of health care when otherwise unavailable This service (often referred to as “outreach” or “enabling” services) includes ensuring effective entry for socially disadvantaged people into a coordinated system of clinical care; culturally and linguistically appropriate materials and staff to ensure linkage to services for special population groups; ongoing “care management”; and transportation. Community health centers 8. Ensure the provision of a competent public and personal healthcare workforce This service includes education and training for personnel to meet the needs of public and personal health services; efficient processes for licensure of professionals and certification of facilities with regular verification and inspection follow-up; adoption of continuous quality improvement and lifelong learning within all licensure and certification programs; active partnerships with professional training programs to ensure community-relevant learning experiences for all students; and continuing education in management and leadership development programs for those charged with administrative/ executive roles. Licensure of physicians, nurses, and other health professionals TABLE 5-1 10 Essential Public Health Services (continued) What Are the Roles of Local and State Public Health Agencies? 85 Monitor Health Evaluate Assure Competent Workforce Diagnose and Investigate Inform, Educate, Empower Link to / Provide Care Enforce Laws Develop Policies Mobilize Community Partnerships ResearchResearch A S S U R A N C E ASSESSM EN T S ys te m M anagem en t POL ICY D EV EL O P M E N T S FIGURE 5-1 Essential Public Health Services and Institute of Medicine’s Core Functions Source: Centers for Disease Control and Prevention. (2017). The public health system & the 10 essential public health services. Retrieved from https://www.cdc.gov/stltpublichealth/publichealthservices/essentialhealthservices.html Governmental Public Health Agencies Other Government Agencies Local State Federal Global Healthcare Delivery System Community and Private Organizations FIGURE 5-2 Framework for Viewing Governmental Public Health Agencies and Their Complicated Connections FIGURE 5-1 then combines the core functions of pub- lic health with the essential services of public health agencies so that you can see the connections. Public health services are delivered through a complex web of local and federal agencies, as well as through increasing involvement from global organi- zations. What follows is a description of the work of public health agencies at each of these levels. FIGURE 5-2 provides a framework to guide our review of the delivery of public health services. It  diagrams the central role of governmental public health agencies and the complicated connections required to accomplish their responsibilities. We begin by taking a look at the structure and function of governmental public health agencies at the local/ state, federal, and global levels. We then examine the key connections with other governmental agencies, community organizations, and private organiza- tions, and finally the connections with the healthcare delivery system. ▸ What Are the Roles of Local and State Public Health Agencies? The U.S. Constitution does not mention public health. Because public health is not a delineated federal 9. Evaluate effectiveness, accessibility, and quality of personal and population- based health services This service calls for ongoing evaluation of health programs, based on analysis of health status and service utilization data, to assess program effectiveness and to provide information necessary for allocating resources and reshaping programs. Development of evidence-based recommendations All three IOM core functions 10. Research for new insights and innovative solutions to health problems This service includes continuous linkage with appropriate institutions of higher learning and research and an internal capacity to mount timely epidemiologic and economic analyses and conduct needed health services research. NIH, CDC, AHRQ, other federal agencies Abbreviations: Agency for Healthcare Research and Quality = AHRQ; Centers for Disease Control and Prevention = CDC; Food and Drug Administration = FDA; National Institutes of Health = NIH; phenylketonuria = PKU. Source: Data from Public Health in America. Essential public health services. Retrieved from http://www.cdc.gov/nphpsp/ essentialservices.html. Accessed October 26, 2015. https://www.cdc.gov/stltpublichealth/publichealthservices/essentialhealthservices.html http://www.cdc.gov/nphpsp/essentialservices.html 86 Chapter 5 Public Health Institutions and Systems BOX 5-2 Brief History of Public Health Agencies in the United States An understanding of the history of U.S. public health institutions requires an understanding of the response of local, state, and federal governments to public health crises and the complex interactions among these levels of government. The colonial period in the United States saw repeated epidemics of smallpox, cholera, and yellow fever, primarily focused in the port cities. These epidemics brought fear and disruption of commerce, along with accompanying disease and death. One epidemic in 1793 in Philadelphia, which was then the nation’s capital, nearly shut down the federal government. These early public health crises brought about the first municipal boards of health, made up of respected citizens authorized to act in the community’s interest to implement quarantine, evacuation, and other public health interventions of the day. The federal government’s early role in combating epidemics led to the establishment in 1798 of what later became known as the U.S. Public Health Service. Major changes in public health occurred in the last half of the 1800s, with the great expansion of the understanding of disease and the ability to control it through community actions. The Shattuck Commission in Massachusetts in 1850 outlined the roles of state health departments as responsible for sanitary inspections, communicable disease control, food sanitation, vital statistics, and services for infants and children. Over the next 50 years, the states gradually took the lead in developing public health institutions based on delivery of these services. Local health departments did not exist outside of the largest cities until the 1900s. The Rockefeller Foundation stimulated and helped fund early local health departments and campaigns, in part to combat specific diseases, such as hookworm. There was no standard model for local health departments; they developed in different ways in the various states and were chronically underfunded. The federal government played a very small role in public health throughout the 1800s and well into the 20th century. However, an occasional public health crisis stimulated federal action, often as a result of media attention. The founding of the FDA in 1906 resulted in large part from the journalistic activity known as “muckraking,” which exposed the status of food and drug safety. The early years of the 1900s set the stage for expansion of the federal government’s role in public health through the passage of the 16th Amendment to the Constitution, which authorized federal income tax as a major source of federal government funding. The Great Depression, in general, and the Social Security Act of 1935, in particular, brought about a new era in which federal funding became a major source of financial resources for state and local public health departments and NGOs. The founding of the CDC (which at that time stood for Communicable Disease Center) in 1946 led to a national (and eventually international) leadership role for the CDC, which attempts to connect and hold together the complex local, state, and federal public health efforts and integrate them into global public health efforts. The Johnson administration’s War on Poverty, as well as the Medicare and Medicaid programs, brought about greatly expanded funding for healthcare services and led many health departments to provide direct healthcare services, especially for those without other sources of care. The late 1980s and 1990s saw a redefinition of the roles of governmental public health, including the IOM definition of core functions and the development of the 10 essential public health services. These documents have guided the development of a broad population focus for public health and a move away from the direct provision of healthcare services by health departments. The terrorism of September 11, 2001, and the subsequent anthrax scare moved public health institutions to the center of efforts to protect the public’s health through emergency response and disaster preparedness. The development of flexible efforts to respond to expected and unexpected hazards is now a central feature of public health institutions’ roles and funding. The success of these efforts has led to new levels of coordination of local, state, federal, and global public health agencies using state-of-the-art surveillance, laboratory technology, and communications systems. responsibility, it is an authority retained by the states. States may retain their authority, voluntarily request or accept help from the federal government, or delegate their responsibility and/or authority to local agencies at the city, county, or other local levels.b BOX 5-2 briefly describes the history of public health agencies in the United States. It is a complex history and has resulted in more structures than there are states—more because large cities often have their own public health systems (Turnock, 2009). In addition, the District of Columbia and several U.S. territories have their own systems and often have the authority to make public health system decisions as if they were states. To understand the role of local health depart- ments, it is useful to think of two models (Turnock, 2007). In the first model, which we will call the “home rule” or “local autonomy” model, authority is dele- gated from the state to the local health department. The local health department, or the local government, has a great deal of autonomy in setting its own struc- ture and function and often raising its own funding. What Are the Roles of Federal Public Health Agencies? 87 In the second model, which we will call the “branch office” model, the local health department can be viewed as a branch office of the state agency, with little or no independent authority or funding. There are several thousand local health departments across the country. The majority of these lie somewhere in between these two extreme models; however, these models provide a framework for understanding the many varieties of department structures. Thus, when we speak of local public health, we may be speaking of a state agency with branch offices or a relatively inde- pendent local agency. Regardless of which model a state uses, many public health responsibilities of local public health departments are quite similar, and they usually have authority and responsibility for at least the following (Turnock, 2007): ■ Immunizations for those individuals not covered by the private health insurance system ■ Communicable disease surveillance and initial investigation of outbreaks ■ Communicable disease control, often including at a minimum tuberculosis and syphilis case finding and treatment ■ Inspection and licensing of restaurants ■ Environmental health surveillance ■ Coordination of public health screening pro- grams, including newborn and lead screenings ■ Tobacco control programs ■ Public health preparedness and response to disasters Health departments in many parts of the United States also serve as the healthcare provider for those without other sources of health care. This function is generally referred to as the healthcare safety net. In recent years, many health departments have reduced or discontinued these services, often transferring them to the healthcare system or integrating their efforts into community health centers. The concept of core functions holds that while these activities can be performed by other organizations or agencies, the public health agencies retain responsibility for ensur- ing access to and the quality of these services. The work of local public health agencies cannot be viewed in isolation. The state health department usu- ally retains important roles even in those states where the local departments have home rule authority. These responsibilities often include collecting vital statistics, running a public health laboratory, licensing health professionals, administering nutrition programs, and regulating health facilities, such as nursing homes. In addition, drinking water regulation, administration of the state Medicaid program, and the office of the med- ical examiner may also fall under the authority of the state health department. The 2003 IOM report The Future of the Public’s Health in the 21st Century, in conjunction with the Futures Initiative of the CDC, initiated the establish- ment of a voluntary national accreditation program for state and local health departments to advance quality and performance in health departments. Through these efforts, the Public Health Accredita- tion Board was formed, and in early 2013, the first set of health departments achieved national accred- itation. The accreditation standards and measures address each of the 10 essential public health services to evaluate health department processes and services and their outcomes (Public Health Accreditation Board, 2013). Today, the federal government has a great deal of involvement in national and global issues of public health and often works closely with local agencies. We now turn to a discussion of the structure and role of the federal government in public health. ▸ What Are the Roles of Federal Public Health Agencies? The federal government’s role in public health does not explicitly appear in the U.S. Constitution. It has been justified largely by that document’s Interstate Commerce clause, which provides federal government authority to regulate commerce between the states. Federal public health authority often rests on the vol- untary acceptance by the states of funding provided by the federal government. The federal government may require that states take certain actions to qualify for the funding. The Department of Health and Human Services (HHS) is the central public health agency of the fed- eral government. It includes operating agencies, each of which reports directly to the cabinet-level secretary of HHS. TABLE 5-2 outlines most of these agencies, their roles and authority, and their basic public health structure and activities (U.S. Department of Health and Human Services, 2017). The NIH, one of the larger agencies within HHS, is devoted to basic science research and the translation of research into clinical practice. Some of the other federal health agencies, such as the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration, and the Indian Health Service, provide or fund individually oriented health services in addition to population- oriented preventive services. The Indian Health Ser- vice is unique because it is responsible for both public health and healthcare services for a defined population. 88 Chapter 5 Public Health Institutions and Systems The CDC is perhaps the agency most closely iden- tified with public health at the federal level. BOX  5-3 describes its first 50 years, from 1946 to 1996, in a reprint of its official history first published in the Morbidity and Mortality Weekly Report (MMWR), TABLE 5-2 Key Federal Health Agencies of the Department of Health and Human Services Agency Roles/Authority Examples of Structures/Activities Centers for Disease Control and Prevention (CDC) and the Agency for Toxic Substances and Disease Registry (ATSDR) The CDC is the lead agency for prevention, health data, epidemic investigation, and public health measures aimed at disease control and prevention. The CDC administers the ATSDR, which works with the Environmental Protection Agency to provide guidance on health hazards of toxic exposures. The CDC and ATSDR work extensively with state and local health departments. The CDC’s Epidemic Intelligence Service functions domestically and internationally at the request of governments. National Institutes of Health (NIH) Serves as lead research agency; also funds training programs and communication of health information to the professional community and the public. NIH comprises 17 institutes in all—the largest being the National Cancer Institute. The National Library of Medicine is part of NIH Centers, which also include the John E. Fogarty International Center for Advanced Study in the Health Sciences. NIH is the world’s largest biomedical research enterprise, with intramural research at NIH and extramural research grants throughout the world. Food and Drug Administration (FDA) Acts as consumer protection agency with authority for safety of foods and safety and efficacy of drugs, vaccines, and other medical and public health interventions. Divisions of FDA are responsible for food safety, medical devices, drug efficacy, and safety pre- and post-approval. Health Resources and Services Administration (HRSA) Seeks to ensure equitable access to comprehensive quality health care. HRSA funds community health centers, HIV/AIDS services, and scholarships for health professional students. Agency for Healthcare Research and Quality (AHRQ) Sets research agenda to improve the outcomes and quality of health care, including patient safety and access to services. AHRQ supports U.S. Preventive Services Task Force, evidence-based medicine research, and Guidelines Clearinghouse. Substance Abuse and Mental Health Services Administration (SAMHSA) Works to improve quality and availability of prevention, treatment, and rehabilitation for substance abuse and mental illness. SAMHSA provides research, data collection, and funding of local services. Indian Health Service (IHS) Provides direct health care and public health services to federally recognized tribes. IHS provides services to approximately 550 federally recognized tribes in 35 states. It is the only comprehensive federal agency responsibility for health care plus public health services. a weekly publication of the agency (CDC, 1996). Today, the CDC is a global partner in conducting research and epidemiologic investigations in addition to working closely with states to monitor and pre- vent disease through health surveillance, taking an What Are the Roles of Federal Public Health Agencies? 89 Source: Reproduced from Centers for Disease Control and Prevention, MMWR 1996;45: 526–528. BOX 5-3 History of the CDC The following is reprinted as it originally appeared in 1996 in the Morbidity and Mortality Weekly Report (CDC, 1996): The Communicable Disease Center was organized in Atlanta, Georgia, on July 1, 1946; its founder, Dr. Joseph W. Mountin, was a visionary public health leader who had high hopes for this small and comparatively insignificant branch of the Public Health Service (PHS). It occupied only one floor of the Volunteer Building on Peachtree Street and had fewer than 400 employees, most of whom were engineers and entomologists. Until the previous day, they had worked for Malaria Control in War Areas, the predecessor of CDC, which had successfully kept the southeastern states malaria-free during World War II and, for approximately 1 year, from murine typhus fever. The new institution would expand its interests to include all communicable diseases and would be the servant of the states, providing practical help whenever called. Distinguished scientists soon filled CDC’s laboratories, and many states and foreign countries sent their public health staffs to Atlanta for training. Medical epidemiologists were scarce, and it was not until 1949 that Dr. Alexander Langmuir arrived to head the epidemiology branch. Within months, he launched the first-ever disease surveillance program, which confirmed his suspicion that malaria, on which CDC spent the largest portion of its budget, had long since disappeared. Subsequently, disease surveillance became the cornerstone on which CDC’s mission of service to the states was built and, in time, changed the practice of public health. The outbreak of the Korean War in 1950 was the impetus for creating CDC’s Epidemic Intelligence Service (EIS). The threat of biological warfare loomed, and Dr. Langmuir, the most knowledgeable person in PHS about this then- arcane subject, saw an opportunity to train epidemiologists who would guard against ordinary threats to public health while watching out for alien germs. The first class of EIS officers arrived in Atlanta for training in 1951 and pledged to go wherever they were called for the next 2 years. These “disease detectives” quickly gained fame for “shoe-leather epidemiology,” through which they ferreted out the cause of disease outbreaks. The survival of CDC as an institution was not at all certain in the 1950s. In 1947, Emory University gave land on Clifton Road for a headquarters, but construction did not begin for more than a decade. PHS was so intent on research and the rapid growth of the National Institutes of Health that it showed little interest in what happened in Atlanta. Congress, despite the long delay in appropriating money for new buildings, was much more receptive to CDC’s pleas for support than either PHS or the Bureau of the Budget. Two major health crises in the mid-1950s established CDC’s credibility and ensured its survival. In 1955, when poliomyelitis appeared in children who had received the recently approved Salk vaccine, the national inoculation program was stopped. The cases were traced to contaminated vaccine from a laboratory in California; the problem was corrected, and the inoculation program, at least for first and second graders, was resumed. The resistance of these 6- and 7-year-olds to polio, compared with that of older children, proved the effectiveness of the vaccine. Two years later, surveillance was used again to trace the course of a massive influenza epidemic. From the data gathered in 1957 and subsequent years, the national guidelines for influenza vaccine were developed. CDC grew by acquisition. When CDC joined the international malaria-eradication program and accepted responsibility for protecting the earth from moon germs and vice versa, CDC’s mission stretched overseas and into space. CDC then played a key role in one of the greatest triumphs of public health: the eradication of smallpox. In 1962 it established a smallpox surveillance unit, and a year later tested a newly developed jet gun and vaccine in the Pacific island nation of Tonga. CDC also achieved notable success at home tracking new and mysterious disease outbreaks. In the mid- 1970s and early 1980s, it found the cause of Legionnaires disease and toxic-shock syndrome. A fatal disease, subsequently named acquired immunodeficiency syndrome (AIDS), was first mentioned in the June 5, 1981, issue of MMWR. Although CDC succeeded more often than it failed, it did not escape criticism. For example, television and press reports about the Tuskegee study on long-term effects of untreated syphilis in black men created a storm of protest in 1972. This study had been initiated by PHS and other organizations in 1932 and was transferred to CDC in 1957. Although the effectiveness of penicillin as a therapy for syphilis had been established during the late 1940s, participants in this study remained untreated until the study was brought to public attention. CDC was also criticized because of the 1976 effort to vaccinate the U.S. population against swine flu, the infamous killer of 1918–1919. When some recipients of the vaccines developed Guillain-Barre syndrome, the campaign was stopped immediately; the epidemic never occurred. As the scope of CDC’s activities expanded far beyond communicable diseases, its name had to be changed. In 1970 it became the Center for Disease Control and in 1981, after extensive reorganization, Center became Centers. The words “and Prevention” were added in 1992 but, by law, the well-known three-letter acronym was retained. In health emergencies, CDC means an answer to SOS calls from anywhere in the world, such as the recent one from Zaire where Ebola fever raged. Fifty years ago, CDC’s agenda was non-controversial (hardly anyone objected to the pursuit of germs), and Atlanta was a backwater. In 1996, CDC’s programs are often tied to economic, political, and social issues, and Atlanta is as near to Washington as the tap of a keyboard. 90 Chapter 5 Public Health Institutions and Systems action-oriented approach to disease prevention, and maintaining health statistics through the National Center for Health Statistics, which has been a part of the CDC since 1987. The CDC’s role in connecting federal, state, and local governmental public health efforts is central to the success of the system. Approximately half of the CDC’s over $10 billion total budget is channeled to state and local health departments. A key function of the CDC is to provide national leadership and to coordinate the efforts of local/state and federal public health agencies. To understand the local/state and federal pub- lic health system, it is important to appreciate that less than 5% of all health-related expenditures in the United States goes to governmental public health agencies, and of that, less than half goes to population-based prevention (as opposed to pro- viding safety net healthcare services to individuals). In addition, the role of governmental public health is limited by social attitudes toward government. For instance, there are constitutional limitations on the authority of public health and other government agencies to impose actions on individuals. These may limit public health agencies’ abilities to address issues ranging from tuberculosis and HIV control to responses to emergencies. The social attitudes of Americans may also limit the authority and resources provided to public health agencies. Americans often favor individual or private efforts over governmental interventions when they believe that individuals and private organizations are capable of success. For instance, some Americans resist active efforts in schools to provide information and access to contraceptives, while others resist the type of case-finding efforts for HIV/AIDS that have been used successfully in investigating and controlling other communicable diseases. Today, governmental public health is a global enterprise. As a result, we now turn to a discussion of the roles of global health organizations and agencies. ▸ What Are the Roles of Global Health Organizations and Agencies? Public health is increasingly becoming a global undertaking. Global governmental efforts have grown dramatically in recent years. The World Health Orga- nization (WHO), created in 1948, has become decid- edly more prominent in the 2000s with the increasing importance of global health issues. WHO is a part of the United Nations organizations, which also include the United Nations International Children’s Emer- gency Fund (UNICEF) and the Joint United Nations Programme on HIV/AIDS (UNAIDS). Today, the World Bank and other multilateral financial institutions are the largest funding source for global health efforts (World Bank, 2018). National governmental aid programs, including the U.S. Agency for International Development (USAID), also play an important role in public health. TABLE 5-3 outlines the TABLE 5-3 Global Public Health Organizations Type of Agency Structure/Governance Role(s) Limitations World Health Organization United Nations Organization Seven “regional” semi- independent components (e.g., Pan American Health Organization covers North and South America) Policy development (e.g., tobacco treaty, epidemic control policies) Coordination of services (e.g., SARS control) Vaccine development Data collection and standardization (e.g., measures of healthcare quality, measures of health status) Limited ability to enforce global recommendations, limited funding, and complex international administration Other UN agencies with focused agenda UNICEF UNAIDS Focus on childhood vaccinations Focus on AIDS Limited agendas and limited financing What Other Government Agencies Are Involved in Health Issues? 91 structure/governance, roles, and limitations of global public health agencies. The complexity of local, state, federal, and global public health agencies raises the question of whether these agencies can and do work together. It should not surprise you that close collaboration, while the goal, is often difficult to achieve with so many organizations involved. Thus, it is important to ask: How can public health agencies work together? ▸ How Can Public Health Agencies Work Together? Coordination among just local, state, and federal pub- lic health agencies has been a major challenge. Increas- ingly, coordination also requires a global aspect. Efforts toward efficient collaboration, on all levels, have a long way to go. There are signs of hope with progress in such fields as tobacco control, food safety, and the response to severe acute respiratory syndrome (SARS). BOX 5-4 discusses the dramatic events of the 2003 SARS epi- demic, providing an example of what can be done and what needs to be done to address future public health emergencies (Duffin & Sweetman, 2006). Collaboration needs to be an everyday effort, not just a requirement for emergencies or epidemics. Let us look at the relationships and needed collaboration among governmental public health and other gov- ernmental agencies, NGOs, and the healthcare deliv- ery system. ▸ What Other Government Agencies Are Involved in Health Issues? To address the full range of issues that affect population health, it is important to recognize the important roles that government agencies not designated as health agencies play in public health. Such agencies exist at the local/state, federal, and global levels. To illustrate the involvement of these agencies in health issues, let us begin with the roles of non-health agencies at the federal level. A number of federal agencies serve public health functions even though they are not defined as health agencies. The roles they play are important, especially when we take the population health perspective, which includes the totality of efforts to promote and protect health and prevent disease, disability, and death. Environmental health issues are an important part of the role of the Environmental Protection Agency. Reduc- ing injury and hazardous exposures in the workplace are key goals of the Occupational Safety and Health Admin- istration, which is part of the Department of Labor. Protecting health as part of preparation and response to disasters and terrorism is central to the role of the Department of Homeland Security. The Depart- ment of Agriculture shares with the FDA the role of protecting the nation’s food supply. The Department of Housing and Urban Development influences the built environment and its impacts on health. The  Depart- ment of Energy plays important roles in setting International financing organizations The World Bank Other multilateral regional banks (e.g., InterAmerican and Asian Development Banks) World Bank is largest international funder. Increasingly supports “human capital” projects and reform of healthcare delivery systems and population and nutrition efforts Provides funding and technical assistance, primarily as loans Criticized for standardized approach with few local modifications Bilateral governmental aid organizations USAID Many other developed countries have their own organizations and contribute a higher percentage of their gross domestic product to those agencies than does the United States Often focused on specific countries and specific types of programs (e.g., the focus on HIV/AIDS in the United States), and maternal and child health May be tied to domestic politics and global economic, political, or military agendas Abbreviations: AIDS = acquired immunodeficiency syndrome; HIV = human immunodeficiency virus; SARS = severe acute respiratory syndrome; UN = United Nations; UNAIDS = Joint United Nations Programme on HIV/AIDS; UNICEF = United Nations International Children’s Emergency Fund; USAID = U.S. Agency for International Development. 92 Chapter 5 Public Health Institutions and Systems BOX 5-4 SARS and the Public Health Response The SARS epidemic of 2003 began with little notice, most likely somewhere in the heartland of China, and then spread to other areas of Asia. The world took notice following televised reports of public health researchers who were sent to Asia to investigate the illness subsequently contracting and dying from the disease. Not an easily transmissible disease except for between those in very close contact, such as investigators, family members, and healthcare providers, the disease spread slowly but steadily through areas of China. Among those infected, the case-fatality rate was very high, especially without the benefits of modern intensive care facilities. The disease did not respond to antibiotics and was thought to be a viral disease by its epidemiologic pattern of spread and transmission, but at first, no cause was known. The outside world soon felt the impact of the brewing epidemic when cases appeared in Hong Kong that could be traced to a traveler from mainland China. Fear spread when cases were recognized that could not be explained by close personal contact with a SARS victim. The epidemic continued to spread, jumping thousands of miles to Toronto, Canada, where the second-greatest concentration of disease appeared. Soon, the whole world was on high alert, if not quite on the verge of panic. At least 8,000 people worldwide became sick, and nearly 10% of them died. Fortunately, progress came quite quickly. Researchers coordinated by WHO were able to put together the epidemiologic information and laboratory data and establish a presumed cause—a new form of the coronavirus never before seen in humans—leading to the rapid introduction of testing. WHO and the CDC put forth recommendations for isolation, travel restrictions, and intensive monitoring that rapidly controlled the disease, even in the absence of an effective treatment aimed at a cure. SARS disappeared as rapidly as it emerged, especially after systematic efforts to control spread were put in place in China. Not eliminated, but no longer a worldwide threat, SARS left a lasting global impact. WHO established new approaches for reporting and responding to epidemics, which now have the widespread formal acceptance of most governments. Once the world could step back and evaluate what happened, it was recognized that the potential burden of disease posed by the SARS epidemic had worldwide implications and raised the threat of interruption of travel and trade. Local, national, and global public health agencies collaborated quickly and effectively. Infection control recommendations made at the global level were rapidly translated into efforts to identify disease at the local level and manage individual patients in hospitals throughout the world. It is a model of communicable disease control that will be needed in the future. groups organizing to advocate for public health causes, delivering public health services, and providing fund- ing to support public health efforts. In recent years, these efforts have been expanding globally as well. The American Red Cross and its network of interna- tional affiliates represent a major international effort to provide public health services. The organization plays a central role in obtaining volunteers for blood donations and ensuring the safety and effectiveness of the U.S. and world supply of blood products in collaboration with the FDA. The ability of the Red Cross to obtain dona- tions, mobilize volunteers, and publicize the need for disaster assistance has allowed it to play a central role in providing lifesaving public health services. Many private organizations provide public health education, support research, develop evidence-based recommendations, and provide other public health services. Many of these organizations are organized around specific diseases or types of disease, such as the American Cancer Association, the American Heart Association, the American Lung Association, and the March of Dimes, which today focuses on birth defects. Other private organizations focus primarily on advo- cacy for individuals with specific diseases, but these organizations also may advocate for specific public health interventions. For instance, Mothers Against Drunk Driving has had a major impact on the passage radiation safety standards for nuclear power plants and other sources of energy. When multiple federal agencies are involved in health-related matters, coordination and collabora- tion are required across agencies. This interaction is certainly important when it comes to food safety and disaster planning and response. It is also key for efforts to address problems that cut across agencies, such as childhood lead exposure or efforts to reduce the envi- ronmental causes of asthma. The collaboration needed to address complex public health issues lends itself to a “health in all pol- icies” approach, which acknowledges that the variety of influences impacting population health are outside the control of the health sector. Collaborative efforts are not restricted to governmental agencies. We will now explore the roles of NGOs in public health. ▸ What Roles Do NGOs Play in Public Health? Nongovernmental Organizations NGOs play increasingly important roles in public health in the United States and around the world. In the United States, there is a long tradition of private 93How Can Public Health Agencies Partner With Health Care? BOX 5-5 National Vaccine Plan In 1994, a National Vaccine Plan was developed as part of a coordinated effort to accomplish the following goals: 1. Develop new and improved vaccines. 2. Ensure the optimal safety and effectiveness of vaccines and immunizations. 3. Better educate the public and members of the health profession on the benefits and risks of immunizations. A recent IOM report evaluated progress since 1994 on achieving these goals and made recommendations for the development of a revised National Vaccine Plan (IOM, 2008). The IOM highlighted a number of successes since 1994 in achieving each of the goals of the plan. These successes illustrate the potential for improved collaboration between public health systems and healthcare systems. In terms of the development of new and improved vaccines since 1994, over 20 new vaccine products resulting from the collaborative efforts of the NIH, academicians, and industry researchers were approved by the FDA. Novel vaccines introduced include vaccines against pediatric pneumococcal disease, meningococcal disease, and the human papillomavirus—a cause of cervical cancer. In terms of safety, vaccines and vaccination approaches with improved safety have been developed since 1994, including those directed against rotavirus, pertussis (whooping cough), and polio. The FDA Center for Biologics Evaluation and Research, which regulates vaccines, now has an expanded array of regulatory tools to facilitate the review and approval of safe and efficacious vaccines. The FDA and the CDC have collaborated on surveillance for and evaluation of adverse events. Efforts have also been made to increase collaboration with the Centers for Medicare and Medicaid Services, the Department of Defense, and the Department of Veterans Affairs to improve surveillance and reporting of adverse events following immunization in the adult populations these agencies serve. In terms of better education of health professionals and the public, progress has also been made. The American Academy of Pediatrics collaborates with the CDC for its childhood immunization support. The American Medical (continues) and enforcement of drunk-driving laws. HIV/AIDS advocacy groups have influenced policies on confi- dentiality, funding, and public education. Globally, NGOs increasingly play a key role in providing services and advocating for public health policies. CARE and Oxfam International are exam- ples of the types of organizations involved in global health-related crises. Physician groups, including Physicians for Social Responsibility and Doctors Without Borders, have been active in advocating for public health efforts, seeking funding for public health needs, and addressing the ethical implementation of public health programs. New combinations of governmental and NGOs are increasingly developing to fill in the gaps. At the global level, the Global Fund to Fight AIDS, Tuber- culosis, and Malaria, which is a public–private effort, provides funding for evidence-based interventions to address these diseases. It is funded not only by govern- ments, but also by private foundations, such as the Bill and Melinda Gates Foundation. Private foundations have long played major roles in both funding public health efforts and stimulating governmental funding. The Rockefeller Foundation’s efforts were instrumental in developing local health departments and initiating schools of public health in the United States during the early years of the 1900s. The Kellogg Foundation, the Robert Wood Johnson Foun- dation, and most recently the Gates Foundation have all played key roles in advancing public health efforts in areas ranging from nutrition to tobacco control to the advancement of new public health technologies. Foundation funding has been the catalyst in initi- ating new funding efforts and sustaining those that are not adequately funded by governments. They cannot be expected, however, to provide long-term support for basic public health services. Thus, additional strat- egies are required. One key strategy is to link public health efforts with the efforts of healthcare profession- als and the healthcare system. ▸ How Can Public Health Agencies Partner With Health Care to Improve the Response to Health Problems? Clinicians and public health professionals increasingly share a common commitment to evidence-based think- ing, cost-effective delivery of services, and computerized and confidential data systems. They also increasingly share a commitment to provide quality services to the entire population and eliminate health disparities. The potential for successful collaboration between public health and health care is illustrated by the National Vac- cine Plan, which is discussed in BOX 5-5 (IOM, 2008). 94 Chapter 5 Public Health Institutions and Systems Association cosponsors the annual National Influenza Vaccine Summit, a group that represents 100 public and private organizations interested in preventing influenza. Despite the growing collaboration and success in vaccine development and use, new issues have appeared in recent years. Vaccines are now correctly viewed by health professionals and the broader public as having both benefits and harms. In recent years, the public has grown more concerned about the safety of vaccines, including the issue of the use of large numbers of vaccines in children. The limitations of vaccines to address problems, such as HIV/AIDS, have also been increasingly recognized. Hopefully, the continued efforts to develop and implement national vaccine plans will build upon these recent successes and address the new realities and opportunities. BOX 5-5 National Vaccine Plan BOX 5-6 Community-Oriented Primary Care Community-oriented primary care (COPC) is a structured effort to expand the delivery of health services from a focus on the individual to include an additional focus on the needs of communities. Serving the needs of communities brings healthcare and public health efforts together. COPC can be seen as an effort on the part of healthcare delivery sites, such as community health centers, to reach out to their community and to governmental public health institutions. TABLE 5-4 outlines the six steps in the COPC process and presents a question to ask when addressing each of these steps. Notice the parallels between COPC and the evidence-based approach. A series of principles underlies COPC: ■ Healthcare needs are defined by examining the community as a whole, not just those who seek care. ■ Needed healthcare services are provided to everyone within a defined population or community. ■ Preventive, curative, and rehabilitative care are integrated within a coordinated delivery system. ■ Members of the community directly participate in all stages of the COPC process. The concept of COPC, if not the specific structure, has been widely accepted as an approach for connecting the organized delivery of primary health care with public health. It implies that public health issues can and should be addressed, when possible, at the level of the community with the involvement of healthcare providers and the community members themselves. TABLE 5-4 The Six Sequential Steps of Community-Oriented Primary Care Steps in the COPC Process Questions to Ask 1. Community definition How is the community defined based on geography, institutional affiliation, or other common characteristics (e.g., use of an Internet site)? 2. Community characterization What are the demographic and health characteristics of the community, and what are its health issues? 3. Prioritization What are the most important health issues facing the community, and how should they be prioritized based on objective data and perceived need? 4. Detailed assessment of the selected health problem What are the most effective and efficient interventions for addressing the selected health problem based on an evidence-based assessment? 5. Intervention What strategies will be used to implement the intervention? 6. Evaluation How can the success of the intervention be evaluated? Data from Mullan, F., & Epstein, L. (2002). Community-oriented primary care: New relevance in a changing world. American Journal of Public Health, 92(11), 1748–1755. (continued) 95How Can Public Health Take the Lead in Mobilizing Community Partnerships? BOX 5-7 Child Oral Health and Community-Oriented Public Health The problem of childhood dental disease illustrates the potential for COPH. A lack of regular dental care remains a major problem for children in developed, as well as developing, countries. Oral health is often high on the agenda of parents, teachers, and even the children themselves. The history of public health interventions in childhood oral health is a story of great hope and partial success. Public health efforts to improve oral health go back to the late 1800s and early 1900s, when toothbrushes and toothpaste were new and improved technologies. The public health campaigns of the early 1900s were very instrumental in making (continues) In the mid-1990s, the Medicine–Public Health Initiative was implemented to investigate better ways to connect public health with medicine, in particu- lar, and health care, in general. Connecting these two fields has not always been easy or yielded successful results. Additional structures are needed to formalize effective and efficient bonds. Models do exist and new ideas are being put forth to connect clinical care and public health. BOX 5-6 discusses one such model, called community-oriented primary care (COPC) (Gofin & Gofin, 2011). Despite efforts in the healthcare system to reach out to the community and address public health issues (such as COPC), it remains the pri- mary responsibility of governmental public health to organize and mobilize community-based efforts. Working with NGOs and healthcare professionals and organizations is imperative to effectively and efficiently accomplish the goals of public health. But how exactly can public health agencies accomplish these goals? ▸ How Can Public Health Take the Lead in Mobilizing Community Partnerships to Identify and Solve Health Problems? An essential service of public health is the mobiliza- tion of community partnerships and action to iden- tify and solve health problems. These efforts by public health agencies are critical to putting the pieces of the health system together to protect and promote health and prevent disability and death. Increasingly, community members themselves are becoming active participants in addressing health and disease in their communities. One approach to engage community members in the process is through community-based participatory research (CBPR). Through CBPR, community members are involved in all phases of the research process, con- tributing their expertise while sharing ownership and responsibility over the research, and assisting to build trust, knowledge, and skill to facilitate the research and development and implementation of interventions. Examples of successful collaboration include state tobacco control programs that have been led by public health agencies but rely heavily on NGOs, healthcare professionals, and other governmental agencies. These efforts have substantially reduced statewide cigarette smoking rates. Efforts to organize coordinated programs for lead control have also been met with success. Collabora- tive efforts between public health and health care have identified and treated children with elevated lead levels. Cooperation with other agencies has provided for the removal of lead paint from homes and testing and control of lead in playgrounds, water, and, most recently, toys. It is possible to view the coordinated mobilization of public and private efforts as community-oriented public health (COPH). We can see this as a parallel to COPC. In COPC, healthcare efforts are expanded to take on additional public health roles. In COPH, public health efforts are expanded to collaborate with healthcare delivery institutions, as well as other com- munity and other governmental efforts. Child oral health, an example of COPH, is illustrated in BOX 5-7. Developing community partnerships is a time- consuming and highly political process that requires great leadership and diplomatic skills. Central author- ity and command and control approaches are generally not effective in the complex organizational structures of the United States. New approaches and new strat- egies are needed to bring together the organizations and individuals who can get the job done. 96 Chapter 5 Public Health Institutions and Systems BOX 5-7 Child Oral Health and Community-Oriented Public Health (continued) toothbrushing a routine part of life in the United States. Unfortunately, the fluoridization of drinking water, despite the well-grounded evidence of its benefits, has not been so readily accepted. The American Dental Association and the American Medical Association have supported this intervention for over half a century. Resistance from those who view it as an intrusion of governmental authority, however, has prevented universal use of fluoridation in this country. After over a half century of effort, fluoridation has reached less than 66% of Americans through the water supply. Today, new technologies, from dental sealants to more cost-effective methods for treating cavities, have again made oral health a public health priority. However, the number of dentists has not grown in recent years to keep up with the growing population. In addition, dental care for those without the resources to pay for it is often inadequate and inaccessible. Thus, a new approach is needed to bring dental care to those in need. Perhaps a new strategy using a COPH approach can make this happen. COPH can reach beyond the institutional and geographical constraints that COPC faces when based in a community health center or other institutions serving a geographically defined population or community. COPH as a government- led effort allows a greater range of options for intervention, including those that require changes in laws, incentives, and governmental procedures. Interventions may include authorizing new types of clinicians, providing services in nontraditional settings such as schools, funding innovations to put new technologies into practice, and addressing the regulatory barriers to rapid and cost-effective delivery of services. ▸ Conclusion In summary, the chapter offered a look at the orga- nization of the public health system and the chal- lenges it faces in accomplishing its core functions and providing its essential services. The role of public health will continue to evolve as current and emerging issues impact the health of the population. 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Public Health Accreditation Board. (2013). Standards and measures. Retrieved from http://www.phaboard.org/accreditation-process /public-health-department-standards-and-measures Turnock, B. J. (2007). Essentials of public health. Burlington, MA: Jones and Bartlett Learning. Turnock, B. J. (2009). Public health: What it is and how it works (4th ed.). Burlington, MA: Jones and Bartlett Learning. U.S. Department of Health and Human Services. (2017). HHS organizational chart. Retrieved from http://www.hhs.gov /about/orgchart World Bank. (2018). Health. Retrieved from http://www .worldbank.org/en/topic/health ▸ Endnotes a. This does not imply that components of the work cannot be contracted to nongovernmen- tal organizations. This activity is increasingly occurring. The concept of core function, how- ever, implies that public health agencies remain responsible for these functions even when the day-to-day work is conducted through con- tracts with an outside organization. b. This delegation may occur at the discretion of the state government or it may be included in the state’s constitution, providing what is called home rule authority to local jurisdictions. In general, jurisdictions with home rule author- ity exercise substantially more autonomy. https://www.cdc.gov/stltpublichealth/publichealthservices/essentialhealthservices.html https://www.cdc.gov/stltpublichealth/publichealthservices/essentialhealthservices.html http://www.phaboard.org/accreditation-process/public-health-department-standards-and-measures http://www.phaboard.org/accreditation-process/public-health-department-standards-and-measures http://www.hhs.gov/about/orgchart http://www.hhs.gov/about/orgchart http://www.worldbank.org/en/topic/health http://www.worldbank.org/en/topic/health 97PART I ADDENDUM: TIMELINE PA RT I AD DE N DU M : T IM EL IN E Pr e- 18 00 18 00 s 18 20 s Po lit ic al P ar ty in P o w er — Fe d er al G o ve rn m en t Pr es id en t Fe d er al is t ( 17 89 –1 80 1) D em -R ep (1 80 1– 18 29 ) G eo rg e W as h in g to n (1 78 9– 17 97 ); Jo h n A d am s (1 79 7– 18 01 ) Th om as J eff er so n (1 80 1– 18 09 ); Ja m es M ad is on (1 80 9– 18 17 ); Ja m es M on ro e (1 81 7– 18 25 ); Jo hn Q ui nc y A d am s (1 82 5– 18 29 ) U .S . H ou se o f Re p re se n ta tiv es Pr o -A d m in is tr at io n (1 78 9– 17 93 ); A n ti- A d m in is tr at io n (1 79 3– 17 95 ); Je ffe rs on ia n R ep ub lic an (1 79 5– 17 97 ); Fe d er al is t ( 17 97 –1 80 1) Je ffe rs on ia n R ep ub lic an (1 80 1– 18 23 ) A d am s– C la y Re p ub lic an (1 82 3– 18 25 ); A d am s (1 82 5– 18 27 ); Ja ck so n s (1 82 7– 18 29 ) U .S . S en at e Pr o -A d m in is tr at io n (1 78 9– 17 95 ); Fe d er al is t ( 17 95 –1 80 1) Re p ub lic an (1 80 1– 18 23 ) Ja ck so n -C ra w fo rd R ep ub lic an (1 82 3– 18 25 ); Ja ck so n ia n (1 82 5– 18 33 ) M aj o r So ci al a n d P o lit ic al E ve n ts In d u st ri al R ev o lu ti o n (~ 17 90 –1 86 0) a n d  in cr ea se d u rb an iz at io n W ar o f 1 81 2 (1 81 2– 18 14 ) a n d p os t- w ar e co n om ic g ro w th K ey F ed er al L eg is la ti ve P ro p o sa ls /L aw s an d K ey L eg al D ec is io n s 17 98 U .S . P ub lic H ea lth S er vi ce A ct : C re at es th e M ar in e H o sp it al S er vi ce , p re d ec es so r t o th e Pu b lic H ea lth Se rv ic e, to p ro vi d e m ed ic al  c ar e to m er ch an t s ea m en . M ar bu ry v . M ad is on , 5 U .S . 1 37 (1 80 3) : Es ta bl is he d th e Su pr em e C ou rt ’s po w er of ju di ci al re vi ew ; 1 81 8 O ffi ce o f t h e Su rg eo n G en er al e st ab lis he d. Im p o rt an t D ev el o p m en ts in H ea lt h an d M ed ic in e St at e Po or L aw s re qu ire c om m un iti es to c ar e fo r r es id en ts w ho a re p hy si ca lly o r m en ta lly in ca p ab le o f c ar in g fo r th em se lv es ; S ta te s b eg in b ui ld in g d is p en sa rie s in th e la te 17 00 s to p ro vi d e m ed ic at io n to th e p oo r; A lm sh ou se s se rv e as p rim iti ve h os p ita ls , p ro vi d in g li m ite d c ar e to th e in d ig en t; Pu b lic h ea lth fo cu se s on fi g ht in g p la g ue , c ho le ra , a nd sm al lp ox e p id em ic s, of te n th ro ug h qu ar an tin e. 98 PART I ADDENDUM: TIMELINE 18 30 s 18 40 s 18 50 s Po lit ic al P ar ty in P o w er — Fe d er al G o ve rn m en t Pr es id en t D em oc ra t ( 18 29 –1 84 1) W h ig (1 84 1– 18 45 ); D em oc ra t ( 18 45 –1 84 9) ; W h ig (1 84 9– 18 53 ); D em oc ra t ( 18 53 –1 86 1) A n d re w J ac ks on (1 82 9– 18 37 ); M ar tin V an B ur en (1 83 7– 18 41 ) W ill ia m H en ry H ar ris on (1 84 1) ; Jo h n T yl er (1 84 1– 18 45 ); Ja m es K . Po lk (1 84 5– 18 49 ); Z ac h ar y Ta yl or (1 84 9– 18 50 ) M ill ar d F ill m or e (1 85 0– 18 53 ); Fr an kl in P ie rc e (1 85 3– 18 57 ); Ja m es B uc h an an (1 85 7– 18 61 ) U .S . H ou se o f Re p re se n ta tiv es Ja ck so n s (1 82 9– 18 37 ); D em oc ra t ( 18 37 –1 84 1) U .S . S en at e A n ti- Ja ck so n ia n (1 83 3– 18 35 ); Ja ck so n ia n (1 83 5– 18 37 ); D em oc ra t ( 18 37 –1 84 1) W h ig (1 84 1– 18 45 ) ( 27 th –2 8t h ); D em oc ra t ( 18 45 –1 86 1) (2 9t h –3 6t h ) M aj o r So ci al a n d P o lit ic al Ev en ts In d u st ri al R ev o lu ti o n (~ 17 90 –1 86 0) a n d in cr ea se d u rb an iz at io n U .S .– M ex ic an W ar (1 84 6– 18 48 ) C ri m ea n W ar (1 85 3– 18 56 ) K ey F ed er al L eg is la ti ve P ro p o sa ls /L aw s an d K ey Le g al D ec is io n s 18 48 Im p o rt D ru g A ct : I n iti at es d ru g re g ul at io n ; U .S . C us to m s Se rv ic e is re q ui re d to e n fo rc e p ur ity s ta n d ar d s fo r i m p or te d m ed ic at io n s. Im p o rt an t D ev el o p m en ts in H ea lt h a n d M ed ic in e 18 46 F irs t p ub lic iz ed u se o f g en er al an es th et ic ; U se o f a n es th et ic s in cr ea se s th e n um b er o f s ur g er ie s p er fo rm ed ; 1 84 7 A m er ic an M ed ic al A ss oc ia tio n (A M A ) i s fo un d ed . St ud ie s b y Ed w in C h ad w ic k in E n g la n d, L em ue l Sh at tu ck in M as sa ch us et ts , a n d o th er s re ve al th at ov er cr ow d ed a n d u n sa n ita ry c on d iti on s b re ed d is ea se , a n d a d vo ca te e st ab lis h m en t o f l oc al h ea lth b oa rd s; B y th e en d o f t h e 18 00 s, 4 0 st at es a n d se ve ra l l oc al iti es e st ab lis h h ea lth d ep ar tm en ts . 99PART I ADDENDUM: TIMELINE 18 60 s 18 70 s 18 80 s Po lit ic al P ar ty in Po w er — Fe d er al G o ve rn m en t Pr es id en t Re p ub lic an ; D em oc ra t Re p ub lic an Re p ub lic an (1 88 1– 18 85 ); D em oc ra t ( 18 85 –1 88 9) A b ra h am L in co ln (1 86 1– 18 65 ); A n d re w J oh n so n (1 86 5– 18 69 ) U ly ss es S . G ra n t ( 18 69 –1 87 7) ; Ru th er fo rd B . H ay es (1 87 7– 18 81 ) Ja m es A . G ar fie ld (1 88 1) ; C h es te r A . A rt h ur (1 88 1– 18 85 ); G ro ve r C le ve la n d (1 88 5– 18 89 ) U .S . H ou se o f Re p re se n ta tiv es Re p ub lic an (1 85 9– 18 75 ) D em oc ra t ( 18 75 –1 88 1) Re p ub lic an (1 88 1– 18 83 ); D em oc ra t ( 18 83 –1 88 9) U .S . S en at e Re p ub lic an (1 86 1– 18 79 ) ( 37 th –4 5t h ) D em oc ra t ( 18 79 –1 88 1) (4 6t h ) Re p ub lic an (1 88 1– 18 93 ) ( 47 th –5 2n d ) M aj o r So ci al a n d Po lit ic al E ve n ts In d u st ri al R ev o lu ti o n (~ 17 90 –1 86 0) a n d in cr ea se d u rb an iz at io n U .S . C iv il W ar (1 86 1– 18 65 ) a n d p os t- w ar ex p an si on in in te rs ta te c om m er ce U .S .– M ex ic an W ar (1 84 6– 18 48 ) C ri m ea n W ar (1 85 3– 18 56 ) K ey F ed er al Le g is la ti ve P ro p o sa ls /L aw s an d K ey L eg al D ec is io n s 18 62 B u re au o f C h em is tr y (fo re ru n n er o f th e Fo od a n d D ru g A d m in is tr at io n [F D A ]) is es ta b lis h ed a s a sc ie n tifi c la b or at or y in th e D ep ar tm en t o f A g ric ul tu re . 18 70 s M ed ic al P ra ct ic e A ct s: E st ab lis h st at e re g ul at io n o f p hy si ci an li ce n si n g ; 1 87 0 M ar in e H o sp it al S er vi ce is c en tr al iz ed a s a se p ar at e b ur ea u of th e Tr ea su ry D ep ar tm en t; 18 78 N at io n al Q u ar an ti n e A ct : G ra n ts th e M ar in e H os p ita l S er vi ce q ua ra n tin e au th or ity d ue to it s as si st an ce w ith y el lo w fe ve r ou tb re ak . 18 87 N at io n al H yg ie n ic L ab or at or y, p re d ec es so r l ab to th e N at io n al In st itu te s of H ea lth , i s es ta b lis h ed in S ta te n Is la n d, N ew Y or k, b y th e N at io n al M ar in e H ea lth S er vi ce . Im p o rt an t D ev el o p ­ m en ts in H ea lt h a n d M ed ic in e 18 61 F irs t n ur si ng s ch oo l i s fo un d ed a nd th e ro le o f n ur si ng is e st ab lis he d d ur in g th e C iv il W ar ; 18 60 s Lo ui s Pa st eu r d ev el op s th e g er m th eo ry o f d is ea se ; 1 86 5 an ti se p ti c su rg er y is in tr od uc ed b y Jo se p h Li st er , d ec re as in g d ea th ra te s fr om su rg ic al o p er at io ns ; W ith th e ad ve nt o f l ic en si ng , th e p ra ct ic e of m ed ic in e b eg in s to b ec om e a m or e ex cl us iv e re al m . 18 77 L ou is P as te ur d is co ve rs th at a n th ra x is c au se d b y b ac te ria ; S ci en tis ts fi n d b ac te rio lo g ic a g en ts c au si n g tu b er cu lo si s, d ip h th er ia , t yp h oi d, a n d y el lo w fe ve r; Im m un iz at io n s an d w at er p ur ifi ca tio n in te rv en tio n s fo llo w re ce n t d is co ve rie s; St at e an d lo ca l h ea lth d ep ar tm en ts c re at e la b or at or ie s; S ta te s b eg in p as si n g la w s re q ui rin g d is ea se re p or tin g a n d e st ab lis h in g d is ea se re g is tr ie s. 18 80 s Fi rs t h os p ita ls e st ab lis h ed a n d th e im p or ta n ce of h os p ita ls in th e p ro vi si on o f m ed ic al c ar e in cr ea se s; 18 82 fi rs t m aj or e m p lo ye e- sp on so re d m ut ua l b en efi t a ss oc ia tio n w as c re at ed b y N or th er n P ac ifi c Ra ilw ay , i n cl ud es h ea lth ca re b en efi t; So ci al In su ra n ce m ov em en t r es ul ts in th e cr ea tio n o f “ si ck n es s” in su ra n ce th ro ug h ou t m an y co un tr ie s in E ur op e; 1 89 5 X- ra ys d is co ve re d. 100 PART I ADDENDUM: TIMELINE 18 90 s 19 00 s Po lit ic al P ar ty in P o w er — Fe d er al G o ve rn m en t Pr es id en t Re p ub lic an (1 88 9– 18 93 ); D em oc ra t (1 89 3– 18 97 ); Re p ub lic an (1 89 7– 19 01 ) Re p ub lic an /P ro g re ss iv e Be n ja m in H ar ris on (1 88 9– 18 93 ); G ro ve r C le ve la n d (1 89 3– 18 97 ); W ill ia m M cK in le y (1 89 7– 19 01 ) Th eo d or e Ro os ev el t ( 19 01 –1 90 9) U .S . H ou se o f Re p re se n ta tiv es Re p ub lic an (1 88 9– 18 91 ); D em oc ra t ( 18 91 –1 89 5) ; R ep ub lic an (1 89 5– 19 11 ) U .S . S en at e D em oc ra t ( 18 93 –1 89 5) (5 3r d ); Re p ub lic an (1 89 5– 19 13 ) ( 54 th –6 2n d ) Re p ub lic an M aj o r So ci al a n d P o lit ic al E ve n ts P ro g re ss iv e Er a (1 90 0– 19 20 ): C h ar ac te riz ed b y p op ul ar s up p or t f or s oc ia l r ef or m , p ar t of w h ic h in cl ud ed c om p ul so ry h ea lth in su ra n ce ; R oo se ve lt ca m p ai g n ed o n a s oc ia l in su ra n ce p la tf or m in 1 91 2. K ey F ed er al L eg is la ti ve P ro p o sa ls / La w s an d K ey L eg al D ec is io n s 18 90 S h er m an A n ti tr u st A ct : Pr oh ib its in te rs ta te tr us ts s o ec on om ic p ow er w ou ld n ot b e co n ce n tr at ed in a fe w c or p or at io n s. H u rl ey v . E d d in g fi el d , 5 9 N .E . 1 05 8 (In d. 1 90 1) : P hy si ci an s ar e un d er n o d ut y to tr ea t, an d a p hy si ci an is n ot li ab le fo r a rb itr ar ily re fu si n g to re n d er m ed ic al a ss is ta n ce ; 1 90 2 M ar in e H ea lt h S er vi ce re n am ed th e P u b lic H ea lt h a n d M ar in e H o sp it al S er vi ce (P H M H S) a s its ro le in d is ea se c on tr ol a ct iv iti es e xp an d s; 1 90 2 B io lo g ic s C o n tr o l A ct : Re g ul at es s af et y an d e ffe ct iv en es s of v ac ci n es , s er um s, e tc .; Ja co b so n v . M as sa ch u se tt s, 19 7 U .S . 1 1 (1 90 5) : S ta te s ta tu te re q ui rin g c om p ul so ry v ac ci n at io n a g ai n st s m al lp ox is a co n st itu tio n al e xe rc is e of p ol ic e p ow er ; 1 90 6 Fo o d a n d D ru g A ct ( W ile y A ct ): G iv es re g ul at or y p ow er to m on ito r f oo d m an uf ac tu rin g, la b el in g, a n d s al es to F D A p re d ec es so r; 19 08 F ed er al E m p lo ye rs L ia b ili ty A ct : C re at es w or ke rs c om p en sa tio n p ro g ra m fo r s el ec t fe d er al e m p lo ye es . Im p o rt an t D ev el o p m en ts in H ea lt h an d M ed ic in e 19 01 A M A re or g an iz es a t l oc al /s ta te le ve l a n d g ai n s st re n g th , b eg in n in g e ra o f “ or g an iz ed m ed ic in e” a s p hy si ci an s as a g ro up b ec om e a m or e co h es iv e an d in cr ea si n g ly p ro fe ss io n al au th or ity . 101PART I ADDENDUM: TIMELINE 19 10 s 19 20 s Po lit ic al P ar ty in P o w er — Fe d er al G o ve rn m en t Pr es id en t Re p ub lic an D em oc ra t Re p ub lic an Re p ub lic an W ill ia m H . T af t ( 19 09 –1 91 3) W oo d ro w W ils on (1 91 3– 19 21 ) W ar re n G . H ar d in g (1 92 1– 19 23 ) C al vi n C oo lid g e (1 92 3– 19 29 ) U .S . H ou se of R ep re se n - ta tiv es D em oc ra t ( 19 11 –1 91 9) (6 2n d –6 5t h ) D em oc ra t ( 19 13 –1 91 9) (6 3r d –6 5t h ); Re p ub lic an (1 91 9– 19 33 ) ( 66 th –7 2n d ) Re p ub lic an (1 91 9– 19 31 ) (6 6t h –7 1s t) Re p ub lic an U .S . S en at e Re p ub lic an D em oc ra t ( 19 13 –1 91 9) (6 3r d –6 5t h ); Re p ub lic an (1 91 9– 19 33 ) ( 66 th –7 2n d ) Re p ub lic an Re p ub lic an M aj o r So ci al a n d P o lit ic al Ev en ts W o rl d W ar I (1 91 4– 19 19 ; U n ite d S ta te s en te rs in 1 91 7) K ey F ed er al L eg is la ti ve P ro p o sa ls /L aw s an d K ey L eg al D ec is io n s 19 12 C h ild re n ’s B u re au o f H ea lt h e st ab lis h ed in D ep ar tm en t o f C om m er ce (l at er m ov ed to D ep ar tm en t of L ab or ); 19 12 P u b lic H ea lt h a n d M ar in e H o sp it al Se rv ic e is re n am ed th e P u b lic H ea lt h S er vi ce a n d is au th or iz ed to in ve st ig at e h um an d is ea se a n d s an ita tio n ; 19 14 C la yt o n A n ti tr u st A ct : C la rifi es th e Sh er m an A n tit ru st A ct a n d in cl ud es a d d iti on al p ro h ib iti on s. 19 11 : F irs t s ta te w or ke rs c om p en sa tio n la w e n ac te d ; 1 91 8 C h am b er la in ­K ah n A ct : Pr ov id es fi rs t f ed er al g ra n ts to s ta te s fo r p ub lic h ea lth s er vi ce s; 1 92 1 Sw ee t A ct : E st ab lis h es th e Ve te ra n s A d m in is tr at io n ; 1 92 2 Sh ep h er d ­T o w n er A ct : P ro vi d es g ra n ts fo r t h e C h ild re n’ s Bu re au a n d s ta te m at er n al a n d c h ild h ea lth p ro g ra m s, a n d is th e fir st d ire ct fe d er al fu n d in g of h ea lth s er vi ce s fo r i n d iv id ua ls . Im p o rt an t D ev el o p m en ts in H ea lt h a n d M ed ic in e 19 10 F le xn er R ep or t o n M ed ic al E d uc at io n c re at es m ed ic al s ch oo l s ta n d ar d s; “s ic kn es s” in su ra n ce es ta b lis h ed b y Br ita in in 1 91 1 an d R us si a in 1 91 2; So ci al is t a n d P ro g re ss iv e p ar tie s in th e U n ite d S ta te s su p p or t s im ila r “ si ck n es s” in su ra n ce . 19 13 A m er ic an C o lle g e o f S u rg eo n s (A C S) is fo un d ed ; 1 91 8 A C S b eg in s ac cr ed ita tio n of h os p ita ls ; 1 91 8– 19 19 p an d em ic fl u k ill s ov er 6 00 ,0 00 p eo p le in th e U n ite d S ta te s; 1 92 0 A M A p as se s re so lu tio n a g ai n st c om p ul so ry h ea lth in su ra n ce ; A M A o p p os iti on c om b in ed w ith e n tr y in to W or ld W ar I (a n d th e an ti- G er m an s en tim en ts a ro us ed ), un d er m in es s up p or t fo r n at io n al h ea lth re fo rm a n d g ov er n m en t i n su ra n ce ; 1 92 9 B lu e C ro ss e st ab lis h ed it s fir st h os p ita l i n su ra n ce p la n a t B ay lo r U n iv er si ty ; C h ro n ic il ln es se s b eg in to re p la ce in fe ct io us d is ea se s as m os t s ig n ifi ca n t h ea lth th re at ; W ith in n ov at io n s in m ed ic al c ar e, h ea lth ca re c os ts b eg in to ri se . 102 PART I ADDENDUM: TIMELINE 19 30 s 19 40 s Po lit ic al P ar ty in Po w er — Fe d er al G o ve rn m en t Pr es id en t Re p ub lic an D em oc ra t H er b er t H oo ve r ( 19 29 –1 93 3) Fr an kl in D . R oo se ve lt (1 93 3– 19 45 ) U .S . H ou se o f Re p re se n ta tiv es D em oc ra t ( 19 31 –1 94 7) (7 2n d –7 9t h ) D em oc ra t U .S . S en at e D em oc ra t ( 19 33 –1 94 7) (7 3r d –7 9t h ) D em oc ra t M aj o r So ci al a n d Po lit ic al E ve n ts G re at D ep re ss io n (1 92 9 th ro ug h 1 93 0s ); N ew D ea l ( 19 33 –1 93 9) W o rl d W ar II (1 93 9– 19 45 ), Pe ar l H ar b or 1 94 1) K ey F ed er al Le g is la ti ve P ro p o sa ls /L aw s an d K ey L eg al D ec is io n s 19 30 N at io n al In st it u te s o f H ea lt h e st ab lis h ed ; 1 93 3 Fe d er al Em er g en cy R el ie f A d m in is tr at io n p ro vi d es li m ite d m ed ic al s er vi ce s fo r t h e m ed ic al ly in d ig en t; 19 35 S o ci al S ec u ri ty A ct : P ro vi d es fe d er al g ra n t- in -a id fu n d in g fo r s ta te s to c re at e an d m ai n ta in p ub lic h ea lth s er vi ce s an d tr ai n in g, e xp an d s re sp on si b ili tie s fo r t h e C h ild re n’ s H ea lth B ur ea u, an d e st ab lis h es A id to F am ili es w ith D ep en d en t C h ild re n (A FD C ) w el fa re p ro g ra m ; 1 93 5 W o rk s P ro je ct A d m in is tr at io n is c re at ed , i n cl ud in g p ro je ct s to b ui ld a n d im p ro ve h os p ita ls ; 1 93 8 Fo o d , D ru g a n d C o sm et ic A ct : E xp an d s re g ul at or y sc op e of F D A to re q ui re p re m ar ke t a p p ro va l ( in re sp on se to d ea th s fr om a n u n te st ed p ro d uc t) ; 1 93 9 Pu b lic H ea lth S er vi ce is tr an sf er re d fr om th e Tr ea su ry D ep ar tm en t t o th e n ew F ed er al S ec ur ity A g en cy . 19 41 M an h am A ct : F un d s w ar tim e em er g en cy b ui ld in g o f h os p ita ls ; 1 94 2 N at io n al W ar L ab o r B o ar d ru le s th at th e p ro vi si on o f b en efi ts , i n cl ud in g h ea lth in su ra n ce , d oe s n ot v io la te w ag e fr ee ze ; 1 94 4 P u b lic H ea lt h S er vi ce A ct : C on so lid at es th e la w s re la te d to th e fu n ct io n s of th e PH S; 1 94 6 H ill ­ B u rt o n A ct : F un d s h os p ita l c on st ru ct io n to im p ro ve a cc es s to h os p ita l-b as ed m ed ic al c ar e; 1 94 6 Th e C o m m u n ic ab le D is ea se C en te r (C D C ) o p en s as p ar t of th e Pu b lic H ea lth S er vi ce ; 1 94 9 Tr um an ’s n at io n al h ea lth in su ra n ce p ro p os al is d ef ea te d. Im p o rt an t D ev el o p m en ts in H ea lt h a n d M ed ic in e Th e G re at D ep re ss io n th re at en s fin an ci al s ec ur ity o f p hy si ci an s, h os p ita ls , an d in d iv id ua ls ; C om m er ci al in su ra n ce in d us tr y ris es in th e ab se n ce o f g ov er n m en t- sp on so re d in su ra n ce p la n s; In th e la te 1 93 0s th e Bl ue C ro ss (h os p ita l s er vi ce s) a n d B lu e Sh ie ld (p hy si ci an s er vi ce s) h ea lth in su ra n ce p la n cr ea te d ; P re p ai d g ro up h ea lth p la n s/ m ed ic al c oo p er at iv es g ai n p op ul ar ity w ith s om e p ro vi d er s an d c on su m er s, b ut a re o p p os ed b y A M A . (1 93 2– 19 72 ) T u sk eg ee S yp h ili s St u d y 19 45 N ob el P riz e in M ed ic in e aw ar d ed fo r d ev el op m en t o f p en ic ill in tr ea tm en t fo r h um an s, w h ic h is u se d e xt en si ve ly in th e w ar ; 1 94 5 Ka is er P er m an en te , a la rg e p re p ai d, in te g ra te d h ea lth p la n is o p en ed to th e p ub lic ; 1 94 6 th e Em er so n Re p or t r el ea se d p ro p os in g o ve ra ll p la n fo r p ub lic h ea lth in th e U n ite d S ta te s; 19 48 A M A o p p os es T ru m an ’s p la n fo r n at io n al h ea lth in su ra n ce a n d s en tim en ts ag ai n st n at io n al h ea lth re fo rm a ls o fu el ed b y th e C ol d W ar ; E m p lo ye r- b as ed h ea lth in su ra n ce g ro w s ra p id ly w ith n o n at io n al h ea lth in su ra n ce p ro g ra m a n d as e m p lo ye rs c om p et e fo r a s h or t s up p ly o f e m p lo ye es d ue to th e w ar a n d b ec au se h ea lth b en efi ts a re e xe m p te d fr om th e w ag e fr ee ze ; A ft er W W II, la b or un io n s g ai n ed th e rig h t t o b ar g ai n c ol le ct iv el y, le ad in g to a n ot h er e xp an si on in em p lo ye e h ea lth p la n s; C om m er ci al in su ra n ce h as ta ke n o ve r 4 0% o f t h e m ar ke t fr om B lu e C ro ss . 103PART I ADDENDUM: TIMELINE 19 50 s 19 60 s Po lit ic al P ar ty in Po w er — Fe d er al G o ve rn m en t Pr es id en t D em oc ra t Re p ub lic an D em oc ra t D em oc ra t H ar ry S . T ru m an (1 94 5– 19 53 ) D w ig h t D . E is en h ow er (1 95 3– 19 61 ) Jo h n F . K en n ed y (1 96 1– 19 63 ) Ly n d on B . J oh n so n (1 96 3– 19 69 ) U .S . H ou se of R ep re se n - ta tiv es Re p ub lic an (1 94 7– 19 49 ) ( 80 th ); D em oc ra t ( 19 49 –1 95 3) (8 1s t– 82 d ) Re p ub lic an (1 95 2– 19 55 ) ( 83 rd ); D em oc ra t ( 19 55 –1 99 4) (8 4t h –1 03 rd ) D em oc ra t D em oc ra t U .S . S en at e Re p ub lic an (1 94 7– 19 49 ) (8 0t h ); D em oc ra t ( 19 49 –1 95 3) (8 1s t– 82 n d ) Re p ub lic an (1 95 3– 19 55 ) ( 83 rd ); D em oc ra t ( 19 55 –1 98 1) (8 4t h –9 6t h ) D em oc ra t D em oc ra t M aj o r So ci al an d P o lit ic al Ev en ts C ol d W ar id eo lo g y an d M cC ar th yi sm (1 95 0– 19 54 ); K o re an W ar (1 95 0– 19 53 ) Ec on om ic d ow n tu rn K ey F ed er al Le g is la ti ve P ro p o sa ls /L aw s an d K ey L eg al D ec is io n s 19 53 D ep ar tm en t o f H ea lt h , E d u ca ti o n , a n d W el fa re (H EW ) i s cr ea te d fr om th e Fe d er al S ec ur ity A g en cy , a n d th e Pu b lic H ea lth S er vi ce is tr an sf er re d to H EW ; 1 95 4 In te rn al R ev en ue S er vi ce d ec la re s th at e m p lo ye rs c an p ay h ea lth in su ra n ce p re m iu m s fo r t h ei r e m p lo ye es w ith p re -t ax d ol la rs ; B ro w n v. B o a rd o f E d u ca ti o n , 3 47 U .S . 4 83 (1 95 4) : R ac ia l s eg re g at io n in p ub lic ed uc at io n v io la te s th e Eq ua l P ro te ct io n C la us e of 1 4t h A m en d m en t; 19 56 D ep en d en ts M ed ic al C ar e A ct : C re at es g ov er n m en t m ed ic al c ar e p ro g ra m fo r m ili ta ry a n d d ep en d en ts o ut si d e th e Ve te ra n s A ff ai rs s ys te m ; 1 95 6 So ci al Se cu ri ty A ct is a m en d ed to p ro vi d e So ci al S ec ur ity D is ab ili ty In su ra n ce . 19 62 A m en d m en ts t o Fo o d , D ru g a n d C o sm et ic A ct s re q ui re th at n ew d ru g s b e “e ffe ct iv e. ” 19 60 K er r­ M ill s p ro g ra m p ro vi d es fe d er al fu n d in g th ro ug h ve n d or p ay m en ts to s ta te s fo r m ed ic al ly in d ig en t e ld er ly ; Si m p ki n s v. M o se s H . C o n e M em o ri al H o sp it al , 3 23 F .2 d 9 59 (4 th C ir. 1 96 3) : R ac ia l s eg re g at io n in p riv at e h os p ita ls re ce iv in g fe d er al H ill -B ur to n fu n d s vi ol at es th e Eq ua l P ro te ct io n C la us e of th e 14 th A m en d m en t; 19 64 : C iv il R ig h ts A ct p as se d ; 19 65 M ed ic ar e an d M ed ic ai d p ro g ra m s cr ea te d th ro ug h So ci al S ec ur ity A m en d m en ts ; G ri sw o ld v . C o n n ec ti cu t, 3 81 U .S . 4 79 (1 96 5) : T h e C on st itu tio n p ro te ct s a rig h t t o p riv ac y, st at e la w fo rb id d in g th e us e of c on tr ac ep tiv es o r p ro vi si on of th em to m ar rie d c ou p le s vi ol at es a c on st itu tio n al ri g h t t o m ar ita l p riv ac y; 1 96 6 C iv ili an H ea lt h a n d M ed ic al P ro g ra m fo r th e U n if o rm ed S er vi ce s (C H A M PU S) c re at ed . Im p o rt an t D ev el o p m en ts in H ea lt h a n d M ed ic in e 19 51 J o in t C o m m is si o n o n A cc re d it at io n o f H o sp it al s (J C A H ) i s cr ea te d to p ro vi de v ol un ta ry a cc re di ta tio n; 1 95 3 Sa lk c re at es p ol io v ac ci ne ; 1 95 4 fir st or ga n tr an sp la nt is p er fo rm ed ; C on tin ue d pr og re ss io n in m ed ic al s ci en ce a nd te ch no lo gy le ad s to in cr ea se d co st s; Po lit ic al fo cu s tu rn s to K or ea n W ar a nd a w ay fro m m ed ic al c ar e re fo rm . 19 65 : M ed ic ar e an d M ed ic ai d c re at ed ; 1 96 7 fir st h um an h ea rt tr an sp la n t. 104 PART I ADDENDUM: TIMELINE 19 70 s 19 80 s Po lit ic al P ar ty in P o w er — Fe d er al G o ve rn m en t Pr es id en t Re p ub lic an Re p ub lic an D em oc ra t Re p ub lic an Ri ch ar d M . N ix on (1 96 9– 19 74 ) G er al d R . F or d (1 97 4– 19 77 ) Ji m m y C ar te r (1 97 7– 19 81 ) Ro n al d R ea g an (1 98 1– 19 89 ) U .S . H ou se o f Re p re se n ta tiv es D em oc ra t D em oc ra t D em oc ra t D em oc ra t U .S . S en at e D em oc ra t D em oc ra t D em oc ra t Re p ub lic an (1 98 1– 19 87 ) ( 97 th –9 9t h ); D em oc ra t (1 98 7– 19 95 ) ( 10 0t h –1 03 rd ) M aj o r So ci al an d P o lit ic al Ev en ts 19 89 “N ew F ed er al is m ” o f t h e Re ag an a d m in is tr at io n ; Be rli n W al l f al ls K ey F ed er al Le g is la ti ve P ro p o sa ls / La w s an d K ey Le g al D ec is io n s Pr es id en t N ix on ’s p ro p os ed c om p re h en si ve h ea lth in su ra n ce p la n fa ils ; 19 71 p ro p os ed H ea lth S ec ur ity A ct fr om S en at or E d w ar d K en n ed y (D -M A ) f ai ls ; 1 97 0 C om m un ic ab le D is ea se C en te r i s re n am ed th e C en te rs fo r D is ea se C o n tr o l; 19 72 S o ci al S ec u ri ty A m en d m en ts ex te n d M ed ic ar e el ig ib ili ty a n d c re at e Su p p le m en ta l S ec ur ity In co m e (S SI ) p ro g ra m ; C a n te rb u ry v . S p en ce , 4 64 F .2 d 7 72 (D .C . C ir. 1 97 2) : Es ta b lis h ed m od er n la w o f i n fo rm ed c on se n t b as ed o n a re as on ab le p at ie n t s ta n d ar d ; R o e v. W ad e, 4 10 U .S . 1 13 (1 97 3) : C on st itu tio n al ri g h t to p riv ac y en co m p as se s a w om an ’s d ec is io n to te rm in at e h er p re g n an cy ; 19 73 H ea lt h M ai n te n an ce O rg an iz at io n A ct : S up p or ts g ro w th o f h ea lth m ai n te n an ce o rg an iz at io n s; 1 97 4 Em p lo ym en t R et ir em en t In co m e Se cu ri ty A ct (E R IS A ) p as se d ; 1 97 7 H ea lt h C ar e Fi n an ci n g A d m in is tr at io n (H C FA ) i s cr ea te d to a d m in is te r t h e M ed ic ar e an d M ed ic ai d p ro g ra m s. 19 79 C ar te r in tr od uc es a N at io n al H ea lth P la n to C on g re ss ; 1 97 9 D ep ar tm en t o f H ea lt h a n d H u m an Se rv ic es (H H S) is c re at ed fr om a re or g an iz ed H EW . 19 83 M ed ic ar e im p le m en ts p ro sp ec tiv e p ay m en t s ys te m fo r r ei m b ur si n g h os p ita ls ; 1 98 6 Em er g en cy M ed ic al Tr ea tm en t an d A ct iv e La b o r A ct (E M TA LA ): E n su re s ac ce ss to e m er g en cy s er vi ce s in M ed ic ar e- p ar tic ip at in g h os p ita ls re g ar d le ss o f a b ili ty to p ay ; 1 98 6 H ea lt h C ar e Q u al it y Im p ro ve m en t A ct : C re at es th e N at io n al Pr ac tit io n er D at ab an k; 1 98 6 C o n so lid at ed O m n ib u s B u d g et R ec o n ci lia ti o n A ct (C O B R A ): In cl ud es h ea lth b en efi t p ro vi si on s th at e st ab lis h c on tin ua tio n of e m p lo ye r- sp on so re d g ro up h ea lth c ov er ag e; 1 98 9 M ed ic ar e C at as tr o p h ic C o ve ra g e A ct o f 1 98 8: In cl ud es o ut p at ie n t p re sc rip tio n d ru g b en efi t a n d o th er ch an g es in M ed ic ar e (r ep ea le d  1 98 9) . Im p o rt an t D ev el o p m en ts in H ea lt h a n d M ed ic in e H ea lth ca re c os ts c on tin ue to ri se d ra m at ic al ly , d ue to a d va nc es in m ed ic al te ch no lo g y, h ig h- te ch ho sp ita l c ar e, th e ne w p oo l o f p ay in g p at ie nt s fro m M ed ic ai d a nd M ed ic ar e, in cr ea se d u til iz at io n of se rv ic es , a nd in cr ea se d p hy si ci an s p ec ia liz at io n; 1 97 2 co m p ut ed to m og ra p hy (C T ) s ca n fir st u se d ; 19 78 fi rs t b ab y co nc ei ve d th ro ug h in v itr o fe rt ili za tio n is b or n. 19 80 W or ld H ea lth A ss em b ly d ec la re s sm al lp ox er ad ic at ed ; 1 98 1 Sc ie n tis ts id en tif y A ID S; 1 98 7 th e Jo in t C om m is si on o n A cc re d ita tio n o f H os p ita ls c h an g es n am e to th e Jo in t C om m is si on o n A cc re d ita tio n o f H ea lth ca re O rg an iz at io n s (J C A H O ); Sh ift a w ay fr om tr ad iti on al fe e- fo r- se rv ic e in su ra n ce p la n s an d to w ar d m an ag ed c ar e. 105PART I ADDENDUM: TIMELINE 19 90 s Po lit ic al P ar ty in Po w er — Fe d er al G o ve rn m en t Pr es id en t Re p ub lic an D em oc ra t G eo rg e Bu sh (1 98 9– 19 93 ) W ill ia m J . C lin to n (1 99 3– 20 01 ) U .S . H ou se of R ep re se n - ta tiv es D em oc ra t *F irs t t im e si nc e 19 55 th at b ot h ho us es a re R ep ub lic an ; R ep ub lic an (1 99 5– 20 05 ) ( 10 4t h –1 08 th ) U .S . S en at e D em oc ra t Re p ub lic an (1 99 5– 20 05 ) ( 10 4t h –1 08 th [J an . 3 –2 0, 2 00 1, a n d J un e 6, 2 00 1– N ov . 1 2, 2 00 2 D em oc ra t] ) M aj o r So ci al a n d Po lit ic al E ve n ts 19 90 –1 99 1 G ul f W ar Fo re ig n c ris es in H ai ti an d B os n ia ; 1 99 3 N or th A m er ic an F re e Tr ad e A g re em en t ( N A FT A ); W h ite w at er in ve st ig at io n ; 1 99 5 O kl ah om a C ity b om b in g ; 1 99 8 Pr es id en t C lin to n im p ea ch ed K ey F ed er al Le g is la ti ve P ro p o sa ls /L aw s an d K ey L eg al D ec is io n s 19 89 A g en cy fo r H ea lt h ca re P o lic y an d R es ea rc h cr ea te d ; 1 99 0 A m er ic an s W it h D is ab ili ti es A ct (A D A ): Pr ov id es p ro te ct io n a g ai n st d is ab ili ty d is cr im in at io n ; 1 99 0 R ya n W h it e C A R E A ct : C re at es fe d er al s up p or t f or A ID S- re la te d s er vi ce s; C ru za n v . D ir ec to r, M is so u ri . D ep ’t o f H ea lt h , 4 97 U .S . 2 61 (1 99 0) : F irs t “ rig h t t o d ie ” c as e b ef or e Su p re m e C ou rt , i n w h ic h th e C ou rt h el d th at a c om p et en t p er so n h as a c on st itu tio n al ly p ro te ct ed li b er ty in te re st in re fu si n g m ed ic al tr ea tm en t. 19 93 P re si d en t C lin to n’ s p ro p os ed H ea lt h S ec u ri ty A ct is d ef ea te d ; 1 99 5 PH S re or g an iz ed to re p or t d ire ct ly to th e Se cr et ar y of H H S; 1 99 6 H ea lt h In su ra n ce P o rt ab ili ty & A cc o u n ta b ili ty A ct (H IP A A ): In cl ud es p riv ac y ru le s to p ro te ct p er so n al h ea lth in fo rm at io n , a tt em p ts to s im p lif y co d in g fo r h ea lth b ill s, m ak es it d iffi cu lt to e xc lu d e p at ie n ts fr om in su ra n ce p la n s d ue to p re ex is tin g c on d iti on s; Pe rs o n al R es p o n si b ili ty a n d W o rk O p p o rt u n it y R ec o n ci lia ti o n A ct o f 1 99 6 re p la ce s A FD C w ith th e Te m p or ar y A ss is ta n ce fo r N ee d y Fa m ili es ( TA N F) p ro g ra m ; 1 99 6 M en ta l H ea lt h P ar it y A ct : R eq ui re s in su ra n ce c ar rie rs th at o ffe r m en ta l h ea lth b en efi ts to p ro vi d e th e sa m e an n ua l a n d lif et im e d ol la r l im its fo r m en ta l a n d p hy si ca l h ea lth b en efi ts ; 1 99 7 Fo o d a n d D ru g A d m in is tr at io n M o d er n iz at io n A ct : R el ax es re st ric tio n s on d ire ct -t o -c on su m er a d ve rt is em en ts o f p re sc rip tio n d ru g s; 1 99 7 B al an ce d B u d g et A ct : A d d s M ed ic ar e p ar t C , t h e M ed ic ar e m an ag ed c ar e p ro g ra m , a n d cr ea te s th e St at e H ea lth In su ra n ce P ro g ra m , w h ic h a llo w s st at es to e xt en d h ea lth in su ra n ce c ov er ag e to a d d iti on al lo w -in co m e ch ild re n ; T h e Ti ck et t o W o rk a n d W o rk In ce n ti ve s Im p ro ve m en t A ct o f 1 99 9: C re at es a n ew s ta te o p tio n to h el p in d iv id ua ls w ith d is ab ili tie s st ay e n ro lle d in M ed ic ai d o r M ed ic ar e co ve ra g e w h ile re tu rn in g to w or k. Im p o rt an t D ev el o p m en ts in H ea lt h a n d M ed ic in e En ro llm en t i n m an ag ed c ar e d ou b le s; G re at er u se o f o ut p at ie n t s er vi ce s; R at e of h ea lth s p en d in g is re la tiv el y st ab le a t r ou g h ly 1 2% to 1 3% o f g ro ss d om es tic p ro d uc t; D ire ct -t o -c on su m er a d ve rt is in g o f p h ar m ac eu tic al s in cr ea se s d ra m at ic al ly a n d th e In te rn et is u se d a s a so ur ce o f m ed ic al in fo rm at io n ; 19 94 O re g on H ea lth P la n ra tio n s M ed ic ai d s er vi ce s th ro ug h a p rio rit iz ed li st o f m ed ic al tr ea tm en ts a n d co n d iti on s; 1 99 7 Ia n W ilm ut c lo n es a s h ee p fr om a d ul t h um an c el ls . 106 PART I ADDENDUM: TIMELINE 20 00 s Po lit ic al P ar ty in Po w er — Fe d er al G o ve rn m en t Pr es id en t Re p ub lic an D em oc ra t G eo rg e W . B us h (2 00 1– 20 09 ) Ba ra ck O b am a (2 00 9– 20 17 ) U .S . H ou se o f Re p re se n - ta tiv es Re p ub lic an (2 00 5– 20 07 ) ( 10 9t h ); D em oc ra t ( 20 07 –2 00 9) (1 10 th ) D em oc ra t ( 20 09 –2 01 1) (1 11 th ); Re p ub lic an 2 01 1– (1 12 th ) U .S . S en at e Re p ub lic an (2 00 5– 20 07 ) ( 10 9t h ); D em oc ra t ( 20 07 –2 00 9) (1 10 th ) D em oc ra t ( 20 09 –2 01 5) (1 11 th –1 13 th ) M aj o r So ci al a n d Po lit ic al E ve n ts Se p te m b er 1 1, 2 00 1, te rr or is t a tt ac ks o n W or ld T ra d e C en te r i n N ew Y or k an d th e Pe n ta g on ; 20 01 U .S . m ili ta ry a ct io n in A fg h an is ta n ; 2 00 3 Ira q W ar b eg in s G re at R ec es si on (b eg an in D ec em b er 2 00 7) , i n cl ud in g fi n an ci al cr is is a n d c ol la p se o f h ou si n g m ar ke t; Pa ss ag e of th e 20 10 P at ie n t Pr ot ec tio n a n d A ffo rd ab le C ar e  A ct K ey F ed er al Le g is la ti ve P ro p o sa ls /L aw s an d K ey L eg al D ec is io n s C on g re ss io n al a tt en tio n a n d s p en d in g tu rn s to in te rn at io n al a n d s ec ur ity c on ce rn s, li tt le d is cu ss io n o f h ea lth re fo rm ; 2 00 2 H o m el an d S ec u ri ty A ct tr an sf er s so m e H H S fu n ct io n s, in cl ud in g th e St ra te g ic N at io n al S to ck p ile o f e m er g en cy p h ar m ac eu tic al s up p lie s an d th e N at io n al D is as te r M ed ic al S er vi ce , t o th e n ew D ep ar tm en t o f H om el an d S ec ur ity ; 2 00 3 M ed ic ar e M o d er n iz at io n A ct : A d d s a p re sc rip tio n d ru g b en efi t t o M ed ic ar e b eg in n in g in 2 00 6; 2 00 4 P ro je ct B io Sh ie ld A ct : P ro vi d es fu n d in g fo r v ac ci n es a n d m ed ic at io n s fo r b io d ef en se a n d a llo w s ex p ed ite d F D A re vi ew o f t re at m en ts in re sp on se to a tt ac ks ; 2 00 5 D efi ci t R ed u ct io n A ct : M ak es c h an g es to M ed ic ai d c os t s h ar in g, p re m iu m s, b en efi ts , a n d a ss et tr an sf er s; 2 00 6 M ed ic ar e P ar t D P re sc ri p ti o n D ru g P la n g oe s in to e ffe ct ; 2 00 8 M en ta l H ea lt h P ar it y A ct a m en d ed to re q ui re in su re rs to tr ea t m en ta l h ea lth c on d iti on s on th e sa m e b as is a s p hy si ca l c on d iti on s. C on g re ss io n al fo cu s on h ea lth re fo rm , s p en d in g c ut s; P re si d en t O b am a es ta b lis h es th e O ffi ce o f H ea lt h R ef o rm ; 2 00 9 A m er ic an R ei n ve st m en t an d R ec o ve ry A ct (A R R A ) c re at es in ce n tiv es to h el p d ev el op h ea lth in fo rm at io n te ch n ol og y an d ex p an d th e p rim ar y ca re w or kf or ce , a m on g o th er th in g s; 2 00 9 C h ild re n ’s H ea lt h In su ra n ce P ro g ra m R ea u th o ri za ti o n A ct e xt en d in g (f or 4 .5 y ea rs ) a n d e xp an d in g th e p ro g ra m ; 20 10 P at ie n t P ro te ct io n a n d A ff o rd ab le C ar e A ct (A C A ): C om p re h en si ve h ea lth re fo rm in cl ud in g a n “i n d iv id ua l m an d at e” to p ur ch as e in su ra n ce c ov er ag e, M ed ic ai d e xp an si on , c re at io n o f st at e h ea lth in su ra n ce e xc h an g es , a n d m uc h m or e. Im p o rt an t D ev el o p m en ts in H ea lt h a n d M ed ic in e A ft er t h e Se p te m b er 1 1, 2 00 1, a tt ac ks , p u b lic h ea lth b ec o m es fo cu se d o n e m er g en cy p re p ar ed n es s; 2 0 0 3 S eq u en ci n g o f h u m an g en o m e co m p le te d ; 2 0 0 3 S A RS e p id em ic an d 2 00 4 flu v ac ci n e sh o rt ag e ra is es c o n ce rn s ab o u t p u b lic h ea lth re ad in es s; W o rld w id e co n ce rn a b o u t a p o ss ib le A vi an fl u e p id em ic ; H ig h le ve l o f c o n ce rn in t h e U n ite d S ta te s ab o u t th e ris in g ra te o f o b es it y; 2 0 0 6 G ar d as il va cc in e p ro te ct in g a g ai n st t w o s tr ai n s o f th e h u m an p ap ill o m av iru s, w h ic h is a ss o ci at ed w ith c er vi ca l c an ce r, ap p ro ve d b y th e FD A ; 2 0 0 7 In te rn at io n al H ea lth R eg u la tio n s, p as se d b y th e W o rld H ea lth O rg an iz at io n in 2 00 5, a re im p le m en te d b y m em b er s ta te s. Ra te o f h ea lth s p en d in g c on tin ue s to s ky ro ck et , a cc ou n tin g in 20 09 fo r 1 7% o f t h e g ro ss d om es tic p ro d uc t; 20 09 H 1N 1 sw in e flu v iru s p an d em ic . 107PART I ADDENDUM: TIMELINE   20 10 s Po lit ic al P ar ty in P o w er — Fe d er al G o ve rn m en t Pr es id en t D em oc ra t Re p ub lic an Ba ra ck O b am a (2 00 9– 20 17 ) D on al d T ru m p (2 01 7– ) U .S . H ou se o f Re p re se n ta tiv es Re p ub lic an 2 01 1– Pr es en t ( 11 2t h –1 15 th )   U .S . S en at e Re p ub lic an 2 01 5 (1 14 th –1 15 th )   M aj o r So ci al an d P o lit ic al Ev en ts   G re at R ec es si o n e n d ed b ut m an y n ot p ro sp er in g d ur in g th e re co ve ry ; C o n ti n u ed p o lit ic al d eb at e re g ar d in g t h e A C A , i n cl ud in g d eb at es in n ea rly h al f t h e st at es c on ce rn in g w h et h er to a d op t t h e A C A ’s M ed ic ai d e xp an si on ; S ev er al st at es c on tin ue to e xp er ie n ce fi n an ci al a n d /o r t ec h n ic al is su es in th e es ta b lis h m en t an d o p er at io n o f A C A in su ra n ce e xc h an g es ; I n cr ea si n g p ol iti ca l a n d le g al ac ce p ta n ce o f s am e- se x m ar ria g e lik el y to im p ac t u se a n d c os t o f h ea lth in su ra n ce an d p ub lic h ea lth p ro g ra m s; G ro w th o f I SI S as a te rr or is t t h re at ; U .S . S u p re m e C o u rt J u st ic e A n to n in S ca lia d ie s su d d en ly in F eb ru ar y 20 16 , a ft er w h ic h th e U .S . S en at e, u n d er R ep ub lic an p ow er , r ef us es to c on si d er P re si d en t O b am a’s re p la ce m en t n om in at io n u n til a ft er th e 20 16 e le ct io n . M ai n ly u n an ti ci p at ed o u tc o m e in 2 01 6 n at io n al e le ct io n re su lts in a b ru p t sh ift in fe d er al p ol ic ym ak in g, v ie w s ab ou t e n tit le m en t a n d w el fa re p ro g ra m s, an d re vi se d im m ig ra tio n p ol ic ie s, a m on g o th er k ey n at io n al p ol iti ca l a n d s oc ia l is su es ; R ac ia l t en si o n s es ca la te ; R o b er t M u el le r ap p o in te d a s Sp ec ia l C o u n se l i n 2 01 7 to in ve st ig at e th e al le g ed ro le o f R us si an in te rf er en ce in th e 20 16 n at io n al e le ct io n ; N ei l G o rs u ch c o n fi rm ed to ta ke J us tic e Sc al ia ’s se at on th e U .S . S up re m e C ou rt ; U .S . S u p re m e C o u rt J u st ic e A n th o n y K en n ed y re ti re s at th e en d o f t h e 20 17 –2 01 8 te rm , i s re p la ce d b y B re tt K av an au g h b y th e sm al le st m ar g in fo r a S up re m e C ou rt J us tic e si n ce 1 88 1 an d a ft er a d ee p ly tr ou b lin g a n d p ol ar iz in g n om in at io n p ro ce ss ; N at io n al e co n om y m ai n ly re co ve rs fr om G re at R ec es si on , y et in co m e in eq u al it y co n ti n u es t o g ro w . K ey F ed er al Le g is la ti ve P ro p o sa ls / La w s an d K ey L eg al D ec is io n s   C on gr es si on al fo cu s co nt in ue s to b e on d eb at in g th e A C A a s w el l a s in te rn at io na l se cu rit y is su es ; D o n’ t A sk D o n’ t T el l R ep ea l A ct o f 2 01 0 en d ed th e d is cr im in at or y m ili ta ry p ol ic y re g ar d in g g ay s er vi ce m em b er s; 20 12 N FI B v . S eb el iu s, S up re m e C ou rt h el d th at th e A C A ’s in d iv id ua l i ns ur an ce re q ui re m en t w as c on st itu tio na l b ut a ls o ru le d th at th e A C A ’s re q ui re m en t t ha t a ll st at es e xp an d M ed ic ai d w as un d ul y co er ci ve ; 2 01 4 B ur w el l v . H ob by L ob by , t he S up re m e C ou rt h el d th at o ne p ro vi si on o f t he A C A v io la te d fe d er al la w b y re q ui rin g c lo se ly h el d c or p or at io ns to p ay fo r i ns ur an ce c ov er ag e fo r c er ta in ty p es o f c on tr ac ep tio n; M ed ic ar e an d C H IP R ea u th o ri za ti o n A ct o f 2 01 5 re p la ce d th e Su st ai na b le G ro w th R at e fo rm ul a us ed fo r p hy si ci an p ay m en t a nd fu nd ed C H IP th ro ug h 20 17 ; 2 01 5 O b er ge fe ll v. H o dg es , th e Su p re m e C ou rt h el d th at th e fu nd am en ta l r ig ht to m ar ria g e is g ua ra nt ee d to sa m e- se x co up le s; In 2 01 5 in B ur w el l v . K in g th e Su p re m e C ou rt u p he ld th e A C A ’s st at ut or y an d re g ul at or y sc he m e p er m itt in g fe d er al s ub si d ie s to fl ow th ro ug h b ot h st at e- ru n an d fe d er al ly fa ci lit at ed in su ra nc e ex ch an g es ; T he G lo b al F o o d S ec u ri ty A ct o f 2 01 6 au th or iz ed a c om p re he ns iv e, s tr at eg ic a p p ro ac h fo r U .S . f or ei gn as si st an ce to d ev el op in g c ou nt rie s to re d uc e g lo b al p ov er ty a nd h un g er , a ch ie ve fo od s ec ur ity , p ro m ot e su st ai na b le a gr ic ul tu ra l-l ed e co no m ic g ro w th , a nd im p ro ve nu tr iti on al o ut co m es , p ar tic ul ar ly fo r w om en a nd c hi ld re n; T he 2 1s t C en tu ry C u re s A ct b ec am e la w in 2 01 6 an d w as d es ig ne d to h el p a cc el er at e m ed ic al p ro d uc t d ev el op m en t a nd b rin g n ew in no va tio ns a nd a d va nc es to p at ie nt s w ho n ee d th em fa st er a nd m or e effi ci en tly ; I n W ho le W om an ’s H ea lt h v. H el le rs te dt (2 01 6) , t he Su p re m e C ou rt s tr uc k d ow n st ric t T ex as a b or tio n re g ul at io ns , r ul in g th at a b or tio n p ro vi d er re g ul at io ns m us t b e b as ed o n co nv in ci ng m ed ic al e vi d en ce a nd c an no t un d ul y b ur d en a w om an ’s rig ht to a b or tio n. A ft er P re si d en t T ru m p’ s in au g ur at io n , m ul tip le R ep ub lic an e ff o rt s to r ep ea l an d r ep la ce t h e A ff o rd ab le C ar e A ct fa il (t h o ug h s ev er al e xe cu tiv e/ re g ul at o ry a ct io n s h al t o r l im it th e re ac h o f t h e A C A ); C H IP r ea u th o ri ze d an d fu n d ed th ro ug h 2 02 7; T h e Ta x C u ts a n d J o b s A ct o f 2 01 7 re p re se n ts th e b ig g es t f ed er al ta x ov er h au l i n 3 0 ye ar s— am o n g o th er th in g s, it c ut th e m ax im um c o rp o ra te in co m e ta x ra te to 2 1% , e lim in at ed th e ta x o n p eo p le w h o d o n o t o b ta in a d eq ua te h ea lth in su ra n ce c ov er ag e, a n d in cr ea se d th e st an d ar d d ed uc tio n a n d th e es ta te ta x ex em p tio n , w h ic h to g et h er w ill re d uc e fe d er al re ve n ue s b y si g n ifi ca n t a m o un ts a n d li ke ly m ak e th e d is tr ib ut io n o f af te r- ta x in co m e m o re u n eq ua l. In C o o p er v . H a rr is (2 01 7) , t h e Su p re m e C o ur t r ul ed th at ra ci al g er ry m an d er in g v io la te d th e rig h ts o f v o te rs to e q ua l p ro te ct io n o f t h e la w s; T h e Su p re m e C o ur t r ul ed 5 –4 th at P re si d en t T ru m p h ad th e le g al a ut h o rit y to re st ric t t ra ve l f ro m s ev er al m o st ly M us lim c o un tr ie s in th e 20 18 c as e o f T ru m p v . H aw a ii; In M as te rp ie ce C ak es h o p v . C o lo ra d o C iv il R ig h ts C o m m is si o n (2 01 8) , t h e Su p re m e C o ur t r ul ed in fa vo r o f a C o lo ra d o b ak er w h o re fu se d to c re at e a w ed d in g c ak e fo r a g ay c o up le , d et er m in in g th at th e b ak er h ad b ee n m is tr ea te d b y th e st at e ci vi l r ig h ts c om m is si on b as ed on re m ar ks o f o n e of it s m em b er s in d ic at in g h os til ity to re lig io n ; I n 2 01 8, th e Su p re m e C ou rt ru le d 5 –4 th at fo re ig n c or p or at io n s m ay n ot b e su ed in A m er ic an c ou rt s fo r c om p lic ity in h um an ri g h ts a b us es a b ro ad (J es n er v . A ra b B a n k) . 108 PART I ADDENDUM: TIMELINE   20 10 s Im p o rt an t D ev el o p m en ts in H ea lt h a n d M ed ic in e   20 10 c h ol er a ou tb re ak in H ai ti, o n e of th e w or st o ut b re ak s in re ce n t h is to ry ; 2 01 2 em er g en ce o f M ER S- C oV , a v ira l r es p ira to ry il ln es s th at is n ew to h um an s, fi rs t re p or te d in th e M id d le E as t b ut la te r s p re ad to s ev er al c ou n tr ie s in cl ud in g th e U n ite d S ta te s; 2 01 3 h ea lth ca re s p en d in g re ac h ed a lm os t $ 3 tr ill io n a n d a cc ou n te d fo r 1 7. 4% o f t h e g ro ss d om es tic p ro d uc t; 20 14 E b ol a ou tb re ak w as th e la rg es t i n h is to ry a n d fi rs t E b ol a ep id em ic ; 2 01 5 Eb ol a re se ar ch a d va n ce s q ui ck ly , s ci en tis ts d is co ve re d a n ew c la ss o f a n tib io tic s, a n d d oc to rs p er fo rm ed th e w or ld ’s fir st rib c ag e tr an sp la n t u si n g a th re e- d im en si on al -p rin te d c h es t p ro st h et ic ; 2 01 5 re p re se n ts th e st ar t o f a w or ld w id e Z ik a vi ru s ep id em ic ; 2 01 6 m ar ks th e p oi n t a t w h ic h th e n at io n’ s op io id c ris is fi n al ly b ec om es fr on t- p ag e n ew s; 2 01 6 th e U .S . D ru g E n fo rc em en t A g en cy p er m its th e fir st -e ve r c lin ic al tr ia l i n w h ic h p at ie n ts w ill b e sm ok in g m ar iju an a, in o rd er to e st ab lis h w h et h er p ot -s m ok in g c an h av e p os iti ve m ed ic al b en efi ts fo r p at ie n ts w ith p os t- tr au m at ic s tr es s d is or d er ; 2 01 6 w itn es se s b ot h H ur ric an e M at th ew , w h ic h k ill s n ea rly 5 0 p eo p le a n d c au se s m or e th an $ 15 b ill io n in d am ag e in F lo rid a, G eo rg ia , a n d th e C ar ol in as , a n d a ls o th e G re at S m ok y M ou n ta in w ild fir es in T en n es se e, w h ic h d es tr oy ed n ea rly 2 ,0 00 st ru ct ur es a n d b ur n ed n ea rly 1 8, 00 0 ac re s of la n d. 20 17 s ci en tis ts s uc ce ss fu lly c ut o ut th e H IV v iru s fr om m ou se c el ls u si n g g en e ed iti n g th er ap y; 2 01 7 h ea lth ca re s p en d in g a cc ou n te d fo r 1 8% o f t h e g ro ss d om es tic p ro d uc t; 20 17 H ur ric an es H ar ve y, Ir m a, a n d M ar ia , r es ul t i n th ou sa n d s of d ea th s an d h un d re d s of b ill io n s of d ol la rs in d am ag es in T ex as , Lo ui si an a, A la b am a, F lo rid a, S ou th C ar ol in a, G eo rg ia , P ue rt o Ri co , a n d m ul tip le is la n d s in th e ea st er n C ar ib b ea n S ea . Endnotes 109 Other Sources Consulted American Medical Association. (n.d.). Chronology of AMA history. Retrieved from https://www.ama-assn.org/ama-history U.S. Food and Drug Administration. (n.d.). A history of the FDA and drug regulation in the United States. Retrieved from https://www.fda.gov/downloads/drugs/resourcesfor you /consumers/buyingusingmedicinesafely/understandingover -the-countermedicines/ucm093550 U.S. National Library of Medicine. (2012). History of medicine. Retrieved from http://www.nlm.nih.gov/exhibition/phs _history/contents.html Source for Political Affiliation of Senate U.S. Senate. (n.d.). Party division. Retrieved from http://www .s enate.gov/p agelayout/histor y/one_item_and_te as ers /partydiv.htm Source for Political Affiliation of the House of Representatives U.S. House of Representatives. (n.d.). House history timeline. Retrieved from http://history.house.gov/Education/Timeline /Timeline/ Further Reading For more on these and other related historical timeline details and trends, see the following: Day, J. G. (1997). Managed care and the medical profession: Old issues and old tensions the building blocks of tomorrow’s health care delivery and financing system. Connecticut Insurance Law Journal, 3(1), 60–78. Hall, M. A. (1999). Health care corporate law: Formation and regulation. New York, NY: Aspen Law & Business. Public Broadcasting System. (n.d.). Healthcare crisis: Healthcare timeline. Retrieved from http://www.pbs.org/healthcarecrisis /history.htm Wing, K. R., Jacobs, M. S., & Kuszler, P. C. (1998). The law and American health care. New York: Aspen Law & Business. References Birn, A. (2003). Struggles for national health reform in the United States. American Journal of Public Health, 93(1), 86–94. Institute of Medicine. (2002). The future of the public’s health in the 21st century (pp. 96–177). Washington, DC: National Academies Press (Ch. 3). Shi, L., & Singh, D. A. (2004). Delivering health care services in America: A systems approach. Sudbury, MA: Jones and Bartlett Learning. Sultz, H., & Young, K. (2003). Health care USA: Understanding its organization and delivery (4th ed.). Sudbury, MA: Jones and Bartlett Learning. https://www.ama-assn.org/ama-history https://www.fda.gov/downloads/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/understandingover-the-countermedicines/ucm093550 https://www.fda.gov/downloads/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/understandingover-the-countermedicines/ucm093550 https://www.fda.gov/downloads/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/understandingover-the-countermedicines/ucm093550 http://www.nlm.nih.gov/exhibition/phs_history/contents.html http://www.nlm.nih.gov/exhibition/phs_history/contents.html http://www.senate.gov/pagelayout/history/one_item_and_teasers/partydiv.htm http://www.senate.gov/pagelayout/history/one_item_and_teasers/partydiv.htm http://www.senate.gov/pagelayout/history/one_item_and_teasers/partydiv.htm http://history.house.gov/Education/Timeline/Timeline/ http://history.house.gov/Education/Timeline/Timeline/ http://www.pbs.org/healthcarecrisis/history.htm http://www.pbs.org/healthcarecrisis/history.htm 111 PART II Essential Issues in Health Policy and Law Part I of this book introduced frameworks for conceptualizing health policy and law and described basic aspects of policy, the policymaking process, law, the legal system, and the healthcare and public health sys- tems. Part II covers many of the essential issues in health policy and law. Chapter 6 addresses individual rights in health care and public health, Chapter 7 describes how law itself is a determinant of health and how law relates to other social determinants of health, and Chapters 8 and 9 cover the fundamentals of health insurance and health econom- ics, respectively. Chapter 10 provides an overview of national health reform. Chapters 11 through 13 cover government insurance programs, healthcare quality, and public health preparedness, respectively. After completing Part II, among other things you will understand how social factors influence individual and population health, how health insur- ance functions, why private employer-based coverage dominates the health insurance market, why gaps in health insurance coverage remain, the importance of health economics to health policymaking, key provi- sions in the Affordable Care Act, various policy and legal dimensions to healthcare quality, and the role of public health in preparing for and responding to national and global emergencies. © Mary Terriberry/Shutterstock 113 © Mary Terriberry/Shutterstock© Mary Terriberry/Shutterstock CHAPTER 6 Individual Rights in Health Care and Public Health LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Describe the meaning and importance of the “no-duty to treat” principle ■ Explain generally how the U.S. approach to health rights differs from that of other developed countries ■ Describe the types and limitations of individual legal rights associated with health care ■ Describe the balancing approach taken when weighing individual rights against the public’s health ▸ Introduction The real-life scenarios in BOX 6-1 touch upon the key issues you will confront in this chapter: namely, the ways in which the law creates, pro- tects, and restricts individual rights in the contexts of health care and public health. Individuals are deeply impacted by law on a daily basis, and this fact is no less true when they navigate the healthcare system, or when an individual’s actions are measured against the broader interests of the public’s health. Over many decades, legal principles have been rejected, developed, and refined as the law continually struggles to define the appro- priate relationship between individuals and the physi- cians, hospitals, managed care companies, and others they encounter in the healthcare delivery system, and between individuals and government agencies charged with protecting public health and welfare. These balanc- ing acts are made all the more difficult as the legal sys- tem bumps up against the quick pace of technological advancements in medicine and against amorphous, potentially deadly risks to the public’s health, such as bioterrorism and fast-spreading influenzas. After a background section, this chapter consid- ers individual legal rights in health care, beginning with a brief overview of health rights under interna- tional and foreign law. This sets up a much lengthier discussion of healthcare rights in the United States, which for purposes of this chapter are classified according to an important distinction: legal rights to health care and rights that individuals can claim only within the context of the healthcare system—that is, only once they have found a way to access needed care.a Examples of the latter type of rights include the right to refuse unwanted treatment, the right to autonomy in making personal healthcare decisions, and the right to be free from wrongful discrimina- tion when receiving care. Finally, the chapter turns to a discussion of individual rights in the context of government- initiated public health efforts. This topic 114 Chapter 6 Individual Rights in Health Care and Public Health is dominated by the role and scope of government “police powers,” which permit governments, when acting to promote or protect public health, to curtail individual freedoms and liberties. ▸ Background Lurking behind any discussion of individual rights in a health context is one of the most basic principles in U.S. health law: generally speaking, individuals have no legal right to healthcare services (or to public health insur- ance), and, correspondingly, there exists on the part of healthcare providers no general legal duty to provide care. This is referred to as the “no-duty” or “no-duty-to- treat” principle, which is aptly described by the Indiana Supreme Court in the well-known 1901 case of Hurley v. Eddingfield, the facts of which were referred to in the first vignette in Box 6-1. In its decision, the court wrote that the state law permitting the granting of a medical license provides for . . . standards of qualification . . . and penalties for practicing without a license. The [state licensing] act is preventive, not a compulsive, measure. In obtaining the state’s license (permission) to practice medicine, the state does not require, and the licensee does not engage, that he will practice at all or on other terms than he may choose to accept. (Hurley v. Eddingfield, 1901) In other words, obtaining a license to practice medicine does not obligate an individual to actually practice, or to practice in a particular fashion or with a particular clientele; the licensure requirement exists instead to filter out individuals who may not have the requisite knowledge or skills to practice medicine. The same can be said for obtaining a law license, or even a driver’s license: the former does not obligate a law- yer to practice, or to choose certain types of clients or cases; the latter does not require that a person actually drive, or drive a certain make of car. As with a medical license, the point of a law or driver’s license is to guar- antee that should the licensee choose to practice law or operate a motor vehicle, he or she is qualified to do so. Furthermore, you will recall from the facts provided in the vignette that Dr. Eddingfield was Mrs. Burk’s family physician, and many students believe that this fact is enough to establish a sufficient legal relationship between the two to hold Dr. Eddingfield accountable for the death of Mrs. Burk. However, the general legal rule is that physician–patient relationships are specific to “spells of illness” and that past treatment is not tan- tamount to an existing physician–patient relationship. Put another way, under the law a physician–patient relationship does not exist as a general, continuous matter—even with one’s family physician, internist, primary care physician, and so on—but rather it exists for a specific period of time and must be established (or renewed) accordingly. Note that this basic premise—that there is no fun- damental right to healthcare services in the United States—was not altered by the passage in 2010 of the Affordable Care Act (ACA). While it is arguable that the ACA moves the country in a direction that makes a legal right to health care more plausible down the road (Friedman & Adashi, 2010), and while there can be no arguing that it makes health care more accessible to mil- lions of people by virtue of its health insurance reforms (as discussed later in this chapter and in greater detail elsewhere), the ACA does not create a right to care. As you begin to think through the significance and implications of the no-duty principle, it is import- ant to understand that there are many other legal principles and health laws that define the relation- ship between an individual and another health system stakeholder (e.g., a physician, hospital, or government program). In fact, there are several federal and state BOX 6-1 Vignette At the turn of the 20th century, an Indiana physician named George Eddingfield repeatedly refused to come to the aid of Charlotte Burk, who was in labor, even though he was Mrs. Burk’s family physician. Doctor Eddingfield conceded at trial that he made this decision for no particular reason and despite the facts that he had been offered monetary compensation in advance of his performing any medical services and that he was aware that no other physician was available to provide care to Mrs. Burk. Unattended by any medical providers, Mrs. Burk eventually fell gravely ill, and both she and her unborn child died. It was determined upon trial and subsequent appeals that Dr. Eddingfield did not wrongfully cause either death. Around the same time as the scenario just described, the Cambridge, Massachusetts, Board of Health ordered everyone within city limits to be vaccinated against the smallpox disease under a state law granting local boards of health the power, under certain circumstances, to require the vaccination of individuals. After refusing to abide by the Cambridge Board’s order, Henning Jacobson was convicted by a state trial court and sentenced to pay a $5 fine. Remarkably, Mr. Jacobson’s case not only made its way to the U.S. Supreme Court, it resulted in one of the court’s most important public health rulings and a sweeping statement about limitations to fundamental individual rights in the face of threats to the public’s health. Background 115 laws that narrow the scope of the no-duty principle. For example, a federal law called the Examination and Treatment for Emergency Medical Conditions and Women in Labor Act enables all individuals to access some hospital care in medical emergencies, irrespec- tive of the individual’s ability to pay for that care or a hospital’s willingness to treat the individual. Also, both federal and state laws that generally prohibit cer- tain forms of discrimination (say, based on race or dis- ability) apply in the context of health care and might thus result in access to health services that otherwise would not be forthcoming. Furthermore, some public health insurance programs—Medicaid and Medicare, most prominently—create entitlements (a legal con- cept denoting a legal claim to something) to services for individuals who meet the programs’ eligibility cri- teria (Jost, 2003), and some health insurance products obligate physicians participating in the plan’s networks to extend care to plan members. Finally, some states implemented universal healthcare coverage programs, such as Maine’s Dirigo Health Reform Act, which was designed to provide access to health coverage to every person in Maine (and which ended at the end of 2014 as residents of the state were transitioned into the health insurance exchanges created by the ACA). When thinking about the law’s no-duty principle, you must also take into account the role of medical ethics, which might require more of a healthcare pro- fessional than does the law. For example, no law man- dates that licensed physicians aid a stranger in medical distress, but many believe an ethical obligation exists in this instance. And although legally the no-duty princi- ple would dictate otherwise, many healthcare provid- ers consider themselves ethically obligated to furnish at least some level of care to those who cannot pay for it. In short, although there is no universal legal right to health care in the United States, certain situations give rise to healthcare rights, and specific populations may be entitled to health care or receive it purely through the magnanimity of ethics-conscious providers. Perhaps because of the federal and state laws that chip away at the no-duty-to-treat principle, many students new to the study of health law erroneously assume that the principle is a legal anomaly, borne solely of the incredible historical power and auton- omy of the medical profession and without mod- ern precedent. In this case, it is instructive to place the principle in a broader “welfare rights” context. During the 1960s, public-interest lawyers, social reform activists, and others pressed for an interpreta- tion of the federal Constitution that would have cre- ated an individual right to welfare. Under this view, the government must provide individuals with min- imally adequate levels of education, food, housing, health care, and so on (Davis, 1993). But in a series of cases, the Supreme Court rejected the notion of a constitutional right to welfare. Consider the right to education. Even though every state provides free public schools and makes education for minors compulsory, there is no national, generalized legal right to education. In the case of San Antonio Independent School District v. Rodriguez (1973), the Supreme Court ruled that education is not a fundamental right under the federal Constitution’s Equal Protection Clause. The plaintiffs in the Rodri- guez case were Mexican-American parents whose children attended elementary and secondary schools in an urban San Antonio school district. They had attacked as unconstitutional Texas’s system of financ- ing public education and filed the suit on behalf of school children throughout the state who were mem- bers of minority groups or who resided in relatively poor school districts. But the court turned the plain- tiffs’ argument away, noting that although education is one of the most important services states perform, it is not among the rights afforded explicit protection under our Federal Constitution. Nor do we find any basis for saying it is implicitly so protected. . . . [T]he undisputed importance of education will not alone cause this Court to depart from the usual standard for reviewing a State’s social and economic legislation. (San Antonio Indep. School Dist. v. Rodriguez, 1973) In the wake of the Rodriguez decision, several states interpreted their own constitutions as prohibit- ing inequitable methods of financing public education, thereby recognizing on some level a right to a mini- mally “meaningful” education. Subsequently, lawyers and social activists seeking to promote equal access to all manner of critical services seized on these state determinations, arguing that an egalitarian approach to constitutional interpretation should not be limited to education (Stacy, 1993). Note, for example, how one author’s writings about the right to education could just as well have been written with respect to health care: Requiring an adequate education will help to fulfill our nation’s promise, articulated in Brown [v. Board of Education], that an indi- vidual be free to achieve her full potential. Ensuring educational adequacy will pro- mote children’s emotional and intellectual development, their career path and earning potential and thus their success throughout life. A meaningful education offers the hope that children can escape the degradation of 116 Chapter 6 Individual Rights in Health Care and Public Health poverty and its lack of opportunity, and attain pride, participation in this country’s economic and political life, and financial and emotional success. (Smith, 1997, p. 825) However, efforts around ensuring adequate edu- cation have not been emulated in other social policy areas, such as health care. In fact, health care is treated not as a right, but as a commodity (like televisions or vacuum cleaners) subject to private market forces and socioeconomic status. During the public debate in 1993 over President Bill Clinton’s failed attempt at national health reform, U.S. Representative Dick Armey (R-TX) stated that “health care is just a com- modity, just like bread, and just like housing and every- thing else” (Reinhardt, 1996, p. 102). But why should this be the case, particularly when the private health insurance market has presumably found equilibrium at a point that continually leaves tens of millions of Americans uninsured, and particularly because health care (like education) is different from vacuum clean- ers and other everyday goods in that it has “a funda- mental bearing on the range of one’s opportunities to realize one’s life plans”? (Stacy, 1993, p. 80). There is no single answer to the question of why health care is generally treated in this country as some- thing less than an individual legal right. Many factors beyond the scope of this chapter are implicated: the nature and interpretation of the federal Constitution, politics, a weak labor movement, powerful interest groups, the nation’s free market philosophies, the pub- lic’s often negative view of the government, and more (Blum et al., 2003; Rich, 2000; Vladeck, 2003). In this chapter, we limit the discussion to describing the kinds of health rights that do exist, and how they operate in the context of the healthcare delivery system and when considered against government-initiated public health efforts. Before we explore in depth the scope of indi- vidual health-related rights under U.S. law, however, we briefly describe these same types of rights under international law and under the law of other countries. Through this examination, we provide a backdrop for understanding this country’s approach to legal rights in the context of health. ▸ Individual Rights and Health Care: A Global Perspective Despite being the world leader in terms of the devel- opment of medical technologies and the quantity of medical services, the United States is one of the only high-income nations that does not guarantee health care as a fundamental right, and it is the only devel- oped nation that has not implemented a system for insuring at least all but the wealthiest segment of its population against healthcare costs (Jost, 2003, p. 3). In essence, other high-income nations with social democracies treat the provision of health care as a social goodb (i.e., something that could be supported through private enterprise but is instead supported by the government and financed from public funds). Fur- thermore, it is worth noting that nations that provide universal healthcare entitlements have not been bank- rupted as a result. In fact, according to Professor Tim- othy Jost, “all of the other developed nations spend less on health care than does the U.S., in terms of both dollars per capita and proportion of gross domestic product” (Jost, 2003, p. 3). A foreign nation’s universal healthcare rights— whether an unlimited right to health, a right to med- ical care generally or to a basic package of services, a right to healthcare insurance, or something else—exist as the result of either a commitment to human rights principles generally or fidelity to the particular coun- try’s own constitution. When recognized by govern- ments, human rights accrue to all individuals because the rights are based on the dignity and worth of the human being; thus, technically, a human right exists regardless of whether positive law (a constitution or statute) has given it expression (Barnes & McChrystal, 1998). Examples of positive expressions of health as a human right include Article 25 of the 1948 Univer- sal Declaration of Human Rights, which states that “everyone has the right to a standard of living ade- quate for the health and well-being of himself and of his family, including . . . medical care . . . and the right to security in the event of . . . sickness [or] disability” (Claiming Human Rights, 2010), and the Constitution of the World Health Organization, which says that “the enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition” (World Health Organi- zation, 2006). In terms of national constitutions, some two- thirds of constitutions worldwide specifically address health or health care, and almost all of them do so in universal terms, rather than being limited to certain populations (Kinney & Clark, 2004). For example, consider the health-related aspects of the constitutions of four politically and culturally diverse countries— Italy, the Netherlands, South Africa, and Poland—that have some type of “right to health”: Italy’s Constitution guarantees a right to health; under the Dutch Consti- tution, the government is mandated “to promote the Individual Rights and the Healthcare System 117 health of the population”; the Constitution of South Africa imposes on government the obligation to pro- vide access to health services; and under Polish con- stitutional law, citizens are guaranteed “the right to health protection” and access to publicly financed healthcare services (Littell, 2002). Of course, including language respecting health rights in a legal document—even one as profound as a national constitution—does not guarantee that the right will be recognized or enforced. As in the United States, multiple factors might lead a foreign court or other tribunal to construe rights-creating language narrowly or to refuse to force implementation of what is properly considered a right. Examples of these fac- tors include the relative strength of a country’s judicial branch vis-a-vis other branches in its national gover- nance structure and a foreign court’s view of its coun- try’s ability to provide services and benefits inherent in the health right. ▸ Individual Rights and the Healthcare System The “global perspective” you just read was brief for two reasons. First, a full treatment of international and foreign health rights is well beyond the scope of this chapter, and second, historically speaking, international law has played a limited role in influ- encing this nation’s domestic legal principles. As one author commented, “historically the United States has been uniquely averse to accepting international human rights standards and conforming national laws to meet them” (Yamin, 2005, p. 1156). This fact is no less true in the area of health rights than in any other major area of law. As described earlier in this chapter, universal rights to health care are virtually nonexistent in this country, even though this stance renders it almost solitary among the world’s devel- oped nations. This is not to say that the United States has not contemplated health care as a universal, basic right. For instance, in 1952, a presidential commission stated that “access to the means for attainment and preser- vation of health is a basic human right” (President’s Commission, 1983, p. 4). Medicaid and Medicare were the fruits of a nationwide debate about universal healthcare coverage. And during the 1960s and 1970s, the claim that health care was not a matter of privi- lege, but rather of right, was “so widely acknowledged as almost to be uncontroversial” (Starr, 1982, p. 389). Nor is it to say that certain populations do not enjoy healthcare rights beyond those of the general public. Prisoners and others under the control of state gov- ernments have a right to minimal health care (Wing, 1993), some state constitutions expressly recognize a right to health or healthcare benefits (for example, Montana includes an affirmative right to health in its constitution’s section on inalienable rights), and indi- viduals covered by Medicaid have unique legal enti- tlements. Finally, it would be inaccurate in describing healthcare rights to cover only rights to obtain health care in the first instance, because many important healthcare rights attach to individuals once they man- age to access needed healthcare services. The remainder of this section describes more fully the various types of individual rights associated with the healthcare system. We categorize these rights as follows: 1. Rights related to receiving services explicitly provided under healthcare, health financ- ing, or health insurance laws—for example, the Examination and Treatment for Emer- gency Medical Conditions and Women in Labor Act, Medicaid, and the ACA 2. Rights concerning freedom of choice and freedom from government interference when making healthcare decisions—for example, choosing to have an abortion 3. The right to be free from unlawful discrim- ination when accessing or receiving health care—for example, Title VI of the federal Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color, or national origin by entities that receive federal funding (Annas, 2004; Barnes & McChrystal, 1998, p. 12) BOX 6-2 Discussion Question Depending on one’s personal experience in obtaining health care, or one’s view of the role of physicians in society, of law as a tool for social change, of the scope of medical ethics, or of the United States’ place in the broader global community, the no-duty principle might seem appropriate, irresponsible, or downright wrong. Imagine you are traveling in a country where socialized medicine is the legal norm, and your discussion with a citizen of that country turns to the topic of your countries’ respective health systems. When asked, how will you account for the fact that health care is far from being a fundamental right rooted in American law? 118 Chapter 6 Individual Rights in Health Care and Public Health Rights Under Healthcare and Health Financing Laws We begin this discussion of rights-creating health laws with the Examination and Treatment for Emergency Medical Conditions and Women in Labor Act (also referred to as EMTALA, which is the acronym for the law’s original name—the Emergency Medical Treat- ment and Active Labor Act—or, for reasons soon to become clear, the “patient anti-dumping statute”). We then briefly discuss the federal Medicaid program in a rights-creating context and wrap up this section with a brief discussion of the ACA. Rights Under Healthcare Laws: EMTALA Because EMTALA represents the only truly universal legal right to health care in this country—the right to access emergency hospital services—it is often described as one of the building blocks of health rights. EMTALA was enacted by Congress in 1986 to prevent the practice of “patient dumping”—that is, the turning away of poor or uninsured persons in need of hospital care. Patient dumping was a common strategy among private hospitals aiming to shield themselves from the potentially uncompensated costs associated with treating poor and/or uninsured patients. By refusing to treat these individuals and instead “dump- ing” them on public hospitals, private institutions were effectively limiting their patients to those whose treatment costs would likely be covered out-of-pocket or by insurers. Note that the no-duty principle made this type of strategy possible. EMTALA was a conscious effort on the part of elected federal officials to chip away at the no-duty principle: by creating legally enforceable rights to emergency hospital care for all individuals regardless of their income or health insurance status, Congress created a corresponding legal duty of care on the part of hospitals. At its core, EMTALA includes two related duties, which technically attach only to hospitals that participate in the Medicare program (but then again, nearly every hospital in the country participates). The first duty requires covered hospitals to provide an “appropriate” screening examination to all individu- als who present at a hospital’s emergency department seeking care for an “emergency medical condition.” Under the law, an appropriate medical screening is one that is nondiscriminatory and that adheres to a hospi- tal’s established emergency care guidelines. EMTALA defines an emergency medical condition as a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of imme- diate medical attention could reasonably be expected to result in (i) placing the health of the individual (or, with respect to a preg- nant woman, the health of the woman or her unborn child) in serious jeopardy, (ii) serious impairment to bodily functions, or (iii) seri- ous dysfunction of any bodily organ or part; or with respect to a pregnant woman who is having contractions, that there is inadequate time to effect a safe transfer to another hospi- tal before delivery, or that transfer may pose a threat to the health or safety of the woman or the unborn child. (Examination and Treat- ment, 2011) The second key duty required of hospitals under EMTALA is to either stabilize any condition that meets the preceding definition or, in the case of a hospital without the capability to treat the emer- gency condition, undertake to transfer the patient to another facility in a medically appropriate fashion. A proper transfer is effected when, among other things, the transferring hospital minimizes the risks to the patient’s health by providing as much treatment as is within its capability, a receiving medical facility has agreed to accept the transferred patient, and the trans- ferring hospital provides the receiving facility all rele- vant medical records. The legal rights established under EMTALA are accompanied by heavy penalties for their violation. The federal government, individual patients, and “dumped-on” hospitals can all initiate actions against a hospital alleged to have violated EMTALA, and the federal government can also file a claim for civil money penalties against individual physicians who negligently violate an EMTALA requirement. Rights Under Healthcare Financing Laws: Medicaid Many laws fund programs that aim to expand access to health care, such as state laws authorizing the establishment of public hospitals or health agencies, and the federal law establishing the vast network of community health clinics that serve medically under- served communities and populations. However, the legal obligations created by these financing laws are generally enforceable only by public agencies, not by individuals. The Medicaid program is different in this respect. (Medicaid is covered elsewhere in greater depth, but because of its importance in the area of individual Individual Rights and the Healthcare System 119 healthcare rights, we mention it also in this context.) Although most certainly a law concerning health- care financing, Medicaid is unlike most other health financing laws in that it confers the right to individ- ually enforce program obligations through the courts (Rosenblatt, Law, & Rosenbaum, 1997, pp. 419–424). This right of individual enforcement is one of the rea- sons why Medicaid, 50 years after its creation, remains a hotly debated public program. This is because the legal entitlements to benefits under Medicaid are viewed as a key contributor to the program’s high cost. Yet whether Medicaid’s legal entitlements are any more of a factor in the program’s overall costs than, say, the generally high cost of health care, is not clearly established. Rights Under Health Insurance Laws: The ACA As you will learn in subsequent chapters, the ACA is far more than a law that concerns only health insurance; it is a sweeping set of reforms that touch on healthcare quality, public health practice, health disparities, com- munity health centers, healthcare fraud and abuse, comparative effectiveness research, the health work- force, health information technology, long-term care, and more. However, for purposes of this chapter, we mention it briefly in terms of its impact on the rights of individuals to access health insurance and to equi- table treatment by their insurer. Details concerning the ACA’s effect on the public and private insurance markets are discussed elsewhere. Through a series of major reforms to existing pol- icies, the ACA reshapes the private health insurance market, transforming private health insurance from a commodity that regularly classified (and rejected) individuals based on their health status, age, disabil- ity status, and more into a social good whose avail- ability is essential to individual and population health (Rosenbaum, 2011). The key elements of this shift include a ban on exclusion and discrimination based on health status or preexisting health conditions; new protections that ensure that, once covered by insur- ance, individuals will have access to necessary care without regard to artificial annual or lifetime expen- diture caps; a guarantee that once insurance coverage is in place, it cannot be rescinded except in cases of applicant fraud; a ban on additional fees for out-of- network emergency services; the provision of finan- cial subsidies to help low- and moderate-income individuals and small businesses purchase insurance coverage; the inclusion, in the individual and small group insurance markets, of a package of “essential health benefits” that must be covered; and the creation of state health insurance “exchanges” through which individuals and small employer groups can purchase high-quality health insurance in a virtual market- place that is substantially regulated and that simplifies the job of learning about, selecting, and enrolling in insurance plans. The ACA also reforms the public health insurance market, primarily through an expansion of Medicaid eligibility to cover all non-elderly low-income persons who are legal residents or citizens (this expansion is now voluntary on the part of states, as the result of a Supreme Court decision described in a subsequent chapter). If fully implemented, this reform would substantially close one of Medicaid’s last remain- ing coverage gaps for the poor—namely, the pro- gram’s historical denial of coverage for nonpregnant, working-age adults without minor children—and in so doing would provide insurance coverage (and the resulting access to health care that often follows cov- erage) to many millions of people. Rights Related to Freedom of Choice and Freedom From Government Interference EMTALA and Medicaid are remarkable in terms of the rights to health care that they each provide, though as mentioned earlier in this chapter, individual rights that attach within the context of healthcare provision can be equally important. Important individual rights within health care include the right to make informed healthcare decisions and the right to personal privacy and autonomy. The Right to Make Informed Healthcare Decisions One of the most important healthcare rights is the right of individual patients to make informed deci- sions about the scope and course of their own care. This includes the right to refuse treatment, regard- less of the treatment’s nature or urgency. That is, the right to refuse treatment exists whether the patient is considering ingesting prescribed medication for minor pain, undergoing a minimally invasive test or procedure, or consenting to a major, potentially life- sustaining operation like the removal of a brain tumor. However, the right pertaining to informed decision making does not come without qualifiers and excep- tions, as described here. Modern notions of informed consent have their roots in the Nuremberg Code, which derived from the Nuremberg trials in the late 1940s of German 120 Chapter 6 Individual Rights in Health Care and Public Health physicians who performed horrendous experiments on prisoners in Nazi concentration camps during the Second World War. The code spells out principles of research ethics, including the need to secure in advance the voluntary consent of the research subject. These principles have been codified and expanded in American federal statutory and regulatory law con- cerning federally funded biomedical research (Protec- tion of Human Subjects, 2009). But if the Nuremberg Code can be thought of as the roots of U.S. informed consent law, then the decision in Canterbury v. Spence (1972) can be thought of as the trunk. In 1959, Jerry Canterbury was a 19-year-old suffering from severe back pain. His neurosurgeon, Dr. William Spence, informed him that he would need a laminectomy—a surgical procedure in which the roofs of spinal vertebrae are removed or trimmed to relieve pressure on the spinal cord—to correct what the doctor believed was a herniated disc. However, Dr.  Spence did not inform Canterbury of any risks associated with the surgery. The day after the opera- tion, while appearing to recuperate normally, Canter- bury fell from his hospital bed while no attendant was on hand and a few hours later began suffering paral- ysis from the waist down. This led to a second spinal surgery, but Canterbury never fully recovered; years later, he needed crutches to walk and he suffered from paralysis of the bowels. Canterbury sued Dr. Spence, alleging negligence in both the performance of the laminectomy and the doctor’s failure to disclose risks inherent in the oper- ation. The federal trial judge ruled in Dr. Spence’s favor and Canterbury appealed, setting the stage for the now-famous decision in 1972 by the federal Court of Appeals for the District of Columbia Circuit (con- sidered second in national importance to the Supreme Court).c The decision includes two important determi- nations pertinent to this chapter. The first is that “as a part of the physician’s overall obligation to the patient, [there exists a] duty of reasonable disclosure of the choices with respect to proposed therapy and the dan- gers inherently and potentially involved.” The court viewed this duty as a logical and modest extension of a physician’s existing general duty to his patients. Importantly, the court discarded the notion that “the patient should ask for information before the physi- cian is required to disclose.” In other words, the duty to disclose requires more than just answering patient questions; it demands voluntary disclosure on the part of the physician of pertinent medical information. The Canterbury court’s second key determination concerns the actual scope of the disclosure required— in other words, once the physician’s duty to disclose is triggered, what information satisfies the legal require- ment? On this matter the court made several obser- vations: that the patient’s right of “self-decision” is paramount, that the right to consent can be properly exercised only if the patient has sufficient information to make an “intelligent choice,” that the sufficiency test is met when all information “material to the decision” is disclosed, and that the disclosure’s legality should be measured objectively, not subjectively from the perspective of a particular physician or patient. From these observations, the court settled on three required pieces of disclosed information: a proposed treat- ment’s inherent and potential risks, any alternatives to a proposed treatment, and the likely outcome of not being treated at all. Applying these criteria, the court ruled that Dr. Spence’s failure to disclose even the tini- est risk of paralysis resulting from the laminectomy entitled Canterbury to a new trial. As mentioned earlier, the right to make informed healthcare decisions is not boundless. For example, the court in Canterbury wrote that where disclosure of a treatment’s risks would pose a threat of harm to the patient (for example, because it would severely complicate treatment or psychologically damage the patient) as to become “unfeasible or contraindicated from a medical point of view,” the physician’s duty to disclose could be set aside. Furthermore, a patient’s competency from a legal vantage point plays a major role in his or her ability to consent to treatment. The Canterbury decision and its progeny have over the years been interpreted expansively, and today the right to make informed healthcare decisions has many facets beyond a clear explanation of proposed treat- ments, potential risks and complications, and the like. For example, patients have the right to know whether outside factors, such as research interests or finan- cial considerations, are coloring a physician’s think- ing about a proposed course of treatment; patients whose first language is not English have the right to an interpreter; and patients have the right to designate in advance their treatment wishes, whether through written advance directives or another individual. The Right to Personal Privacy Another right related to freedom of choice and free- dom from government interference is the constitu- tional right to personal privacy. Although the federal Constitution makes no explicit mention of the right to privacy, the Supreme Court has recognized some form of it since the 1890s.d The court has taken a more or less two-pronged approach to the right. The first approach defines the protected personal interest as Individual Rights and the Healthcare System 121 “informational privacy,” meaning the limiting of oth- ers’ access to and use of an individual’s private infor- mation.e The second approach—the focus of this section—is concerned with individual autonomy and freedom from governmental interference in making basic personal decisions. This right is one of the most debated in law, both because of its implicit nature (constitutionally speaking) and because it has served as the legal underpinning of several divisive social issues, including abortion, intimate associations, and the decisions as to whether, when, and how to end one’s life. The right to privacy achieved prominence begin- ning with the Supreme Court’s landmark 1965 deci- sion in Griswold v. Connecticut (1965), in which the court considered the constitutionality of a state law criminalizing the provision of contraception to mar- ried couples. In the early 1960s, Estelle Griswold, the Executive Director of the Planned Parenthood League of Connecticut, and one of her colleagues were convicted of aiding and abetting “the use of a drug, medicinal article, or instrument for the purpose of preventing conception” by providing contraceptives to a married couple in violation of Connecticut law. The court determined that although the Constitution does not explicitly protect a general right to privacy, certain provisions in the Bill of Rights create “penumbras,” or zones, of guaranteed privacy, and that Connecticut’s law constituted an undue intrusion into one of these zones (i.e., marriage). After the Griswold decision, advocates of the con- stitutional right to privacy flooded the federal courts with cases designed to expand the scope of the right. Quickly, laws banning interracial marriage were struck down (Loving v. Virginia, 1967), as were laws prohibiting unmarried individuals from using contra- ception (Eisenstadt v. Baird, 1972). At the same time, federal courts were confronted with cases asking them to determine how the right to privacy applied in the context of abortion. The remainder of this section analyzes the courts’ response to this particular issue. We selected the constitutional right to abortion as the focal point of the right to privacy discussion because it is not only one of the most contested rights in a health context, but also one of the most contested areas of public policy generally. The Roe v. Wade Decision. Few judicial decisions have affected this country’s legal, political, and social landscape as much as Roe v. Wade (1973).f In 1970, an unmarried pregnant woman filed a lawsuit under the pseudonym “Roe” challenging the constitutional- ity of a Texas criminal law that prohibited procuring or attempting an abortion at any stage of pregnancy, except for the purpose of saving the pregnant woman’s life. Roe was joined in the lawsuit by a doctor who per- formed abortions in violation of the law. They argued that the constitutional right to privacy articulated in Griswold and its progeny included a woman’s right to choose to obtain an abortion. Texas, through district attorney Henry Wade, claimed that the law was per- missible because the state had a compelling interest in protecting women from an unsafe medical proce- dure and in protecting prenatal life. The federal trial court agreed with Roe and declared the law unconsti- tutional, and Texas immediately appealed to the U.S. Supreme Court, which agreed to hear the case (in rare circumstances, the Supreme Court will hear a case without an intermediate appellate court ruling). At the Supreme Court, the work of drafting the majority opinion in Roe v. Wade fell to Justice Harry Blackmun, who earlier in his legal career had been counsel to a well-known and highly regarded medi- cal clinic. By a 7–2 margin, the court ruled that the constitutional right to privacy, which in its view most strongly emanates from the 14th Amendment’s due process protections, is broad enough to encompass a woman’s decision to terminate her pregnancy. Once the court established that a woman has a constitutional right to obtain an abortion, it went on to discuss the limits of that right. Roe had argued that the right to obtain an abortion is absolute and that no state or federal law abridging the right could be enacted. The court did not agree. Justice Blackmun wrote that states have both an interest in protecting the welfare of its citizens and a duty to protect them and that the duty extends to the unborn. According to the court, “a State may properly assert important BOX 6-3 Discussion Questions Go back to the first legal principle drawn from the Canterbury decision: namely, that physicians have a duty of reasonable disclosure to include therapy options and the dangers potentially involved with each. Do you agree with the court that this duty is both a logical and modest extension of physicians’ “traditional” obligation to their patients? Why or why not? Depending on your answer, are you surprised to learn that some states have opted not to follow the Canterbury court’s patient-oriented standard of informed consent, relying instead on the more conventional approach of measuring the legality of physician disclosure based on what a reasonable physician would have disclosed? 122 Chapter 6 Individual Rights in Health Care and Public Health interests in safeguarding health, in maintaining medi- cal standards, and in protecting potential life. At some point in pregnancy, these respective interests become sufficiently compelling to sustain regulation of the fac- tors that govern the abortion decision” (Roe v. Wade, 1973). The court then linked both a woman’s “right to choose” and states’ interest in protecting potential life to the viability of the fetus, setting forth the following “trimester framework” that enhances state power to regulate the abortion decision and restricts a pregnant woman’s right as the fetus grows older: a. For the stage prior to approximately the end of the first trimester, the abortion deci- sion and its effectuation must be left to the medical judgment of the pregnant woman’s attending physician. b. For the stage subsequent to approximately the end of the first trimester, the State, in promoting its interest in the health of the mother, may, if it chooses, regulate the abortion procedure in ways that are reason- ably related to maternal health. c. For the stage subsequent to viability, the State, in promoting its interest in the poten- tiality of human life may, if it chooses, reg- ulate, and even proscribe, abortion except where it is necessary, in appropriate medical judgment, for the preservation of the life or health of the mother (Roe v. Wade, 1973). As a matter of both policy and law, the Roe deci- sion has been vigorously criticized (Barzelay & Hey- mann, 1973; Bopp & Coleson, 1989; Ely, 1979; Regan, 1979). For example, detractors claim that the court improperly made social policy by “finding” an expan- sive constitutional right to privacy (one broad enough to include the right to terminate a pregnancy) where one did not expressly exist. As a legal matter, many have argued that the decision relied too heavily on medical concepts that would be rendered obsolete as medical technology advanced and that would, in turn, result in a narrowing of the constitutional right advanced in the decision.g Regardless of these and other criticisms, the Roe decision was monumental beyond its legal implica- tions. It galvanized political forces opposed to abortion and prompted a movement to create ways to discour- age the practice through state policies designed to regulate the factors involved in the abortion decision. For example, as described next, Pennsylvania enacted a law that imposed a series of requirements on women seeking abortion services, and it was this law that nearly 20 years after Roe set the stage for another battle at the Supreme Court over abortion and the right to privacy. The Planned Parenthood of Southeastern Penn- sylvania v. Casey Decision. At issue in the 1992 case of Planned Parenthood of Southeastern Pennsylvania v. Casey were several amendments to Pennsylvania’s Abortion Control Act that made it more difficult for a pregnant woman to obtain an abortion: one provi- sion required that a woman seeking an abortion be provided with certain information at least 24 hours in advance of the abortion; a second stated that a minor seeking an abortion had to secure the informed con- sent of one of her parents, but included a “judicial bypass” option if the minor did not wish to or could not obtain parental consent; a third amendment required that a married woman seeking an abortion had to sub- mit a signed statement indicating that she had notified her husband of her intent to have an abortion, though certain exceptions were included; and a final provision imposed new reporting requirements on facilities that offered abortion services. The revised law exempted compliance with these requirements in the event of a “medical emergency.” Before any of the new provisions took effect, they were challenged by five Pennsylvania abortion clinics and a group of physicians who performed abortions. The federal trial court struck down all of the provi- sions as unconstitutional violations under Roe. On appeal, the Third Circuit Court of Appeals reversed and upheld all of the provisions, except for the hus- band notification requirement, as constitutional. The plaintiffs appealed to the Supreme Court, which agreed to hear the case. The court’s 5–4 decision in favor of the plaintiffs in Casey expressly acknowledged the widespread confu- sion over the meaning and reach of Roe, and it used its opinion in Casey to provide better guidance to legisla- tures seeking to regulate abortion as a constitutionally protected right. Specifically, the court in Casey sought to define more precisely both the constitutional rights of pregnant women and the legitimate authority of states to regulate some aspects of the abortion deci- sion. The deeply divided court wrote the following: It must be stated at the outset and with clar- ity that Roe’s essential holding, the holding we reaffirm, has three parts. First is a recognition of the right of the woman to choose to have an abortion before viability and to obtain it without undue interference from the State. Before viability, the State’s interests are not strong enough to support a prohibition of Individual Rights and the Healthcare System 123 abortion or the imposition of a substantial obstacle to the woman’s effective right to elect the procedure. Second is a confirmation of the State’s power to restrict abortions after fetal viability, if the law contains exceptions for pregnancies which endanger the woman’s life or health. And third is the principle that the State has legitimate interests from the outset of the pregnancy in protecting the health of the woman and the life of the fetus that may become a child. These principles do not con- tradict one another; and we adhere to each. (Planned Parenthood of Southeastern Pennsyl- vania v. Casey, 1992) Notice how, in interpreting Roe, the court in Casey makes some remarkable alterations to the contours of the right to choose to have an abortion. First, trimesters were replaced by fetal viability as the regulatory touch- stone. Second, the pregnant woman, not her attending physician, makes the abortion decision. Third, a state’s interest in protecting pregnant women and fetuses now attaches “from the outset of the pregnancy,” not at the beginning of the second trimester. Fourth, and perhaps most important, the court’s invalidation of the trimester framework enabled the establishment of a new “undue burden” standard for assessing the con- stitutionality of state abortion regulations. Under this new standard, a state may not prohibit abortion prior to fetal viability, but it may promulgate abortion regu- lations as long as they do not pose a “substantial obsta- cle” to a woman seeking to terminate a pregnancy. The court did not, however, alter its decision in Roe that, post-viability, a state may proscribe abortion except when pregnancies endanger a woman’s life or health. Taken together, these alterations both maintain a pregnant woman’s basic constitutional right to obtain an abortion pre-viability and enhance state interest in protecting the potentiality for human life. Once the court established the undue burden standard for assessing the constitutionality of state abortion regulations, it applied the standard to each constitutionally questionable amendment to Penn- sylvania’s Abortion Control Act. In the end, only the spousal notification provision was struck down as an unconstitutional burden; the court determined that some pregnant women may have sound reasons for not wishing to inform their husbands of their decision to obtain an abortion, including fear of abuse, threats of future violence, and withdrawal of financial support. As a result, the court equated the spousal notification requirement to a substantial obstacle because it was likely to prevent women from obtaining abortions. The court majority in Casey provided a new tem- plate for lower courts to use in deciding the consti- tutionality of state abortion regulations. Likewise, the opinion offered guidance to state legislatures as to what kinds of abortion restrictions were likely to withstand a constitutional attack. Nonetheless, some state legislatures have tested the boundaries of Casey by enacting bans on a procedure known as “partial birth” abortion, an issue to which we now turn. The Stenberg v. Carhart Decision. The undue bur- den standard articulated in Casey for assessing the constitutionality of abortion regulations was put to the test in Stenberg v. Carhart (2000). At issue in the case was a Nebraska criminal law banning “an abor- tion procedure in which the person performing the abortion partially delivers vaginally a living unborn child before killing the unborn child and completing the delivery.” It further defined “partially delivers vag- inally a living unborn child before killing the unborn child” to mean “deliberately and intentionally deliv- ering into the vagina a living unborn child, or a sub- stantial portion thereof, for the purpose of performing a procedure that the person performing such proce- dure knows will kill the unborn child and does kill the unborn child.” The Nebraska law penalized physicians who performed a banned abortion procedure with a prison term of up to 20 years, a fine of up to $25,000, and the automatic revocation of the doctor’s license to practice medicine in Nebraska. Dr. Leroy Carhart, a Nebraska physician who per- formed abortions, filed a lawsuit seeking a declara- tion that the Nebraska law violated the constitutional principles set forth in Roe and Casey. After a lengthy trial, a federal district court agreed with Dr. Carhart and declared the Nebraska law unconstitutional. The Court of Appeals for the Eighth Circuit agreed, con- cluding that Nebraska’s statute violated the Constitu- tion as interpreted by the Supreme Court in Casey. The Supreme Court then granted review. The court was unequivocal in its opinion in Sten- berg that the case was not a forum for a discussion on the propriety of Roe and Casey, but rather an appli- cation of the rules stated in those cases. In applying the undue burden standard to pre-viability abor- tions, the court considered trial court testimony from expert witnesses regarding several different abortion procedures that were then current in medical prac- tice to flesh out the procedures’ technical distinctions and to determine whether the procedures fell within Nebraska’s definition of “partial birth” abortion. The court determined that two distinct abortion proce- dures were relevant—dilation and evacuation (D&E), 124 Chapter 6 Individual Rights in Health Care and Public Health and dilation and extraction (D&X)—and that the Nebraska law’s vague definition of “partial birth” abor- tion effectively banned both procedures. Again by a 5–4 majority, the Supreme Court struck down the Nebraska law as unconstitutional on two separate grounds. First, the court concluded that the statute created an undue burden on women seeking pre- viability abortions. The court reasoned that ban- ning the most commonly used method for pre-viability second trimester abortions—the D&E procedure— unconstitutionally burdened a woman’s ability to choose to have an abortion. Second, the court invali- dated the state law because it lacked an exception for the preservation of the health of the pregnant woman. The court rejected Nebraska’s claim that the banned procedures were never necessary to maintain the health of the pregnant woman and held that “significant med- ical authority” indicated that the D&X procedure is in some cases the safest abortion procedure available. At the time Stenberg was decided, nearly 30 states had laws restricting D&E- and D&X-type abortions in some manner. Attempts to enact bans on these abor- tion procedures, however, have not been made only by state legislatures. Congress has tried numerous times to promulgate a federal ban, and after Stenberg was handed down, congressional opponents to abortion vowed to craft a ban that would pass constitutional muster. This effort culminated in the Partial Birth Abortion Ban Act of 2003 (PBABA). Partial Birth Abortion Ban Act of 2003. PBABA represented Congress’s third attempt since 1996 to ban “partial birth” abortions. Previous bills were vetoed by President Bill Clinton in 1996 and 1997, but in late 2003, PBABA easily passed both houses of Congress and was signed into law by President George W. Bush. Immediately, the constitutionality of PBABA was challenged in federal court, and the Supreme Court ultimately decided the law’s fate in 2007, as described here. PBABA establishes criminal penalties for “any physician who . . . knowingly performs a partial birth abortion and thereby kills a human fetus.” Attempt- ing to avoid the definitional vagueness that affected the Nebraska law’s constitutionality, the drafters of the federal law used more precise language in an effort to ban only D&X procedures, although PBABA does not specifically refer to any medical procedure by name. Instead, the law defines a “partial birth” abortion as an abortion in which the person performing the abortion deliberately and intentionally vaginally delivers a living fetus until, in the case of a headfirst presentation, the entire fetal head is outside the body of the mother, or, in the case of a breech presentation, any part of the fetal trunk past the navel is out- side the body of the mother, for the purpose of performing an overt act that the person knows will kill the partially delivered living fetus. (PBABA, 2003) PBABA contains an exception allowing for these otherwise illegal abortions when necessary to pro- tect a pregnant woman’s life, but not health. The law’s authors claim that the banned procedure is never nec- essary to protect the health of a pregnant woman and thus that an exception is not required. Separate lawsuits challenging PBABA were filed in federal courts in California, Nebraska, and New York. All three federal trial courts concluded that the lack of a health exception necessarily rendered the law unconstitutional under Supreme Court prece- dent. With enforcement of PBABA halted, the federal government appealed all three cases. The appellate courts that examined PBABA all found that substan- tial medical authority exists supporting the necessity of the banned procedure and declared PBABA uncon- stitutional because of its lack of a health exception. As noted, the fate of PBABA was then decided by the Supreme Court. The Gonzales v. Carhart Decision. The Supreme Court upheld the constitutionality of the PBABA in Gonzales v. Carhart, another 5–4 decision. The court rejected the reasoning of the appellate courts and found that PBABA was not on its face “void for vagueness” (a doctrine that permits courts to reject statutes under which a layperson could not generally understand who is being regulated or what is being prohibited) and did not pose an undue burden on the right to receive an abortion under Casey. Although the court reaffirmed again the various basic principles of Roe and Casey—that women have an unfettered right to an abortion pre-viability, that the government has the power to restrict abortions post-viability, and that the government has an interest from the outset of pregnancy in protecting the health of the woman and the fetus—the court in Carhart focused on the latter and held that the government’s legitimate interest in promoting fetal life would be hindered if the act was invalidated. The court first ruled that PBABA was not void for vagueness simply because the law prohibits per- forming intact D&Es. According to the court, the law puts doctors on notice of the prohibited conduct by adequately describing the intact D&E procedure and requiring that the doctor have knowledge that he is Individual Rights and the Healthcare System 125 performing the intact D&E for the purpose of destroy- ing the fetus. The court also found that PBABA did not impose an undue burden for being overly broad. To distinguish it from the Nebraska law in Stenberg, the court majority stated that PBABA targets extraction of the entire fetus, as opposed to the removal of fetal pieces beyond a specific anatomic point in the preg- nant woman. The court then held that PBABA did not pose a “substantial obstacle” to obtaining an abortion under Casey’s undue burden test. According to the court, the ban on partial birth abortions furthers the govern- ment’s interest in protecting fetal life and the govern- ment has the ability to prohibit practices ending fetal life that are similar to condemned practices. Finally, in a major shift that received relatively little attention by the court majority, the court ruled that the fact that PBABA did not contain language protecting the health of the woman did not render the law uncon- stitutional. Deferring to Congress because there are other safe procedures besides intact D&E that a doctor may use to perform an abortion and because accord- ing to the court PBABA promotes fetal life, the court simply declared the law constitutional notwithstand- ing the missing language. The Right to Be Free From Wrongful Discrimination We now transition to the final topic in the discussion of individual legal rights to and within health care— namely, the topic of healthcare discrimination.h Like discrimination generally, healthcare discrimination has a lurid and lengthy history in this country. Prior to the Brown v. Board of Education decision in 1954 and the civil rights movement of the 1960s, health- care injustice and exclusion based on race and other factors were commonplace, dating to slavery times and plantation-based racially segregated health care. After the end of the First Reconstruction, states passed so-called Jim Crow laws, cementing in place legally segregated health care. As a result, hospitals, physician practices, medical/nursing/dental schools, and pro- fessional medical societies were all separated based on race. In places where Jim Crow laws had not been passed, corporate bylaws and contracts between pri- vate parties often had the same discriminatory effect, and these “Jim Crow substitutes” were generally hon- ored and enforced by the courts that interpreted them. Federal law also played a role in perpetuating racially segregated health care. For example, the Hos- pital Survey and Construction Act of 1946 (more commonly known as the Hill–Burton Act, after the key congressional sponsors of the measure) provided federal money to states to build and refurbish hospi- tals after World War II, but explicitly sanctioned the construction of segregated facilities: A hospital will be made available to all per- sons residing in [its] territorial area . . . with- out discrimination on account of race, creed, or color, but an exception shall be made in cases where separate hospital facilities are provided for separate population groups, if the plan makes equitable provision on the basis of need for facilities and services of like quality for each such group. (Hospital Survey and Construction Act, 1946) This provision was not ruled unconstitutional until the 1963 case of Simkins v. Moses H. Cone Memo- rial Hospital, which has been referred to as the “Brown v. Board of Education of health care” (Smith, 1999). Simkins also helped fuel the passage of the Civil Rights Act of 1964, this country’s most important civil rights legislation of the 20th century. For purposes of health care, Title VI of the 1964 Act was of specific impor- tance. Title VI is discussed in more depth later in this chapter; in sum, this portion of the Civil Rights Act makes it illegal for programs and activities that receive federal funding to discriminate on the basis of race, color, or national origin. Notwithstanding the healthcare rewards brought about by the civil rights movement—Title VI, the pas- sage of Medicaid and Medicare, the establishment of federally financed community health centers—the focus on healthcare civil rights was waning as early as 1968. Several factors led to this decline, but what is most striking is that compared to the progress made by public and private civil rights efforts over the past 45 years in education, employment, and housing, civil rights enforcement in the healthcare field has been anything but sustained. Of course, even an enduring and well-funded enforcement effort is no guarantee of wiping out dis- crimination, regardless of its social context. There are, unfortunately, vestiges of discrimination in many important aspects of American society, including the healthcare system. Moreover, although historically healthcare discrimination on the basis of race and eth- nicity has received the most attention, the existence of discrimination in health care on the basis of socio- economic status, disability, age, and gender also raises troubling questions. The remainder of this section touches briefly on each of these areas, describing laws (where applicable) or legal theories used to combat the particular healthcare discrimination at issue. 126 Chapter 6 Individual Rights in Health Care and Public Health Race/Ethnicity Discrimination The fact that healthcare discrimination premised on race or ethnicity has dominated the healthcare civil rights landscape should not be surprising, because racist beliefs and customs have infected health care no less so than other areas of life, such as education, employment, and housing. This fact is chronicled to a staggering degree by W. Michael Byrd and Linda A. Clayton, two physician-researchers at the Har- vard School of Public Health (2000; 2002). Byrd and Clayton paint a complex and disturbing picture of a healthcare system that itself perpetuates racism in health care in three distinct ways: by not destroying the myth that minority Americans should be expected to experience poorer health relative to Caucasians; by organizing itself as a private, for-profit system that marginalizes the indigent and minorities; and by refusing to acknowledge the historical and ongoing problem of racial exclusion in health care. One key problem that in part results from the design of the healthcare system is that of racial and ethnic health disparities—differences in healthcare access, treatment, and outcomes between popula- tions of color and Caucasians. In 2003, the Institute of Medicine (IOM; now called the Academy of Med- icine) released an influential report that included overwhelming evidence of racial and ethnic health disparities and documented that these disparities could not be explained solely by the relative amount of health care needed by populations of color and nonminority populations (Smedley, Stith, & Nelson, 2003). For example, the report concluded that Afri- can Americans are relatively less likely to receive treatment for early-stage lung cancer, publicly insured Latinos and African Americans do not receive coro- nary artery bypass surgery at rates comparable to pub- licly insured nonminorities, and Latino and African American children on Medicaid experience relatively higher rates of hospitalization. Furthermore, the IOM study revealed that even when relevant patient characteristics are controlled for, racial and ethnic differences arise not only in terms of accessing care initially, but also after individuals have entered the healthcare system, a finding that supports the notion that both the system itself and physician practice style contribute to disparities. This notion is, of course, quite controversial, because it suggests that physician decision making and clinical practice can increase the likelihood of racially disparate outcomes. The key federal law used to combat race and eth- nicity discrimination in health care is Title VI of the 1964 Civil Rights Act, which states that “no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimina- tion under any program or activity receiving federal financial assistance.” Because it attaches only to recip- ients of federal funding, Title VI does not reach, for example, health professionals who do not directly par- ticipate in government-sponsored health programs; nor does it reach physicians whose only participation in federal assistance programs is under Medicare Part B (the basis for this exemption is historical and purely political, and the exemption is not codified in Title VI statutory or regulatory law [Smith, 1999, pp. 115– 128]). Nonetheless, Title VI has long had the potential to greatly impact the field of health care, because an enormous amount of federal funding has been poured into the healthcare enterprise over the past 50 years. The concept of “discrimination” under Title VI applies both to intentional acts and to actions or pol- icies that unintentionally have the effect of discrimi- nating against racial and ethnic minorities. This is so because federal regulations implementing the Title VI statute (which explicitly prohibits only intentional discrimination) reach actions that, even if neutral on their face, have a disproportionate adverse impact (or effect) on members of minority groups. In the case of healthcare access and delivery, you can imagine sev- eral types of conduct that might potentially violate the Title VI disproportionate impact regulations. For example, were a hospital to segregate patients by source of payment—say, by maintaining a ward or floor that treated only patients covered under Medicaid—racial and ethnic minorities may be adversely impacted, given the overall makeup of the Medicaid population. Similarly, the Title VI regulations could be violated if a managed care organization enrolled both privately and publicly insured persons but allowed participat- ing providers to refuse to accept as patients those indi- viduals covered by Medicaid. The disproportionate impact regulations are cru- cial to realizing Title VI’s full force, because much of the racism in post-1954 America does not take the form of overt, intentional acts. However, as a result of the 2001 Supreme Court decision in Alexander v. Sandoval, these regulations were severely undercut. BOX 6-4 Discussion Question If you were asked to distill, down to their most essential parts, the constitutional right to privacy and the right to privacy as it applies to abortion, what elements would you include? Individual Rights and the Healthcare System 127 Under Alexander, private individuals were barred from bringing a lawsuit under the disparate impact regulations, leaving the federal government as the sole enforcer when racial or ethnic minorities allege a vio- lation of the regulations.i Physical and Mental Disability Discrimination Like discrimination based on race or ethnicity, health- care discrimination premised on disability has a long, sad history in this country and, as with race, the health system itself is partly to blame for its perpetuation. For instance, historically, persons with mental disabilities were viewed from a medical standpoint as having little to offer to society, and they were, as a matter of prac- tice, shipped to mental asylums isolated from commu- nities. Those with physical disabilities were not spared discriminatory practices, either; because individuals with Down syndrome were viewed by medical practi- tioners as “Mongoloid idiots” and children with cere- bral palsy or other serious physical limitations were regularly viewed as unable to contribute to society, they were all simply institutionalized. These historical practices and perspectives resonate even in the mod- ern healthcare system, in which treatment opportuni- ties for the disabled are skewed toward institutional, rather than community, settings, and disease-specific limitations in health insurance are commonplace. However, passage of the Americans With Disabil- ities Act (ADA) in 1990 alleviated at least some of the problems associated with disability discrimination in health care. Like Title VI, the ADA is not specifically a “health law”; its intent is to extend to the disabled the maximum opportunity for community integra- tion in many sectors of society, including employ- ment, public services, public accommodations (i.e., privately owned entities open to the public), telecom- munications, and more. For this reason, it prohibits discrimination generally against disabled individuals who satisfy the essential requirements of a particular job, or who meet the qualification standards for a pro- gram, service, or benefit. But the ADA’s impact on health care for disabled individuals is notable, in large part because the law defines “places of public accommodation” to include private hospitals and other private healthcare provid- ers. So, for example, a dentist in private practice who does not receive any federal funds for his services is nonetheless prohibited from discriminating against a person who is HIV-positive, as the well-known case of Bragdon v. Abbott (1990) makes clear. This rep- resents an important expansion of federal disability law because prior to the ADA, only recipients of fed- eral funds were proscribed from discriminating on the basis of disability. Note also how this expanded con- cept of public accommodations differs from Title VI of the Civil Rights Act, which still requires the receipt of federal money on the part of the offending entity to trigger protections for racial and ethnic minorities. Although the ADA has dramatically altered the disability law landscape, it is not without limita- tions. For example, the regulations implementing the ADA’s statutory text require entities that implement public programs and services to make only “reason- able modifications”—but not “fundamental alter- ations”—to those programs and services. Under the ADA, a fundamental alteration is one that would change the essential nature of a public program or service. Whether a requested change to a public pro- gram or service by a disabled individual amounts to a “reasonable” or a “fundamental” one is potentially determinative to the outcome of the request. Why? Because if a court determines that the request would alter the essential nature of the program or service at issue, it is powerless under the ADA to order the change. Another way of understanding this reason- able modification/fundamental alteration dichotomy is to recognize that fundamental alterations to public services—alterations that might actually be necessary to achieve at least the spirit of the ADA’s loftiest goals and meet the expectations of a modern, enlightened society—could be made only by the political branches of government, not by the courts. Another important limitation of the ADA (at least as it has been interpreted by most courts) is that it does not prohibit arbitrary insurance coverage lim- its attached to certain medical conditions. A stark example of this is found in the case of Doe v. Mutual of Omaha Insurance Company (1999), in which a fed- eral appellate court ruled that a lifetime benefit limita- tion in a health insurance policy of $25,000 for AIDS or AIDS-related conditions did not violate the ADA, even though the very same policy set a $1 million life- time limit for other conditions. Socioeconomic Status Discrimination Compared to race or disability discrimination in healthcare access and treatment, healthcare discrim- ination based on class gains little attention—even though socioeconomic status is independently asso- ciated with health status, and the negative effects of poverty on health and healthcare access are incontro- vertible. Class-related healthcare discrimination can take many forms. For example, healthcare providers 128 Chapter 6 Individual Rights in Health Care and Public Health might refuse to accept as patients individuals who are covered under Medicaid, or low-income individuals might fall victim to the practice of redlining, which refers to discrimination based on geographic location when companies offer goods and services to consum- ers. (Although insufficient data exist to know the extent of redlining in healthcare-related goods and services, industries such as home health care, pharmaceuticals, and managed care have come under particular scru- tiny [Perez, 2003].) Another example stems from the fact that healthcare providers (e.g., physician and den- tal practices, hospitals) sometimes elect to not operate in relatively poor communities, leaving residents of these communities at heightened risk for experiencing a shortage of adequate healthcare resources. Gender Discrimination Discrimination against women is also a problem in health care. This bias appears to be of particular concern in the area of coronary heart disease (Bess, 1995), in which delayed or disparate care could have severe conse- quences. While it may seem that gender discrimination in health care could be remedied under the Equal Pro- tection Clause of the federal Constitution, Equal Protec- tion claims are difficult to win because they require proof of both state action (a sufficient government connection to the discriminatory acts) and proximate causation (a cause-and-effect link between the discrimination and the harm suffered). Also, consider the fact that health- care practitioners who receive federal funds cannot face suit under Title VI for even obvious gender discrimina- tion, because Title VI’s prohibitions relate only to race, color, and national origin discrimination. Age Discrimination Finally, the medical care system also seems to be biased against older adults. Just one of several disturbing facts on the treatment front is that older adults sometimes do not receive needed surgical care because health professionals wrongfully assume that the chances of recovery are not good (Smith, 1996). Another concern pertains to insurance coverage, in that many employ- ers are attempting to rescind lifetime health coverage benefits to retired workers, even where the benefits had been promised as part of negotiated labor con- tracts. At first blush, this may not seem like a critical issue, because many retirees are at or beyond the age required for Medicare eligibility. But some retirees are not yet 65 years old, a retiree’s employer-sponsored benefits might provide more or different coverage than Medicare, and employer benefits might cover a retiree’s dependents, which Medicare does not do. ▸ Individual Rights in a Public Health Context The discussion thus far has focused on healthcare legal rights that individuals can claim in the con- text of access, receipt of services, freedom of choice, and antidiscrimination. In each of these areas, how- ever, the right claimed is not absolute. For exam- ple, EMTALA does not make illegal all transfers of indigent patients from private hospitals to public ones; rather, it requires that patients be medically stabilized before a transfer can occur. Even eminent civil rights laws do not provide blanket protections, because they might be triggered only where federal funding is present, or where the assistance requested would not fundamentally alter a government health program. In this section, we consider restrictions on indi- vidual rights and liberties of a different sort: those that derive not from the limitations of specific laws, but rather from governmental police pow- ers used to protect the general public’s health and welfare. One simple way to think about individual rights in a public health context is to use a balancing approach—what might the appropriate legal trade- offs be between private rights and public welfare? Public discussion of this trade-off intensified after the terrorist attacks of September 11, 2001, because many government actions taken in their wake— the passage of new laws, the tightening of existing regulations, the detainment of alleged terrorists— starkly raised the question of where to draw the line between individual autonomy and government authority to restrain that autonomy in the name of public welfare and national security. The attacks raised new questions relating to public health law as well, including whether the potential for a bioterror- ist attack using smallpox should compel the federal government to vaccinate individuals—even against their will—against the virus in order to protect the public at large in the event of an attack. Overview of Police Powers Police powers represent state and local government authority to require individual conformance with established standards of conduct. These standards are designed to promote and protect the public’s health, safety, and welfare, and to permit government con- trol of personal, corporate, and other private interests. The government’s police powers are broad and take many forms. Healthcare professionals are required to obtain licenses from government agencies. Healthcare Individual Rights in a Public Health Context 129 facilities face accreditation standards. Food establish- ments are heavily regulated. Employers are bound by numerous occupational health and safety rules. Busi- nesses are constrained by pollution control measures. Tobacco products can be marketed in only certain ways. The purchase of guns is controlled, buildings have to abide by certain codes, motorcyclists must wear helmets. The list goes on and on. The government’s police powers are oftentimes invasive, a result that stems in part from the fact that the American colonies were battling multiple com- municable diseases during the time of the writing of the Constitution, and its drafters were thus well aware of the need for pervasive governmental public health powers. At the same time, the government may not overreach when restricting private autonomy in the name of public health promotion and protection. For example, police powers cannot be used as a form of punishment, they cannot be used arbitrarily and capriciously, and they cannot be used for purposes unrelated to public health and welfare. A key principle inherent to the use of police powers is that of coercion. This is so because, in a country founded upon the twin ideals of individu- alism and a limited government, many individu- als and businesses do not respond kindly to being told to conform with public health regulations that limit their actions. For example, sometimes a public health concern (e.g., pollution) requires a response (enhanced governmental regulation) that may not be in the best economic interests of an implicated party (a refinery). This is not to say that individuals and businesses do not voluntarily assume responsi- bilities and measures that are in the public’s interest. For instance, one effect of poor exercise habits— obesity—has enormous implications for the public’s health and for national healthcare costs. As a result, the government would prefer that all individuals exercise for a minimum amount of time each week, but there is of course no law requiring this; rather, voluntarism is the guiding principle when it comes to personal exercise. Nonetheless, personal coercion and industrial regulation have long been adopted (and accepted) practices of public health officials, and all of the major communicable disease outbreaks have been combated with some combination of com- pulsory screening, examination, treatment, isolation, and quarantine programs. The Jacobson v. Massachusetts Decision The fact that government coercion can be justified by important public health goals does not answer the question of where to draw the line between personal/ economic freedom on the one hand, and the public welfare on the other. This question was taken up by the Supreme Court in Jacobson v. Massachusetts (1905), perhaps the most famous public health law decision in the court’s history and the one to which we alluded in the second factual scenario in Box 6-1 at the opening of this chapter. The facts in Jacobson are straightforward enough. At the turn of the 20th century, the state of Massa- chusetts enacted a law granting local health boards the power to require vaccination when necessary to protect the public’s health or safety. In 1902, the Cam- bridge Board of Health, in the throes of attempting to contain a smallpox outbreak, took the state up on its offer and issued an order requiring all adults in the city to be vaccinated against the disease. Henning Jacobson refused vaccination on the ground that he previously suffered negative reactions to vaccinations. Jacobson was fined $5 for his refusal, a penalty upheld by the state’s highest court. Jacobson appealed to the U.S. Supreme Court, setting the stage for a decision that, more than 100 years later, remains both controversial and at least symbolically forceful (Gostin, 2005). Like the enduring tension between private inter- ests and public welfare underpinning public health law generally, the Jacobson decision amounts to “a classic case of reconciling individual interests in bodily integrity with collective interests in health and safety” (Mariner, Annas, & Glantz, 2005). The 7–2 decision went the state’s way, with the Supreme Court recognizing that police powers were generally broad enough to encompass forced vaccination. Respond- ing to Jacobson’s argument that the Massachusetts law impermissibly infringed on his constitutional right to liberty, the court wrote the following: The liberty secured by the Constitution of the United States to every person within its jurisdiction does not import an absolute right in each person to be, at all times and in all circumstances, wholly freed from restraint. There are manifold restraints to which every person is necessarily subject for the common good. On any other basis organized society could not exist with safety to its members. Society based on the rule that each one is a law unto himself would soon be confronted with disorder and anarchy. (Jacobson v. Massachusetts, 1905) Due to this and other language used by the court in the decision, Jacobson is often described as sweep- ingly deferential to public health officials and their 130 Chapter 6 Individual Rights in Health Care and Public Health use of police powers. And without question, social compact theory (the idea that citizens have duties to one another and to society as a whole) animates the court’s decision. However, the Jacobson decision also recognizes the individual liberties protected by the Constitution, and in fact requires a deliberative gov- ernmental process to safeguard these interests. According to the Jacobson court, public health powers must be exercised in conformity with four standards in order to pass constitutional muster: ■ The first standard, that of “public health necessity,” requires that government use its police powers only in the face of a demonstrable public health threat. ■ The second standard, termed “reasonable means,” dictates that the methods used when exercising police powers must be designed in such a way as to prevent or ameliorate the public health threat found to exist under the first standard. ■ “Proportionality” is the third Jacobson standard; it is violated when a particular public health mea- sure imposes a burden on individuals totally dis- proportionate to the benefit to be expected from the measure. ■ Finally, and axiomatically, the public health reg- ulation itself should not pose a significant health risk to individuals subject to it. This is the stan- dard of “harm avoidance.” These standards have never been explicitly over- turned, but it can be argued that they have at the very least been implicitly replaced, given that in the 100- plus years since Jacobson was decided, the Supreme Court has developed a much more complex approach to applying constitutional provisions to cases impli- cating individual autonomy and liberty. The “Negative Constitution” The discussion of police powers up to this point might reasonably lead you to believe that the Constitution obligates the government to protect the public’s health and welfare through affirmative use of its powers. This view, however, has never been adopted by the Supreme Court. Instead, the prevailing view is that the Constitution empowers government to act in the name of public health, but does not require it to do so. This interpretation of the Constitution refers to what is known as the “negative constitution”—that is, the idea that the Constitution does not require government to provide any services, public health or otherwise. This approach to constitutional law derives from the fact that the Constitution is phrased mainly in negative terms (e.g., the First Amendment prohibits govern- ment abridgment of free speech). Professor Wendy Parmet describes the “negative constitution” this way: In the century that has witnessed Auschwitz and Chernobyl, it is easy to see the dangers posed by state power. This recognition tem- pers enthusiasm for public authority and leads us to use law as a limiting device. In our legal tradition, this view of law is integral to constitutional structure, with its emphasis on separation of powers, checks and balances, procedural protections, and individual rights. We rely on the Constitution to limit the power of the government to restrain our free- doms and cause us harm. In this sense, law is a negative force that prevents the state from intruding upon the individual. This negative conception of law, which sees legal rights as a restraint upon the state, has played a domi- nant role in the formulation of contemporary American public health law. It explains the central pillars of constitutional public health law: the search for limits on governmental authority to restrain individual freedoms in the name of public health, and the concom- itant assumption that government has no obligation to promote public health. (Parmet, 1993, pp. 267, 271) In two important decisions, DeShaney v. Win- nebago County Department of Social Services (1989) and Town of Castle Rock, Colorado v. Gonzales (2005), the Supreme Court has advanced this view of the nega- tive constitution. In the former case, 1-year-old Joshua DeShaney was placed in his father’s custody after his parents divorced. Two years later, the father’s second wife complained to county officials in Wisconsin that BOX 6-5 Discussion Question Jacobson v. Massachusetts is a product of the early 20th century, and the public health law principles supporting it are vestiges of an even earlier time. This, coupled with a century of subsequent civil liberties jurisprudence and societal advancement, has led some commentators to question whether Jacobson should retain its paradigmatic role in terms of the scope of government police powers. At the same time, other public health law experts call for Jacobson’s continued vitality, arguing that it is settled doctrine and a still-appropriate answer to the private interest/collective good question. What do you think? Individual Rights in a Public Health Context 131 the father had been abusing Joshua physically. Social service workers opened a file on the case and inter- viewed Joshua’s father, but the county did not pursue the matter further after the father denied the charges. One year after that, an emergency department physi- cian treating Joshua alerted social services of his sus- picion that Joshua’s injuries were the result of abuse. The county again investigated but decided that insuffi- cient evidence of child abuse existed to remove Joshua from his father’s custody. This emergency department scenario played out two additional times over the next several months, but Joshua’s caseworkers still believed that they had no basis on which to place Joshua in court custody. Some months later, when Joshua was 4 years old, he suffered a beating so severe that he fell into a life-threatening coma. He survived but was left with permanent, severe brain damage, and he was expected to live his life in an institution for the pro- foundly mentally disabled. Joshua’s father was subse- quently convicted of child abuse. Joshua’s mother filed a civil rights claim on Josh- ua’s behalf against the county officials who failed to take the boy into their custody. The lawsuit was based on the Due Process Clause of the federal Constitu- tion, which prohibits states from depriving any per- son of property without due process of law. However, the Supreme Court in DeShaney concluded that the “substantive” component of the Due Process Clause— which focuses on challenges to government conduct— could not be read to provide Joshua with a property interest in having state child welfare officials protect him from beatings by his father. For a 6–3 majority, Chief Justice Rehnquist held that state officials had no affirmative constitutional duty to protect Joshua: Nothing in the language of the Due Pro- cess Clause itself requires the State to pro- tect the life, liberty, and property of its citizens against invasion by private actors. The Clause is phrased as a limitation on the State’s power to act, not as a guarantee of cer- tain minimal levels of safety and security. It forbids the State itself to deprive individuals of life, liberty, or property without “due pro- cess of law,” but its language cannot fairly be extended to impose an affirmative obligation on the State to ensure that those interests do not come to harm through other means. (Deshaney, 1989) The majority further rejected the argument that the state’s knowledge of the danger Joshua faced, and its expression of willingness to protect him against that danger, established a “special relationship” that gave rise to an affirmative constitutional duty to protect. In dissent, three justices in DeShaney argued that through the establishment of its child protec- tion program, the state of Wisconsin undertook a vital duty and effectively intervened in Joshua’s life, and its failure to live up to its child protection duty amounted to a constitutional violation. According to the dissenters, the majority opinion “construes the Due Process Clause to permit a State to displace private sources of protection and then, at the crit- ical moment, to shrug its shoulders and turn away from the harm that it has promised to try to prevent” (Deshaney, 1989). Sixteen years after DeShaney, the Supreme Court in Castle Rock v. Gonzales had an opportunity to again consider whether the government has a duty to affir- matively protect its citizens. This time, however, the court was concerned not with substantive due process, but rather with procedural due process, which man- dates that when a state establishes a benefit or right for its citizens, it is not entitled to deny individuals the benefit or right in an arbitrary or unfair way. Unfortunately, the facts in Gonzales are as tragic as those in DeShaney. In May 1999, Jessica Gonzales received a court order protecting her and her three young daughters from her husband, who was also the girls’ father. On June 22, all three girls disappeared in the late afternoon from in front of the Gonzales home, and Jessica suspected that her husband had taken them in violation of the restraining order. This suspicion was confirmed in a phone conversation she had with her husband. In two initial phone conver- sations with the Castle Rock Police Department, she was told there was nothing the police could do and to wait until 10:00 p.m. to see if her husband brought the girls home. Shortly after 10:00 p.m., Jessica called the police to report that her children were still missing, but this time she was told to wait until midnight to see what transpired. She called the police again at midnight, reported that her children were still missing, and left her home to go to her husband’s apartment. Finding nobody there, she called the police again at 12:10 a.m. and was told to wait for an officer to arrive. Thirty minutes later, after no officer showed up, she went to the police station to submit a report. According to the Supreme Court decision, the officer who wrote up the report “made no reasonable effort to enforce the [restraining order] or locate the three children. Instead, he went to dinner.” A couple of hours later, Jessica’s husband pulled his truck up to, and began shooting at, the Castle Rock Police Department. After 132 Chapter 6 Individual Rights in Health Care and Public Health he was killed by police during the gunfight, the three Gonzales daughters were found dead in the back of the truck; they had been murdered by their father hours earlier. Jessica sued the police department, claiming that her constitutional right to procedural due process was violated by the department’s inaction. She argued that the restraining order she received was her “prop- erty” under the Constitution’s Due Process Clause and that it was effectively “taken” from her without due process. Overturning the federal appellate court that ruled in her favor, the Supreme Court decided by a 7–2 margin that Jessica did not have a property interest in police enforcement of the restraining order against her husband. The court said it was not clear that even if it had found an individual entitlement to enforcement of a restraining order under a Colorado state statute requiring officers to use every reasonable means to enforce restraining orders, that this entitlement would constitute a protected “property” interest that triggers due process protections under the federal Constitution. Justice Antonin Scalia wrote that the Due Process Clause does not protect all government “benefits,” including those things that government officials have discretion to grant or deny. Applying this standard, the court ruled that Colorado’s pro- tection order law did not create an individual enti- tlement to police enforcement of restraining orders, explaining that police have discretion to act or not act under many circumstances, including when to enforce a restraining order (e.g., police officers have discretion to consider whether a violation of a pro- tection order is too “technical” or minor to justify enforcement). Furthermore, the court noted that if the Colorado legislature included statutory language making police enforcement of a restraining order “mandatory,” even that would not necessarily mean that Mrs. Gonzales had a personal entitlement to its enforcement, given that the statute makes no men- tion of an individual’s power to demand—or even request—enforcement. In dissent, two justices in Gonzales argued that restraining orders amount to a personal, enforce- able property interest. They asserted that the major- ity opinion wrongly ruled that a citizen’s interest in government-provided police protection does not resemble a “traditional conception” of property. Look- ing to the legislative history and text of Colorado’s own protection order law and to the purpose of the state’s domestic violence legislation, the dissent con- cluded that a particular class of individuals was indeed entitled beneficiaries of domestic restraining orders. ▸ Conclusion This chapter offered a snapshot of the current state of health-related legal rights. But, as alluded to early on in the chapter, there were times in its relatively short his- tory that this country was closer to recognizing broader individual healthcare rights than is currently the case, just as there have been times (as the aftermath of Sep- tember 11, 2001, proved) when concerns for the pub- lic’s health and safety have eclipsed the nation’s more natural inclinations toward individualism and a dereg- ulated marketplace. That this is so is of no surprise: legal rights are, by nature, subject to shifts in the polit- ical and social terrain. For example, the Aid for Fam- ilies With Dependent Children program (commonly known as AFDC), the federal welfare entitlement pro- gram for low-income populations, was dismantled in 1996 after more than 60 years in existence. Originally enacted under a slightly different name as part of the New Deal in 1935, the AFDC was replaced with the Temporary Assistance for Needy Families (TANF) pro- gram by a moderate Democrat (President Bill Clinton) and a conservative, Republican-controlled Congress. Compared to the AFDC, TANF dramatically limited the receipt of individual benefits and focused much more heavily on creating work opportunities for needy BOX 6-6 Discussion Questions The “negative constitution” is a concept over which reasonable people can easily disagree. Notwithstanding the “defensive” manner of some of the Constitution’s key provisions, there are several arguments in support of more affirmative action on the part of government health and welfare officials than current Supreme Court jurisprudence requires. For example, the dissent in DeShaney argues persuasively that Wisconsin’s implementation of a child protection program effectively created a constitutional duty to actually protect children from seemingly obvious danger. As one leading scholar put it, If an agency represents itself to the public as a defender of health, and citizens justifiably rely on that protection, is government “responsible” when it knows that a substantial risk exists, fails to inform citizens so they might initiate action, and passively avoids a state response to that risk? (Gostin, 2000) What do you think of this argument? Can you think of other arguments that call into question the soundness of the negative theory of constitutional law? 133References References Alexander v. Sandoval, 532 U.S. 275 (2001). Americans With Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq. (1990). Annas, G. J. (2004). The rights of patients (3rd ed.). Carbondale, IL: Southern Illinois University Press. Barnes, A., & McChrystal, M. (1998). The various human rights in health care. Human Rights, 25, 12–14. Barzelay, D. E., & Heymann, P. B. (1973). The forest and the trees: Roe v. Wade and its critics. Boston University Law Review, 53, 765–784. Bess, C. J. (1995). Gender bias in health care: A life or death issue for women with coronary heart disease. Hastings Women’s Law Journal, 6(1), 41–65. Blum, J. D., Talib, N., Carstens, P., Nasser, M., Tomkin, D., & McAuley, A. (2003). Rights of patients: Comparative perspectives from five countries. Medical Law Review, 22(3), 451–471. Bopp, J., & Coleson, R. (1989). The right to abortion: Anomalous, absolute, and ripe for reversal. Brigham Young University Journal of Public Law, 3(2), 181–355. Bragdon v. Abbott, 524 U.S. 624 (1998). Byrd, W. M., & Clayton, L. A. (2000). An American health dilemma: A medical history of African Americans and the problem of race, beginnings to 1900. New York, NY: Routledge. Byrd, W. M., & Clayton, L. A. (2002). An American health dilemma: Race, medicine, and health care in the United States, 1900–2000. New York, NY: Routledge. Canterbury v. Spence, 464 F.2d 772 (D.C. Cir. 1972). Civil Rights Act of 1964, 42 U.S.C. §§ 2000d (1964). Claiming Human Rights. (2010). The Universal Declaration of human rights: Article 25. Retrieved from http://www .claiminghumanrights.org/udhr_article_25.html Davis, M. F. (1993). Brutal need: Lawyers and the welfare rights movement, 1960–1973. New Haven, CT: Yale University Press. DeShaney v. Winnebago Cnty., 489 U.S. 189 (1989). Doe v. Mutual of Omaha Insur. Co., 179 F.3d 557 (7th Cir.1999), cert. denied, 528 U.S. 1106 (2000). Eisenstadt v. Baird, 405 U.S. 438 (1972). Ely, J. H. (1979). The wages of crying wolf: A comment on Roe v. Wade. Yale Law Journal, 82, 920–949. Examination and Treatment for Emergency Medical Conditions and Women in Labor, 42 U.S.C. § 1395dd (2011). Friedman, E. A., & Adashi, E. Y. (2010). The right to health as the unheralded narrative of health care reform. Journal of the American Medical Association, 304(23), 2639–2640. Friedman, L. M. (1971). The idea of right as a social and legal concept. Journal of Social Issues, 27(2), 189–198. Garrow, D. J. (1994). Liberty and sexuality: The right to privacy and the making of Roe v. Wade. Berkeley, CA: University of California Press. Gonzales v. Carhart, 550 U.S. 124 (2007). Gostin, L. O. (2000). Public health law: Power, duty, restraint. Berkeley, CA: University of California Press. Gostin, L. O. (2005). Jacobson v. Massachusetts at 100 years: Police powers and civil liberties in tension. American Journal of Public Health, 95(4), 576–581. Griswold v. Connecticut, 381 U.S. 479 (1965). Halpern, S. A. (2004). Medical authority and the culture of rights. Journal of Health Politics, Policy and Law, 29(4-5), 835–852. Hospital Survey and Construction Act of 1946, 42 U.S.C. § 291e(f ) (1946). Hurley v. Eddingfield, 59 N.E. 1058 (Ind. 1901). Jacobson v. Massachusetts, 197 U.S. 11 (1905). Jost, T. S. (2003). Disentitlement? The threats facing our public health-care programs and a rights-based response. New York, NY: Oxford University Press. Kinney, E. D., & Clark, B. A. (2004). Provisions for health and health care in the constitutions of the countries of the world. Cornell International Law Journal, 37(2), 285–355. Littell, A. (2002). Can a constitutional right to health guarantee universal health care coverage or improved health outcomes? A survey of selected states. Connecticut Law Review, 35(1), 289–318. Loving v. Virginia, 388 U.S. 1 (1967). Mariner, W. K., Annas, G. J., & Glantz, L. H. (2005). Jacobson v. Massachusetts: It’s not your great-great-grandfather’s public health law. American Journal of Public Health, 95(4), 581–590. families. Like legal rights generally, health-related legal rights are similarly subject to changing political cur- rents. For example, at the time of this writing, several state legislatures continue to pass bills that protect health professionals from providing care that conflicts with their personal beliefs, reflecting the current polit- ical power of social conservatives.j Of course, changes to legal rights are not always represented by restrictions of those rights. The enact- ment of Medicaid and Medicare, which created new health-related rights, is an obvious example. Other major examples include EMTALA and expanded state consumer rights for persons in managed care. On a less noticed scale, legal rights for persons with HIV/AIDS have expanded since the 1980s (Halpern, 2004), and federal courts now review the constitution- ality of the treatment provided in, and conditions of, psychiatric hospitals (Wyatt v. Stickney, 1972). These are just a few of many examples. Nonetheless, vast challenges remain. After all, many scholars, politicians, and consumers point to the millions of uninsured Americans as just one example of not only a failing healthcare financing and delivery sys- tem, but also a failing of the legal system. To reduce this nation’s huge uninsured population takes not just polit- ical will, but also an enormous undertaking to change the law, as witnessed with the ACA. A “rights revolu- tion” in a health context, like other major legal upheav- als, requires something else, too: a substantial amount of general economic and social unrest (Friedman, 1971). As historian Brooks Adams once noted, “Law is merely the expression of the will of the strongest for the time being, and therefore laws have no fixity, but shift from generation to generation” (Nash & Zullo, 1995). http://www.claiminghumanrights.org/udhr_article_25.html http://www.claiminghumanrights.org/udhr_article_25.html 134 Chapter 6 Individual Rights in Health Care and Public Health ▸ Endnotes a. These competing concepts were given life in Paul Starr’s influential 1982 book, The Social Transformation of American Medicine: The Rise of a Sovereign Profession and the Making of a Vast Industry. Incidentally, The Social Transfor- mation of American Medicine should be read by all students with an interest in the history of medicine; the book’s significance across a range of disciplines is hard to overstate. See Wailoo and Schlesinger, 2004. b. For an interesting article describing the impor- tance of political structures in determining the level of equalities/inequalities in a society, including the level of government-provided healthcare coverage, see Navarro and Shi, 2003. c. Incidentally, the Canterbury decision was authored by Spottswood Robinson, III, who, prior to becoming a highly regarded federal judge, was instrumental in the fight for civil rights, in part as one of the National Associa- tion for the Advancement of Colored People (NAACP) lawyers who initially brought suit in one of the cases that eventually morphed into Brown v. Board of Education. Nash, B., & Zullo, A. (Eds.) (1995). Lawyer’s wit and wisdom: Quotations on the legal profession, in brief. Philadelphia, PA: Running Press. Navarro, V., & Shi, L. (2003). The political context of social inequalities and health. In R. Hofrichter (Ed.), Health and social justice: Politics, ideology, and inequity in the distribution of disease. San Francisco, CA: Jossey-Bass. Parmet, W. (1993). Health care and the constitution: Public health and the role of the state in the framing era. Hastings Constitutional Law Quarterly, 20(2), 267–335. Partial Birth Abortion Ban Act, 18 U.S.C. §§ 1531 (a)-(b) (2003). Perez, T. E. (2003). The civil rights dimension of racial and ethnic disparities in health status. In B. D. Smedley, A. Y. Stith, & A. R. Nelson. (Eds.), Unequal treatment: Confronting racial and ethnic disparities in health care (pp. 626–663). Washington, DC: The National Academies Press. Planned Parenthood of Southeasten Pa. v. Casey, 505 U.S. 833 (1992). President’s Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research. (1983). Securing access to health care: A report on the ethical implications of differences in the availability of health services. Washington, DC: The National Academies Press. Protection of Human Subjects, 45 C.F.R. Part 46 (2009). Regan, D. H. (1979). Rewriting Roe v. Wade. Michigan Law Review, 77, 1569–1646. Reinhardt, U. (1996). The debate that wasn’t: The public and the Clinton health care plan. In H. Aaron (Ed.), The problem that won’t go away: Reforming U.S. health care financing (pp. 70–109). Washington, DC: Brookings Institution. Rich, R. F. (2000). Health policy, health insurance and the social contract. Comparative Labor Law Policy Journal, 21, 397–421. Roe v. Wade, 410 U.S. 113 (1973). Rosenbaum, S. (2011). Realigning the social order: The patient protection and affordable care act and the U.S. health insurance system. Suffolk Journal of Health and Biomedical Law, 7, 1–31. Rosenbaum, S., & Teitelbaum, J. (2003). Civil rights enforcement in the modern healthcare system: Reinvigorating the role of the federal government in the aftermath of Alexander v. Sandoval. Yale Journal of Health Policy, Law, and Ethics, 3(2), 215. Rosenblatt, R. E., Law, S. A., & Rosenbaum, S. (1997). Law and the American health care system. Westbury, CT: The Foundation Press. San Antonio Indep. School Dist. v. Rodriguez, 411 U.S. 1 (1973). Simkins v. Moses H. Cone Memorial Hospital, 323 F.2d 959 (4th Cir. 1963). Smedley, B. D., Stith, A. Y. & Nelson, A. R. (Eds.). (2003). Unequal treatment: Confronting racial and ethnic disparities in health care. Washington, DC: The National Academies Press. Smith, D. B. (1999). Health care divided: Race and healing a nation. Ann Arbor, MI: The University of Michigan Press. Smith, G. P. (1996). Our hearts were once young and gay: Health care rationing and the elderly. University of Florida Journal of Law and Public Policy, 8, 1. Smith, P. S. (1997). Addressing the plight of inner-city schools: The federal right to education after Kadrmas v. Dickinson Public Schools. Whittier Law Review, 18, 825–835. Stacy, T. (1993). The courts, the constitution, and a just distribution of health care. Kansas Journal of Law and Public Policy, 3, 77–94. Starr, P. (1982). The social transformation of American medicine: The rise of a sovereign profession and the making of a vast industry. New York, NY: Basic Books. Stein, R. (2006, January 30). Health workers’ choice debated: Proposals back right not to treat. Washington Post. Retrieved from http://www.washingtonpost.com/wp-dyn/content/article /2006/01/29/AR2006012900869.html Stenberg v. Carhart, 530 U.S. 914 (2000). Teitelbaum, J. B. (2005). Health care and civil rights: An introduction. Ethnicity and Disease, 15(2, supp. 2), 27–30. Town of Castle Rock, Colorado v. Gonzales, 545 U.S. 748 (2005). Vladeck, B. (2003). Universal health insurance in the United States: Reflections on the past, the present, and the future. American Journal of Public Health, 93(1), 9–16. Wailoo, K., & Schlesinger, M. (2004). Transforming American medicine: A twenty-year retrospective on The Social Transformation of American Medicine. Journal of Health Politics, Policy, and Law, 29(4–5), 1005–1019. Wing, K. R. (1993). The right to health care in the United States. Annals of Health Law, 2, 161–193. World Health Organization. (2006). Constitution of the World Health Organization. Retrieved from http://www.who.int /governance/eb/who_constitution_en Wyatt v. Stickney, 344 F. Supp. 373 (M.D. Ala. 1972). Yamin, A. E. (2005). The right to health under international law and its relevance to the United States. American Journal of Public Health, 95(7), 1156–1161. http://www.washingtonpost.com/wp-dyn/content/article/2006/01/29/AR2006012900869.html http://www.washingtonpost.com/wp-dyn/content/article/2006/01/29/AR2006012900869.html http://www.who.int/governance/eb/who_constitution_en http://www.who.int/governance/eb/who_constitution_en Endnotes 135 d. A now-famous 1890 Harvard Law Review arti- cle titled “The Right to Privacy,” written by Sam- uel Warren and Louis Brandeis, is often credited with introducing the constitutional “right to be let alone.” e. In a health context, this type of privacy is embodied by the Health Insurance Portability and Accountability Act (HIPAA) of 1996, found in large part at 29 U.S.C. §§ 1181–1187, 42 U.S.C. §§ 300gg et seq. and 42 U.S.C. §§ 1320a et seq., which creates a federal right to main- tain the confidentiality of one’s personal health information. f. For a compelling look at what the case has meant to society, see Garrow, 1994. g. For example, notice how the Supreme Court linked states’ power to ban abortions (with cer- tain exceptions) to fetal viability, even though the progression of medical knowledge and tech- nology could push back the point of viability earlier into pregnancy. Also, who appears to hold the power, under “(a),” to decide whether an abortion should occur? The physician, a fact often overlooked by those who hail Roe as a seminal women’s rights case and one that calls into question how the pregnant woman’s constitutional right to privacy could be effectu- ated by her treating physician. h. This section was adapted from Teitelbaum, 2005. i. For a discussion of the implications of the Alexander decision in a healthcare context, see Rosenbaum and Teitelbaum, 2003. j. These bills represent a surge of legislation that reflects the inten- sifying tension between asserting indi- vidual religious values and defending patients’ rights. . . . The flurry of political activity is being welcomed by conserva- tive groups that consider it crucial to pre- vent health workers from being coerced into participating in care they find mor- ally repugnant—protecting their “right of conscience” or “right of refusal.” . . . The swell of propositions is raising alarm among advocates for abortion rights, family planning, AIDS prevention, the right to die, gays and lesbians, and others who see the push as the latest manifes- tation of the growing political power of social conservatives. (Stein, 2006) 137 © Mary Terriberry/Shutterstock CHAPTER 7 Social Determinants of Health and the Role of Law in Optimizing Health LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Describe the meaning of social determinants of health and the significance of social factors on individual and population health ■ Describe how law can create or perpetuate health-harming social conditions ■ Explain how law can be used to ameliorate health-harming social conditions ■ Understand how innovative interventions to improve health, such as medical-legal partnership, can help address health-harming social conditions at the individual and population levels BOX 7-1 Vignette Living through brief periods without heat or electricity is a fact of life for most of us, perhaps as a result of a powerful weather system or a blown generator. But have you thought about what it would be like to be without heat or electricity more chronically, due to homelessness, inadequate housing, or an unscrupulous landlord who neglects a property without concern for tenants? Even for the healthiest among us, this social factor would be incredibly challenging; for those with chronic illness, it can mean increased asthma attacks, severe pain associated with sickle cell disease, an inability to refrigerate needed medicine, and much more, including death. The social factors just noted— homelessness, dilapidated homes, slum landlords—and many others have nothing to do with biology, genetics, personal choice, or access to healthcare services, but have a great deal to do with individual and public health. 138 Chapter 7 Social Determinants of Health and the Role of Law in Optimizing Health ▸ Introduction Disparities in health and health care are a sys-temic and deeply challenging problem in the United States (Smedley, Stith, & Nelson, 2003). While related, the two terms have different meanings. A health disparity exists when one popula- tion group experiences a higher burden of disability or illness relative to another group; a healthcare dispar- ity, by contrast, tends to denote differences in access to healthcare services or health insurance, or in the quality of care actually received (Kaiser Family Foun- dation, 2012). What makes both types of disparities so invidious—and a major social justice concern—is that they can exist even when patient needs or treatment recommendations do not differ across populations (Hoffman, Trawalter, Axt, & Oliver, 2016). As long as these disparities exist, a society cannot achieve what is known as health equity—a situation in which every- one has the opportunity to attain his or her full health potential. Many different factors can contribute to health and healthcare disparities. Individual behaviors, healthcare provider bias, cultural expectations and differences, the location and financing of healthcare systems, social factors, and more can all be contrib- utors. Furthermore, health and healthcare disparities appear through many different lenses; researchers have documented disparities based on race, ethnic- ity, socioeconomic status, age, geography, language, gender, disability status, citizenship status, and sexual identity and orientation. In 2010 the U.S. Department of Health and Human Services developed a series of strategies and goals for eliminating health disparities based on race and eth- nicity (National Partnership for Action, n.d.) and, as described most prominently in the Health Reform in the United States chapter, the Affordable Care Act (ACA) includes many provisions aimed at improving the health of vulnerable individuals and populations, including several programs specifically directed at reducing health disparities. In addition, many states, localities, and private organizations have agendas for combating and eliminating various types of health and healthcare disparities. Too often overlooked in discussions about health and health disparities, however, is a striking fact about American society that both differentiates it from other developed countries and appears to deeply affect individual and population health: aside from expenditures related to the direct provision of indi- vidual healthcare  services, the United States spends far less on social services (e.g., housing and food pro- grams, support services for older adults, disability and sickness benefits, employment programs, unemploy- ment benefits, homeless shelters, utility assistance programs) than do other developed countries. For every $1 spent on health care, the United States ded- icates approximately $0.90 to other social services; in the 33 other Organisation for Economic Co- operation and Development countries (a multinational organi- zation, of which the United States is a member, that strives to fight poverty and achieve economic growth and employment in member countries), the typical spending ratio is $1 on health care to $2 on other social services. As it turns out, the latter ratio is sig- nificantly associated with better health outcomes, including less infant mortality, less premature death, longer life expectancy, and fewer low-birth-weight babies (Bradley, Elkins, Herrin, & Elbel, 2011). At the same time, despite spending two to three times more per capita on direct healthcare services than nearly all of our European counterparts, the United States has significantly worse health outcomes in many respects, particularly among the poorest individuals and fami- lies (Tobin-Tyler, 2012). As evidence mounts that interventions target- ing social, economic, and environmental factors can account for sizable reductions in morbidity and mor- tality (Gostin, Jacobson, Record, & Hardcastle, 2011), healthcare payers and policymakers are increasingly aiming to tie these nonmedical interventions to new models of healthcare delivery that create economic incentives for providers to incorporate social inter- ventions into their approach to care by linking pay- ments to overall health outcomes (Bachrach, 2014); for example, “accountable care organizations,” or ACOs, are an evolving concept in which various types of healthcare providers collaborate in the pro- vision of care and accept collective accountability for the cost and quality of care delivered to a popula- tion of patients. While it will take time to implement and test these new models, early results indicate that these multifaceted approaches to health and health care can result in cost savings, higher patient satis- faction, more provider productivity, and improved employee satisfaction (Bachrach, 2014). BOX 7-2 Discussion Questions Do you think trying to achieve wide-scale health equity is a laudable goal? Why or why not? If yes, what do you think are the keys to achieving it? And what about people who are given the opportunity to achieve optimal health but do not take advantage of it; should they face consequences of some sort? Social Determinants of Health 139 ▸ Social Determinants of Health Defining Social Determinants of Health According to the federal Centers for Disease Control and Prevention (CDC), determinants of health are “factors that contribute to a person’s current state of health” (2013). Included within this broad category are biologic factors (e.g., carrying a genetic mutation that could increase one’s chances of developing a particular disease, such as sickle cell anemia), psychosocial fac- tors (e.g., conflicts within one’s family that may lead to stress, anger, and/or depression), behavioral factors (e.g., alcohol/drug use, smoking, unprotected sex), and finally, social factors. Social determinants of health (SDH), broadly speaking, are the social conditions into which people are born and that affect their daily lives and overall well-being as they move through the various stages of life. The World Health Organization (WHO) defines SDH as “the conditions in which people are born, grow, live, work and age” (2018), and the CDC notes that SDH are shaped by the distribution of money, power, and resources at both local and national levels. Resources that enhance the quality of one’s life— such as the availability of healthy foods, access to edu- cation, and an environment free of toxins—all shape individual and population health. These and many other SDH are transient across the life cycle, with some social determinants becoming more pertinent depend- ing on one’s stage of life. For example, proximity to a high-quality school would be more meaningful for a child, while one’s actual education level would be more significant to an adult who is either seeking work or to increase his or her income to better support his or her family. Social determinants include factors that may have led to an individual’s disadvantaged state to begin with—institutional racism, exposure to crime and vio- lence, a lack of available community-based resources, and many other factors can all be health harming. As you have likely gleaned already, social factors that influence health cover a wide swath of topics and life events, many of which remain outside the control of individuals and populations affected by them. As a result, it is not always easy to define exactly what role SDH—whether one individual social factor, or many at once—play in shaping health. Researchers have for decades explored such questions as these: Why are some populations more predisposed than others to develop and suffer from certain ailments? Why do dif- ferences persist in healthcare quality among racial and ethnic groups? Why do people in low-income fami- lies sometimes experience lower-quality care com- pared to high-income families? Why do studies show incremental improvements in health as one rises in social status? In some capacity, it is likely that social factors are at play in all of these situations, but defin- ing their role is a challenge. Before delving into some of the more specific research findings concerning the health effects of certain social factors, let’s take a more detailed look at some different types of SDH. Types of SDH The Healthy People 2020 Initiative lists many differ- ent examples of SDH (U.S. Department of Health and Human Services, 2018). We summarize several of them here to provide context for the discussion that follows. ■ Access to high-quality educational opportu- nities: Individuals with access to consistent, high-quality educational opportunities are more likely to obtain higher-income jobs, and comple- tion of undergraduate and graduate studies affords a sheer greater number of these higher-paying opportunities. Many middle and high schools in low-income areas, however, have high dropout rates or do not adequately prepare students for higher education, and many of these areas do not have adequate access to job training resources for those seeking training in a vocation, which can provide a path to a well-paying career in the absence of a 4-year college degree. Furthermore, many low-paying positions do not offer health insurance as a job benefit, making it all the more difficult for individuals in these positions to access routine and specialty physician services. Overall, educational attainment and corresponding income levels tend to be strong predictors of individual and population health. From an early age, educational attainment and income provide valuable resources that protect individuals against stressors that tend to lead to health complications later in life. ■ Access to medical care services: Individuals who do not live close to medical care providers (e.g., primary care doctors, clinics, hospitals) are less likely to see a physician regularly and will often seek care only in emergencies, eschewing preven- tive care. Access is also not just about geography— it entails affordability as well. People who do not receive health insurance coverage as a job-related benefit and cannot purchase it on their own can forgo seeing a doctor for several years before pre- senting to the emergency department for an acute problem, which can possibly lead to a lengthy hos- pitalization and/or decreased quality of life. ■ Access to social media and other technologies (e.g., the Internet, cell phones): The Internet and cell phones are becoming increasingly use- ful in individual and population health, from 140 Chapter 7 Social Determinants of Health and the Role of Law in Optimizing Health appointment time reminders, to learning more about one’s symptoms and diagnoses, to buying insurance through state exchanges established under the ACA, to finding providers who are accepting new patients. In addition, many peo- ple connect to support groups or other valuable health-related resources through the Internet, and providers are increasingly making health records available via Internet portals. ■ Availability of community-based resources and opportunities for recreational activities: Community-based resources can connect resi- dents to local health providers and recreational/ physical activities, both of which increase the like- lihood that people will lead healthier lives overall. The absence of leisurely activities in one’s life can lead to increased stress, which in turn is associ- ated with poorer health outcomes overall. ■ Availability of resources to meet daily needs (e.g., access to local food markets): The further an indi- vidual lives from a grocery store that offers healthy food options, like fruits and vegetables, the more likely it is that the individual will consume fast foods or other relatively unhealthy options. Geographic areas that have no or few healthy food options are referred to as “food deserts.” Food deserts tend to be identified based on their shortages of whole food providers and their abundance of “quick marts” and fast-food establishments that stock processed, sugar-heavy, and fat-laden foods that contribute to a poor diet and can lead to higher levels of obesity and other diet-related diseases, such as diabetes and heart disease. Due to the enormous individual and public health effects of food deserts, the U.S. Depart- ment of Agriculture has developed a map of the nation’s food deserts and many resources aimed at reducing their number (2017). ■ Culture: By way of example, some cultures rely heavily on time-honored approaches to illness, such as teas and other homemade remedies. While these can be effective, some commonly ingested herbals can in fact be quite dangerous when taken in conjunction with other regularly prescribed medications; for example, St. John’s wort—a plant that is used for medicinal purposes in this country and many others—can have drastic effects when taken alongside certain antidepressant medica- tions. So while traditions can have important pos- itive effects in treating illness, cultural norms can also impact health in unseen ways. ■ Language/literacy: If adequate translation and interpretation services are not in place in health- care facilities, foreign language–speaking patients may be discouraged from seeking out care. Even when they do, many patients struggle to under- stand clinicians and medication or other treat- ment protocols. ■ Public safety: Individuals who live in dangerous neighborhoods tend to remain indoors, which can close off opportunities for exercise and social interaction. People who must pass through a dangerous neighborhood in order to reach pub- lic transportation often have to make a choice between their own safety and attending work or a doctor’s appointment. Furthermore, alcohol, drugs, violence, and the adverse health outcomes associated with them tend to be more prevalent in relatively unsafe neighborhoods. ■ Residential segregation: Physicians may preferen- tially set up their practices in locations dominated by certain demographics. As a result, some patient populations—often minority and low-income populations—suffer from a lack of healthcare facil- ities and resources in their neighborhoods, a par- ticularly strident problem in rural areas. ■ Social norms and attitudes (e.g., discrimination, racism, distrust of government): Discrimina- tory attitudes remain a cause of health disparities (Tobin-Tyler & Teitelbaum, 2019). Multiple stud- ies have shown that physicians are more likely to recommend medical best practices based on race, gender, and age (Schulman et al., 1999; van Ryn, Burgess, Malat, & Griffin, 2006). These studies demonstrate that bias (unconscious or otherwise) in physicians and other health professionals still plays a significant role in how patients of certain races, ethnicities, social statuses, and education levels are treated. Patient attitudes about the medical pro- fessions can also affect health. The most infamous example of discriminatory practice creating nega- tive patient attitudes toward the medical commu- nity stems from the Tuskegee syphilis experiment. In this experiment, hundreds of syphilis-infected, African American men in rural Alabama were used as unwitting research subjects by the U.S. Public Health Service, which wanted to study untreated syphilis in humans. The men were given free med- ical care but were never told they had the disease, nor were any of them treated with penicillin once it became the accepted course of treatment for syphi- lis. The study lasted a stunning 40 years, from 1932– 1972, and has affected the attitudes and healthcare decisions of many African Americans ever since. In 1997 President Bill Clinton issued a formal apology for the Tuskegee Study, but government healthcare programs have been hard-pressed to earn back the trust of millions of patients that was shattered once the study was revealed.a Social Determinants of Health 141 ■ Socioeconomic conditions (e.g., concentrated poverty and the stressful conditions that accom- pany it): While the link between poverty and poor health is discussed below, suffice it to say here that the connection between the two is well docu- mented and undeniable, and the health effects of extreme financial hardship in childhood can be lifelong even in the event that people eventually escape poverty. A similar phenomenon, though with far different health effects, can be seen at the other end of the socioeconomic spectrum: greater wealth correlates with lower rates of morbidity and longer life spans. ■ Transportation options: Many individuals miss medical appointments because they cannot afford private transportation and live long distances from reliable public transportation. It is common for patients without their own cars to spend hours on buses in an effort to reach medical appointments. The Link Between Social Determinants and Health Outcomes While it is well beyond the scope of this chapter to provide a full discussion of the myriad ways in which social factors play important roles in individual and population health, we provide in this section a flavor of the types of links that researchers have drawn in this respect. We note at the outset that these links are not usually linear and directly causative: social deter- minants do not usually act alone or in “‘simple addi- tive fashion,’ but rather in concert with one another in complex, interdependent, bidirectional relationships” (McGovern, Miller, & Hughes-Cromwick, 2014, p. 3). Indeed, “most diseases and injuries have multiple potential causes and several factors and conditions may contribute to a single death. Therefore, it is a challenge to estimate the contribution of each factor to mortality” (Mokdad, Marks, Stroup, & Gerberding, 2004, p. 1238). That said, “the overwhelming weight of evidence demonstrates the powerful effects of socio- economic and related social factors on health, even when definitive knowledge of specific mechanisms and effective interventions is limited” (Braveman & Gottlieb, 2014, p. 22). Links can be drawn between social determi- nants and both physical and mental health. Among many examples on the physical health front, research indicates that while half of all deaths in the United States involve behavioral causes (McGinnis & Foege, 1993), evidence shows that health-related behav- iors are strongly shaped by three important social factors: income, education level, and employment (Braveman, Egerter, & Barclay, 2011; Stringhini, et al., 2010). Another study concluded that the num- ber of U.S. deaths in 2000 attributable to low educa- tion, racial segregation, and low social support was comparable with the number of deaths attributable to heart attack, cerebrovascular disease, and lung cancer, respectively (Galea, Tracy, Hoggatt, DiMag- gio, & Karpati, 2011). The CDC has regularly found that individuals among the lowest levels of income and education suffered the greatest age-adjusted prevalence and incidence rate of diagnosed diabe- tes (CDC, 2013). Similarly, associations have been demonstrated between lower socioeconomic status and increased prevalence of disease, morbidity, and mortality in persons with arthritis and rheumatic conditions (Callahan et al., 2011). Access to safe, quality, affordable housing rep- resents one of the most influential SDH. Indeed, for individuals and families trapped in a cycle of housing instability, this determinant can almost completely dictate their ability to achieve and maintain a healthful state (Corporation for Supportive Housing, 2014). Sev- eral studies demonstrate that linking healthcare man- agement to supportive housing—an evidence-based practice that combines permanent affordable housing with relevant support services—leads to improved health outcomes. For example, a study out of Denver, Colorado, found that 50% of supportive housing res- idents experienced improved health status, 43% had better mental health outcomes, and 15% reduced sub- stance use (Perlman & Parvensky, 2006). Regardless of income or housing cost, living in a predominately minority neighborhood increases the likelihood of having poor access to healthy food choices (Jack, Jack, & Hayes, 2012). For example, one study found that African American urban neighbor- hoods have only 41% of the chain supermarkets found in comparable white neighborhoods (Powell, Slater, Mirtcheva, Bao, & Chaloupka, 2007), and minority neighborhoods have an overabundance of fast-food restaurants known for relatively inexpensive but unhealthful food options (Fleischhacker, Evenson, Rodriguez, & Ammerman, 2011). BOX 7-3 Group Activity Each student should begin by rank-ordering a list of the half-dozen social determinants (from those listed in this chapter or otherwise; broad or specific) that he or she believes most significantly affect individual health. Then get together in groups of three or four people to compare lists, discussing disagreements and making the case for some determinants over others. 142 Chapter 7 Social Determinants of Health and the Role of Law in Optimizing Health As noted, social determinants play a significant role in mental health outcomes, as well. Emotional stressors—such as neighborhood violence, poverty, or familial abuse—during key developmental years in childhood can lead to severe consequences later in life. For example, several studies have been con- ducted regarding the mental health outcomes of chil- dren who have been subject to abuse, including one showing that survivors of childhood sexual abuse have higher levels of both general distress and major psychological disturbances, including personality disorders (Schneiderman, Ironson, & Siegel, 2005). One particularly fascinating but worrisome study demonstrated that the brains of children in low- income families actually had less surface area than did the brains of children from families who were wealthier—specifically, 6% less surface area in chil- dren whose families made less than $25,000 a year compared with children whose families made more than $150,000 (Layton, 2015). One theory behind this finding was that children from poor fami- lies tend to be malnourished and have less access to high-quality education than their richer peers. Another theory proposed that poorer families tend to lead more chaotic lives, which can inhibit brain development in children. ▸ Law as a Social Determinant of Health Up to this point, we’ve described generally various types of SDH and some correlations between those determinants and the health of people who live in communities in which SDH may be relatively more compromised. We turn now to a more nuanced discus- sion of one very influential SDH: the law. Throughout the nation’s history, law has played an integral role in causing, exacerbating, and alleviating health- harming social conditions, from the legally sanctioned, racially segregated—and horribly unequal—medical care sys- tems used during slavery time, to the expansion of building codes in the 1920s, to the War on Poverty legislation of the 1960s, to the ACA’s focus on health equity. Because the law’s reach in this regard is so expansive, we provide only an overview for purposes of this chapter. Whether embodied in constitutions, statutes, reg- ulations, executive orders, administrative agency deci- sions, or court decisions, the law plays a profound role in shaping life circumstances and, in turn, health. The ways in which this occurs can be broken down into five categories. 1. The law can be used to design and per- petuate social conditions that can have terrible physical, mental, and emotional effects on individuals and populations. One obvious example in this category is the “separate but equal” constitutional doctrine that allowed racial segregation in hous- ing, health care, education, employment, transportation, and more. Indeed, injus- tices in healthcare access and quality were commonplace in the United States prior to the civil rights movement. Racially seg- regated health care dates to slavery times, when plantations had on-site facilities to care for slave laborers. After the slaves were freed but also after the First Reconstruction ended in the late 1870s, Jim Crow laws ush- ered in a new era of discriminatory health- care access and delivery through separate hospitals and physician practices; separate medical, nursing, and dental schools; and separate professional medical societies. For example, Alabama once had a law that stated: “No person or corporation shall require any White female nurse to nurse in wards or rooms in hospitals, either public or private, in which Negro men are placed” (Ferris State University, 2012). 2. The law can be used as a mechanism through which behaviors and prejudices are transformed into distributions of well-being among populations. By way of example, although black and white people use illicit drugs at approximately the same rate, drug crime incarceration rates are far higher for black people. Thus, who is cho- sen for surveillance and arrest, and how the arrested are selected for either punishment or treatment, turns out to be an important driver of how a supposedly neutral law dif- ferentially impacts people and communi- ties, and in turn their health (Burris, 2011). Healthcare provider discrimination and bias reside in this category, as well. Health- care discrimination and bias can take many forms: it can be based on race, ethnicity, disability, age, gender, and class (or socio- economic status). Class-related healthcare discrimination alone can take multiple forms. For example, some healthcare pro- viders might refuse to accept as patients individuals who are covered under Medic- aid (because the Medicaid population tends Law as a Social Determinant of Health 143 to be disproportionately poor and of color), or low-income individuals might fall victim to the practice of redlining, which refers to situations in which healthcare entities relo- cate from poor neighborhoods to wealthier ones (Yearby, 2013). 3. Laws can be determinative of health through their under-enforcement. For example, a perfectly good set of housing regulations aimed at keeping housing units safe, clean, and quiet are of little value to individual and group health if there is nei- ther the will, nor the resources, to enforce them. Substandard housing conditions, including the presence of rodents, mold, peeling lead paint, exposed wires, and insufficient heat—all of which are common among low-income housing units—can cause or exacerbate asthma, skin rashes, lead poisoning, fires, and common illnesses, yet none of these housing problems can be “cured” by a clinical encounter. While their consequences can be treated medically, the causes require robust enforcement of exist- ing laws (Tobin-Tyler, Lawton, Conroy, Sandel, & Zuckerman, 2011). 4. Laws can be determinative of health through their interpretation. In 2012, the U.S. Supreme Court was asked by half the states in the country to rule on whether the Medicaid expansion in the ACA was unlawfully coercive (National Federation of Independent Business v. Sebelius, 2012; note that this decision is discussed in more detail in the Health Reform in the United States chapter). As originally passed into law, the ACA permitted the secretary of the U.S. Department of Health and Human Ser- vices to terminate all of a state’s Medicaid funding if the state failed to implement the Medicaid expansion—even those Medicaid funds that a state would receive that were unconnected to the expansion. While deter- mining that the Medicaid expansion itself was perfectly legitimate, the court ruled that Congress unconstitutionally forced states to potentially have to choose between the Medicaid expansion and a total loss of Medicaid funding. This ruling had the effect of making the ACA’s Medicaid expansion optional, rather than mandatory, and states have been deciding individually whether to implement the expansion ever since. At the time of this writing, 33 states and the Dis- trict of Columbia have adopted the ACA’s Medicaid expansion, while 17  states have not; thus, the court’s interpretation of a stat- ute has contributed to the fact that other- wise eligible individuals in “non- expansion states” do not have access to Medicaid ben- efits in the same way that individuals in “expansion states” do. 5. Finally, the law can be used to structure direct responses to health-harming social needs that result from factors like impov- erishment, illness, market failure, and individual behavior that harms others. For example, the Emergency Medical Treatment and Active Labor Act (EMTALA) requires Medicare-participating hospitals to provide needed stabilization services to individuals who have an emergent condition. Notably, EMTALA’s requirements are universal— meaning they have to be fulfilled by hospi- tals irrespective of the presenting patient’s socioeconomic or insurance status—and were written into law because many private hospitals had long turned away emergent patients who were uninsured and could not pay out-of-pocket for their care. Many financing laws that subsidize healthcare services for vulnerable popula- tions also fit into this category. Medicaid is an obvious example, and the Public Health Service Act includes funding for commu- nity health centers, persons with HIV/ AIDS, persons with mental illness or sub- stance abuse disorders, and project grants to provide preventive and immunization services, and breast and cervical cancer screening and detection. Title VI of the 1964 Civil Rights Act prohibits discrimina- tion on the basis of race, color, or national origin by any recipient of federal financing, including healthcare providers and facil- ities. Finally, public health departments funded under state and local legal authority provide primary and preventive healthcare services, such as childhood immunizations, to underserved populations. Programs such as the National Health Service Corps (NHSC) and the Indian Health Service (IHS) were established under federal law to address the lack of providers in rural and other underserved areas. The NHSC was founded in order to incentivize graduates 144 Chapter 7 Social Determinants of Health and the Role of Law in Optimizing Health of medical school and other health profes- sions programs to practice primary care in underserved areas, because starting in the 1950s medical graduates began gravitating in large numbers to large cities to practice a medical specialty. The IHS is the princi- pal federal healthcare provider and health advocate for Indian people, providing com- prehensive health services to approximately 1.9 million American Indians and Alaska Natives. Furthermore, through their police powers, states directly regulate individual and corporate behavior in order to protect and promote the public’s health. For exam- ple, states regulate the food supply and food establishments, enforce occupational safety rules, curb pollution, control the sale of firearms, restrict the marketing of tobacco products, and accredit healthcare profes- sionals and facilities. Indeed, at the local, state, and federal levels, the law has played important roles in all of the 10 most note- worthy public health achievements of the 20th century, as selected by the CDC (1999): control of infectious diseases, motor vehi- cle safety, fluoridation of drinking water, tobacco use control, vaccinations, decline in deaths due to coronary heart disease and stroke, food safety, improvements in mater- nal and child health, family planning, and safer workplaces. Taken together, the preceding discussion illus- trates how using law to achieve better health is well suited to what is called a “health in all policies” (HIAP) strategy. This strategy is based on the recogni- tion that several pressing health-related challenges— inequities, chronic disease, skyrocketing costs, the need for insurance reform, and so on—are often com- plex, multidimensional, and linked to one another. As a result, HIAP relies on a collaborative govern- mental (and sometimes nongovernmental) approach to health improvement by incorporating health con- siderations into an array of policy decisions, and by engaging governments and other stakeholders in a multisector approach to shaping the economic, phys- ical, and social environments in which people live, work, and play. In thinking about how law could be used to foster a HIAP approach, consider the number of rule-making departments and agencies at just the federal level that can (and do) serve healthcare and public health functions even though they are not commonly identified as health agencies. The Envi- ronmental Protection Agency plays an obviously important role in environmental health. Reducing injuries and hazards in the workplace is the key goal of the Occupational Safety and Health Administra- tion, which is part of the Department of Labor. The Department of Homeland Security protects health when it prepares for and responds to disasters and terrorism. The Department of Agriculture (along with the Food and Drug Administration) plays an important role in the protection of the nation’s food supply. The Department of Housing and Urban Development influences the built environment, which in turn influences health. The Department of Energy sets radiation safety standards for nuclear power plants and other sources of energy. Again, these are just federal agencies, and they are all part of the executive branch of government; legislative branch committees at the federal, state, and local levels that are also not typically considered “health” committees could also craft legislation with a HIAP approach in mind. The involvement of multiple branches and agencies in health-related matters plainly shows that the variety of influences impact- ing individual and population health are outside the control of the health sector alone. Right to Criminal Legal Representation vs. Civil Legal Assistance Appreciating the law’s power to ameliorate social conditions that negatively affect health requires an understanding of the difference between using law to design broad policies (e.g., Title VI of the Civil Rights Act, firearm regulations, federal housing pol- icy, the ACA) and leveraging the legal system as an individual who is aiming to redress his or her own hardship. In the case of the latter, it helps to under- stand the difference between rights that attach in the area of criminal legal representation versus those that BOX 7-4 Group Activity Get together in groups of three or four people. As a group, take 20 minutes to make a list of all the specific ways you can think of that the law has been used to directly respond to health-harming social needs (examples exist in category 5 in this section). When time is up, compare lists across groups, discuss disagreements, and see which group thought of the greatest number of legal interventions. Law as a Social Determinant of Health 145 exist in the realm of civil legal assistance, because it is through civil legal assistance that many types of SDH can been ameliorated. Criminal Legal Representation The government is required to provide legal counsel to all federal defendants who are unable to afford their own attorneys; this right is explicit in the Sixth Amend- ment to the U.S. Constitution. The right to counsel in state criminal prosecutions was established by the U.S. Supreme Court (though only for serious offences) in the famous 1963 case of Gideon v. Wainwright. The case arose out of an everyday burglary at a Florida pool hall, for which Clarence Earl Gideon was arrested not- withstanding the flimsy evidence against him. Because Gideon was indigent and could not afford private coun- sel, he appeared in court alone. He requested counsel but was denied, and as a result acted as his own lawyer at trial. A jury found him guilty and the Florida trial court sentenced Gideon to serve 5 years in state prison. From prison, Gideon appealed his conviction to the U.S. Supreme Court, arguing that his constitutional rights had been violated when he was denied counsel. The Supreme Court agreed to hear Gideon’s constitu- tional claim and assigned him a well-known lawyer, Abe Fortas, who himself would one day become a U.S. Supreme Court Justice. Building on previous right to counsel cases (for example, in the event of a state prosecution where the death penalty was sought), the court ruled that the assistance of counsel, if desired by an indigent defendant, was a fundamental right under the U.S. Constitution that was required in state prosecutions of serious crimes. Gideon received a new trial and—with the assistance of a lawyer supplied at government expense—was acquitted of all charges just 5 months after the Supreme Court’s ruling. The decision in Gideon v. Wainwright spawned many changes in the representation of indigent crim- inal defendants, including in misdemeanor and juve- nile proceedings. The decision effectively created the need for public defenders (lawyers employed at public expense in criminal trials), and it lies at the heart of a series of cases dealing not only with legal representa- tion at trial and on appeal, but also with police interro- gation tactics and the right to remain silent. Civil Legal Assistance While the right to legal representation exists in crim- inal matters, no such right exists on the other side of the legal ledger: there is no right to the assistance of a lawyer in civil matters, even when the most basic human needs are at stake. Common civil legal matters involve immigration status, domestic vio- lence, disability law, family law (e.g., child custody cases), housing needs, public benefits (e.g., Medicaid, food stamps, Social Security), employment disputes, and special education needs. In all of these types of disputes—which can be incredibly complex from a legal perspective and which can have life-altering consequences—low-income individuals and families can have no expectation that an attorney will pro- vide them with assistance. (We should note, however, that under some state laws individuals have a right to counsel in limited civil situations, such as with the termination of parental rights or involuntary com- mitments to mental health facilities.) In civil matters, indigent people (and, increasingly, more members of the middle class and a rising number of small busi- nesses who cannot afford legal fees)b can apply for what is known as civil legal aid or civil legal services, which are provided by a network of publicly funded legal aid agencies, private lawyers and law firms prac- ticing on a pro bono basis, law school clinics and professional organizations (the latter group includes organizations such as the American Bar Association, the National Legal Aid and Defender Association, and the American Bar Foundation). This network is the heart and soul of what is termed the access to justice movement, which pro- motes strategies to address the severe gap in access to both criminal and civil justice for low-income and other vulnerable populations.c One of the goals of this movement is to establish a “civil Gideon”—in other words, to create a mandate for legal representation of the poor in civil lawsuits. For example, the American Bar Association’s House of Delegates passed in 2006 a resolution backing the concept of “civil Gideon”: RESOLVED, That the American Bar Associa- tion urges state, territorial and federal jurisdic- tions to provide counsel as a matter of right at public expense to low-income persons in those categories of adversarial proceedings where basic human needs are at stake, such as those involving shelter, sustenance, safety, health or child custody, as determined by each jurisdic- tion.d (American Bar Association, 2006) Because the combined resources of the civil legal services community are very limited, services are approved on the basis of financial need, meaning that only those individuals with very low incomes receive assistance. Indeed, reports on the legal aid community routinely describe situations in which 80% of civil legal needs for low-income families were not being met, and legal services programs typically turn away over half of 146 Chapter 7 Social Determinants of Health and the Role of Law in Optimizing Health the low-income individuals that seek assistance. Con- gress is most to blame for legal aid’s financial predic- ament; it provides the vast majority of the budget for the Legal Services Corporation (LSC), a not-for-profit corporation established by federal law in 1974 as the single largest funder of civil legal aid for low-income Americans. Considering LSC’s annual appropriations from Congress in constant 2015 dollars, its appro- priation in 1976 was approximately $386 million; in 2015, its appropriation was $375 million (Legal Ser- vices Corporation, 2015).e So even as need has soared over time—the U.S. Census Bureau’s 2012 statistics on poverty show that over 63 million Americans could qualify for civil legal assistance funded by LSC—the key element of legal aid funding has been treated as an afterthought (Legal Services Corporation, 2018). The link between civil legal assistance and indi- vidual and population health is exemplified by a study of the civil justice experiences of the American public, called the Community Needs and Services Study (San- defur, 2014). The study uncovers widespread incidence of events and situations that have civil legal aspects and for which people receive no formal or expert legal assistance: fully two-thirds of a random sample of adults in a middle-sized American city reported experiencing at least one of 12 different categories of civil justice situations in the previous 18 months (the average number of situations reported was 3.3, and poor people, African Americans, and Hispanics were more likely to report civil justice situations than were middle- or high-income earners and white peo- ple). Unsurprisingly, the most commonly reported situations concerned problems with employment, finances and government benefits, health insurance, and housing. Importantly, respondents indicated that almost half of the civil justice situations they experi- enced resulted in a significant negative consequence such as feelings of fear, a loss of confidence, damage to physical or mental health, or verbal or physical vio- lence or threats of violence. In fact, adverse impacts on health were the most common negative consequence, reported for 27% of situations. Also important is the fact many of those who responded indicated that they didn’t even know that the problems they were experi- encing were rightly considered “legal” in nature. For all of the reasons just discussed—the lack of a right to needed civil legal services, the misunder- standings among those most in need, and the lack of resources in the civil legal aid community—it is paramount that the nation develop and implement innovative, upstream approaches to addressing social conditions that harm health. One such innovation that has taken root is medical-legal partnership. ▸ Combating Health-Harming Social Conditions Through Medical-Legal Partnershipf “Do you have any concerns about your housing con- ditions? Are you concerned about having enough food to eat? Is your child receiving proper supports at school? Do you feel safe at home?” These types of ques- tions are asked of low-income patients with regularity, and their medical care providers know well that the answers speak volumes about patients’ health. When the answers come back, however, healthcare providers are too often powerless to do as much as they would like to help remedy these “life circumstances.” Training doctors, nurses, and allied health pro- fessionals to reframe these circumstances can help. By now, you probably recognize many of these types of determinants of health for what they are: social condi- tions whose improvement would benefit from civil legal assistance. Yet despite the connection between poverty, health, and legal needs, and despite the fact that health- care and civil legal aid professionals commonly provide services to overlapping vulnerable populations, the professions too infrequently attempt to address their populations’ needs in a coordinated fashion. Medical-legal partnership (MLP) aims to bridge this divide. At a practical level, MLPs function as a patient care team that includes both medical and legal professionals; a legal services attorney is liter- ally embedded in a medical care setting (e.g., a hos- pital, community health center) to address underlying social conditions that negatively affect patient health but whose remediation is outside the expertise of tra- ditional healthcare providers. At a more fundamental level, the goal of the MLP movement is to help cre- ate an interconnected care system that focuses on the whole patient (rather than just on biology and behav- ior), including the ways in which myriad social con- ditions factor into individual and population health. Thus, the work of MLP lawyers is quite different from BOX 7-5 Discussion Questions What do you think about the differences that exist between rights that attach in the area of criminal legal representation versus those that exist in the realm of civil legal assistance? Does it seem fair to you? Why or why not? Even if you believe it is fair, do you think all individuals should have access to at least a baseline level of civil legal assistance? 147Combating Health-Harming Social Conditions Through Medical-Legal Partnership that of a general counsel or compliance officer who normally inhabits hospitals and clinics: a general counsel typically provides legal advice to clinicians on matters of medical liability and informed consent and represents them in insurance and disciplinary matters; corporate compliance officers ensure that the facility meets all governmental, environmental, and licensing regulations. The Evolution of an “Upstream” Innovation The modern MLP movement has its roots in the late 1960s, when visionary physicians H. Jack Geiger and Count Gibson were funded by the federal government to form the nation’s first community health centers in Mississippi and Massachusetts. The government’s community health center program grew out of the civil rights movement, when the federal Office of Economic Opportunity (the agency created to administer many of President Lyndon Johnson’s War on Poverty programs, and whose programs continue in large part to this day under the auspices of the U.S. Department of Health and Human Services) established “neighborhood health centers” to provide health and social services to medically underserved populations. In designing the earliest centers, Drs. Geiger and Gibson recognized the importance of spending some of their federal funding on lawyers, who assisted African American health cen- ter patients battling housing discrimination. The second prominent instance of the blending of medical and legal services for low-income populations occurred in the early 1980s when, faced with devastat- ing death tolls from HIV/AIDS, some health clinics began providing on-site legal assistance to patients who needed to quickly grapple with end-of-life issues (e.g., medical decision making, asset distribution, family and custody matters). A few pioneering clinics held on to this blended model even after the national AIDS crisis abated, offering comprehensive legal ser- vices to all patients in need. Building on these examples, the first formal MLP was created in the early 1990s in a Boston hospital to intervene on behalf of pediatric patients with chronic conditions who were suffering the consequences of inadequate housing. From that point through 2006, MLPs sprouted up a few at a time, mainly in pediatric healthcare settings, where the model had proven effec- tive in Boston. Since 2006, however, use of the MLP model has expanded considerably. Fueled by the cre- ation of the National Center for Medical-Legal Part- nership (NCMLP), the focus by social scientists on the importance of social factors in determining health, and the ACA’s focus on disease prevention and professional collaboration, MLP is now practiced in 46  states by more than 300 hospitals and health centers, in settings as diverse as veteran care facilities, American Indian reservations, and correction facilities (National Center for Medical-Legal Partnership, 2018). Under the MLP model, public interest lawyers work with healthcare workers to screen for health-related legal problems, often encompassing family matters (divorce, domestic violence), housing problems (eviction, hab- itability, utility advocacy), special education advocacy, immigration issues, disability issues, employment instability, receipt of public benefits (health insurance, Supplemental Security income), food security con- cerns, and additional problems that can lead to stress or injury or that can exacerbate existing health problems. FIGURE 7-1 lays out the key types of patient problems that make up the practice of a typical, comprehensive MLP, using the mnemonic “I-HELP”: Income, Housing and utilities, Education and employment, Legal status, and Personal and family stability (Marple, 2015). The MLP approach is built on the understanding not only that many SDH require legal interventions, but that moving “upstream” to assist vulnerable populations with legal needs is preferable to waiting until a legal cri- sis erupts (for example, remediating a housing problem prior to the receipt of an eviction notice). It is similar to preventive health care: it is often more cost effective— and of course more beneficial to the patient, both physi- cally and emotionally—to help a patient remain healthy, rather than treat the patient post-illness. At MLPs, healthcare and legal professionals are trained side by side about the intersection of health and legal needs and ways to screen for health-harming legal needs. Because MLPs recognize that social determinants contributing to poor health require both health system and public pol- icy change, MLP lawyers utilize on-site legal assistance provided to patients to identify patterns of systemic need, transform institutional practices, and advocate for improved population health policies. FIGURE 7-2 portrays this upstream MLP approach. Similar to the movement to integrate behavioral healthcare services into primary care, the integration of civil legal aid with healthcare delivery can improve access to services, build team capacity, and promote patient-centered care. MLPs have become more integrated over time, with healthcare and legal partners sharing patient and institutional data, jointly developing service and training priorities, and establishing cross-sector communication processes. The more collaboration and integration that occurs, the more likely it is that upstream detection of the social conditions that lead to poor health can occur. Deep collaboration and integration also present an opportunity for healthcare 148 Chapter 7 Social Determinants of Health and the Role of Law in Optimizing Health providers and lawyers—two learned professions that, historically, have not been the closest of colleagues— to work together when policymakers design fixes for health-harming social and legal problems. The Benefits of MLPs Due to the relatively recent growth of MLPs, the effects of the MLP model have not been regularly tested in for- mal, large-scale studies. However, several small-scale studies have been conducted (Beeson, McAllister, & Regenstein, 2013; Martinez et al., 2017) and offer pre- liminary evidence of the benefits of the model in three areas: impact on patient health and well- being, finan- cial impact on partners and patients, and impact on knowledge and training of health providers. A handful of studies make the case for MLPs by demonstrating the positive impact they can have on patient health and well-being. One such study, focused on home visit/nurse-based interventions for Housing & Utilities Education & Employment Legal Status Income $ $$ Personal & Family Stability 1. Less violence at home means less need for costly emergency healthcare services. 2. Stable family relationship signi�cantly reduce stress and allow for better decision-making, including decisions related to health care. 1. Clearing a person’s criminal history or helping a veteran change their discharge status helps make consistent employment and access to public bene�ts possible. 2. Consistent employment provides money for food and safe housing, which helps people avoid costly emergency healthcare services. 1. A quality education is the single greatest predicator of a person’s adult health. 2. Consistent employment helps provide money for food and safe housing, which also helps avoid costly emergency healthcare services. 3. Access to health insurance is often linked to employment. 1. A stable, decent, affordable home helps a person avoid costly emergency room visits related to homelessness. 2. Consistent housing, heat and electricity helps people follow their medical treatment plans. 1. Increasing someone’s income means s/he makes fewer trade-offs between affording food and health care, including medications. 2. Being able to afford enough healthy food helps people manage chronic diseases and helps children grow and develop. Education & Employment Units: Secure specialized education services; Prevent and remedy employment discrimination and enforce workplace rights Bene�ts Unit: Appeal denials of food stamps, health insurance, cash bene�ts, and disability bene�ts Housing Unit: Secure housing subsidies; Improve substandard conditions; Prevent eviction; Protect against utility shut-off Family Law Unit: Secure restraining order for do- mestic violence; Secure adoption, custody and guardianship for children Veterans & Immigration Units: Resolve veteran discharge status; Clear criminal/credit histories; Assist with asylum applications Civil Legal Aid Interventions That Help Availability of resource to meet daily basic needs Access to the opportunity to learn and work Healthy physical environments Access to the opportunity to work Expose to violence Common Social Determinant of Health Impact of Civil Legal Aid Intervention on Health /Health Care I-HELP ® Issue JOB FIGURE 7-1 Framing Legal Care as Health Care Source: Reproduced from: Marple, K. Framing Legal Care as Health Care. National Center for Medical-Legal Partnership. http://medical-legalpartnership.org/new-messaging-guide-helps-frame-legal-care-health-care/. Published January 21, 2015. Accessed August 27, 2015. Train & Identify Need Treat Patients with direct legal assistance Transform Clinic Practice through enhanced screening, toolkits, and EHR template letters Improve Population Health through joint policy advocacy FIGURE 7-2 The Medical-Legal Partnership Approach to the Social Determinants of Health Source: Reproduced from: The MLP Approach to the Social Determinants of Health. National Center for Medical-Legal Partnership. 2013. http://medical-legalpartnership.org/new-messaging-guide-helps-frame-legal-care-health-care/ Conclusion 149 prenatal and postpartum patients, demonstrated bet- ter prenatal health behaviors, better pregnancy out- comes, lower rates of child abuse and neglect, and higher rates of maternal employment among partic- ipants as a result of MLP services (Williams, Costa, Odunlami, & Mohammed, 2008). A second study found a 91% reduction in emergency department visits and hospital admissions of inner-city asthmatic adults after a medical-legal intervention. In the same study, over 91% of patients also dropped two or more classes in asthma severity (O’Sullivan et al., 2012). Another study focused on cancer patients in an MLP showed a reduction in stress for 75% of the patients, an increase in treatment adherence for 30% of them, and greater ease in keeping appointments for 25% of patients (Fleishman, Retkin, Brandfield, & Braun, 2006). Yet another study showed that by redressing complex social issues through legal advocacy, patients experienced less stress, improved access to preventive health care, and a greater feeling of general well-being (Wang, Conroy, & Zuckerman, 2009). Several MLP studies have focused on the financial benefits of the model—in other words, on the “return on investment” that accrues to institutions that invest in an MLP. One such study found that an MLP tar- geting the needs of cancer patients generated nearly $1 million by resolving previously denied health insur- ance benefit claims (Rodabaugh, Hammond, Myszka, & Sandel, 2013). Similarly, a separate study highlighted four MLP programs, each of which demonstrated suc- cessful recovery of previously unreimbursed funds as a result of improperly denied Medicaid or Social Security Disability claims (Knight, 2008). More strik- ing still is evidence of the financial impact that MLPs could have on patients: an MLP in Illinois helped to relieve $4 million in patients’ healthcare debt, and claimed $2 million in additional awarded Social Secu- rity benefits for patients (Teufel et al., 2012). Finally, multiple articles have addressed how MLPs can benefit practitioners and patients alike through interdisciplinary training and education. One article, focused on strategies for teaching cultural compe- tence, interdisciplinary practice, and holistic problem solving in legal and medical curricula, describes a legal clinic that increased knowledge about avenues of legal assistance among doctors and of the clinical impact of SDH among lawyers (Tobin-Tyler, 2008). A sec- ond paper describes how medical residents working in clinics with social/legal resources were more con- fident in their knowledge regarding public benefits, and how these same residents were more likely than residents without these resources to ask patients about their social history, use of public benefits, and hous- ing situation (O’Toole, Burkhardt, Solan, Vaughn, & Klein, 2012). Finally, medical residents who had social work or MLP resources on-site were more confident regarding their personal knowledge of SDH, and as a result were found to screen for them more frequently than other residents (O’Toole et al., 2012). ▸ Conclusion Recall from the start of this chapter the concept of health equity—essentially, an environment in which all people have an equal opportunity to attain their full health potential. While the nation is far from achiev- ing a state of health equity, it should be everyone’s goal to orient society in this direction, even if incremen- tally. More evidence of whether this is in fact the case will come in a few years, when it will be clearer as to whether most Americans accept the ACA’s main goals as ones worth striving for. (Note one final time the law’s role as social determinant of health: should the ACA achieve near-complete implementation—and public acceptance along the lines of, say, the Medicare program—the nation, in our view, will be healthier than if the ACA continues to be subjected to politi- cal and legal attacks, and to implementation battles in more than a dozen states.) Whether the nation strives for full health equity aggressively or half-heartedly, there is little doubt that increasing our collective focus on the link between social factors and health would benefit millions of individuals and, in turn, the public more generally. Considering that American children, in particular, experience a high prevalence of social conditions that compromise their care and development— including insufficient family income to meet basic living needs, food insecurity, unstable housing, environmental toxins, and a lack of high-quality child care—this type of reorientation is nothing less than a moral imperative (Miller, Sadegh-Nobari, & Lillie-Blanton, 2011). One facet of this transformation is reframing civil legal services for vulnerable populations as a critical component of health care. Civil legal aid, after all, is first and foremost about promoting the enforce- ment of existing laws that protect vulnerable popu- lations (Houseman, 2015). If health is at the core of well-being for all people, then reducing barriers to good health should be an obvious societal goal, and for low-income and other vulnerable populations this means reducing the health-harming effects of social conditions that they struggle with disproportionately. To address this inequality, the civil legal community should closely align its activities and priorities with healthcare and public health partners. 150 Chapter 7 Social Determinants of Health and the Role of Law in Optimizing Health References American Bar Association. (2006). Recommendation. Retrieved from http://www.americanbar.org/content/dam /ab a/administ rat ive/lega l_aid_indigent_defendants/ls _sclaid_06A112A.authcheckdam Bachrach, D. (2014). Addressing patients’ social needs: An emerging business case for provider investment. Retrieved from http://www.commonwealthfund.org/publications/fund -reports/2014/may/addressing-patients-social-needs Beeson, T., McAllister, B., & Regenstein, M. 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For a full account of the Tuskegee Study, see Jones, 1993. b. According to the World Justice Project, a not- for-profit group promoting the rule of law, the United States ranks 66th out of 98 countries in the access to and affordability of civil legal ser- vices (Bronner, 2013). c. For more information, see, for example, U.S. Department of Justice, n.d. d. See American Bar Association (2006) for the resolution and an accompanying report on achieving equal justice in the United States. e. Note that LSC’s heyday was back in the late 1970s and early 1980s, when their budget topped $800 million dollars in 2015 terms. f. In the interest of disclosure, Professor Teitelbaum is co-principal investigator of the National Cen- ter for Medical-Legal Partnership at The George Washington University’s Milken Institute School of Public Health. For more information about medical-legal partnership and the National Cen- ter, visit http://www. medical-legalpartnership.org/ National Partnership for Action to End Health Disparities. (n.d.). Home page. Retrieved from http://minorityhealth.hhs.gov/npa/ O’ Sullivan, M. M., Brandfield, J., Hoskote, S. S., Segal, S. N., Chug, L., Modrykamien, A., & Eden, E. (2012). Environmental improvements brought by the legal interventions in the homes of poorly-controlled inner-city adult asthmatic patients: A proof-of-concept study. Journal of Asthma, 49(9), 911–917. O’Toole, J. K., Burkhardt, M. C., Solan, L. G., Vaughn, L., & Klein, M. D. (2012). Resident confidence addressing social history: Is it influenced by availability of social and legal resources? Clinical Pediatrics, 51(7), 625–631. Perlman, J., & Parvensky, J. (2006). Denver housing first collab- orative cost benefit analysis and program outcomes report. Retrieved from http://shnny.org/uploads/Supportive_Housing _in_Denver Powell, L. 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Breaking the cycle of “unequal treatment” with health care reform: Acknowledging and addressing the continuation of racial bias. Connecticut Law Review, 44(4), 1281–1324. http://minorityhealth.hhs.gov/npa/O� http://shnny.org/uploads/Supportive_Housing_in_Denver http://shnny.org/uploads/Supportive_Housing_in_Denver http://www.americanbarfoundation.org/uploads/cms/documents/sandefur_accessing_justice_in_the_contemporary_usa._aug._2014 http://www.americanbarfoundation.org/uploads/cms/documents/sandefur_accessing_justice_in_the_contemporary_usa._aug._2014 http://www.americanbarfoundation.org/uploads/cms/documents/sandefur_accessing_justice_in_the_contemporary_usa._aug._2014 http://www.ers.usda.gov/data/fooddesert http://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-health http://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-health http://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-health https://www.justice.gov/archives/atj http://www.who.int/social_determinants/sdh_definition/en/ http://www.who.int/social_determinants/sdh_definition/en/ http://www.medical-legalpartnership.org/ © Mary Terriberry/Shutterstock CHAPTER 8 Understanding Health Insurance LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Understand the role of risk and uncertainty in insurance ■ Define the basic elements of health insurance ■ Differentiate various insurance products ■ Discuss incentives created for providers and patients in various types of insurance arrangements ■ Discuss health policy issues relating to health insurance ▸ Introduction Unlike many other countries, the United States does not have a national healthcare deliv-ery system; whether individuals have access to healthcare services—and whether they receive health care of appropriate quantity and quality—often depends on whether they are insured. Even if an indi- vidual is insured, the kind of coverage he or she has can affect his or her ability to obtain care. Understand- ing health insurance, however, requires more than understanding its importance to healthcare access. Policymakers must also know how providers, sup- pliers, employers, states, and others respond to changes in the health insurance market. For example, if policy- makers decide to reduce the number of uninsured by creating a new state health insurance exchange (essen- tially, an online marketplace) for the sale and purchase of private insurance coverage (as happened under the ACA), they must know whether providers will partic- ipate in the program and what features will make it more or less attractive to providers. Or, if policymak- ers want to reduce the number of uninsured by man- dating that employers offer health insurance (as also happened under the ACA), they must know which requirements will make it more or less likely that more employees will be covered under such a mandate. In either case, policymakers might also want to know whether an initiative will affect the financial viability of public hospitals or health centers. Several themes emerge when considering these types of health-insurance–related policy questions. First, insurance is rooted in the concepts of uncertainty and risk; reducing uncertainty and risk by, for exam- ple, offering a health insurance product, participating as a provider in a health insurance plan, or purchasing health insurance coverage as a consumer creates vari- ous incentives for insurers, the insured, providers, and 153 governments to act or refrain from acting in certain ways. As noted in BOX 8-1, one goal of the ACA is to reduce the risk of insuring small businesses and indi- viduals by creating a large purchasing pool through state health insurance exchanges (Patient Protection and Affordable Care Act [ACA], 2010). Second, to a large extent, insurance carriers choose the design of their health insurance products, and employers and individuals choose whether to purchase health insurance—and, if so, what type. Indeed, insurance carriers have had wide latitude to determine the indi- viduals or groups that may join a plan, employers have had broad discretion to determine whether to offer coverage and what type to offer, and individuals have had the choice whether to purchase health insurance coverage, although this choice was often illusory due to the high cost of health care. The ACA attempts to change these choices and incentives. For example, many insurance plans will have to meet new require- ments, such as offering a package of “essential health benefits”; most employers will have to provide health insurance coverage or pay a penalty; and most indi- viduals will have to purchase health insurance or pay a penalty. For each choice, the question is: What policy goal (e.g., equity, universal coverage, fiscal restraint, market efficiency) should drive the design and regu- lation of health insurance? This chapter begins with a short history of health insurance in the United States and then reviews the health insurance concepts key to understanding the structure and operation of health insurance. It con- cludes with an overview of managed care, a particular form of health insurance dominant in today’s market. ▸ A Brief History of the Rise of Health Insurance in the United States Although about 88% of people in this country were insured in 2017, health insurance was not always an integral part of our society (Auter, 2018). The initial movement to bring health insurance to the United States was modeled after activities in Europe. In the late 1800s and early 1900s, the European social insur- ance movement resulted in the creation of “sickness” insurance throughout many countries: Germany in 1883, Austria in 1888, Hungary in 1891, Britain in 1911, and Russia in 1912, to name just a few exam- ples. These programs varied in scope and structure, from a compulsory national system in Germany, to industry-based requirements in France and Italy, to extensive state aid in Sweden and Switzerland. Although the Socialist and Progressive parties advo- cated for the adoption of similar social insurance systems in the United States in the early 1900s, their efforts were unsuccessful (Starr, 1982). In the absence of government-sponsored health insurance plans, the private sector insurance industry flourished with the growth of Blue Cross, Blue Shield, and commercial insurance carriers. Blue Cross estab- lished its first hospital insurance plan at Baylor Uni- versity in 1929 by agreeing to provide 1,500 teachers with 21 days of hospital care per year for the price of $6 per person (Starr, 1982, p. 295). The hospital BOX 8-1 Vignette William owns a small business that sells all kinds of wheels and gears. He has nine employees and has always made it a priority to offer competitive benefits, including health insurance. Unfortunately, last year one of his employees was diagnosed with cancer, which he continues to fight. Due to the sharp increase in use of health services by his employee group, the insurance company doubled his group premiums for the upcoming year. When William contacted other carriers, several of them would not consider insuring his group, and most of the others gave him quotes as expensive as his current carrier. One company gave him a lower quote, but it covered only catastrophic care; his employees would have to pay for the first $5,000 of care out of their own pockets. After reviewing his company’s finances, William is left with several unattractive options: stop offering health insurance; offer comprehensive health insurance but pass on the cost increase to his employees, which would make it unaffordable for most of them; offer the bare-bones catastrophic plan only; or significantly lower wages and other benefits to defray the rising health insurance costs. In addition to wanting to offer competitive benefits, William is concerned that adopting any of these options will cause his employees to leave and make it hard to attract others, threatening the sustainability of his company. The 2010 health reform law, the Patient Protection and Affordable Care Act (ACA), attempts to help small businesses like William’s by creating state health insurance exchanges. Starting in 2014, these exchanges were intended to offer a variety of plans to individuals and small businesses that otherwise might not be able to afford health insurance coverage. By creating large groups of purchasers through the exchanges, it is possible to pool risk and keep prices lower than if individuals or small businesses were attempting to purchase insurance coverage on their own. 154 Chapter 8 Understanding Health Insurance industry supported the growth of private insurance as a way to secure payment for services during the Depression. Blue Shield, the physician-based insur- ance plan, began in 1939 as a way to forestall renewed efforts to enact compulsory national health insurance and to avoid growth in consumer-controlled prepaid health plans, both of which would have reduced the type of physician autonomy endemic at that time (Starr, 1982, p. 307). World War II led to rapid growth in employer- sponsored health insurance. With employees scarce and a general wage freeze in effect, a 1942 War Labor Board ruling that employee fringe benefits of up to 5% of wages did not violate the wage freeze created a strong incentive for employers to provide health bene- fits to attract new workers and keep their current ones. After the war, labor unions gained the right to bargain collectively, leading to another expansion of employee health plans. In 1954, the Internal Revenue Service declared that employers could pay health insurance premiums for their employees with pre-tax dollars, further increasing the value of the fringe benefit to employers.a By 1949, 28 million people had commer- cial hospital insurance, 22 million had commercial physician insurance, and 4 million had independent hospital plans. At that time, over 31 million had Blue Cross hospital coverage and 12  million had Blue Shield coverage (Starr, 1982, p. 327). Employer-sponsored health insurance, not national health insurance, was well on its way to becoming entrenched as the primary form of health insurance. The federal government first became a major player in health insurance with the passage of Med- icaid and Medicare in 1965. These programs were created, in part, to fill in coverage gaps left by the private insurance market—namely, coverage for the elderly, disabled, and low-income populations who had too little income and too high health risks to be viable candidates for insurance coverage from the insurance carriers’ point of view. Like many major policy changes, the passage of these programs was a multilayered compromise. Before the final design of these programs was established, several proposals were considered: the American Medical Association (AMA) supported a combination federal–state pro- gram to subsidize private insurance policies for older adults to cover hospital care, physician care, and pre- scription drugs; Representative John Byrnes (R-WI), ranking Republican on the House Ways and Means Committee, endorsed an AMA-like proposal but with federal, instead of federal–state, administration; the Johnson administration supported hospital insurance for older adults through Social Security; and Senator Jacob Javitz (R-NY) supported federal payments to state programs to provide health care to poor, elderly individuals (Stevens & Stevens, 2003, pp. 46–48). In the end, the Medicare and Medicaid programs were passed in one bill with features from all of these pro- posals. For example, Medicare was established as a federally funded program with two parts, one for hos- pital insurance and one for physician insurance, and Medicaid as a state–federal program for the poor. By the 1970s a number of factors converged to place rising healthcare costs on the national agenda: advances had been made in medical technology, hos- pitals expanded and became more involved in high- tech care, physician specialties became more common, hospitals and physicians had a large new pool of pay- ing patients due to Medicaid and Medicare, wages for medical staff increased, and an aging population required an increasing amount of services (Starr, 1982, pp. 383–384). In addition, the prevailing fee-for- service (FFS) insurance system rewarded healthcare professionals for providing a high quantity of services. As the name suggests, fee-for-service reimbursement means the providers are paid for each service they provide—the more services (and the more expensive the services) rendered, the more reimbursement the provider receives. From 1960 to 1970, hospital care expenditures tripled from $9.3 billion to $28 billion, and physician service expenditures almost matched that growth rate, increasing from $5.3 billion to $13.6 billion (Sultz & Young, 2001, pp. 257–258). Federal and state governments were also feeling the burden of high healthcare costs. From 1965 to 1970, federal and state governments collectively experienced a 21% annual rate of increase in their healthcare expendi- tures (Starr, 1982, p. 384). BOX 8-2 Discussion Questions Most people in this country obtain health insurance through employer-sponsored plans. Although the historical background you just read explains how this system came about, it does not discuss whether it is a good or bad thing. Is our reliance on employer- sponsored health insurance ideal for individuals? Providers? Employers? Society? What are the benefits and drawbacks to having employers as the primary source of health insurance? How different are the benefits and drawbacks when considered from various stakeholder perspectives? Would it be better to have more federal government involvement in providing health insurance? What primary policy goal would you use to decide how to answer these questions? A Brief History of the Rise of Health Insurance in the United States 155 As is discussed in more detail later in this chap- ter, managed care moves away from the FFS sys- tem by integrating the payment for services and the delivery of services into one place in an attempt to rein in healthcare costs and utilization. The federal Health Maintenance Organization Act of 1973 was intended to spur the growth of managed care by pro- viding incentives to increase the use of health main- tenance organizations (HMOs). The act relied on federal loans and grants and a mandate that employ- ers with 25 or more employees offer an HMO option if one was available in their area (Sultz & Young, 2001, pp. 262–263). Even so, managed care did not flourish due to opposition by patients who did not want their provider and service choices restricted, and by providers who did not want to lose control over their practices. As healthcare cost and quality concerns remained a national priority, the managed care industry eventu- ally found a foothold in the health insurance market. Indeed, enrollment in managed care doubled during the 1990s, with almost 80 million enrollees by 1998. In 2017, only 1% of workers were in conventional, non-managed-care arrangements (Kaiser Family Foundation [KFF], 2017). Although only about 33% of Medicare enrollees choose managed care arrange- ments (Jacobson, Damico, & Neuman, 2017), some 65% of Medicaid beneficiaries receive some or all of their services through managed care, though for many of them it is mandatory that they receive ser- vices through a managed care arrangement (Rudowitz & Garfield, 2018). ▸ How Health Insurance Operates This section provides an overview of the purpose and structure of health insurance. It begins with a review of basic health insurance terminology, considers the role of uncertainty and risk in insurance, and con- cludes with a discussion of how insurance companies set their premium rates. Basic Terminology As you read earlier, the health insurance industry first developed when the FFS system was standard. Under this system, not only do providers have incen- tive to conduct more and more expensive services, but patients are unbridled in their use of the health- care system because FFS does not limit the use of ser- vices or accessibility to providers. As we will discuss later in this chapter, managed care developed as a response to the incentives created by the FFS system. However, even though there are numerous differ- ences between FFS and managed care, many of the fundamental principles of how insurance operates are applicable to any type of health insurance con- tract. The following discussion reviews how health insurance works generally, regardless of the type of insurance arrangement. The health insurance consumer (also known as the beneficiary or insured) buys health insurance in advance for an annual fee, usually paid in monthly installments, called a premium. In return, the health insurance carrier (or company) pays for all or part of the beneficiary’s healthcare costs if she or he becomes ill or injured and has a covered medical need. (A cov- ered need is a medical good or service that the insurer is obligated to pay for because it is covered based on the terms of the insurance contract or policy. As dis- cussed in detail elsewhere, the ACA requires many plans to cover all “essential health benefits.”) Insurance contracts cannot identify every conceivable healthcare need of beneficiaries, so they are generally structured to include categories of care (e.g., outpatient, inpatient, vision, maternity) to be provided if deemed medically necessary. Definitions of the term medically necessary vary by contract and are important when determining whether a procedure is covered. Even if the beneficiary never needs healthcare ser- vices covered by the insurance policy, he or she still pays for the policy through premiums. The consumer benefits by having financial security in case of illness or injury, and the insurance company benefits by mak- ing money selling health insurance. In addition to premiums, the beneficiary typically pays other costs under most health insurance policies. Many policies have deductibles, which is the amount of money the beneficiary must pay on his or her own for healthcare needs each year before the insurance carrier starts to help with the costs. For example, if a policyholder has a $500 deductible, the beneficiary must pay 100% of the first $500 of healthcare costs each year. The insurance carrier is not liable to cover any costs until the individual’s healthcare bill reaches $501 in a given year. If the individual does not need more than $500 worth of health care in a specific year, the insurance carrier generally will not help that indi- vidual pay his or her healthcare costs. Furthermore, a beneficiary generally contin- ues to incur some costs in addition to the premiums even after the deductible has been met. Insurance carriers often impose cost sharing on the beneficiary through co-payment or co-insurance requirements. 156 Chapter 8 Understanding Health Insurance A co-payment is a set dollar amount the beneficiary pays when receiving a service from a provider. For example, many HMOs charge their beneficiaries $15 every time a beneficiary sees a primary care provider. Co-insurance refers to a percentage of the healthcare cost the individual must cover. For example, 20% is a common co-insurance amount. This arrangement means the beneficiary pays 20% of all healthcare costs after the deductible has been met, with the insurance carrier paying the other 80%. Uncertainty From a traditional economic perspective, insurance exists because of two basic concepts—risk and uncer- tainty. The world is full of risks—auto theft, house fires, physical disabilities—and uncertainty about whether any such events might affect a particular individual. As a result, people buy various forms of insurance (e.g., automobile insurance, home insurance, life or disability insurance) to protect themselves and their families against the financial consequences of these unfortunate and unforeseen events. Although genetic predisposition or behavioral choices such as smoking or working a high-risk job may increase the chances that an individual will suf- fer from a health-related problem, in general there is a high level of uncertainty as to whether a particular person will become sick or injured and need medical assistance. Health insurance protects the consumer from medical costs associated with both expensive and unforeseen events. Even if the consumer does not experience a negative event, a benefit exists from the peace of mind and reduced uncertainty of financial exposure that insurance provides. In terms of health status and wise use of resources, when insurance allows consumers to purchase nec- essary services they would not otherwise be able to afford, it functions in a positive manner. Conversely, when insurance leads consumers to purchase unnec- essary healthcare goods or services of low value because the consumer is not paying full cost, it works in a negative manner. The difficult task is trying to fig- ure out how to set the consumer’s share of the burden at just the right point to encourage and make avail- able the proper use of health care, while discouraging improper usage. BOX 8-3 Discussion Questions As a general matter, all types of insurance under traditional economic models cover expensive and unforeseen events, not events that have small financial risk or little uncertainty (Council of Economic Advisors, 2004, p. 195). For example, auto insurance does not cover regular maintenance such as an oil change, and home insurance does not protect against normal wear and tear, such as the need to replace an old carpet. Accordingly, many economists argue that health insurance should not cover regular, foreseeable events such as physical exams or low-cost occurrences such as vaccinations. Other economists support a different school of thought. An alternative economic view is that health insurance should insure one’s health, not just offer protection against the financial consequences of major adverse health events. Because people without health insurance are less likely to obtain preventive care such as physical exams or vaccinations, these economists believe it is in everyone’s best interest, ethically and financially, to promote preventive care. Therefore, it is appropriate for insurance to cover both unpredictable and expensive events as well as predictable and less expensive events. Which theory do you support? What do you think is the best use of insurance? If insurance does not cover low-cost and predictable events, should another resource be available to assist individuals, or should people pay out of their own pockets for these healthcare needs? BOX 8-4 Discussion Questions As discussed earlier, risk and uncertainty are important concepts in health insurance. Individuals purchase health insurance policies to protect themselves financially against healthcare costs, and insurance carriers try to set premiums that will cover the cost of the services used by their beneficiaries. Currently (when allowed by law), insurance carriers may consider factors such as medical history, demographics, type of occupation, size of the beneficiary pool, and similar criteria when setting the terms of an insurance policy. Should health insurance carriers also have access to and be able to use genetic testing results when deciding whether to insure an individual, what premiums to charge, or which services to cover? If you think the answer to that question should be “no,” why is genetic information different from all of the other kinds of information insurance carriers may take into account when making those decisions? Conversely, what is the strongest argument you can make in favor of allowing insurance carriers to consider an applicant’s genetic information? How would allowing genetic testing alter an individual’s or a provider’s diagnosis and treatment decisions? What is the primary policy goal that affects your view? How Health Insurance Operates 157 Risk Risk is a central concern in insurance. Consumers buy insurance to protect themselves against the risk of unforeseen and costly events. But health insurers are also concerned about risk—the risk that their benefi- ciaries will experience a covered medical event. Individuals purchase health insurance to protect themselves against the risk of financial consequences of healthcare needs. Because of differences in risk level, individuals who are generally healthy or otherwise do not anticipate having health expenses may place a lower value on insurance than individuals who are unhealthy or those who are healthy but expect to have medical expenses, such as pregnant women. Therefore, healthy individuals tend to seek out lower-cost insurance plans or refrain from obtaining insurance altogether if it is not, in their view, cost effective. Unhealthy individu- als or healthy individuals who often use the healthcare system would obviously prefer a low-cost insurance plan (with comprehensive benefits) but are generally more willing to pay higher premiums because of the value they place on having insurance. Health insurance carriers are businesses that need to cover their expenditures, including the cost of accessing capital needed to run their company, to stay in the market.b They earn money by collecting premi- ums from their beneficiaries, and they pay out money to cover their beneficiaries’ healthcare costs above the deductible amount and to cover the costs of running a business (e.g., overhead, marketing, taxes). One way health insurance companies survive is to make sure the premiums charged to beneficiaries cover these costs. From the insurance carrier’s perspective, it would be ideal to be able to charge lower premiums to attract healthy individuals who are less likely to use their ben- efits, and higher premiums to unhealthy individuals who are more likely to need medical care. However, insurance companies have difficulty matching healthy people with low-cost plans and unhealthy people with high-cost plans because of the problem of asymmetric information. This is the term used by economists when one party to a transaction has more information than the other party. In the case of insurance, the imbalance often favors the consumer because insurance carriers generally do not know as much as the individual does about the individu- al’s healthcare needs and personal habits. Although relatively healthy low-cost individuals want to make their status known because insurance carriers might be willing to sell them an insurance product for a lower price, relatively unhealthy individuals do not want their status known because insurance companies might charge them higher premiums. For this reason, when an insurance carrier lacks complete informa- tion, it is more beneficial to unhealthy beneficiaries than to healthy ones. Together, uncertainty about risk and the pres- ence of asymmetric information lead to the problem of adverse selection. In terms of health insurance, adverse selection is when unhealthy people overse- lect (that is, select beyond a random distribution) a particular plan. This occurs because people at risk for having high healthcare costs choose a particular plan because of that plan’s attractive coverage rules (Pen- ner, 2004, pp. 12–13). The consumer who knows he is a high risk for needing services will be more likely to choose a more comprehensive plan because it cov- ers more services, even though it is probably a more expensive option. This overselection leaves the insurer that offers the comprehensive plan with a dispropor- tionate number of high-risk beneficiaries. As a result of the relatively high-risk pool, beneficiaries will have high service utilization rates, requiring the insurance carrier to raise premiums to pay for the increased cost of covering services for beneficiaries. In turn, some of the healthier individuals might choose to leave the plan because of the higher premiums, resulting in an even riskier beneficiary pool and even higher premi- ums, and the cycle continues. The healthier consumers may find a lower-cost plan or may choose to go with- out health insurance (especially since the Tax Cut and Jobs Act of 2017 repealed, as of 2019, the penalty asso- ciated with violating the ACA’s individual mandate, as described in more detail in a subsequent chapter), while the insurance plan is left with an increasingly higher percentage of relatively unhealthy people. This is the problem of adverse selection. One instance where adverse selection is a key concern is with an increasingly popular type of health plan, the high-deductible health plan (HDHP). As the name suggests, these plans have very high deductibles (usually defined as at least $1,000 for an individual or $2,000 for a family). In 2017, annual premiums for the average HDHP were $6,024 for individuals and $17,581 for families (KFF, 2017). As with other insurance plans, consumers pay most of their health- care expenses out-of-pocket until they reach the deductible. HDHPs are often used in conjunction with health reimbursement arrangements (HRAs) or health savings accounts (HSAs), which allow individ- uals to set aside money for future healthcare needs. Health reimbursement arrangements are funded solely by employers, who usually commit to making a specified amount of money available for healthcare expenses incurred by employees or their dependents, while HSAs are created by individuals, but employers may also contribute to HSAs if the employers offer a 158 Chapter 8 Understanding Health Insurance 4% 40% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 6% 3% 3% 7%* 3% 6% 6% 9% 7%* 9%* 12% 11% 8% 8% 9% 20% 21% 7% 14% 15% 9% 24% 28% 28% 9% 9% 19%19%* 13%* 17%* 20% 3%2% 2% 4%* * Estimate is statistically different from estimate for the previous year shown (p < 0.05). Note: Covered workers enrolled in an HDHP/SO are enrolled in either an HDHP/HRA or a HSA-Qualified HDHP. HDHP/HRA HSA-qualified HDHP 70% 60% 50% 40% 30% 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 8% 16%* 18% 21% 26%* 32% 41%* 40% 43% 45% 52%* 57% 58% 5% 13%* 18% 26% 39% 38% 38% 49%* 52% 33% 21% 15% 4% 7% 10% 22% 27% 25% 27% 23% 31% 23% 15% 11% 13% * Estimate is statistically different from estimate for the previous year shown (p < 0.05). 3–199 Workers 1,000 or more workers 200–999 Workers Source: Reproduced from: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2017 https://www.kff.org/report-section/ehbs-2017-section-8-high-deductible-health-plans-with-savings-option/ Source: Reproduced from: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2017. https://www.kff.org/report-section/ehbs-2017-section-8-high-deductible-health-plans-with-savings-option/ qualified HDHP. Individual contributions to HSAs are made with pre-income tax dollars, and withdrawals to pay for qualified healthcare expenses are also not taxed. As shown in FIGURES 8-1 and 8-2, HDHPs are increasingly popular with employers and employees. Those who support HDHPs assert that plans with high deductibles promote personal responsi- bility because enrollees have a financial incentive to avoid overusing the healthcare system and to choose cost-effective treatment options. As a result, HDHPs are favored by employers and others as a cost-cutting strategy. Others are concerned that HDHPs will have a negative effect on enrollees’ health because individuals cannot or will not price shop and are more likely to save money by simply avoiding needed care. As discussed in BOX 8-5, researchers continue to evaluate these questions. An enrollee’s experience with a HDHP may depend, in part, on income level. Individuals who are FIGURE 8-1 Percentage of Covered Workers Enrolled in a High-Deductible Health Plan (HDHP) or Health Reimbursement Arrangement, or in a Health Savings Account–Qualified HDHP, 2006–2017 FIGURE 8-2 Among Firms Offering Health Benefits, Percentage That Offer a High-Deductible Health Plan With a Savings Option, 2005–2017 How Health Insurance Operates 159 https://www.kff.org/report-section/ehbs-2017-section-8-high-deductible-health-plans-with-savings-option/ https://www.kff.org/report-section/ehbs-2017-section-8-high-deductible-health-plans-with-savings-option/ wealthier and healthier are likely to have funds to place in a savings account, can afford high out-of-pocket expenses, and are less likely to use the healthcare sys- tem (Davis, 2004). As a result, critics contend that the lower service utilization associated with HDHP enrollees is likely due to their better health status, not price sensitivity, undermining one of the main argu- ments in support of these plans (Davis, 2004). Poorer individuals who may be drawn to the lower premium cost of HDHPs may not be able to afford care when they need it. In fact, a 2018 study found that HDHP enrollees without a savings account were less likely to obtain primary care, preventive services, or specialty care and more likely to be in poor or fair health as compared to enrollees with a savings account (Jetty, Petterson, Rabin, & Liaw, 2018). Finally, if healthier and wealthier individuals flock to HDHPs, poorer individuals in a comprehensive group plan (assuming one is available and affordable), face the possibility of adverse selection due to being part of a relatively high- risk insurance pool (Davis, 2004). Setting Premiums Assuming that insurance companies make their decisions in the context of asymmetric information, they cannot determine with certainty the appropri- ate amount of premium to charge each individual. Instead, insurance companies rely on making edu- cated guesses about the risk each individual or group of individuals has of needing healthcare services. The two main methods of setting premiums are experience rating and community rating. When insurance companies use experience rating to make an educated guess about the risk of someone’s needing healthcare services, they are relying on how much a beneficiary or group of beneficiaries spent on medical services previously to determine the amount of the premium for each member or group. Thus, if an individual or group had very high medical costs in a given year, premiums are likely to rise the following year. Conversely, community rating does not take into account health status or claims history when setting premiums. In “pure” community rating, insurers use only geography and family composition to set rates; in “modified” community rating, insurers may be allowed to consider other characteristics, such as age and sex. Which rating system makes more sense from a policy perspective as a basis for setting premiums may depend on whether you evaluate the insurance market based on efficiency or equity (think back to discussions of competing conceptual frameworks). If the market is judged based on efficiency, then the key issue is whether the optimal amount of risk has shifted from consumers to insurers. If there are individuals willing to pay a higher amount for greater coverage BOX 8-5 Discussion Questions A literature review of studies relating to consumer behavior with HDHPs found that these plans reduced the use of both appropriate care, such as preventive screenings, and inappropriate care, such as unnecessary emergency department visits (Argwal, Mazurenko, & Menachemi, 2017). To date, research generally has not focused on health outcomes of HDHP users. Some recent studies have shown consumers rarely engaging in price-conscious behavior, instead achieving savings through use of fewer services (Kullgren, Cliff, & Krenz, 2018; Sinaiko, Mehrotra, & Sood, 2016; Sood, Wagner, Huckfeldt, & Haviland, 2013). Do HDHPs achieve the right balance of providing insurance coverage while incentivizing consumers to use resources prudently? Or are they simply a way to lower employer healthcare costs while making it unaffordable for many consumers to obtain the health care they need? How easy is it for consumers to compare costs for healthcare providers and services? What additional challenges might an HDHP present for individuals who are low-income, live in rural areas, speak a primary language other than English, or have low health literacy? BOX 8-6 Discussion Questions In general, people with low incomes or no health insurance (or both) tend to be less healthy than those who are financially better off or insured (or both). As a result, policy proposals that suggest including poor, uninsured individuals in already-existing insurance plans are met with resistance by individuals in those plans and by carriers or employers who operate them. Yet, if an insurance plan is created that subscribes only a less-healthy, poor, or uninsured population, it is likely to be an unattractive business opportunity because beneficiaries are likely to need a high quantity of health care that will be costly to provide. Given what you know about adverse selection and risk, what, in your opinion, is the best way to provide insurance coverage to the poor and uninsured? Should they be included in current plans? Should the government provide financial incentives for private carriers to insure them? Should a separate plan or program be created to serve them? In these various scenarios, what incentives are created for plans, current plan members, government, and so on? 160 Chapter 8 Understanding Health Insurance and insurers willing to provide greater coverage for the higher amount, but something in the market pre- vents this transaction from occurring, then the opti- mal amount of risk shifting has not occurred. Or, if individuals value a certain level of insurance coverage at a price that is less than the price at which insurers are willing to provide that coverage, but individuals buy coverage anyway at the higher price, the market is not optimally efficient (due to excess coverage). Conversely, the market may be judged based on equity or fairness. Even the most efficient market may result in some inequities. Some individuals may be uninsured, some may have to pay more than other individuals for the same level of insurance, some may not be able to purchase the level of coverage they desire, and some individuals may not be able to join a particular plan. These inequities are often a concern in the context of the uninsured, especially as uninsur- ance relates to low-income individuals or those with high health needs due to random events, such as an accident or genetic condition. Regardless of the underwriting methodology used, premiums are cheaper for people purchasing insurance as part of a large group rather than buy- ing health insurance individually or as part of a small group. Due to the law of averages, larger groups of people are more likely to have an average risk rate. When people join a group for reasons unrelated to health status, such as working for the same com- pany, it is also more likely that the group will have an average risk rate. Groups with average risk rates are attractive to insurers because the cost of insuring a few unhealthy people will probably be offset by sav- ings from insuring many healthy ones. Conversely, in smaller groups it is more likely that the group will have a relatively high risk rate and less likely that the cost of insuring an unhealthy person can be offset by the savings of insuring a few other healthy people. This is the problem faced by William, the small business owner described at the outset of the chapter who has one high-cost employee. Even though he would like to offer health insurance coverage to his employees, William and other small business owners like him often are able to offer only expensive or limited cov- erage, if they can offer any health insurance benefit at all. To help individuals and small business owners like William, some states require insurers to use a commu- nity rating system to set premiums for these groups and in the state health insurance exchanges that were created by the ACA. Carriers also prefer to insure large groups because most of the administrative costs associated with insur- ance are the same whether the carrier is covering a few people or a few thousand (Phelps, 2003, pp. 342–344). In fact, group coverage has traditionally required fewer marketing resources than individual cover- age, which targets customers one at a time. However, the proliferation of information on the Internet may change this equation. Medical Underwriting The prior discussion about rate setting assumed asymmetric information (i.e., where the insurer has little information about the consumer’s health status and the consumer has substantial information about his or her own healthcare needs). Of course, there are ways for insurers to gain information about the medical needs of a consumer looking to join a health plan: physical exams, questionnaires, medical records, occupation, and demographics all provide clues about the health status of the consumer. Although it is much more difficult to accomplish, insurers may also try to predict an individual’s future costs through question- naires that ask, for example, whether an individual engages in risky activities (e.g., riding a motorcycle) or through genetic testing (which is itself an emerging health policy and law issue). Whether companies are allowed to consider an applicant’s medical history or other personal information to help assess risk of healthcare needs in the future—a practice referred to as medical underwriting—is a somewhat complicated legal question that involves both federal and state law. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) includes an important protection for consumers by prohibiting group health plans from excluding or limiting otherwise qualified individuals due to preexisting conditions (a preexisting condition is a medical condition, such as cancer or diabetes, that is present at the time an individual applies to enroll in an insurance plan). The ACA expands this protection BOX 8-7 Discussion Questions What populations or types of people pay more under experience rating? Does experience rating create any incentives for individuals to act in a certain way? What populations or types of people pay more under community rating? Does community rating create any incentives for individuals to act in a certain way? Which rating system seems preferable to you? What trade-offs are most important to you? Should the focus be on the good of the individual or the good of the community? Are these mutually exclusive concerns? How Health Insurance Operates 161 by requiring all health insurers to sell policies to all applicants, regardless of preexisting conditions. This requirement was in effect for children shortly after the ACA was signed into law, and took effect for adults in 2014 (as discussed in the Health Reform in the United States chapter, attempts are being made to chip away at this protection). Prior to HIPAA, many individuals with pre- existing conditions were denied insurance altogether, denied coverage for particular medical care, or charged very high premiums if they sought to purchase a pol- icy. These practices led to a problem referred to as “job lock.” Because most Americans receive insurance cov- erage through their employers, many employees with preexisting conditions could not switch jobs for fear that their new company’s insurance policy would be denied to them on account of their preexisting condi- tion. One study estimated that job lock resulted in a 4% reduction in voluntary turnover (Phelps, 2003, p. 341). Although HIPAA and the ACA do not regulate the amount of premiums that may be charged, all members of a group generally pay the same premium due to the laws’ nondiscrimination provisions. In HIPAA, these provisions prohibit plans or insurance carriers from requiring any individual to pay a higher premium or contribution than another “similarly situated” indi- vidual (Nondiscrimination in health coverage, 2001, p.  1382) in the plan based on eight health factors: health status, physical or mental medical conditions, claims experience (i.e., the individual has a history of high health claims), receipt of health care, medical history, genetic information, evidence of insurability, and disability (Nondiscrimination in health coverage, 2001, pp. 1378–1384, 1396–1403). However, because those who purchase individual health insurance plans are not covered by HIPAA’s protections, the ACA pro- tections were needed as well. The ACA also prohibits plans from charging individuals higher premiums due to their preexisting conditions. ▸ Managed Care The prior sections reviewed the history, basic struc- ture, and purpose of health insurance generally. In this section, we discuss a specific kind of health insurance structure that has come to dominate the American mar- ket: managed care. We will describe why managed care emerged, some of the frequent cost-containment strate- gies used by managed care organizations, and the most common managed care structures in the market today. Managed care became the predominant health- care financing and delivery arrangement in the United States because healthcare costs had risen to alarming levels and there were few mechanisms for containing costs under the FFS system. As mentioned earlier, FFS does not create incentives for providers or patients to utilize healthcare services sparingly. Providers have an incentive under FFS to provide more services and more expensive services (but not necessarily higher-quality services) because their income rises with each procedure or office visit and fees are higher for more expensive services. As long as providers are accessible, insured patients can request services and assume their insurance company will pay most or all of the costs to the extent that the services are covered by the health plan and medically necessary. In addition, the FFS system does not create incen- tives for providers or patients to use the lowest-cost quality care available. Many people believe specialists provide higher-quality care and turn to them even for minor needs that do not truly require expensive spe- cialty services, and the FFS system does not discour- age this behavior. Furthermore, because traditional insurance coverage requires a specific diagnosis for reimbursement, patients are discouraged from seek- ing preventive services when they are symptom-free under FFS. At the same time, traditional insurance companies do not have the ability to control costs or quality of care under FFS. Their job is limited to deter- mining whether a service is covered and medically necessary and providing the agreed-upon reimburse- ment. They have little ability to measure or improve the quality of care provided by healthcare profession- als and cannot control costs by limiting the amount or type of services received; instead, they can only raise premiums and other rates in the future to cover increasing costs. To alter the inherent incentives under FFS and to grant insurers some ability to control the quality and utilization of services, managed care integrates the provision of and payment for healthcare services. Through various strategies discussed in the following sections, managed care organizations (MCOs) and managed care plans create incentives to provide fewer services and less expensive care, while still maintain- ing the appropriate level of healthcare quality. MCOs also attempt to alter patients’ decision making through cost-sharing requirements, cost containment tools, utilization restrictions, and free or low-cost coverage for preventive care. MCOs take various forms, but certain general features apply to all of them to varying degrees. All MCOs provide a comprehensive, defined package of benefits to the purchaser/member for a preset fee (including both monthly premium and cost-sharing 162 Chapter 8 Understanding Health Insurance requirements). Services are offered to members through a network of providers, all of whom have a contractual relationship with the MCO. The MCOs choose which providers to include in their networks and what services are rendered by network providers. Most notably, they also use financial incentives and other mechanisms to control the delivery, use, quality, and cost of services in ways that are not present in FFS insurance systems (Sultz & Young, 2001, p. 260). Cost Containment and Utilization Tools Managed care introduced a variety of tools in its attempt to contain costs and control healthcare ser- vice utilization. The cost containment strategies of performance-based salary bonuses or withholdings, discounted fee schedules, and capitated payments shift financial risk or limit payments to providers who, in turn, have an incentive to choose the least costly, but still effective, treatment option. The utilization control strategies of gatekeeping and utilization review focus on ensuring that only appropriate and necessary care is provided to patients. Another type of strategy, case management, is designed to ensure that necessary care is provided in the most coordinated and cost-effective way possible. Provider Payment Tools Depending on the structure of the MCO, provider salaries are based on a discounted fee schedule or capitation rate and include incentives to act or not act in certain ways. Providers in what are called staff- model MCOs are employees of the MCO and are paid an annual salary. The salary structure often includes bonuses or salary withholdings that are paid (or with- held) upon meeting (or not meeting) utilization or performance goals, thus shifting some financial risk from the MCO to the provider. A discounted fee schedule is a service-specific fee system, as is used in FFS. However, an MCO-style fee schedule pays lower reimbursement rates than is true in FFS systems; pro- viders agree to accept less than their usual fee in return for the large volume of patients available to them by being a part of the MCO provider network. The MCO retains the financial risk in a discounted fee system, but the costs are lower for the company due to the discounted rate paid to providers. Finally, a capitated payment rate is a fixed monthly sum per member that the MCO uses to determine the provider salary. The capitation rate does not vary regardless of the number or type of services provided to patients. The physician receiving a salary based on a capitated rate is respon- sible for providing all of the care needed by his or her MCO patients, within the provider’s scope of practice. As a result, the financial risk in the case of capitated arrangements is shifted entirely from the MCO to the provider. Depending on the contract between the pro- vider and the MCO, the insurance company may or may not guarantee the provider a minimum number of patients in exchange for accepting a capitated rate. These provider-focused cost containment strategies are summarized in TABLE 8-1. These payment methods lead to very different incentives for providers than is the case under the FFS system. Instead of being paid more for doing more, HMO providers are paid the same amount regardless of the number or type of services they provide. Given the use of bonuses and withholdings, TABLE 8-1 Provider Payment Cost Containment Strategies Strategy Provider Payment Method How Costs Are Controlled Who Assumes Financial Risk Salary and bonuses/ withholdings Provider receives a salary as an employee of an MCO Incentive for provider to perform fewer and/or less-costly services MCO and provider Discounted fee schedule Provider receives a lower fee than under FFS for each service to members Pays provider less per service rendered than under FFS MCO (but also has lower costs) Capitation Provider receives a set payment per month for each member regardless of services provided Incentive for provider to perform fewer and/or less-costly services Provider Abbreviations: FFS = fee for service; MCO = managed care organization. Managed Care 163 salaried providers may be paid more if they make treatment decisions deemed favorable by an MCO. By using these incentives, MCOs encourage provid- ers to render the fewest and most cost-effective ser- vices necessary. Critics of managed care payment methodologies argue that MCO plan members will not receive all necessary care if providers are incentivized to provide fewer services and less-costly care. Instead of treating patients using both the most cost-efficient and medi- cally necessary services, critics claim MCOs encourage providers to save money by providing fewer ser- vices and less specialized care than necessary; MCOs counter that their own incentive is to keep their mem- bers healthy so they do not need expensive services in the future. In addition, MCOs point to their ability to impose quality control measures on providers as a way to ensure that patients are properly treated. In response, critics argue that because members switch health plans relatively frequently, MCOs do not have an incentive to keep their members healthy because the MCOs will not realize the long-term savings as members come and go. Which side has the better argument? There is no definitive answer. On the one hand, studies have found that treatment decisions under MCO arrange- ments are mostly influenced by clinical factors (not economic ones), that there is little or no measurable difference in the health outcomes of patients in FFS versus managed care plans, and that the quality of care provided under FFS and managed care plans is basi- cally equal (Shi & Singh, 2017, p. 235; Shi & Singh, 2019, p. 382). In fact, patients in areas with a high market share of HMOs are more likely to engage in preventive care, receive diabetes care, and give high provider satisfaction ratings than are patients in areas with low HMO market share (Shi & Singh, 2017, p.  235). Researchers also have not found disparities based on race, ethnicity, and socioeconomic status in MCO versus FFS settings (Shi & Singh, 2017, p. 235; Shi & Singh, 2019, p.  382). While previous studies found that mental health patients did not fare as well in MCOs as in FFS plans, more recent research refutes that conclusion (Shi & Singh, 2019, p. 383). On the other hand, nonprofit HMOs (a type of MCO) score better on quality measures than do for-profit ones, and HMO enrollees indicate lower patient satisfaction than do non-HMO patients (Shi & Singh, 2017, pp. 235–262; Shi & Singh, 2019, p. 382). Also, due to low reimbursement rates, access is a particular concern for Medicaid MCO enrollees, who appear to have more limited access to certain services, higher emergency department use, and more unmet prescription drug needs (Shi & Singh, 2019, p. 381). Utilization Control Tools MCOs also employ other techniques, not related to provider payment methods, to control use of health- care services. Once again, the goal in using these tools is to reduce the use of unnecessary and costly services. We review three common utilization control tools: gatekeeping, utilization review, and case management. Gatekeepers monitor and control the services a patient receives. Members of managed care plans are often required to select a primary care provider from the MCO network upon enrollment. This provider acts as the member’s “gatekeeper” and is responsible for providing primary care, referring patients for addi- tional care, and generally coordinating the patient’s care. Having a gatekeeper allows the MCO, not the patient or specialty provider, to determine when a patient needs additional or specialty services, diagnos- tic tests, hospital admissions, and the like. As with the cost containment strategies discussed earlier, there are critics who contend that utilization-based bonuses or salary withholdings give gatekeepers financial incen- tive not to provide specialty referrals even when it is in the best interest of the patient. Utilization review (UR) allows an MCO to evalu- ate the appropriateness of the services provided and to deny payment for unnecessary services. MCO person- nel review and approve or deny the services performed or recommended by network providers. UR specialists are often healthcare professionals, and MCOs gener- ally use existing clinical care guidelines to determine whether services are appropriate. UR may occur prospectively, concurrently, or retrospectively. Prospective UR means that an MCO reviews the appropriateness of treatment before a ser- vice is rendered. A request for a recommended service is sent to a UR panel for approval or denial. A denial does not mean a patient cannot move forward with his preferred treatment plan; however, it does mean that the patient will have to pay for the treatment out of his own pocket. Prospective UR is distinguished from concurrent UR, which is when the MCO review of the appropriateness of treatment occurs while treatment is being rendered. For example, a patient may need a procedure that requires hospitalization. Even though the procedure is performed and covered, a UR spe- cialist might still determine the number of days the patient may remain in the hospital or whether certain services, such as home care or physical therapy, will be covered upon discharge from the hospital. Finally, 164 Chapter 8 Understanding Health Insurance retrospective review means the MCO reviews the appropriateness of treatment (and therefore its cover- age) after a service is rendered. In this case, a patient’s medical records are reviewed to determine whether the care provided was appropriate and billed accu- rately; MCOs will not provide reimbursement for ser- vices deemed inappropriate or unnecessary. This latter type of review may also be used to uncover provider practice patterns and determine incentive compensa- tion (Shi & Singh, 2019, pp. 373–374). Regardless of when the review occurs, the use of UR is controver- sial because it may interfere with the patient–provider relationship and allow for second-guessing of provider treatment decisions by a third party who is not part of the diagnosis and treatment discussions. Case management is a service utilization approach that uses trained personnel to manage and coordinate patient care. Although gatekeeping serves as a basic form of case management for all members, many patients with complex or chronic conditions, such as HIV/AIDS or spinal cord injuries, may benefit from more intensive case management. These patients may have frequent need for care from various specialists and thus benefit from assistance by personnel who are familiar with the many resources available to care for the patient and who are able to provide information and assistance to patients and their families. A case manager works with providers to determine what care is necessary and to help arrange for patients to receive that care in the most appropriate and cost-effective settings (Shi & Singh, 2019, p. 370). Although the general idea of case management is not controversial, some people believe it can be implemented in a man- ner that acts more as a barrier than an asset to care because additional approval is needed before a patient receives care and because another layer of bureau- cracy is placed between the patient and the provider. TABLE  8-2 summarizes the three service utilization control strategies just discussed. As you might imagine, managed care’s use of ser- vice utilization control mechanisms frequently leads to disputes between patients and their managed care company over whether the company is improperly affecting the provider–patient relationship (and nega- tively impacting the quality of care provided) by mak- ing decisions as to the type or quantity of care a patient should receive. This is both a highly charged health policy issue and a complicated legal issue, and one that is discussed in more detail in a review of individual rights in health care. For purposes of this chapter, it is enough to note that MCOs must have a grievance and appeal process to at least initially handle these sorts of disputes. Although companies’ processes differ in their specifics, they generally allow members to appeal a coverage decision, provide evidence to support the appeal, and receive an expedited resolution when medically necessary. The ACA included a number of provisions relating to the appeals process required of insurance plans; these provisions establish a federal standard for state external appeals laws governing products in the individual and group markets and cre- ate a new federal appeals process for self-insured plans (the provisions do not affect Medicaid and Medicare, which have their own appeals processes) (National Conference of State Legislatures, 2018). The need for adequate grievance and appeal procedures can be particularly acute for patients with special healthcare needs, such as those with physical or mental disabil- ities, and patients who otherwise use the healthcare system more frequently than most people. TABLE 8-2 Service Utilization Control Strategies Strategy Description Potential Concerns Gatekeeper Uses a primary care provider to make sure only necessary and appropriate care is provided Gatekeepers may have financial incentive to approve fewer services or less-costly care Utilization review Uses MCO personnel to review and approve or deny services requested by a provider to make sure only necessary and appropriate care is provided Interferes with patient–provider relationship; someone other than the patient’s provider decides whether treatment is appropriate Case management Uses MCO personnel to manage and coordinate patient care to make sure care is provided in the most cost-effective manner May act as a barrier to receiving care if the case manager does not approve a desired service or service provider Abbreviation: MCO = managed care organization. Managed Care 165 Source: Reproduced from: Kaiser/HRET Employer Health Benefits Survey, 2017. Retrieved from https://www.kff.org/health-costs/report/2017-employer-health-benefits-survey/ Common Managed Care Structures There are three managed care structures common in the market today: health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-service (POS) plans. All three provide preventive and specialty care, but the rules relating to accessing care differ for each. In general, HMOs have the most restrictive rules pertaining to patients and providers, PPOs have the least restrictive rules, and POS plans fall in the middle. As shown in FIGURE 8-3, PPOs are the most popu- lar type of managed care plan, while very few people are still insured by a conventional FFS plan. In general, the more control an MCO has over its providers and members, the easier it is to control utilization of ser- vices and, therefore, healthcare costs and quality. Con- versely, providers and patients prefer to have as much autonomy as possible, so the more restrictive MCO structures may be less desirable in that respect. How- ever, the distinctions among managed care structures have become blurred recently because of the consumer and provider backlash against MCO restrictions. Health Maintenance Organizations When managed care first became prominent in the 1970s, HMOs were the most common type of MCO. There are several characteristics shared by all HMOs: 0% 10% 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1996 1993 1988 73% 46% 21% 26% 28% 39% 42% 46% 52% 54% 55% 61% 60% 57% 58% 60% 58% 55% 56% 57% 58% 52% 48% 48%14% 15% 14% 13% 14% 16% 17% 19% 20% 20% 21% 20% 21% 25% 24% 27% 24% 29% 28% 31%27% 10% 8% 7% 4% 5% 5% 3% 3% 3% 7% 14% 24% 21% 23% 18% 17% 15% 15% 4% 5% 8% 8% 13% 17% 19% 20% 20% 24% 29% 28%10% 9% 10% 8% 9% 9% 10% 8% 10% 12% 13% 13% 16% 11% 20% 30% 40% 50% 60% 70% 80% 90% 100% Note: Information was not obtained for POS plans in 1988 or for HDHP/SO plans until 2006. A portion of the change in plan type enrollment for 2005 is likely attributable to incorporating more recent Census Bureau estimates of the number of state and local government workers and removing federal workers from the weights. See the Survey Design and Methods section from the 2005 Kaiser/HRET Survey of Employer-Sponsored Health Benefits for additional information. Conventional POSHMO PPO HDHP/SO FIGURE 8-3 Distribution of Health Plan Enrollment for Covered Workers by Plan Type, 1988–2017 166 Chapter 8 Understanding Health Insurance https://www.kff.org/health-costs/report/2017-employer-health-benefits-survey/ ■ They pay providers a salary to cover the cost of any and all services that beneficiaries need within a provider’s scope of practice. ■ They negotiate a capitated rate with plan purchas- ers (e.g., employers) that prices the plan based on a per-member, per-month amount for each type of provider. ■ They coordinate and control receipt of services. ■ They arrange for care using only their network providers. ■ They are responsible for providing care according to established quality standards. Despite these commonalities, HMOs may be structured through a variety of models, including the staff model/closed-panel model, group model, network model, individual practice association, and direct-contract model (Shi & Singh, 2019, pp. 374– 377). Each model has advantages and disadvantages from the perspective of the HMO, its providers, and its members, as shown in TABLE 8-3. Preferred Provider Organizations As is evident from Table 8-3, every form of HMO is fairly restrictive. In all models, the HMO provides coverage only if members seek care from network providers, and providers may or may not be limited to serving only HMO members. As both patients and providers began rebelling over these restrictions, new TABLE 8-3 Key Characteristics of Common HMO Models HMO Model HMO-Provider Relationship and Payment Type Provider Employment Arrangement Must Members Seek Care From Network? May Providers Care for Nonmembers? General Comments Staff model/ closed-panel HMO employs providers and pays a salary that often includes bonuses or withholdings. Employed by HMO. Yes No Provides services only in HMO’s office and affiliated hospitals. Relatively speaking, HMO has the most control over providers and service utilization, but has fixed costs of building and staff. HMO may contract with outside providers if necessary. Providers and consumers often do not like restrictions imposed by HMO. Providers do not need to solicit patients. Consumers may find it to be the most cost- effective option. Group HMO contracts with one multispecialty group for a capitated rate. Employed by own provider group. Yes Depends on terms of contract HMO has less control over utilization. HMO contracts for hospital care on a prepaid or FFS basis. Providers may prefer this model because they remain independent as opposed to becoming an employee of the HMO and because they may serve nonmembers if their contract permits. (continues) Managed Care 167 HMO Model HMO-Provider Relationship and Payment Type Provider Employment Arrangement Must Members Seek Care From Network? May Providers Care for Nonmembers? General Comments Network HMO contracts with several group practices (often primary care practices) for a capitated rate. Employed by own provider group. Yes Depends on terms of contract The group practices may make referrals but are financially responsible for reimbursing outside providers. HMO has less control over utilization due to greater number of contracts and ability of providers to subcontract. Providers may prefer additional autonomy, but also take on financial risk of providing primary and specialty care. Members may have a relatively greater choice of providers. IPA HMO contracts with IPA for a capitated rate. IPA is intermediary between HMO and solo practitioners and groups. IPA pays providers a capitated rate. Yes Depends on terms of contract HMO has reduced control over providers but may have less malpractice liability because IPA is an intermediary. HMO may contract with specialty physicians as needed and for hospital care on a prepaid or FFS basis. Providers may prefer contracting with IPA instead of HMO to retain more autonomy. Members may have greater choice of providers. Direct- contract HMO contracts directly with individual providers for a capitated rate. Self- employed. Yes Depends on terms of contract HMO has more leverage over providers because it contracts with them as individuals, but its administrative costs are much higher than having one contract or a few contracts with groups. Providers have less leverage regarding practice restrictions when contracting on an individual basis. Abbreviations: fee for service = FFS; HMO = health maintenance organization; IPA = individual practice association. TABLE 8-3 Key Characteristics of Common HMO Models (continued) 168 Chapter 8 Understanding Health Insurance forms of MCOs emerged, often formed by providers and hospitals themselves. Like HMOs, PPOs have a provider network, referred to as preferred providers. Unlike HMOs, how- ever, PPOs provide coverage to patients seeking care from any provider, regardless of whether the provider is part of the member’s PPO preferred provider network. However, the amount of the service price that the PPO will cover is greater for an in-network provider than an out-of-network provider. For example, a PPO may agree to cover 80% of the cost for an in-network physi- cian visit, but only 70% of the cost for a similar, but out- of-network, physician visit. PPO patients thus have the option of paying more but choosing among a greater number of providers or paying less but choosing among a more limited number of (in-network) providers. In addition, a PPO member’s cost-sharing responsibilities are often higher than is the case for HMO members. In exchange for being in the network, providers agree to accept a discounted rate for their services, often 25–35% below their usual rates (Shi & Singh, 2019, p. 378). Because PPO members have a financial incentive to seek providers who are in-network, these healthcare professionals find it worthwhile to accept a reduced rate from the PPO in exchange for the higher likelihood that PPO members will select them over non-network providers. Furthermore, unlike the cap- itation system found in HMOs, PPO providers do not assume financial risk for providing services. Depend- ing on the terms of their contract with the PPO, pre- ferred providers may or may not agree to limit their practice to PPO members. Although it is rare, PPOs may choose to guarantee preferred providers a mini- mum number of patients. Even though an MCO has much less control over service utilization in the PPO model than in the HMO model, PPOs still provide more incentives to use care judiciously than is the case in an FFS system. For exam- ple, in-network PPO providers are paid less than their customary rate by the company when they provide care to PPO members and often agree to abide by quality control and UR strategies used by the PPO. In addition, PPO patients have an incentive to use certain providers who will cost them less and have cost-sharing require- ments unlike anything found under FFS. The PPO model attempts to locate a middle ground between the very restrictive HMO models and the FFS structure that resulted in very high healthcare utilization and costs. Point-of-Service Plans In another effort to contain costs while still provid- ing patients the freedom to choose their provider, POS plans combine features of HMOs and PPOs. Like an HMO, POS plans have a provider network, use a capitated or other payment system that shares financial risk with providers, and require members to use a gatekeeper to help control service utilization. However, designated services may be obtained from out-of- network providers who are paid on an FFS basis, but use of these providers costs the member more money, as with the PPO model. A POS gate- keeper must approve all in- network care and may also have some control over out-of- network care, depend- ing on the terms of the plan. The call by many con- sumers for increased choice in providers has become forceful enough that some HMOs are now offering POS plans, which they may refer to as open-ended (as opposed to closed-panel) models. The Future of Managed Care Managed care is likely to remain an integral part of the health system despite its drawbacks. Patients chafe at utilization restrictions, as is evident by the increase BOX 8-8 Discussion Questions Cost containment strategies embraced by MCOs were a direct result of the FFS experience with ever-increasing utilization and healthcare costs. However, many consumers and providers chafe at the restrictions imposed by MCOs and are concerned that someone other than the provider is making treatment decisions. Are these restrictions appropriate and necessary? Do you favor some of the restrictions over others? Is it appropriate for one entity to be responsible for both paying for and providing care? Should someone other than an MCO—say the federal or state governments—have primary responsibility for making determinations about service utilization? BOX 8-9 Discussion Questions In terms of containing healthcare costs and improving healthcare quality, do you think healthcare consumers and professionals need even more restrictions than are currently used in managed care? Are there any reasons to revert back to the FFS system, even knowing its inflationary qualities? If you think that managed care is not the answer to our still-rising healthcare costs and quality concerns, what other tools might help lower costs and improve the quality of care? Should any tools be imposed by government regulation or agreed to voluntarily by insurers and the insured? Managed Care 169 in PPO popularity and the emergence of the hybrid HMO/POS plan. Accurate or not, there is a widespread perception that managed care plans deny necessary care and provide lower-quality care (Shi & Singh, 2017, pp. 218, 235). Providers also complain that managed care interferes with their ability to practice medicine in a manner of their choosing, placing them in ethi- cal dilemmas due to the use of financial incentives and possibly lowering the quality of care they provide due to limits on tests and procedures they order. Yet, the key circumstance that led to the creation of managed care—high healthcare expenditures—has not abated. While the country struggles with ever-growing health- care costs, even under managed care, the willingness to experiment with various cost and utilization con- tainment strategies is likely to endure. ▸ Conclusion This introduction to health insurance serves as a building block for additional study, which expands upon many of the key health policy and law themes mentioned here. It should be clear to readers that health policy analysts and decision makers must be particularly attuned to health insurance issues; with- out knowing both the basic structure of health insur- ance and how various incentives impact the actions of healthcare consumers, professionals, and insur- ance carriers, they cannot make informed recom- mendations and policies addressing the key health issues of the day. References Argwal, R., Mazurenko, O., & Menachemi, N. (2017). 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Retrieved from https://www.kff.org/medicare/issue-brief/medicare -advantage-2017-spotlight-enrollment-market-update/ Jetty, A., Petterson, S., Rabin, D. L., & Liaw, W. (2018). Privately insured adults in HDHP with higher deductibles reduce rates of primary care and preventive services. Translational Behavioral Medicine, 8(3), 375–385. doi:10.1093/tbm/ibx076 Kaiser Family Foundation. (2017, September 19). 2017 Employer health benefits survey. Retrieved from https://www.kff.org /health-costs/report/2017-employer-health-benefits-survey/ Kullgren, J. T., Cliff, E. Q., & Krenz, C. (2018). Consumer behaviors among individuals enrolled in high deductible health plans in the United States. JAMA Internal Medicine, 178(3), 424–426. doi:10.1001/jamainternmed.2017.6622 National Conference of State Legislatures. (2018). Right to health insurance appeals process. Retrieved from http://www.ncsl.org /research/health/right-to-health-insurance-appeals-in-aca .aspx Nondiscrimination in health coverage in the group market: Interim final rules and proposed rules, 66 Fed. Reg, 1378, 1382 (January, 2001) (codified in 29 C.F.R. pt. 2590.702). Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148 (2010). Penner, S. (2004). Introduction to health care economics and financial management: Fundamental concepts with practical application. Philadelphia, PA: Lippincott, Williams, and Wilkins. Phelps, C. E. (2003). Health economics (3rd ed.). Boston, MA: Addison-Wesley. Rudowitz, R., & Garfield, R. (2018, April 12). Ten things to know about Medicaid: Setting the facts straight. Retrieved from https://www.kff.org/medicaid/issue-brief/10-things-to-know -about-medicaid-setting-the-facts-straight/ Shi, L., & Singh, D. A. (2019). Delivering health care in America: A  systems approach (7th ed.). Burlington, MA: Jones and Bartlett Learning. Shi, L., & Singh, D. A. (2017). Essentials of the U.S. health care system (4th ed.). Burlington, MA: Jones and Bartlett Learning. Sinaiko, A. D., Mehrotra, A., & Sood, N. (2016). Cost-sharing obligations, high-deductible health plan growth, and shopping for health care: Enrollees with skin in the game. JAMA Internal Medicine, 176(3), 395–397. doi:10.1001 /jamainternmed.2015.7554 Sood, N., Wagner, Z., Huckfeldt, P., & Haviland, A. (2013). Price-shopping in consumer-directed health plans. Forum of Health Economics and Policy, 16(1), 1–19. doi:10.1515 /thep-2012-0028 Starr, P. (1982). The social transformation of American medicine: The rise of a sovereign profession and the making of a vast industry. New York, NY: Basic Books, Inc. Stevens, R., & Stevens, R. (2003). Welfare medicine in America: A case study of Medicaid. New Brunswick, NJ: Transaction Publishers. Sultz, H. A., & Young, K. M. (2001). Healthcare USA: Understanding its organization and delivery (3rd ed.). Gaithersburg, MD: Aspen Publishers. Tax Cut and Jobs Act of 2017, Pub. L. No. 115-97 (2017). 170 Chapter 8 Understanding Health Insurance https://news.gallup.com/poll/225383/uninsured-rate-steady-fourth-quarter-2017.aspx?g_source=Well-Being&g_medium=newsfeed&g_campaign=tiles https://news.gallup.com/poll/225383/uninsured-rate-steady-fourth-quarter-2017.aspx?g_source=Well-Being&g_medium=newsfeed&g_campaign=tiles https://news.gallup.com/poll/225383/uninsured-rate-steady-fourth-quarter-2017.aspx?g_source=Well-Being&g_medium=newsfeed&g_campaign=tiles https://news.gallup.com/poll/225383/uninsured-rate-steady-fourth-quarter-2017.aspx?g_source=Well-Being&g_medium=newsfeed&g_campaign=tiles https://www.kff.org/medicare/issue-brief/medicare-advantage-2017-spotlight-enrollment-market-update/ https://www.kff.org/medicare/issue-brief/medicare-advantage-2017-spotlight-enrollment-market-update/ https://www.kff.org/health-costs/report/2017-employer-health-benefits-survey/ https://www.kff.org/health-costs/report/2017-employer-health-benefits-survey/ http://www.ncsl.org/research/health/right-to-health-insurance-appeals-in-aca.aspx http://www.ncsl.org/research/health/right-to-health-insurance-appeals-in-aca.aspx http://www.ncsl.org/research/health/right-to-health-insurance-appeals-in-aca.aspx https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-medicaid-setting-the-facts-straight/ https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-medicaid-setting-the-facts-straight/ ▸ Endnotes a. Section 106 of the IRS Code of 1954 states that employers who pay a share of premiums for employees’ hospital and medical insurance may exclude that amount from the gross income of employees. b. There are both for-profit and not-for-profit insurance companies. Both types of companies seek to earn enough revenues to cover expenses and the cost of accessing capital. However, for-profit companies return excess revenue to their investors whereas not-for-profit compa- nies put excess revenue back into the company. Endnotes 171 173 © Mary Terriberry/Shutterstock CHAPTER 9 Health Economics in a Health Policy Context LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Understand why it is important for health policymakers to be familiar with basic economic concepts ■ Understand how economists view decision making and options analysis ■ Describe the basic tenets of supply, demand, and markets ■ Understand how health insurance affects economic conditions ■ Apply economic concepts to health policy problems ▸ Introduction There are several disciplines that may be used to assist you in analyzing health policy prob-lems; these include frameworks such as topi- cal domains, historically dominant perspectives, and key stakeholder perspectives, along with political and legal analysis. Furthermore, throughout the text, issues are viewed through a social framework by ask- ing you to consider what policies guide your decision making—in other words, what do you think should happen? This chapter informs you about yet another discipline—economics—that is useful when conduct- ing health policy analysis. Students just beginning their health policy studies often question why it is necessary to study econom- ics. Most would rather think about and discuss what policies they support and what values should govern decision making, not about competitive markets, equilibriums, and externalities. What may not be clear initially to students is that economic theory provides one of the fundamental building blocks for making policy choices, both generally and in the context of health care and public health. For instance, economic tools help policymakers predict how consumers and producers will react if they implement certain policies. Knowing this may help policymakers choose the most effective and efficient policy to achieve their goals. The governor’s request to Jaia in BOX 9-1 provides one example of how economic knowledge would prove helpful in health policy decision making. Other exam- ples include the following: ■ When federal officials decide which communi- ties should receive grants to support primary care clinics, they need to know if appropriate providers are available to staff clinics. Economic theory can help explain why some providers prefer to locate in urban or suburban Maryland instead of rural 174 Chapter 9 Health Economics in a Health Policy Context West Virginia, why there is a shortage of qualified nurses but an abundance of cardiologists, and how to change this situation and help a rural primary care clinic remain viable. ■ In the face of a flu vaccine shortage, the president considers launching an initiative to ensure that every American can be vaccinated against the flu in the case of an epidemic. Economic theory sheds light on why there are so few vaccine producers supplying the United States currently and what could be done to entice manufacturers to partici- pate in the flu vaccine market. Entire books and courses are devoted to the con- cept of health economics, and this chapter is not an attempt to distill all the theories and lessons of those texts and courses. Instead, our goal is to introduce you to the basic concepts of health economics, because understanding how economists view health-related problems is one essential component of being a good health policy analyst and decision maker. This chapter begins with an overview of what health economics is, how economists view health care, and how individu- als determine whether obtaining health insurance is a priority in their lives. It then moves to a review of the basic economic principles of supply, demand, and mar- ket structure. As part of this discussion, you will learn what factors make supply and demand increase or decrease, how the presence of health insurance affects supply and demand, how different market structures function, and what interventions are available when the market fails to achieve desired policy goals. ▸ Health Economics Defined Economics is concerned with the allocation of scarce resources, as well as the production, distribution, and consumption of goods and services. Macroeconomics studies these areas on a broad level, such as how they relate to national production or national unemployment levels, while microeconomics studies the distribution and production of resources on a smaller level, including individual decisions to purchase a good or a firm’s deci- sion to hire an employee. Microeconomics also consid- ers how smaller economic units, such as firms, combine to form larger units, such as industries or markets (Pin- dyck & Rubinfeld, 2003, p. 3). Health economics, then, is the study of economics as it relates to the health field. How Economists View Decision Making Economists assume that people, given adequate infor- mation, are rational decision makers. Rational deci- sion making requires that people have the ability to rank their preferences (whichever preferences are rel- evant when any sort of decision is being made) and assumes that people will never purposely choose to make themselves worse off. Instead, individuals will make the decision that gives them the most satisfac- tion, by whatever criteria the individual uses to rate his level of satisfaction. This satisfaction, referred to as utility by economists, may be achieved in many ways, including volunteering time or giving money to char- ities. Utility in a health context takes into account that individuals have different needs for and find different value in obtaining healthcare goods and services, and that whether they purchase health resources—and, if so, which ones they purchase—will depend on the individual’s preferences and resources. Utility Analysis What does utility mean in terms of health care? Most people do not enjoy going to the doctor or taking medicine. It seems strange to think of individuals as BOX 9-1 Vignette Jaia is Governor Jara’s chief health policy analyst. Governor Jara is interested in improving the health status of residents in the state but is concerned about the impact any new initiative will have on the state’s economy. She asks Jaia to compare the economic consequences of three options: tax incentives for individuals to purchase exercise equipment or gym memberships, tax incentives for employers to offer wellness programs, and a mandate requiring that all stores selling food in the state provide fresh food and other healthy options. Fortunately, Jaia has a background in economics and knows that she needs to be concerned with basic principles of supply, demand, and market functions to help her governor make the best choice. This knowledge will lead her to ask questions such as: How big of a tax incentive is necessary to compel individuals or employers to act? Will tax incentives encourage behaviors, such as people joining a gym or employers offering wellness programs, that would not occur otherwise, or will the government simply be subsidizing transactions that would take place anyway? Is the problem that exercise options and healthy foods are not available and affordable, or are individuals simply making the choice not to engage in healthy behavior because they prefer to spend their time and money on other goods and activities? Will a mandate lead to the proliferation of healthy food stores or encourage stores to leave the state? The answers to these questions will help Jaia supply the governor with informed policy recommendations. Health Economics Defined 175 being “happy” as a result of, for example, receiving weekly allergy shots or getting chemotherapy treat- ments. Likewise, it seems odd to think of individuals as undergoing such regimens to “maximize the utility” of the interventions. However, health care can be dis- cussed in terms of utility because most people enjoy being healthy. Everyone has a different level of health, some due to their status at birth (e.g., infants born prematurely may have problems with their lungs or mental devel- opment) and others due to incidents that occur during their lives (e.g., an individual who was in a serious car crash may suffer from back pain). In addition, peo- ple have various tolerance levels for being unhealthy. In other words, the willingness to pay for a particular healthcare good or service will vary among individu- als based on their circumstances and preferences. Furthermore, at some point, obtaining additional “units” of a particular good will bring less satisfaction than the previous units did. For example, although icing a sore knee for 20 minutes may reduce swelling, icing the same knee for 40 minutes will not reduce swelling twice as much, or, although buying one pair of glasses may bring high satisfaction, buying two pairs of glasses will not double the consumer’s satis- faction, because the second pair of glasses cannot do more than the first. This concept is called diminishing marginal utility, and it also affects what goods and ser- vices a consumer purchases. In addition, consumers must consider the oppor- tunity costs of their decisions. Opportunity costs refer to the cost associated with the options that are not chosen. For example, if a consumer decides not to purchase any medication to ease his or her back pain, there is zero accounting or monetary cost; that is, it did not cost the consumer any money because he or she did not purchase the medication. However, there may be opportunity costs, monetary or otherwise, because the consumer is not pain-free. The consumer may endure a monetary loss if he or she has to take time off from work due to the injury. Or, the consumer may endure a nonmonetary loss because he or she can- not enjoy walking or exercising due to the back pain. Opportunity costs are the hidden costs associated with every decision, and in order to fully assess the cost and benefits of any decision, these hidden costs must be included in the calculation. In terms of healthcare goods only, utility can be thought of as a function of individuals’ health and the healthcare goods and services they desire. Utility maximization in health care is the ideal set of health- related goods and services that an individual pur- chases. However, people need to purchase a variety of goods and services, not just those relating to health care. Overall, consumers maximize their utility by purchasing what they consider to be an ideal bundle of healthcare goods and services, as well as other goods and services, based on their desire for each good and service and subject to the income they have available to make these purchases. Scarce Resources In the healthcare arena, consumers have to make choices about the production, distribution, and con- sumption of healthcare resources. There are many types of healthcare resources. Healthcare goods include items such as eyeglasses, prescription drugs, and hos- pital beds; healthcare personnel include providers such as physicians, nurses, and midwives, as well as lab technicians, home healthcare workers, and count- less others; and healthcare capital inputs (resources used in a production process) include items such as nursing homes, hospitals, and diagnostic equipment (such as an X-ray machine). All of these things (and others) are considered healthcare resources. If there were unlimited healthcare resources and an unlimited ability to pay for goods and services, the questions confronted by health policy analysts about what healthcare items should be produced and who should have access to them would still exist, but the answers would be less dire because there would be enough health care available for everyone. In reality, however, there is a finite amount of healthcare goods, personnel, and capital inputs. The financial resources are not available to provide all of the health care demanded by the entire population and still provide other goods and services that are demanded. As  a result of this scarcity of resources, choices and very apparent trade-offs must be made. In general, consumer choices are based on indi- vidual preference, as discussed earlier, and the con- cept of efficiency. In economic terms, an efficient distribution of resources occurs when the resource distribution cannot be changed to make someone bet- ter off without making someone else worse off. This notion of efficiency in exchange is also referred to as Pareto-efficient, named after the Italian economist Vilfredo Pareto, who developed the concept. There are several types of efficiency, such as allocative effi- ciency, production efficiency, and technical efficiency (Penner, 2004, pp. 9–10; Santerre & Neun, 2004, p. 5). Allocative efficiency focuses on providing the most value or benefit with goods and services. Production efficiency focuses on reducing the cost of the inputs used to produce goods and services. Technical effi- ciency focuses on using the least amount of inputs to create goods or services. 176 Chapter 9 Health Economics in a Health Policy Context The notion of efficiency raises many questions because there are always trade-offs to be made when producing goods and services. For example, should the production be more automated or more labor- intensive? Should the production sites be located in the United States or overseas? Can a service be pro- vided in a less costly setting? Is there any additional or different service or product that will enhance the benefits of the goods or services consumers receive? Although they may not use this technical eco- nomic jargon, public and private policymakers often consider concepts of efficiency when they answer these types of questions. The answers, in turn, help identify which goods and services should be produced over- all in society and which of those goods and services should be related to health care. Because there is a finite amount of resources available, the choice to pro- duce more healthcare goods and services would result in the production of fewer non-healthcare goods and services, and vice versa. Similarly, the choice to pro- duce more of one kind of healthcare good or service will lead to the production of fewer healthcare goods and services of other types. Finally, policymakers must also decide whether equity or fairness concerns should be taken into account, and in response alter their production and distribution decisions in ways that may make some people better off at the expense of others. For example, when a U.S. flu vaccine shortage occurred, some states required that vaccines be given only to individuals in high-risk groups. Individuals who had access to the vaccine, but were not in those high-risk groups, were made worse off by this decision because they were no longer allowed to receive the inoculation. On the other hand, some individuals in the high-risk group who otherwise would not have been able to obtain the vaccine were made better off under the new pol- icy. The point is not that efficiency is more import- ant than equity or vice versa. However, it is important to understand that these are distinct and not always complementary concerns, and whether and how one decides to influence the market will depend, in part, on how much the decision maker values efficiency and equity. In a world of limited resources, balancing con- sumer preferences, efficiency, and equity concerns can be a very difficult task for policymakers. How Economists View Health Care Health economics helps explain how health-related choices are made, what choices should be made, and the ramifications of those choices. Evaluating the con- sequences of these choices is referred to as positive economics. Positive economics identifies, predicts, and evaluates who receives a benefit and who pays for a public policy choice. Positive economics answers the questions, “What is the current situation?” and “What already happened?” Normative economics discusses what public policy should be implemented based on the decision maker’s values. It answers the question, “What should be?” (Feldstein, 2005, p. 5; Senterre & Neun, 2004, p. 14). For example: A positive statement: In 2016 approximately 28  million people in the United States did not have health insurance for the entire year. A normative statement: All people living in the United States should have health insurance. As shown by the concepts of positive and nor- mative economics, health economists, like other ana- lysts, cannot avoid discussing how health care should be perceived. Is health care a good or service like any other good or service such as food, shelter, or clothing that consumers obtain or refrain from obtaining based on availability, price, resources, and preference? Or is health care a special and unique commodity for rea- sons such as its importance to individuals’ quality of life or how the healthcare market is structured? Bear in mind that health policymakers take their own view of health care’s place in the market into account when they argue for or against a policy. The following sections identify two theories of how to view health care. Many economists’ views fall some- where in the middle of these two theories or combine aspects of the two theories to create a hybrid theory. These theories were not presented to be an either/or choice, but to illustrate that even within the field of economics there is a fundamental debate about how to view health care. ▸ Economic Basics: Demand Consumers, whether an individual, firm, or country, purchase goods and services. Demand is the quan- tity of goods and services that a consumer is willing and able to purchase over a specified time. In the case of health care, for example, demand equals the total demand for healthcare goods and services by all the consumers in a given market. Demand Changers In general, as the price of a good or service increases, demand for that good or service will fall. Conversely, as the price of goods or services decreases, demand for those goods or services will rise. Economic Basics: Demand 177 Various factors in addition to price also increase or decrease the demand for a product. Insurance is an important factor relating to demand that is discussed separately later in this chapter. A few of the other fac- tors that may change the demand for a product include the following: ■ Consumer’s income: As a consumer’s income increases, demand for a product may increase. For example, a consumer may desire a new pair of eyeglasses but cannot afford it. Once the consum- er’s income increases, the consumer can purchase the eyeglasses. ■ Quality: Consumers have preferences based on quality, both actual and perceived. In addition, a change in quality will likely result in a change in demand. A decrease in the quality of a product may result in a decrease in demand because con- sumers decide the product is no longer worth the price charged. For example, a consumer may discover that the eyeglasses he or she wants fall apart easily, thus may decide not to buy the product. ■ Price of substitutes: A substitute is a differ- ent product that satisfies the same demand. For example, contact lenses may be a substitute for eyeglasses. As the price of contact lenses drops, a consumer may decide he or she prefers contact lenses to eyeglasses. ■ Price of complements: A complement is a prod- uct associated with another product. For exam- ple, cleaning solution is a complement to contact lenses. The price and quality of cleaning solution (the complement) may be an important factor when a consumer is debating whether to keep wearing glasses (the original product) or switch to contact lenses (the alternative product). If the price of cleaning solution increases, even though the price of contact lenses stays the same, the consumer may decide to purchase eyeglasses instead of contact lenses. In other words, demand for complements and alternative products shifts in opposite ways, so an increase in the price of a complement will decrease the demand for the alternative product, and vice versa. BOX 9-2 Discussion Questions Consider each of the following issues and discuss whether you support Theory X, Theory Y, neither theory, or some combination of them. Issue Theory X Theory Y Your view about how an individual’s health is determined Whether a person is healthy or sick is determined randomly. Whether a person is healthy or sick depends on lifestyle choices such as whether a person smokes, drinks, or wears a seatbelt. Your view of medical practice Medicine is a science, and experts will ultimately discover the best means for treating every illness. Medicine is an art and there will never be one best way to treat every illness because illnesses are often patient-specific and because there will always be a demand for lower-cost and less painful treatments. Your view of medical care Medical care is a unique commodity. Medical care is similar to any other good or service. Your view of the government’s role in health care Government regulations are necessary to protect this unique commodity, to control profiteering at the cost of patient care, to control resources spent on health care, and to improve information sharing. Government regulations are not necessary, technological advances and more services are desirable, and competition, not regulation, should drive the market. Source: From Musgrave, GL. Health economics outlook: two theories of health economics. Bus Econ. 1995;30:7–13. 178 Chapter 9 Health Economics in a Health Policy Context The physical profile of a consumer has an impact on demand for healthcare services in some predict- able ways. Women generally demand more healthcare services than men do before reaching 65 years of age, primarily due to health needs related to childbearing, whereas men older than 65 years use more care than do women in the same age group. In addition, many diseases are more prevalent in women than in men, resulting in an expected increase in demand for health services by women. Some of these diseases include cardiovascular disease, osteoporosis, and immuno- logic diseases (Phelps, 2003, pp. 149–150; Senterre & Neun, 2004, p. 111). Regardless of sex, an individual who is born with a medical problem, or who devel- ops one at a relatively young age, can be expected to have a higher than average demand for healthcare ser- vices. Aging consumers are more likely to have higher healthcare needs than younger consumers. Of course, any factor that usually leads to increases in demand for healthcare services may be offset by lack of finan- cial resources or lack of access to providers. In addition to the physical profile of a consumer, interesting research is being conducted in relation to consumers’ level of education and their demand for services. Although there is no consensus on the direct impact of general education on demand for health services, some studies show a positive relationship between medical knowledge and demand for health- care services; that is, the more the consumer knows about medicine, the higher the level of consumption of healthcare services. This association may indicate that consumers without as much medical knowledge underestimate the appropriate amount of health ser- vices they need, or it may mean that consumers with more medical education have a greater ability to pur- chase medical care. Other explanations are possible as well (Agency for Healthcare Research and Quality, n.d.; Cutler & Lleras-Muney, 2006; Senterre & Neun, 2004, p. 127). Elasticity Two of the demand changers discussed previously are shifts in price and shifts in income. Elasticity is the term used to describe how responsive the change in demand or supply is when there is either a change in price or a change in income. The concept of elasticity is important to understand as a policy analyst because it is essential to know whether changes in consumers’ incomes (say, through a tax credit) or changes in the price of a product (perhaps through incentives given to producers) will result in the desired outcome. The desired outcome may be increased consumption, which might be the case if the service is well-child checkups. Conversely, the desired outcome may be decreased consumption, which might be the case if cigarettes are the product being consumed. Price Elasticity of Demand Price elasticity of demand is based on the percentage change in the quantity demanded resulting from a 1% change in price. In other words, does consumer demand for a product, such as a vaccination, increase as the price of a product decreases by 1%, or vice- versa? Elasticity is calculated as follows: =Demand elasticity % change in quantity demanded % change in price (Economists often use the midpoint method which averages the percentage change in quantity and price. This results in the same answer whether there is a price increase or decrease. Price elasticities are always negative because price and demand are inversely related. Even so, elasticities are reported in absolute values, not negative numbers). Demand for a product is considered elastic if the sum is greater than 1 and inelastic if the sum is less than 1. An elasticity of 0 is perfectly inelastic, meaning the demand does not change in response to a change in price. For example, suppose a vaccine costs $20 per dose and at that price a family buys four doses, for a total of $80. The next year the price increases 20% to $24 per dose and the family buys only three doses for a total of $72. The mid-point of the two prices is $22 and the mid-point of the two quantities demanded is 3.5. Using the mid-point method, the calculation is as follows − = − 1/3.5 2/22 3.14 or 3.14 Because elasticity equals 3.14, the product is con- sidered elastic (because the result of the elasticity cal- culation is greater than1). In this example, for every 1% increase in vaccine price, demand decreases by 3.14%. If the price decreases, the quantity demanded would be expected to increase. Of course, goods may also be inelastic, which means the demand for the good is not as sensitive to a change in price. As a result, when price increases, the quantity demanded will not decrease at the same rate as the price increases. For example, some people will not reduce their consumption of cigarettes even Economic Basics: Demand 179 if the price of cigarettes increases. However, at some point the price could become high enough that con- sumer behavior will change, resulting in a decrease in demand. Supply elasticity works in much the same way as the price elasticity of demand and uses the same formula, except it refers to the relationship between the quantity of goods supplied and the price of the goods. Supply elasticity is often defined as the percent- age change in quantity supplied resulting from a 1% increase in the price of buying the good. The change is usually positive because producers have an incen- tive to increase output as the price they will receive for the good rises. However, if supply elasticity refers to variables other than the price of the good, such as the cost of raw materials or wages, then the supply elastic- ity will be negative; that is, as prices of labor or other inputs rise, the quantity supplied will fall (all other things being equal). Income Elasticity of Demand Elasticity works in the opposite way in the case of inferior goods. An inferior good, as the name suggests, is less desirable than a normal good. As a result, as a consumer’s income increases, demand for the infe- rior good will decrease. Instead of buying more of the inferior good, the consumer will prefer to buy the normal good. For example, suppose a generic over-the-counter pain medication is cheaper than a particular prescription pain medication, but the prescription pain medication is more effective. Con- sumers with low income may choose to purchase the over-the-counter medicine, the inferior good. If their income increases, they will not buy more of the infe- rior good, but instead will switch to the prescription pain medicine because it is a better good, for their purposes, than the inferior good. Health Insurance and Demand In addition to the general economic rules of demand for health services, the presence of health insurance affects demand for healthcare goods and services. Health insurance acts as a buffer between consum- ers and the cost of healthcare goods and services. In an insured consumer’s view, healthcare goods or ser- vices cost less because instead of paying full price, the consumer may only have to pay, for example, a co- insurance rate of 20% (after satisfying the deduct- ible). For example, if a surgical procedure normally costs $10,000, the insured consumer may have to pay only $2,000 for the benefit of the surgery because his or her insurance company pays for the remainder. In this way, the presence of health insurance can have an effect on the consumer—to increase demand—in the same way that an increase in the consumer’s income can increase demand. In general, insured consumers are less sensitive to the cost of healthcare goods and services than unin- sured consumers (Penner, 2004, p. 38). Thus, the pres- ence of health insurance creates the problem of moral hazard. Moral hazard can occur in a variety of eco- nomic situations when consumers buy more goods or services than necessary because they do not have to pay the full cost of acquiring the good or service. In relation to health insurance, moral hazard results when an insured consumer uses more services than he or she would otherwise because part of the cost is covered by insurance. For example, if a consumer has a $500 health insurance deductible, the consumer pays 100% of the first $500 of health care received. If there is a 20% co-insurance charge after that, the consumer pays only $.20 per dollar for every dollar spent after $500. If the consumer values a particular healthcare service, such as a preventive dental exam, at $50 but the ser- vice costs $100, the consumer will not purchase the service before meeting the deductible. However, after the deductible has been met, the dental exam (assum- ing it is a covered benefit) will cost the consumer $20 (20% of $100), so the consumer will purchase the service because it is under the consumer’s $50 value threshold. As the portion of the healthcare cost that a con- sumer pays based on co-payments or co-insurance decreases, the consumer becomes less sensitive to changes in the price of the product. Say a consumer decides he or she is unwilling to pay more than $2,500 for surgery. If the consumer owes a 10% co-insurance charge, the consumer will be willing to pay for sur- gery as long as it is not priced at more than $25,000. At $25,000, the consumer would pay $2,500 and the insurance company would pay $22,500. However, if the same consumer has a 20% co-insurance rate, he or she will not elect surgery once the price rises above $12,500 because the cost to the consumer would be more than the consumer’s $2,500 limit; for example, if the surgery costs $15,000, the consumer would owe $3,000 and the insurance company would cover the other $12,000. The problem of moral hazard is particularly rel- evant in health care because consumers have an incentive to seek out more medical care: they think it will make them feel better. And, as noted earlier, an insured consumer is more likely to purchase a 180 Chapter 9 Health Economics in a Health Policy Context desirable healthcare good or service because the pres- ence of insurance reduces his or her cost. The same cannot be said of owning a home or auto insurance; although consumers may be a little less careful because of the protection fire or car insurance affords them, it is unlikely that a person will allow an automotive cen- ter to replace a working fuel pump on his or her car just because he or she has car insurance. ▸ Economic Basics: Supply Supply is the amount of goods and services that pro- ducers are able and willing to sell at a given price over a given period of time. As with demand, the price of a product is a key factor in determining the level of supply. However, unlike demand, where there is often an inverse relationship between price and demand, an increase in the price a good is sold for usually leads to an increase in quantity supplied. Conversely, as the price consumers will pay for a product decreases, sup- ply will often decrease as well. As with demand, there are many factors that affect the quantity of a good or service being supplied. Costs Costs are a key factor in determining the level of sup- ply. Costs refer to what inputs are needed to produce a good or service. For example, the price of cotton may impact the cost of producing medical scrubs or bed linens made out of cotton, or the price of steel may affect the cost of producing an autoclave or X-ray machine made with steel. As the cost of these inputs increases, the cost of producing the final good increases as well. If the price for a good or service does not increase as the cost of inputs increases, the quantity supplied is likely to decrease. Thus, if it costs a manufacturer $100 more to build an X-ray machine because the cost of steel has risen, it is likely that the manufacturer will pass that production cost increase on to the consumer by raising the purchase price of the X-ray machine. Alternately, the manufacturer may choose to absorb the $100 cost increase and not raise the purchase price, which will lead the manufacturer to supply fewer X-ray machines, find a way to produce the good more cheaply using the same method, or find a different way to produce the good. Costs are counted in many different ways. We focus here on average costs and marginal costs. ■ Average cost: The cost of producing one product over a specific period of time. For example, if it costs a manufacturer $2 million to produce 2,000 hospital beds in 1 year, the average cost is $1,000 per bed during that year. = = = Average cost Total cost/Quantity $2,000,000/2,000 hospital beds $1,000 per hospital bed ■ Marginal cost: The price of producing one more unit of the output—in our example, one more hos- pital bed. Whatever additional labor, equipment, and supplies are needed to produce one more hospital bed is the marginal cost of production. As a general matter, the marginal cost increases as output increases. Supply Changers Other factors in addition to sale price and cost can increase or decrease the supply of a product. Two common factors are number of sellers and changes in technology: ■ Number of sellers: As the number of sellers of a good increases, the supply of the good will increase as well because there are more compa- nies producing the good. As long as the market is profitable, new sellers will be enticed to enter the market. This occurs until the market reaches equilibrium, where the quantity demanded equals the quantity supplied. ■ Change in technology: New technology may mean a new way to produce a desired outcome, which may alter the supply of a good or service. For example, fiberglass has replaced plaster in most casts and the production of each material has shifted accordingly (fiberglass up, plaster down). New technology can also make a product more accessible than before. For example, many surgeries once handled on an inpatient basis may now be performed on an outpatient basis or in a physician’s office due to new technology, such as arthroscopy. In addition, evolving technology has led to brand new fields, such as robotic sur- gery. Technological improvements can increase demand for some services and reduce it for oth- ers, leading to a change in the production of these goods and services. Profit Maximization Although consumers are driven by the desire to max- imize their satisfaction, suppliers are driven by their desire to maximize revenues. For-profit companies Economic Basics: Supply 181 seek to make profits to pass on to their sharehold- ers, while not-for-profit companies face a variety of requirements regarding disposing of the revenue they generate in excess of expenses and the cost of acquiring capital to run the company. For ease of explanation, the term profit will be used here to discuss supplier incentives, even though the healthcare field includes a large share of not-for-profit companies. Profit is the price per unit sold less the produc- tion cost per unit. In a competitive market, profit is maximized at the level of output where the marginal cost equals the price. If a hospital bed costs $1,000 to produce and is sold for $1,500, the profit per bed is $500. If the marginal cost of producing one more bed is $1,400, the producer will make that additional bed because it can be sold for $1,500, a $100 profit; how- ever, if the marginal cost of producing an additional bed is $1,600, the producer has no incentive to pro- duce that additional bed because it can only be sold at a loss of $100. Due to the profit maximization goal, if the price of a product increases and a competitive market exists for the product, manufacturers will increase production of the product until the output level again reaches the point where the marginal cost equals the price. When a profitable market exists, new produc- ers will be drawn into the market so they can reap financial benefits. The new producer may price its hospital bed for less than $1,500 to attract consum- ers, or the new producer may think there is a niche for a higher-priced bed that has additional features. Assume the new producer chooses to market a similar bed as the $1,500 bed but sells it for $1,250. If a con- sumer can purchase the bed from the competing com- pany for $1,250 with no additional opportunity costs, demand for the $1,500 hospital bed is likely to fall. The manufacturer of the $1,500 bed will have to lower its price or improve the product (or the perception of the product) to increase demand for a higher-priced bed. At the point where there is a balance between the quantity supplied and the quantity demanded and the price is set to the marginal cost of production, there is equilibrium in the market. If such a balance does not occur, there is disequi- librium in the market. The disequilibrium could repre- sent a surplus of a good or service due to excess supply or sudden drop in demand, or it could result from a product shortage due to inadequate supply or a sharp increase in demand. Surpluses occur when the market price in a competitive market is higher than the mar- ginal cost of production; as a result, producers lower their prices to increase sales of their product. These price reductions will keep happening until market equilibrium is reached. For example, there could be a sudden drop in demand for a food product due to a news report that eating the product more than three times a week may put people’s health at risk. Due to the sudden drop in demand, excess product will be available. Producers will, in turn, lower the price of the product until equilibrium is reached. Shortages occur when the market price is lower than the marginal cost of production. As a result of the shortage, consum- ers might be willing to pay more for the product, so producers increase their prices until demand stops increasing and market equilibrium is reached. If an opposite news story appeared, hailing the food product as improving health if eaten at least four times a week, there may be a sudden surge in demand. As a result, consumers will likely be willing to pay more for the product and producers will raise the price until equi- librium is reached. Because producers often cannot make significant changes to their production schedule or products in a short amount of time, market equilib- rium positions may take some time to achieve. Health Insurance and Supply Just as the presence of health insurance affects a con- sumer’s demand for medical goods and services, it also may impact a healthcare provider’s willingness to supply goods and services. This is a complicated issue because, on the one hand, a provider is expected to act as the patient’s agent and thus should act in the patient’s best interests. If providers encourage only appropriate care, insurance is working in a positive way. On the other hand, providers may have a financial incentive to encourage or discourage the consumption of healthcare goods and services. Providers could rec- ommend against treatment because of financial incen- tives resulting from the presence or absence of health insurance. For example, financial incentives found in managed care may discourage providers from rec- ommending a particular treatment. Additionally, if a patient is both uninsured and unable to pay for ser- vices out-of-pocket, providers have a financial incen- tive not to provide potentially necessary services due to their inability to receive payment. Similarly, a provider may seek to increase his or her income by encourag- ing inappropriate or excessive care. This problem—the provider version of moral hazard—is referred to as supplier- induced demand. Supplier-induced demand is the level of demand that exists beyond what a well- informed consumer would have chosen. The theory behind supplier-induced demand is that instead of consumer demand leading to an increase in suppliers (healthcare providers), the suppliers create demand 182 Chapter 9 Health Economics in a Health Policy Context in the consumers (patients), often by relying on infor- mation only available to the supplier. However, econ- omists debate whether supplier-induced demand actually exists because it is difficult to study empirically and because behavior consistent with supplier-induced demand may also be consistent with appropriate med- ical treatment (Phelps, 2003, pp. 237–242). ▸ Economic Basics: Markets To this point, we have reviewed many basic aspects of economic theory—how consumers behave, how sup- pliers behave, what drives and shifts demand, and what drives and shifts supply. To understand how these the- ories work in the healthcare industry, it is necessary to explore how health insurance affects markets, what kind of market exists for health care, how market structure relates to the production and distribution of goods and services, and why markets fail and what can be done to alleviate the problems associated with market failure. Health Insurance and Markets Before delving into the basics of economic markets, it is necessary to highlight how the presence of health insurance alters the dynamics of a standard economic transaction. In a typical market transaction, such as buying food at the grocery store, there are only two parties involved—the consumer who buys the food and the supplier who sells the food. The cost to the consumer is the cost of the food; the consumer bears full responsibility for paying that cost and pays that cost directly to the supplier, the grocery store. The typical medical transaction, however, does not follow these rules, both because of the types of events that lead to a medical transaction and because of the presence of health insurance. In health care, there are both routine and expected events (e.g., an annual physical) and unanticipated needs due to an unpredictable illness or injury. The exact diagnosis and treatment are often unknown initially and the patient’s response to treatment is not guaranteed, resulting in an inability to predict exactly what resources will be needed. Without knowing what goods and services are required, it is impossible to estimate the cost to be incurred. This makes it very difficult for consumers to weigh their preferences for medical care as compared to other goods and services, and makes it difficult for suppliers to know which goods and services will be demanded and at what price they can sell their goods and services. Another reason healthcare transactions often do not follow the typical market exchange is because the presence of health insurance means healthcare trans- actions involve three players, instead of two; these three players are (1) patients (the consumer), (2) healthcare providers (the supplier), and (3) insurers (who are often proxies for employers). Insurers are also known as “third-party payers” because they are the third party involved in addition to the two customary parties. In the public insurance system, the third-party payer is the government, and in the private sector, the third- party payers are private health insurance companies. Having the health insurance carrier as a third party means consumers do not pay the full cost of health- care resources used and therefore may be less likely to choose the most cost-effective treatment option, to reduce the information gap between themselves and providers, or be as vigilant against supplier-induced demand as they might in other circumstances. Market Structure Understanding markets begins with the notion of a perfectly competitive market, because in economic theory a perfectly competitive market serves society by efficiently allocating the finite resources available. Due to specific market conditions that make up a per- fectly competitive market, a competitive equilibrium is reached once quantities supplied equal the quanti- ties demanded. There are numerous types of market structures, ranging from perfectly competitive markets with many buyers and sellers to monopolistic markets with a single seller controlling the market. Other common market structures include oligopolies, which have a few domi- nant firms and substantial but not complete barriers to entry, and monopsonies, which have a limited number of consumers who control the price paid to suppliers. Based on the market structure, consumers and pro- ducers have varying degrees of power in terms of set- ting prices, choosing among products, and deciding whether to participate in the market. TABLE 9-1 reviews the characteristics of three market structures that are most useful to understanding healthcare markets: per- fectly competitive markets, monopolistic markets, and monopolistically competitive markets. You know from the discussion of supply and demand that the healthcare market cannot be perfectly competitive based on the description in Table 9-1. (In fact, no markets are truly perfectly competitive.) Some consumers, such as the federal government, may have extensive market power as well as the ability to set prices. Producers of patent-protected healthcare products are provided with supply power for a limited period of time, which gives them an ability to control Economic Basics: Markets 183 prices. Consumers do not have perfect information regarding healthcare needs and healthcare costs, and providers and insurers do not have perfect informa- tion regarding patient illnesses. Given the presence of health insurance, consumers do not bear all the cost of using healthcare services. With these characteristics, the healthcare market is monopolistically competitive. In many areas of the healthcare market, there are a few dominant firms with a lot of market power and many smaller firms who participate in the market, but the smaller firms do not have the power to shape market conditions. Market Failure A market failure means resources are not produced or allocated efficiently. As you recall, we defined effi- ciency generally as the state of least cost production where the resource distribution cannot be changed to make someone better off without making someone else worse off, and we also described a few specific types of efficiency. When something about the structure of the market prohibits it from being efficient, it is referred to as market failure; the question then becomes what interventions in the market, if any, should occur in an attempt to alleviate the market failure. Before we turn to why markets fail, we must address one additional issue: Does an inequitable distribution of resources constitute a market failure? Under the tra- ditional economic school of thought, the answer is no; a market failure refers to inefficiency, and concerns about equity are not part of the efficiency calculation. How- ever, some economists consider equity a valid factor when evaluating the functioning of a market. Regard- less, whether an inequitable distribution of resources fits under the economic designation of “market failure” is not as important as whether policymakers choose to intervene in a market based on equity concerns. Some of the most salient reasons that market fail- ures occur in health care include concentration of market power, imperfect information (producers or consumer not having complete and accurate infor- mation), the consumption of public goods, and the presence of externalities. We have already discussed TABLE 9-1 Characteristics of Key Market Structures   Perfectly Competitive Monopoly Monopolistically Competitive Number of firms Many One (in a pure monopoly) Many Market share No dominant firms One firm has all market share and price and output. There may be many firms with market share and or a few dominant firms. Firms can set price because of product differentiation. Barriers to entry for new firms into market No Yes—absolute barriers; no new firms may enter market. Some barriers, due to differentiation of product, licensure, etc. Product differentiation No. Products are for each other. No. Only one product; no substitutes are available. Yes. Many products; they are not substitutes for each other (brand loyalty). Access to information and resources Consumers and producers have perfect information. One firm controls all information (asymmetric information). All firms have equal access to resources and technology unless there are a few dominant firms with more access to resources. Cost of transaction Consumers bear cost of consumption, and producers bear cost of production. Higher price to consumer because firm has ability to reduce quantity, retain excess profits. Blend of costs in perfectly competitive market and monopoly market. 184 Chapter 9 Health Economics in a Health Policy Context concentration of market power and imperfect infor- mation; the next sections focus on public goods and externalities. Public Goods Public goods have two main features. First, public goods are nonrival, meaning that more than one per- son can enjoy the good simultaneously. An example of a rival private good would be a single pen, as two people may not use the same pen at the same time. Second, a public good is nonexclusive, because it is too costly to try to exclude nonpaying individuals from enjoying public goods (Senterre & Neun, 2004, p. 230). Classic examples of public goods are national defense measures and lighthouses. Everyone simulta- neously benefits from national defense, and it is not economically feasible to exclude nonpaying individ- uals (e.g., tax evaders) from enjoying the benefits. In the same way, multiple ships may benefit at the same time from a warning provided by a lighthouse, and it would be very difficult to exclude a particular ship from enjoying the benefit. In the health field, examples of local public goods include clean water in a free pub- lic swimming area or a public health awareness cam- paign on city streets. Everyone enjoys the clean water (at least until it is overcrowded), and it would be costly to exclude nonpayers. Similarly, multiple people can benefit from a public health campaign simultaneously, and exclusion of nonpayers would be impossible or quite costly. Public goods can be transformed into other types of goods. For example, a public good could be made exclusive by charging a fee; these are called toll goods (Weimer & Vining, 1999, p. 81). The public swimming water could be fenced off and a fee charged for admis- sion, or the public health campaign could be placed in the subway, which would exclude those who could not afford the fare. Once public goods are transformed into toll goods, concerns arise about whether the price is set at the most efficient level. Toll goods may still lead to market failure if the cost of using the good excludes users who would gain more from enjoying the good than they would cost society by consuming the good (Weimer & Vining, 1999, pp. 81–82). In addition, goods provided by local, state, and federal governments may be, but are not necessarily, public goods in the economic sense. For example, if a state funds a free healthcare clinic, it is not funding a public good. Even though nonpayers are, by defini- tion, included, the benefits generally inure to the indi- vidual and, in most cases, more than one individual cannot enjoy the same healthcare good or service. It is possible, however, that other people will benefit from a healthcare service they do not receive; for example, if your neighbor receives a service that helps him quit smoking, you will receive the benefit of no longer being exposed to your neighbor’s secondhand smoke. Public goods also create the free rider problem, making it unprofitable for private firms to produce and sell goods due to the high cost of excluding non- payers (Santerre & Neun, 2004, p. 230). The free rider is one who enjoys the benefit of the good without paying for the cost of producing the good. Because it is impossible to exclude users or force consumers to reveal their true demand for the public good, they do not have incentive to pay for the units of the good they use (Weimer & Vining, 1999, p. 86). For example, an individual cannot be prevented from gaining knowl- edge from a public health awareness campaign, so if a private company were responsible for providing the education campaign, it could not force a consumer to pay for it. Eventually, even though many people would like to take advantage of clean air or health educa- tion, the lack of people paying for it would result in an underproduction of these services unless some action were taken to alter the market dynamics. Externalities Externalities are much more common than pub- lic goods in the healthcare market. An externality is “any valued impact (positive or negative) resulting from any action (whether related to production or consumption) that affects someone who did not fully consent to it through participation in a voluntary exchange” (Weimer & Vining, 1999, p. 94). In a typi- cal economic transaction, the costs and benefits asso- ciated with a transaction impact only those involved in the transaction. For example, remember our con- sumer buying food at the grocery store? The only two people affected by that transaction are the consumer, who pays money and receives food, and the grocer, who provides food and receives money. Situations with externalities, however, are different. Externalities exist when the action of one party impacts another party who is not part of the transaction; in other words, the parties to the transaction will find there is an “unpriced by-product” of producing or consuming a good or service (Santerre & Neun, 2004, p. 231). Externalities may be positive or negative. An exam- ple of a positive externality is when one person gets vaccinated against the chicken pox and other people benefit because chicken pox is less likely to be transmit- ted in that community. If enough people get vacci- nated, “herd immunity” will exist in the community.a Economic Basics: Markets 185 In this case, the positive unpriced by-product is the additional protection received by others who were not vaccinated. An example of a negative externality is represented by illegal hazardous waste disposal. Say a hospital dumps biologic waste such as blood, syringes, gauze with infected material on it, and the like into a public water source. The unpriced by-product is paid by the general public, who face an increased risk of illness from using the contaminated water source. The costs to the general public may not have been included in the hospital’s cost–benefit analysis when it decided to dump the biologic waste. With both positive and negative externalities, the cost and benefits of production or consumption are borne by individuals who do not participate in the transaction. Due to the unpriced by-products, there are external costs and benefits that are not considered when deciding whether to make the transaction, lead- ing to an under- or overproduction of the resource from society’s perspective. Government Intervention When market failures occur, the government may intervene to promote efficiency or to promote equity (of course, it may also choose not to intervene at all). Some examples of government interventions include financing or directly providing public goods, creating incentives through tax breaks and subsidies, imposing mandates through regulation, prohibiting activities, and redistributing income. We discuss these options in the following sections. Government Finances or Directly Provides Public Goods. When market failure occurs, the government may choose to finance or provide a good or service directly instead of attempting to influence the actions of private producers. For example, if the government wanted to increase access to health care, it could cre- ate new government-run health centers or provide financing to privately run health centers. These are two different paths—direct provision or financing—with different sets of issues. The main dif- ference when the government provides or finances care instead of a private sector is the lack of profit motive on the part of the government (Santerre & Neun, 2004, p. 252). Instead of focusing on the financial bottom line, public providers may focus on other goals, such as equity or assuring the presence of a particular good or service for everyone or for specific populations. When the government creates or expands a public program, there is concern that crowd-out may occur. Whenever a program is established or expanded, the program has a particular goal and targets a particu- lar audience. For example, the government may try to reduce the number of people without insurance by expanding an existing public program such as the Children’s Health Insurance Program. Crowd- out occurs when instead of reaching only the target audience (in this case, the uninsured), the public pro- gram also creates an incentive for other individuals (in this case, privately insured people) to participate in the public program. Because the program has a finite amount of resources, some of the target audi- ence (the uninsured) may be crowded out from par- ticipating in the program by the presence of the other, nontargeted individuals (the privately insured). This unintended development prevents programs from maximizing cost-effectiveness because instead of obtaining the largest change (in this case, the reduc- tion in the number of uninsured) for the public dollar, some of the change is simply a result of a cost shift from a private payer (the privately insured) to a public payer (the expanded program). Crowd-out may also change incentives for other providers of services. In this example, the presence of the new or expanded government program may reduce the incentive for private employers to provide the same good or service (in this case, health insurance). Government Increases Taxes, Tax Deductions, or Subsidies. Taxes and subsidies can be used to alter the price, production, or consumption of goods in an effort to fix a market failure. For example, increasing a tax on a good raises the price of that good and dis- courages consumption; this strategy is often employed to discourage consumption of harmful products, such as cigarettes. Similarly, the government could choose to tax cigarette producers as a way to encourage them to produce less of the harmful product or leave the market altogether. Conversely, the government could subsidize a good, directly or through a tax deduction, when it wants to encourage the consumption and production of the good. For example, if the government wanted more low-income individuals to purchase healthy foods, it could choose to subsidize their purchase of fruits and vegetables by allowing individuals who use public ben- efits, such as food stamps, to purchase more fruits and vegetables than would normally be allowed by the face value of the food stamps (for example, $1 in food stamps would allow for the purchase of $2 of fruits or vegeta- bles). Similarly, if the government wanted to encourage vaccine manufacturers to produce more vaccine doses, it could accomplish this goal through direct subsidies to or tax deductions for the manufacturers. 186 Chapter 9 Health Economics in a Health Policy Context Note that the government has an economic incen- tive to tax goods that are price inelastic. This incentive exists because the amount purchased declines by a smaller percentage than the price increase. For exam- ple, if cigarettes are price inelastic, a 10% cigarette tax increase will result in less than a 10% decrease in cig- arette consumption, meaning the cigarette tax will be a good revenue producer for the government because consumers will continue to purchase cigarettes despite the tax. However, taxing price-inelastic goods is less effective as a public health tool for the same reason. If the government desires a 10% reduction in cigarette consumption, the tax must be much higher than 10% if cigarettes are price inelastic. Of course, the govern- ment may choose to impose a higher cigarette tax, but it is likely that, for political reasons, a higher tax increase will be harder to obtain than a smaller one. Government Issues Regulatory Mandates. Regula- tions may be used to fix a market failure by controlling the price, quantity, or quality of goods and services, or the entry of new firms into the market (Santerre & Neun, 2004, p. 241). For example, healthcare consum- ers often have imperfect information when making their healthcare decisions. As a result, the government may choose to create a requirement that a type of pro- vider, such as nursing homes, supply information to the public about the quality of care in their facilities to aid in consumers’ decision making. The government may also promulgate regulations that restrict entry of new firms into a market and regulate prices because it is cheaper for one or a few firms to produce a high level of output. Of course, government regulations could also be used to achieve a policy goal like reducing carbon emissions by mandating that public transportation sys- tems use alternative fuels that result in lower emissions. The government could also set a cap on the price of a good and prohibit producers from selling that good above the set price. This will keep the good at a price the government deems socially acceptable. How- ever, if the price is set below the market price, some unfavorable market consequences may occur because it is no longer profitable for the producer to supply the product. Possible consequences include the following: ■ Suppliers exiting the market or reducing the quan- tity of the good supplied, resulting in a shortage ■ Suppliers reducing the quality of the good by making cheaper products or providing less care ■ Suppliers shifting cost from one product to another ■ Suppliers engaging in unethical behavior because some consumers will be willing to pay more than the government price ceiling Furthermore, regulations aimed at increasing the quality of a good or service will likely impose additional costs on producers of the good. As the cost of inputs rise, the price charged to consumers is likely to rise as well. As a result, some consum- ers will be priced out of the market for that good or service. Government Prohibits Goods or Services. Pro- hibiting the production of goods and services often is ineffective and leads to a “black market” for such products. Because the prohibited goods or services are not available legally, consumers may be tempted to purchase goods or services that are not protected by price or quality controls. This situation may occur with the use of drugs or supplements not approved by the Food and Drug Administration, including unapproved drugs from other countries entering the United States via the Internet or other sources. In addition, because other countries are producing the good or service, the United States may be at a competitive disadvantage. For example, if stem cell research is permitted abroad but not in this country, some scientists may leave the United States to work abroad and domestic companies may not remain competitive in certain fields. Redistribution of Income In the case of market failure, the government may also act to redistribute income. Remember, efficient allocation of resources is not the same as equitable allocation of resources. A government may decide that every member of society should obtain a cer- tain minimum level of income or resources or health status. Redistributing income may occur by taxing BOX 9-3 Discussion Questions Some people argue that the government should not intervene in the case of a market failure because the government itself is inefficient and will simply create new problems to replace the ones it is trying to fix. In addition, critics contend that the government is usually less efficient than private sectors. Do you think the government is less efficient than the private sector? Does it depend on the issue involved? If you think it is inefficient in a particular area, does that lead you to recommend against government intervention, or is there a reason that you would still support government intervention? If you think the government should intervene, which intervention options do you prefer and why? 187Endnotes the wealthier members of society and using the reve- nue to provide resources to poorer members of soci- ety. If the government sought to create more market equity through voluntary donations, it is likely that a free rider problem would exist because some citi- zens would volunteer to contribute resources while others would not, but the latter would still receive a benefit from the redistribution. For example, wealth- ier citizens who should be in the “donor group” but do not contribute may benefit from the donations given by other wealthy citizens that lead to increased productivity and welfare of those in the recipient group. Both the notion of income redistribution and the decisions as to who should be providing versus receiving resources is open to debate. In addition, it is important to remember that income redistribu- tion may reduce efficiency or have other undesirable market effects. ▸ Conclusion This introduction to economic concepts illustrates why health policy analysts and decision makers must under- stand how economists analyze healthcare problems. We have taken a broad look at the issues of supply, demand, and market structure with a focus on concerns that are relevant in the health policy field. In particular, it is essential to understand how health insurance affects both consumer and producer decisions. Although we only scratched the surface of healthcare economics in this chapter, you should now realize that without an understanding of the economic ramifications of a pol- icy decision, a health policy analyst cannot know, for example, whether to recommend addressing a problem through a government-run program, subsidy, or the like, or if it would be better to let the free market set the production level and price of a resource. References Agency for Healthcare Research and Quality. (n.d.). Population health: Behavioral and social science insights. Retrieved from https://www.ahrq.gov/professionals/education/curriculum -tools/population-health/zimmerman.html Cutler, D., & Lleras-Muney, A. (2006). Education and health: Evaluating theories and evidence (National Bureau of Economic Research Working Paper 12352). Retrieved from http://www .nber.org/papers/w12352 Feldstein, P. (2005). Health care economics (6th ed.). Clifton Park, NY: Thomas Delmar Learning. Gordis, L. (2000). Epidemiology (2nd ed., p. 19). Philadelphia, PA: WB Saunders. Penner, S. J. (2004). Introduction to health care economics and financial management: Fundamental concepts with practical applications. Philadelphia, PA: Lippincott, Williams, & Wilkins. Phelps, C. E. (2003). Health economics (3rd ed.). Boston, MA: Addison-Wesley. Pindyck, R. S., & Rubinfeld, D. L. (2003). Microeconomics (5th ed.). Upper Saddle River, NJ: Prentice Hall. Senterre, R. E., & Neun, S. P. (2004). Health economics: Theories, insights, and industry studies (3rd ed.). Mason, OH: Thomas South-Western. Weimer, D., & Vining, A. (1999). Policy analysis: Concepts and practice (3rd ed.). Upper Saddle River, NJ: Prentice-Hall. ▸ Endnotes a. Herd immunity is “the resistance of a group to an attack by a disease to which a large propor- tion of the members of the group are immune” (Gordis, 2000). Once a certain portion of the group is immune, there is only a small chance that an infected person will find a sus- ceptible person to whom the disease may be transmitted. https://www.ahrq.gov/professionals/education/curriculum-tools/population-health/zimmerman.html https://www.ahrq.gov/professionals/education/curriculum-tools/population-health/zimmerman.html http://www.nber.org/papers/w12352 http://www.nber.org/papers/w12352 189 © Mary Terriberry/Shutterstock CHAPTER 10 Health Reform in the United States LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Describe previous national health reform attempts ■ Understand why national health reform has been difficult to achieve in the United States ■ Analyze why national health reform succeeded in 2010 when so many previous attempts had failed ■ Understand the key components of the Patient Protection and Affordable Care Act ■ Understand the core rulings of multiple U.S. Supreme Court decisions related to the Affordable Care Act ■ Evaluate the political climate regarding repealing and replacing the Affordable Care Act, and understand the main features of legislation drafted toward that end ■ Describe key issues going forward related to implementation of the Affordable Care Act ▸ Introduction The Patient Protection and Affordable Care Act of 2010 (generally referred to as the Affordable Care Act, or ACA) is the most monumental piece of U.S. federal health policymaking in nearly 50  years. It reorders not only many aspects of the health insurance and healthcare delivery systems but also longstanding relationships that underpin those systems. Yet beyond the sheer scope and content of the ACA and the policy trade-offs that led to its passage lies another story: its implementation and subsequent effect on the lives of tens of millions of Americans. Implementation of the ACA is an ongoing, dynamic process for the federal government, states, employers, insurers, providers, patients, and others. In addition, there have been and, no doubt, will continue to be state and federal court decisions across the country that alter the trajectory of the law and its implementation. The vignette in BOX 10-1 describes just a few of the competing viewpoints about the ACA and its role in creating a new and potentially more equitable health insurance system. As ACA implementation moves forward, bear in mind the many different ways that this round of health reform can be perceived and how it affects people differently. Furthermore, the future of the ACA was made even more uncertain by the monumental election cycle in 2016. Unexpectedly, Donald Trump was elected president in November of that year, and the Repub- licans maintained control of both the U.S. House of Representatives and the Senate. Having control of 190 Chapter 10 Health Reform in the United States Congress and the White House gives Republicans a chance to fulfill a promise they have campaigned on for years—to repeal and replace the ACA. Even if they are not successful in passing a repeal and replacement bill, President Trump can use his executive powers to rewrite existing regulations and implement new poli- cies. Indeed, he has already started to do so, as will be discussed in this chapter. The interplay between legal and political decisions makes it difficult to discern how implementation of the law will be carried out, assuming it is not repealed entirely. By way of example, the U.S. Supreme Court’s landmark 2012 decision upholding the constitutional- ity of the ACA and 2015 decision upholding subsidies provided through the ACA to the federal insurance exchange are described in the pages that follow, and there are currently dozens of lawsuits challenging the ACA’s coverage mandate related to contraceptive and other family planning services. The practical conse- quences and legal rulings that actually manifest as a result of ACA implementation—not just the changes to American health care contemplated by Congress when they put pen to paper with the ACA—will, for years to come, need to be studied and understood by students across a range of disciplines, not just for aca- demic purposes, but for healthcare and public health job market purposes as well. Although there has been general agreement about the problems facing the U.S. healthcare system— high costs, high uninsured rates, health disparities, quality concerns—politicians and voters have dis- agreed about the best solutions. As a result, numerous attempts to pass national health reform legislation did not succeed. What was different in 2010? Why was the Obama administration successful when several pre- vious attempts had failed? This chapter begins with a discussion of why it has been so difficult to achieve broad health reform in this country and then exam- ines the numerous failed attempts at national health reform over the last century. It then analyzes how health reform was enacted in 2010, provides an over- view of the law that eventually emerged, and covers the U.S. Supreme Court decision upholding its consti- tutionality. Finally, the discussion turns to the current political climate and what it means for health reform going forward, including a discussion of key political and implementation issues. Throughout this chapter we examine several key themes: choosing between state flexibility and national uniformity; determining the appropriate role for government, the private sec- tor, and the healthcare financing and delivery entities; defining a primary decision-making goal (e.g., fiscal restraint, equity/social justice, improved health out- comes, uniformity); and settling on the appropriate scope of coverage to offer beneficiaries. ▸ Difficulty Achieving Health Reform in the United States The array of problems facing the healthcare system has led to numerous health reform proposals and implemented policies. The concept of health reform can have several different meanings. Given the patch- work health insurance system, health reform often refers to changes that seek to reduce the number of uninsured. Due to the high and increasing cost of healthcare services, health reform might also include changes that seek to contain costs and control utiliza- tion. The notion of health reform could also address other shortcomings, such as trying to reduce medical BOX 10-1 Vignette A group of friends were talking about the ACA, illustrating the wide-ranging viewpoints about the law. Katherine, whose friend Sophia is struggling to make a living as an artist, is pleased that Sophia has health insurance for the first time since graduating from college. Although Sophia cannot stay on her parents’ insurance because she just turned 27 years old, she can now afford a good health insurance plan that she found on her state’s health exchange. While Katherine has not noticed much of a change in her own health insurance coverage, which she obtains through her government employer, her cousin Mia is upset about health reform. She does not want the government forcing her to purchase health insurance (although she always chose to be insured in the past), and she recently found out that her old plan was cancelled because it did not meet the law’s requirements. Mia found several new plan options to choose from, but none had her former plan’s exact combination of benefits, providers, and price. In addition, Katherine’s uncle, Ethan, is 55 years old and self-employed. He purchases his health insurance on his state’s exchange and because he has preexisting conditions, he is grateful to be able to find a plan. Even so, Ethan’s premiums will increase by 15% this year and his deductible is $5,000, making health care difficult to afford even with insurance. Katherine’s husband, Calvin, thinks we should all be willing to pay a little more or change some aspects of our plans to help the millions of people who can now afford insurance for the first time as a result of the ACA. After witnessing her uncle’s experience, however, Katherine is doubtful that the government will be able to keep its promises. Difficulty Achieving Health Reform in the United States 191 errors, strengthening patient rights, building the pub- lic health infrastructure, and confronting the rising cost of medical malpractice insurance. Unsurpris- ingly, the ACA touches on many of these issues. We begin with a discussion about why health reform is difficult to achieve in the United States and then introduce some of the reforms that have been attempted, with varying degrees of success, on a national level. Numerous authors have addressed the main factors that deter significant social reform in this country, including health reform (Blake & Ado- lino, 2001; Gordon, 2003; Jost, 2004). Factors that are prominently discussed include the country’s culture, the nature of U.S. political institutions, the power of interest groups, and path dependency (i.e., the notion that people are generally opposed to change). Culture This country’s culture and lack of consensus about health reform have impeded attempts to create uni- versal coverage health plans. The twin concepts of entrepreneurialism and individualism have had a real impact on health policy decisions: Americans gen- erally oppose government solutions to social welfare problems (Jost, 2004, p. 238). In addition, there is no agreement about the overall scope of the healthcare problems we face (Kaiser Family Foundation [KFF], 2008). Prior to the passage of the ACA, most Amer- icans believed the extant health system needed major changes, yet 22% believed only minor changes were required and another 17% thought the system should basically stay the same (KFF, 2009b). Americans have a complicated and partisan view of the proper role of the federal government in the healthcare arena. On one hand, 60% of respondents to a 2017 survey felt that the federal government has a responsibility to ensure healthcare coverage for all Americans (Kiley, 2017). This is much higher than the 47% who shared that view in 2010, at the height of the health reform debate (Newport, 2010). Of those who supported federal intervention in the 2017 sur- vey, 33% reported they would like to see a single-payer system developed (Kiley, 2017). At the same time, there was a stark difference of opinion based on the respondents’ political views. While 85% of Democrats and Democrat-leaning independents believed the federal government was responsible for ensuring healthcare coverage, only 32% of Republicans and Republican-leaning indepen- dents agreed (Kiley, 2017). Even so, over half (57%) of Republican/Republican-leaners supported the contin- uation of Medicaid and Medicare, the country’s largest public health insurance programs. Furthermore, only 5% of respondents thought the federal government should not have any role in ensuring healthcare cover- age (Kiley, 2017). It is accepted political dogma that it is difficult to take away benefits once they are established, and this has proven to be true with healthcare coverage (Steinhauer, 2017). The popularity of the ACA has increased since the Republicans gained power in the 2016 elections and the threat of repealing the ACA became a realistic possibility. A June 2017 Kaiser Tracking poll showed the ACA’s favorability ratings above 50% for the first time since the poll began in 2010 (KFF, 2017b), and a separate poll taken a cou- ple months later showed 64% of respondents pre- ferred to either keep the ACA as it is or make fixes to it that would shore up problems and weaknesses (Kahn & Erman, 2017). Furthermore, the public is clearly opposed to the proposed Republican replace- ment plans. A majority of respondents opposed both the House (56% opposed) (Magness, 2017) and Sen- ate (55% opposed) (Wynn, 2017) bills. Even though many Republicans also opposed the replacement options (only 21% have a very favorable view) (KFF, 2017b), most Republicans (about 75%) would still like to see the ACA repealed and replaced at some point (Kahn & Erman, 2017). U.S. Political System The country’s system of government also has made it difficult to achieve universal coverage. Traditionally, social welfare programs—including the provision of health care—have been the responsibility of the states. Initially, there was almost no federal involvement in the provision of health care, and when the federal gov- ernment became more heavily involved in 1965, Med- icaid continued to keep the locus of decision making at the state level. Of course, there are select popula- tions, such as older adults (Medicare) and veterans (Veterans Health Administration), who have a feder- alized health insurance system. However, support for federal involvement in health care depends on what language is used to describe the change. For example, “single-payer” or “socialized” health care was backed by less than half of the public in a 2017 poll, while “universal health coverage” and “Medicare-for-all” was supported by over 60% (KFF, 2017c). Although states are generally home to social wel- fare changes, it is difficult to provide universal health care on a state-by-state basis. If state health reform efforts lead the way, the country could have a patch- work of programs and policies that vary from state to state, with the potential to make health coverage even more complex and inefficient than it is currently. 192 Chapter 10 Health Reform in the United States In  addition, states must consider whether they are making policy decisions that will give employers an incentive to choose to locate in another state with fewer or less onerous legal requirements. If employers leave the state, it could result in loss of jobs and have downstream effects on the state’s economy. The federal government also has resource advan- tages over states, making it easier for the federal level to be the engine for health reform. Individual states have a much smaller tax and revenue base than the federal government to draw from to implement health reform plans. In addition, once the federal government decides to tax a good or service, a state’s ability to tax that same good or service is constrained by the indi- vidual’s willingness and ability to pay a higher price. Unlike the federal government, most states have some type of balanced budget requirement (Garrett, 2011). While state legislatures may use accounting gim- micks and other maneuvers to avoid balanced budget requirements, states more often must make difficult choices about resource allocation that federal policy- makers often avoid (and thus generate enormous defi- cits). These restrictions, however, also may help with reform efforts by forcing states to a crisis point where a decision must be made to avoid an untenable situ- ation. The federal government rarely reaches such a crisis point, which means tough decisions are often left for the next Congress, executive branch adminis- tration, or generation. State reform efforts are also constrained by the Employee Retirement Income Security Act of 1974 (ERISA). ERISA is a federal law that regulates “welfare benefit programs,” including health plans, operated by private employers. ERISA limits ability of states to reform because it broadly preempts state laws that “relate to” employer-sponsored plans and because it applies to nearly all individuals who receive health benefits through a private employer. One effect of the law, for example, is that states have little regulatory con- trol over the benefits covered in employer- sponsored health plans, because ERISA accords employers near-total discretion over the design of their benefit packages (Weissert & Weissert, 2002, p. 237). Despite these hurdles, it is also important to rec- ognize that a health reform strategy focusing on states has benefits as well. At its best, reform at the state level can be accomplished more rapidly and with more innovation than at the federal level. State legislatures may have an easier time convincing a narrower band of constituents important to the state than Congress has in accommodating the varied needs of stakehold- ers nationwide. Along the same lines, states are able to target reforms to meet the particular needs of their population, instead of covering more diverse needs across the entire country. Additionally, through the use of “direct democracy” (e.g., referenda, ballot ini- tiatives), it is easier for citizens to have an impact on decisions by state-level policymakers than by federal legislators. Finally, because the healthcare delivery system is run primarily on the state level, states have the expertise and ability to implement many parts of healthcare reform. Other aspects of the U.S. political system also make it difficult to institute sweeping reform. For example, although presidents have significant influence on set- ting policy agenda and proposing budgets, they have limited power to make changes without the assistance of Congress. The federal government is often politi- cally divided, with different parties holding power in the executive and legislative branches. This division often results in partisanship and policy inaction due to different policy priorities and views. Furthermore, although members of Congress may ride the coattails of a popular president from their own party, they are not reliant on the president to keep their jobs. The issues and views their constituents care about most may not align with the president’s priori- ties. In those cases, members of Congress have a strong incentive to adhere to the wishes of those who vote for them, instead of simply following the president’s lead. Barring an overwhelming wave of discontent, as occurred in the 2010 midterm elections when Dem- ocrats suffered historic losses in Congress, it is usu- ally difficult to unseat incumbents. Even when there is a historic level of turnover, reelection rates remain very high. For example, 97% of House incumbents successfully defended their seats in 2016; even in the Senate, where turnover is relatively more common, 93% of incumbents won reelection in 2016 (Kondick & Skelley, 2016). As a result, legislators in Congress may have confidence in focusing on their district’s or state’s needs before those of the entire nation. Federal legislative rules also support inaction or incremental reform over sweeping changes. In the Senate, 60 (of 100) votes are needed to break a fili- buster in most cases. Thus, even the political party in the majority can have difficulty effecting change. One exception to the filibuster rule is the “reconciliation” process, which allows bills to pass with only 51 votes. Reconciliation is used as part of the budgetary pro- cess, and bills passed via reconciliation may not be fil- ibustered (so can pass with 51 votes), can pertain only to federal revenue and spending issues, must comply with spending and revenue targets set forth in the budget resolution, and must adhere to other budget- ary rules (Tax Policy Center, n.d.). The reconciliation Difficulty Achieving Health Reform in the United States 193 process is being increasingly used when one party maintains a slim majority and that party cannot find 60 votes to pass a bill. For example, the Democrats used a reconciliation bill to pass the ACA in 2010 after they lost their filibuster-proof majority, and like- wise, the Republicans attempted to use a reconcilia- tion bill to pass their ACA repeal-and-replace bills. Also, because both the House and the Senate have to pass bills containing the same policies and language to have any chance at becoming law, a large political majority in one chamber or the other does not guar- antee the ability to enact a policy. As a result, in many cases members of Congress have to work together, at least to some degree, to devise a consensus policy that satisfies enough members to pass a bill. This need to build consensus makes radical change unlikely. Interest Groups Interest groups often influence the decisions of pol- iticians. The role of interest groups is to represent their members’ interests in policy decisions. These groups can be corporate for-profit entities or non- profit consumer-oriented organizations. They lobby politicians and the general public about the virtues or vices of specific proposals, work to improve proposals on the policy agenda, and attempt to defeat proposals they believe are not in the best interest of their group. By contributing to political campaigns or by helping to draw supportive voters out on Election Day, interest groups gain the ear, and often the influence, of poli- ticians who vote on issues that are important to the group. In terms of health reform, interest groups rep- resenting various providers, businesses, employer groups, insurance companies, and managed care orga- nizations often have been opposed to comprehensive health reform (Jost, 2004, pp. 438–439). There are numerous points along the path—from developing a policy idea to voting for or against a bill—when inter- est groups can attempt to affect politicians’ views. The more radical the policy proposal, the more interest groups are likely to become engaged in the political decision-making process, making it difficult to pass a bill that includes comprehensive reform. In general, it is easier to oppose a proposal than to develop one and pass a bill. Opponents of propos- als are not required to provide a better alternative to whatever is on the table. Instead, they can simply point to aspects of the policy idea that are unpopular and call for the proposal to be rejected. This was the tactic used by the Health Insurance Association of America in their well-known “Harry and Louise” television ads that opposed the Clinton administration’s compre- hensive health reform bill in 1993, the Health Security Act. In the ad, Harry and Louise, two “average” Amer- icans, are seen discussing the healthcare system over breakfast. Although they both agree the system needs to be improved, they highlight certain aspects of the Clinton plan that were particularly controversial, such as an overall cap on funds for healthcare needs and restrictions on provider choice. The tag line for the ad was, “There’s got to be a better way” (West, Heith, & Goodwin, 1996). Similarly, before the 2016 elections, many Republicans promised to “repeal and replace” the health reform bill without specifying their favored replacement option. To be effective in opposing health reform, opponents did not have to propose an alter- native that was scrutinized and compared with the existing proposal. Simply saying “the country can do better” was enough to help create significant opposi- tion to the plan. Path Dependency Finally, the concept of path dependency has been a hindrance to major health reform. “The notion of path dependency emphasizes the power of inertia within political institutions” (Jost, 2004, p. 439). That is, once a certain way of doing things becomes the norm, it is hard to change course. Yet this theory does not mean that health reform is impossible. Inertia may be over- come at “critical moments or junctures” that open a window for change (Jost, 2004, p. 439). For example, the passage of Medicaid and Medicare in 1965 was a radical change from the past pattern of limited federal government involvement in health care. The catalysts for this change were the growing social pressure for improving the healthcare system and the landslide victory of Democrat Lyndon Johnson as president and of liberal and moderate Democrats in Congress. The 1992 election of Democrat Bill Clinton, who ran on a platform emphasizing broad health reform, coupled with the Democratic majority in Congress (until 1994), also presented a window of opportunity. Although Clinton’s plan was not ultimately successful, it appeared that the American public and politicians were open to changing the course of the healthcare “path” that had been taken to date. In 2010 another “critical moment” appeared, and President Obama took advantage of the circumstances to push through the health reform bill. Although path dependency suggests that inertia and fear of change have made broad reform difficult, it is not impossible to achieve. Path dependency is also evident on the individ- ual level; that is, once individuals are accustomed to 194 Chapter 10 Health Reform in the United States having things a certain way, it is difficult for them to accept change. In 2010, prior to the passage of the ACA, about 84% of Americans had health insurance, most through employer-sponsored coverage (U.S. Census Bureau [Census], 2010). It was assumed that comprehensive health reform would likely change the condition of the insured population to some degree by changing either their source of coverage, the ben- efits included in coverage, the cost of coverage, or some other factor. During the debate over the ACA, about one-third of people surveyed reported that the bill would probably make them worse off, and another third thought it would not make any difference to them (KFF, 2008). Professor Judith Feder refers to this problem as the “crowd-out” politics of health reform: “The fundamental barrier to universal coverage is that our success in insuring most of the nation’s population has ‘crowded out’ our political capacity to insure the rest” (Feder, 2004, p. 461). In other words, many of the insured do not want a change in the healthcare system that will leave them worse off to make the uninsured better off. According to Professor Feder, the way to solve the political crowd-out dilemma is by changing the very nature of American culture. The focus on individu- alism must be replaced with a concern for the com- munity and recognition that all Americans are part of a single community. “The challenge to improving or achieving universal coverage is to decide whether we are a society in which it is every man, woman or child for him/herself or one in which we are all in it together” (Feder, 2004, p. 464). Clearly, the country remains divided about the extent to which “we are all in it together.” Shortly before the ACA passed, over half of people surveyed (54%) said they would not be willing to pay more so others could have access to health insurance (KFF, 2009a). The continued debate over the future of the ACA has highlighted fundamen- tal disagreements about how our health system should be structured and the proper role of individuals and governments in ensuring the country’s good health. ▸ Unsuccessful Attempts to Pass National Health Insurance Reform Since the early 1900s, when medical knowledge became advanced enough to make health care and health insurance desirable commodities, there have been periodic attempts to implement universal cov- erage through national health reform. The Socialist Party was the first U.S. political party to support health insurance in 1904, but the main engine behind early efforts for national reform was the American Asso- ciation for Labor Legislation (AALL), a “social pro- gressive” group that hoped to reform capitalism, not overthrow it (Starr, 1982, p. 243). In 1912, Progres- sive Party candidate Theodore Roosevelt supported a social insurance platform modeled on the European social insurance tradition that included health insur- ance, workers’ compensation, old-age pensions, and unemployment insurance. After his loss to Woodrow Wilson, the national health insurance movement was without a strong national leader for three decades. The AALL continued to support a form of health insurance after Roosevelt’s defeat and drafted a model bill in 1915. This bill followed the European model, limiting participation to working class employees and their dependents. Benefits included medical aid, sick pay, maternity benefits, and a death benefit. These costs were to be financed by employers, employees, and the state. The AALL believed that health insur- ance for the working population would reduce pov- erty and increase society’s productivity and well-being through healthier workers and citizens. Opposition to AALL’s bill came from several sources (Starr, 1982, pp. 247–249). Although some members of the American Medical Association (AMA) approved of the bill conceptually, physician support rapidly evaporated when details emerged about aspects of the plan that would negatively impact their income and autonomy. The American Federation of Labor (a labor union) opposed compulsory health insurance because it wanted workers to rely on their own economic strength, not the state, to obtain bet- ter wages and benefits. In addition, the federation was concerned that it would lose power if the government, not the union, secured benefits for workers. Employ- ers were generally opposed to the bill, contending that supporting public health was a better way to ensure productivity. In addition, they feared that provid- ing health insurance to employees might promote malingering instead of reducing lost workdays. After experiencing the high cost associated with workers’ compensation, employers also were not eager to take on an additional expensive benefit. Of course, the part of the insurance industry that had already established a profitable niche in the death benefit business was strongly opposed to a bill that included a death benefit provision. Employers, healthcare providers, and insur- ers have, in general, remained staunch opponents of national health reform over the years, whereas unions have supported national reform efforts. However, this dynamic has changed recently with more provider Unsuccessful Attempts to Pass National Health Insurance Reform 195 groups, employers, and even some insurers calling for a national solution to the problems of rising health- care costs and the uninsured. The country’s entry into World War I in 1917 also changed the health reform debate. Many physicians who supported the AALL bill entered the military, shifting their focus away from the domestic health policy debate. Anti-German sentiment was high, so opponents of the bill gained traction by denouncing compulsory health insurance as anti-American. One pamphlet read as follows: “What is Compulsory Social Health Insurance? It is a dangerous device, invented in Germany, announced by the German Emperor from the throne the same year he started plotting and pre- paring to conquer the world” (Starr, 1982, p. 253). The next time national health insurance might have taken hold was from the mid-1930s through the early 1940s as the country was coping with the diffi- culties of the Great Depression. During this time there was a significant increase in government programs, including the creation of Social Security in 1935, which provided old-age assistance, unemployment compensation, and public assistance. Yet the fourth prong of the social insurance package, health insur- ance, remained elusive. President Franklin Roosevelt heeded his staff ’s advice to leave health insurance out of Social Security because of the strong opposition it would create (Starr, 1982, p. 267). Opposition from the AMA was particularly strong. The AMA believed that “socialized medicine” would increase bureau- cracy, limit physician freedom, and interfere with the doctor–patient relationship. Even so, members of Roosevelt’s administration continued to push for national health insurance. The Interdepartmental Committee to Coordinate Health and Welfare Activities was created in 1935 and took on the task of studying the nation’s healthcare needs. This job fell to its Technical Committee on Medical Care. Instead of supporting a federal program, the committee proposed subsidies to the states for oper- ating health programs. Components of the proposal included expanding maternal and child health and public health programs under Social Security, expand- ing hospital construction, increasing aid for medical care for the indigent, studying a general medical care program, and creating a compensation program for those who lost wages due to disability. Although President Roosevelt established a National Health Conference to discuss the recom- mendation, he never fully supported the medical care committee’s proposal. With the success of conserva- tives in the 1938 election and the administration’s con- cerns about fighting the powerful physician and state medical society lobbies, national health reform did not have a place on Roosevelt’s priority list. Senator Rob- ert Wagner (D-NY) introduced a bill that followed the committee’s recommendations in 1939, and although it passed in the Senate, it did not garner support from the president or from the House. World War II provided another opportunity for the opposition to label national health insurance as socialized medicine. But once the war neared an end, President Roosevelt finally called for an “economic bill of rights” that included medical care. President Truman picked up where Roosevelt left off, strongly advocating for national health insurance. Presi- dent Truman’s proposal included expanding hospi- tals, increasing public health and maternal and child health services, providing federal aid for medical research and education, and, for the first time, a single health insurance program for all (Starr, 1982, p. 281). Heeding lessons from earlier reform failures, Truman emphasized that his plan was not socialized medicine and that the delivery system for medical and hospital care would not change. Again, there was strong opposition to the pro- posal. The AMA vehemently rejected the proposal, and most other healthcare groups opposed it as well. Although the public initially approved of it, there was no consensus about how national health insur- ance should be structured, and more people preferred modest voluntary plans over a national, compulsory, comprehensive health insurance program (Starr, 1982, p. 282). Additional opposition came from the American Bar Association, the Chamber of Com- merce, and even some federal agencies concerned about losing control over their existing programs. In the end, only the hospital construction portion of the proposal was enacted. When Truman won reelection on a national health insurance platform in 1948, it appeared the tide had turned. However, the AMA continued its strong opposition and its attempts to link national health insurance to socialism. Congress considered various compromises but never reached a consensus. The public remained uncertain about what kind of plan to favor. Employers maintained their opposition to compulsory insurance. In addition, one large group of potential supporters—veterans—was disinterested in the debate because they had already secured exten- sive medical coverage through the Veterans Adminis- tration. As the Korean War moved forward, Truman’s focus shifted away from national health insurance and toward the war effort and other priorities. National health insurance did not return to the national policy agenda until the 1970s. The landscape 196 Chapter 10 Health Reform in the United States then was quite different from Truman’s era. Medic- aid and Medicare had been created, healthcare costs had begun to rise exponentially, and the economy was deteriorating. In 1969, President Nixon declared that a “massive crisis” existed in health care and that unless it was fixed immediately, the country’s medical system would collapse (Starr, 1982, p. 381). The gen- eral public seemed to agree, with 75% of respondents in one survey concurring that the healthcare system was in crisis (Starr, 1982, p. 381). Democrats still con- trolled Congress by a significant margin, and Sena- tor Edward Kennedy (D-MA) and Representative Martha Griffiths (D-MI), the first woman to serve on the powerful House Committee on Ways and Means, proposed a comprehensive, federally operated health insurance system. At the same time, a movement supporting health care and patient rights was gaining momentum. This movement included rights to informed consent, to refuse treatment, to due process for involuntary com- mitment, and to equal access to health care (Starr, 1982, p. 389). The public was both anxious to obtain care and willing to challenge the authority of health- care providers. The Nixon administration’s first attempt at health reform focused on changing the healthcare system’s financing from one dominated by a fee-for-service system, which created incentives to provide more and more expensive services, to one that promoted restraint, efficiency, and the health of the patient. The result was a “health maintenance strategy” intended to stimulate the private industry to create health maintenance organizations (HMOs) through federal planning grants and loan guarantees, with the goal of enrolling 90% of the population in an HMO by the end of the 1970s (Starr, 1982, pp. 395–396). Iron- ically, group health plans, often labeled socialized medicine, had become the centerpiece of a Republi- can reform strategy. Nixon’s proposal included an employer mandate to provide a minimum package of benefits under a National Health Insurance Standards Act, a federally administered Family Health Insurance Program for low-income families that had a less generous benefit package than the one required by the National Health Insurance Standards Act, reductions in Medicare spending to help defray the costs, a call for an increase in the supply of physicians, and a change in how medi- cal schools were subsidized. Opponents were plentiful, and this plan did not come to fruition. Some believed the plan was a gift to private insurance companies. Advocates for the poor were outraged at the second tier of benefits for low-income families. The AMA was concerned about HMOs interfering with physician practices and supported an alternative that provided tax credits for buying private insurance. After the 1972 election, Nixon proposed a second plan that covered everyone and offered more compre- hensive coverage. Private insurance companies would cover the employed and a government-run program would cover the rest of the population, with both groups receiving the same benefit package. Senator Kennedy and Representative Wilbur Mills (D-AR) supported a similar plan, and it appeared a compro- mise was close at hand. However, labor unions and lib- eral organizations preferred the original Kennedy plan and resisted compromising with the hope of gaining power in the 1974 post-Watergate elections. Fearing the same political shift, insurance companies actually supported a catastrophic insurance plan proposed by Senator Russell Long (D-LA), believing it was better than any plan that would come out of a more liberal Congress after the elections. Once again, there was no majority support for any of the bills, and a national health insurance plan was not enacted. Although President Jimmy Carter gave lip service to national health reform, he never fully supported a proposal. It was not until the election of Bill Clinton in 1992 that the next real attempt at national health insurance was made. The Clinton administration plan, dubbed the Health Security Act, was designed to create national health insurance without spending new federal funds or shifting coverage from private to public insurance. It relied on the concept of “managed competition,” which combined elements of managed care and market competition. Under the Health Security Act, a National Health Board would have established national and regional spending limits and regulated premium increases. “Health alliances” would have included a variety of plans that were competing for the business of employ- ees and unemployed citizens in each geographic area. All plans were to have a guaranteed scope of benefits and uniform cost-sharing. Employers would have been required to provide coverage for their workers at a defined high level of benefits, and those with 5,000 employees or fewer would have had to purchase plans through the health alliance. Subsidies were provided for low-income individuals and small businesses. Funding was to be provided from cost-containment measures that were reinvested. Forced by the Con- gressional Budget Office to provide an alternative funding strategy should the cost containment not cre- ate enough funds, the plan also included the option of capping insurance premium growth and reducing provider payments. The Stars Align (Barely): How the ACA Became Law 197 Like the national health insurance plans before it, the Health Security Act had opponents from many directions. The health alliances were attacked as big government, employers resisted mandates and interference with their fringe benefits, some advocates feared that cost containment would lead to care rationing, the insured were concerned about losing some of their existing benefits or cost-sharing arrangements, older adults feared losing Medicare, and academic health centers were concerned about losing funds based on new graduate medical edu- cation provisions (Starr, 1982, p. 463). In addition, the usually strong support from unions was missing because of an earlier disagreement with the president on trade matters. It is also generally accepted that the Clinton administration made several political mistakes that made a difficult political chore nearly impossible. The Health Security Act never made it to a vote. ▸ The Stars Align (Barely): How the ACA Became Law In many ways, 2010 was a very unlikely year to pass a national health reform plan. The country had been growing increasingly ideological, with the popular and electoral votes almost evenly split in both the 2000 and 2004 presidential elections. George W. Bush beat Al Gore despite losing the popular vote in 2000, and Bush beat John Kerry in 2004 with only 51% of the popular vote. Even though Barack Obama won the electoral vote in a landslide over John McCain (365 to 173), only 53% of the population voted for Obama in 2008 (National Archives and Records Administration, n.d.). In addition to the ideological divide, a financial crisis erupted toward the end of the 2008 presiden- tial election. In October 2008, President Bush signed into law the Emergency Economic Stabilization Act, which included the $700 billion Troubled Asset Relief Program (TARP) that allowed the federal government to take over distressed assets, primarily bad mortgage loans, from private financial institutions (Emergency Economic Stabilization Act of 2008). It was argued that TARP was necessary to save the financial indus- try from collapsing, which could have led to another Great Depression. Even with TARP, the United States (and many other countries) entered into a recessionary period. Many individuals lived in homes they could no longer afford, banks limited lending opportunities, and employers laid off millions of workers due to the drop in consumer spending. In an effort to improve the economy, Obama signed into law the American Recovery and Reinvestment Act of 2009, also known as the stimulus bill. This almost $800 billion effort was intended to save existing jobs, create new jobs, and spur long-term growth of the U.S. economy. Although TARP was not popular with politicians or the general public, it was seen as necessary by members of both political parties and signed into law by a Republican president. Unlike TARP, however, the stimulus bill was not a bipartisan effort. Republicans in the House unanimously opposed the stimulus bill, and only three Republicans voted for the bill in the Senate. Not surprisingly, health care was not the only issue on voters’ minds during the election campaign. Shortly before the election, 43% of registered voters ranked the economy as their number one priority. Economic concerns trumped health care, which ranked sec- ond, by an almost two-to-one margin (Jones, 2010). Although voters from both political parties ranked the economy as their top priority, differences emerged along party lines regarding the next most important issue. Democratic voters ranked health care second, whereas both Republican and Independent voters were more concerned about the size and power of the federal government. These results were not surprising; Democrats have ranked health care as a higher prior- ity than Republican and Independent voters in every presidential election from 1988 to 2012 (Blendon et al., 2008, p. 2053; Jones, 2010). It was against this backdrop of a faltering econ- omy, partisan differences, and the recent passage of two massive government spending bills that President Obama pursued a national health reform plan. Given the history of failed reform efforts, it would have been an accomplishment to pass health reform in the best of times, and clearly this was not the best of times. How did Obama and the 111th Congress succeed? It was a combination of having commitment, exhibiting lead- ership, applying lessons from past failures, and being pragmatic that led to the passage of health reform. Commitment and Leadership It is highly unlikely that the 2010 health reform effort would have succeeded without a passionate and committed president willing to make health reform a priority. Health care has long been a priority for Democrats, and President Obama was no excep- tion. Perhaps Obama’s dedication to passing health reform stemmed in part from his personal experience: Obama’s mother died of ovarian cancer, and he had seen her worry about paying her medical bills as much as beating the disease (Kornreich, 2007). Thus, for 198 Chapter 10 Health Reform in the United States Obama, signing comprehensive health reform legisla- tion into law would represent the opportunity to make sure others would not endure the same experience. Some of Obama’s political advisors suggested wait- ing to tackle health reform until after taking action to address the poor economy and rising unemployment. Even voters who supported Obama were split over what his priorities should be during his first days in office (Appleby, 2008). Just days before the election, Obama suggested that the economy and energy independence were higher priorities than health reform. To Obama, that meant he should tackle several majors issues at once, not put health reform on the back burner. Health reform efforts did not begin smoothly. President Obama initially wanted former U.S. sen- ator Tom Daschle to run both the Department of Health and Human Services (HHS) and the White House Office on Health Reform. It was thought that his experience in the Senate and relationships with legislators were the right combination to take the lead on health reform. When his nomination was derailed due to personal tax problems, it was not a good omen. As deliberations in Congress lagged, Democrats were not able to present a bill to President Obama before recessing for the summer. During the summer of 2009, members of Congress went home to their constituents and held town hall meetings to discuss health reform. Some of the meetings erupted in vocal opposition to health reform, and the media focused on these town hall meetings throughout the summer. Obama and the Democrats were criticized for losing the momentum for reform by letting the debate linger. At the same time, there were several instances when the health reform effort appeared politically doomed, and President Obama’s leadership made a clear differ- ence. Obama attempted to reclaim the upper hand on health reform with a speech to a joint session of Con- gress in September 2009. He memorably proclaimed, “I am not the first president to take up health reform, but I intend to be the last” (White House, 2009b). Although public support for health reform had been on the decline for several months, September 2009 polls showed that 62% still thought it was important to address health reform at that time, and 53% thought the country as a whole would be better off if health reform passed (KFF, 2009c). Less support existed for the Democrats’ specific reform proposal, however, with 46% in support of the proposed change and 48% opposed to it (Cohen & Balz, 2009). In January 2010, an event occurred that some assumed was the death knell of health reform. In the 2008 elections, Democrats had made significant gains in Congress, earning a 59–41 majority in the Senate and a 257–178 majority in the House. Furthermore, Senator Arlen Specter of Pennsylvania switched par- ties, giving Democrats the crucial 60th vote needed for a filibuster-proof majority. Although the num- bers were now in their favor, President Obama, Sen- ate Majority Leader Harry Reid (D-NV), and House Speaker Nancy Pelosi (D-CA) would have to balance the competing interests of conservative Democrats who were concerned with having too much gov- ernment intervention, progressive Democrats who sought a public insurance option to compete with pri- vate companies, Blue Dog Democrats who were most concerned with fiscal discipline, and pro-life and pro- choice factions who would battle over whether and how abortion services would be included in any health reform bill. Then, in August 2009, Senator Ted Kennedy (D-MA) died. In office for 47 years, Kennedy was not only a lifelong supporter of health reform but also an expert negotiator who could work with Republicans and possibly achieve a bipartisan consensus. The Jan- uary 2010 special election to fill his seat was won by Republican Scott Brown, who campaigned against the Democrats’ health reform plan. In a postelection poll, 42% of voters said they voted for Brown to stop health reform from moving ahead (Condon, 2010). Despite this setback and concerns by some that health reform efforts should be abandoned, Obama, along with Reid and Pelosi, remained strong in his conviction to pursue reform. President Obama’s senior advisors said it would be a “terrible mistake” to walk away from the process based on Brown’s vic- tory, and Pelosi reminded her caucus how detrimental it was when Democrats abandoned the health reform effort during the Clinton administration (Brown & O’Connor, 2010). In his State of the Union address just a week after Senator Brown claimed the special elec- tion, President Obama tied his health reform efforts to fixing the economy and reiterated his commitment to the issue: And it is precisely to relieve the burden on middle class families that we still need health reform. Now let’s be clear, I did not choose to tackle this issue to get some legislative victory under my belt. And by now it should be fairly obvious that I didn’t take on health reform because it was good politics. . . . Here is what I ask of Congress though: Do not walk away from reform. Not now. Not when we are so close. Let us find a way to come together and finish the job for the American people. (White House, 2010) The Stars Align (Barely): How the ACA Became Law 199 Obama was not alone in providing leadership on health reform. Reid’s and Pelosi’s determination to see health reform succeed, and their skill in mobiliz- ing and controlling their caucuses, were essential to the passage of the ACA. It is likely that health reform would not have passed without the skillful efforts of all three leaders working together. Even so, it is clear that the health reform effort would not even have begun without a president who put health reform at the top of the agenda and stuck with it despite the pitfalls and political opposition. Lessons From Failed Health Reform Efforts The Obama administration tried to avoid events that doomed earlier health reform efforts. Although the failed effort by the Clinton administration proba- bly provided the most relevant lessons, Obama con- fronted some of the same obstacles that reformers had faced decades earlier. At times, President Obama was accused of learning some of the lessons too well, swing- ing the pendulum too far to the other side. Although that debate may continue, clearly the way in which the Obama administration applied those lessons brought him success where others had failed before him. President Clinton was criticized for not moving quickly enough to try to enact health reform after he was elected in 1992. He did not present a plan to Con- gress until a year into his presidency, having been side- tracked by other issues such as the economy, including a budget showdown with Republicans, and whether gays should be allowed to serve in the military. Even after he finally sent his healthcare proposal to Con- gress, Clinton was preoccupied with other issues that sapped his political capital, such as passing the North American Free Trade Agreement and the fallout from the deaths of 18 American soldiers in Somalia. President Obama, over the objection of some aides, chose to address health reform as quickly as possible, despite also having to tackle the poor econ- omy and possible collapse of the financial sector. Obama was elected into office with a 70% approval rating, and he moved to capitalize on his popularity (Saad, 2008). It was almost inevitable that his approval rating would decline as he tried to turn the promise of a campaign into the reality of running the coun- try. As Lyndon Johnson said after winning the 1964 election in a landslide, “Every day while I’m in office, I’m gonna lose votes” (Blumenthal & Morone, 2009, p. 172). In addition, it is almost universally expected that the president’s party will lose seats in the midterm elections due to both lower voter turnout that gives more clout to partisan voters and a loss of popularity as the president moves from candidate to elected offi- cial (Wihbey, 2014). Obama was correct to assume his Democratic majorities in Congress would not last long. After the 2010 midterm elections, the Demo- crats lost control of the House and several seats in the Senate. President Obama also dealt with interest groups in a different way from his predecessors. Previous failed efforts at health reform have shown that those vested interests can be important players in the debate. In general, though not in all instances, provider groups, insurers, and employers have opposed health reform, whereas unions have supported health reform efforts. All of these stakeholders have been known to devote significant resources and apply pressure on their rep- resentatives to support their point of view. During its reform effort, the Clinton administration warred with many stakeholder groups, with insurance companies and small businesses taking a leading role (West & Heith, 1996). Obama took a different approach than Clinton by making deals with various stakeholders at the outset of the health reform debate. The lure of millions of newly insured customers helped convince the Phar- maceutical Research and Manufacturers of America and the American Hospital Association to contribute to health reform financing through reduced Medi- care and Medicaid payments. In addition, the health insurance industry supported universal insurance coverage under health reform. After being credited with helping derail the Clinton health plan, the Health Insurance Association of America favored the general idea of health reform, though it differed with Obama and the Democrats on some of the specifics. To be fair, Clinton may not have been able to broker deals with these stakeholders in the 1990s no matter how hard he tried. A combination of a changing healthcare environment, the likelihood that some type of health reform was likely to pass, and the uncertain future of employer-sponsored insurance made it more palat- able for interest groups to try to influence instead of oppose the 2010 legislation (Oberlander, 2010). Clinton was also criticized for failing to master the legislative process. The Clinton administration chose to design the health reform plan itself and developed a complicated and secretive process, headlined by the Health Care Task Force run by Hillary Clinton, to do so. Although naming Hillary Clinton as the leader of the task force signaled the administration’s commitment to the issue, she became a lightning rod for criticism, and questions about the appropriateness of the First Lady taking on such a significant policy role detracted from the substance of the health reform  debate. 200 Chapter 10 Health Reform in the United States Instead of negotiating with Congress, the administra- tion debated the specifics of health reform among its own advisors and then asked Congress to pass the bill they had developed. Shutting out members of Con- gress instead of negotiating with them and taking over Congress’s role in developing legislation was not, it turned out, a formula for success. President Obama learned from Clinton’s mistakes as well as from other presidents’ legislative achieve- ments. Instead of presenting a detailed plan or writ- ten legislation to Congress, success has often been found in outlining ideas and principles and letting Congress work through the details. When President Johnson was trying to get a Medicare bill passed, he told key members of Congress that he would not delve into the details of the bill but generally pushed for a larger package. When President George W. Bush was pursuing a new Medicare prescription drug benefit, he outlined his desire for an approach that worked with the private sector and encouraged competition, but let Congress find the exact formula that would pass (Morone, 2010, p. 1097). Similarly, Obama set out his principles but left the work of drafting a bill and fleshing out the details to Congress. On June 2, 2009, President Obama sent a letter to Senators Kennedy and Baucus, two leaders in the health reform effort, outlining his “core belief ” that Americans deserved better and more affordable health insurance choices and that a health reform bill must not add to the federal deficit (White House, 2009a). Although he let the negotiators know what his priori- ties were, Obama stayed above the fray during the leg- islative process. Whereas he preferred a public option to compete with private insurers, he did not insist on it. Although Obama campaigned against an individ- ual mandate as a presidential candidate, he was open to including it in the bill. The president refused to be drawn into the debate over taxing generous health plans or creating a Medicare cost- containment com- mission. Instead, he focused his efforts on persuad- ing Congress not to give up on the effort, bringing together various factions of the Democratic caucus, and reaching out to the public to garner support for health reform. The legislative process for completing the bill was long, rocky, and ultimately partisan. The House of Representatives moved more quickly and with less fractious debate than the Senate. Instead of having multiple House committees work on competing bills, as occurred during the Clinton administration, House Democratic leaders created a “Tri-Committee” bill jointly sponsored by Charles Rangel (D-NY), Henry Waxman (D-CA), and George Miller (D-CA), the chairmen of the House Ways and Means, Energy and Commerce, and Education and Labor (later renamed the Education and Workforce committee) committees, respectively. On November 7, 2009, the House passed its health reform bill with only two votes to spare, 220–215 (Affordable Health Care for America Act, 2009). Only one Republican voted for it, and 39 con- servative Democrats voted against it. The bill from the then-more-liberal House contained several provisions that were likely to be rejected by the Senate: a public health insurance option to compete with private plans, a national health insurance exchange instead of state- based exchanges, more generous subsidies for low- income individuals, a broader expansion of Medicaid, and higher taxes on wealthier Americans. Finance Committee Chairman Max Baucus (D-MT) led the effort in the Senate. The legislative process he established was lengthy, and some observ- ers believed he compromised on too many issues in an attempt to forge a bipartisan bill. For a time Senator Charles Grassley (R-IA) actively participated in the health reform deliberations, and a few other Republi- can senators appeared willing to consider a bipartisan measure. Ultimately, however, a bipartisan agreement could not be reached. In a 2009 Christmas Eve vote, the Baucus bill passed 60–39, with all Democrats and two Independents voting for the measure and all Republicans voting against it (ACA, 2010). Shortly after the New Year, members of the House and Senate began meeting to resolve differences between the bills passed in the House and the Senate. Before those differences were resolved, however, Scott Brown was elected to fill Kennedy’s seat in the Senate and the Democrats no longer had a filibuster-proof majority. Before the special election that led to Brown’s victory, it was assumed that after the Senate passed a health reform measure, House and Senate negotiators would work out their differences in a conference com- mittee, with each chamber then voting to pass the com- promise bill. With Brown’s election and his opposition to health reform, however, this plan became unwork- able. Democratic congressional leaders were left with few options, all of them unpalatable: the House could pass the Senate version of the bill; Democrats could try to use the reconciliation process—which does not allow for the use of filibusters and requires only a sim- ple majority vote—to pass a new comprehensive bill; the House and Senate could compromise on a much smaller, more incremental health reform bill that focused on areas where a bipartisan agreement could be reached; or Democrats could abandon their efforts to pass a health reform bill. The day after Brown’s election, House Speaker Pelosi appeared to eliminate Overview of the ACA 201 the easiest (legislatively speaking) of these paths by declaring that the House would not pass the Senate version of the bill: “I don’t think it’s possible to pass the Senate bill in the House. I don’t see the votes for it at this time” (Murray & Kane, 2010). In the end, a compromise was reached. House and Senate leaders agreed to use the budget reconcilia- tion process to amend the Senate bill. The House then passed the Senate version of the bill along with a com- panion reconciliation bill that amended certain aspects of the Senate bill. The reconciliation bill included more generous subsidies for individuals to purchase insurance than existed in the stand-alone Senate bill, the closure of the Medicare Part D doughnut hole, a tax on more generous insurance plans, changes to the penalties on individuals who would not buy insurance and for employers that would not offer insurance, and an increase in Medicare and investment taxes for higher earners. The Senate then passed the reconcilia- tion bill. Once again, the final vote to approve the bills was along party lines. The House approved the Senate bill by a vote of 219–212, with all Republicans and 34 Democrats voting against it (Khan, 2010). President Obama signed the bill into law on March 23, 2010 (ACA, 2010). Some observers argue that Obama may have overlearned the lesson about working with Congress and that in doing so he did not provide enough guid- ance to legislators and allowed the debate over health reform to linger for too long (Morone, 2010, p. 1097). On the one hand, it is difficult to criticize Obama’s approach because he was ultimately successful. On the other hand, could the problems stemming from the 2009 town halls and Scott Brown’s election have been avoided, and would public opinion of the health reform effort be higher, if the process had been bet- ter managed? Only time will tell whether Obama was successful over the long term (e.g., Is the law effective? Will the public support it over time? Will it be repealed?) and whether the political cost of the lengthy battle hurt the Democrats more than passing the bill helped them. Political Pragmatism President Obama is both credited and criticized for being as pragmatic as necessary to help ensure that a health reform law came to fruition. He was comfort- able making deals with industry stakeholders even though those agreements limited the savings and other changes that could have been achieved in the health reform bill. Obama ultimately signed a bill that did not include a public option, even though he preferred that one be included, and his liberal base thought health reform without such an option was not true reform. An argument over abortion nearly derailed the bill in its final days, and Obama supported a compromise on abortion language to keep enough Democrats in the fold. Even his goal of creating universal insurance cov- erage was not recognized. Yet Obama’s willingness to be pragmatic instead of staunchly principled, taking some victories instead of an all-or-nothing approach, allowed him to succeed in passing a health reform bill where others had failed (Oberlander, 2010, p. 1116). Some people argued it was worse to pass a flawed bill than not pass a bill at all, but Obama believed the promise of reducing the uninsured rate and gaining numerous health insurance market reforms were worth the compromises he made. ▸ Overview of the ACA As noted earlier, while President Obama left the details of health reform legislation to Congress, he set forth what he believed to be the most important principles that should guide the legislation’s development. Soon after becoming president in 2009, Obama delineated those principles, saying that any health reform mea- sure should do the following: 1. Protect families’ financial health (slowing the growth of out-of-pocket expenses and protecting people from bankruptcy due to catastrophic illness) 2. Make health insurance coverage more affordable (reducing administrative costs, wiping out unnecessary tests and services, limiting insurers’ ability to charge higher premiums for certain populations) 3. Aim for insurance coverage universality 4. Provide portability of insurance coverage 5. Guarantee choice of health plans and pro- viders (including keeping current ones) 6. Invest in disease prevention and wellness initiatives 7. Improve patient safety and healthcare quality 8. Maintain long-term fiscal sustainability (reducing cost growth, improving produc- tivity, adding new revenue sources) The extent to which these principles were brought to life in what eventually became the ACA lives along a spectrum. For example, health insurance was abso- lutely made more affordable for millions of people; disease prevention and wellness initiatives seem to be gaining momentum, though slowly; and universal 202 Chapter 10 Health Reform in the United States insurance coverage was absolutely not achieved. Whatever the case with any particular principle, it is instructive to look to four key reforms that became law under the ACA as having paved the way for Presi- dent Obama’s overall vision to come to fruition. These four reforms essentially reordered long-standing rela- tionships among health system stakeholders, includ- ing individuals, providers, insurers, employers, and governments. As a result of this reordering, all of these stakeholders were legally obligated to alter normative behaviors. The first major change, known as the individual mandate, is a requirement that individuals maintain “minimum essential health coverage” (i.e., health insurance) or face financial penalties that are spelled out in the ACA. This requirement was a critically important beam in the ACA architecture because it created a new, large pool of individuals who pay pre- miums to insurance companies, and it created lever- age for policymakers who were eager for the private insurers to accept many of the ACA’s other insurance reforms that may otherwise have been unpalatable. For certain individuals whose socioeconomic status makes it impossible for them to purchase (or gain through an employer) the type of minimum cover- age mandated by the ACA, and who do not qualify for Medicaid (even under the ACA expansion), fed- eral subsidies are made available under the law. As discussed in more detail below, in 2017 Congress repealed the penalties associated with the individual mandate as part of the Tax Cut and Jobs Act. The second fundamental change results from reforms that prohibit or curtail existing health insurer and health plan practices (these are the types of reforms, noted in the preceding paragraph, that all insurers— not just those who sell products through the new exchanges, described in the following paragraph— were forced to accept to reciprocate for the new group of premium payers they would insure as a result of the individual mandate). For example, the ACA prohibits insurers from considering an applicant’s preexisting conditions when determining whether to insure the applicant, guarantees the renewability of an individu- al’s existing insurance plan, requires insurers to cover certain preventive and immunization services, and guarantees coverage for dependent children who are 26 years old or younger. The third key change is the creation of health insurance “exchanges” or “marketplaces” in each state. These are essentially online shopping sites, the purpose of which is to make it easier for individuals and small employers to compare and purchase health insurance. Because the ACA requires everyone to carry health insurance, and because the insurance marketplace has not historically been easy to navigate, policymakers forced the creation of regulated state-based exchanges to help with the purchase of individual and small- group insurance plans. The final major reform is an expansion of the exist- ing Medicaid program (which is discussed in detail in the Government Health Insurance Programs: Medic- aid, CHIP, and Medicare chapter). This reform has the potential to dramatically increase the number of indi- viduals who can gain access to insurance coverage— and thus access to better and more appropriate health care. Because states cannot be forced to implement this expansion (more on this to follow in the discussion of the U.S. Supreme Court’s decision around the consti- tutionality of the ACA), and many states have thus far declined to implement the expansion, this potential has yet to become a reality. Although the ACA does not completely alter the way health insurance is pro- vided by, say, establishing a single-payer system or even a large government-run insurance plan to com- pete with private insurers, the law makes significant philosophical and practical changes in how health insurance is regulated, structured, and administered. Indeed, as a result of the reforms and reordering just described, the ACA has resulted in 19 million people gaining insurance between 2010 and 2017, dropping the uninsured rate from 16% in 2010 to 11.1% in early 2017 (Blumberg, Holahan, Karpman, & Elmendorf, 2018). In addition, as a result of the essential health benefits requirement, there is a large segment of the population that is no longer underinsured because of insurance plans that do not offer comprehensive benefits. Even so, many people contend that the ACA falls short in its reform of the healthcare delivery system. And in many cases they are correct. The ACA is most notable for the transformations it makes to health insurance—both access to it and its content—rather than for structural reforms made to the delivery sys- tem. Many provisions that focus on improving the healthcare delivery system, increasing the quality of care received by patients, reducing healthcare costs, and incentivizing providers to reconsider traditional methods of delivering care, often exist in the form of temporary pilot programs that may never be enacted permanently even if they prove to be valuable. Other analysts contend that these provisions were written as strongly as they could be at the time, given the polit- ical environment and data available to policymakers. According to this view, the ACA provides the secre- tary of HHS with unprecedented authority to make the pilot programs permanent, and it would have been Overview of the ACA 203 the administration’s efforts have altered the law even though Congress has been unsuccessful in its efforts to repeal and replace the ACA. Individual Mandate An individual mandate is a requirement that individ- uals purchase health insurance. This is not a new idea. President Clinton proposed an individual mandate in 1993 as part of his Health Security Act, and other competing proposals at the time, including those sup- ported by Republicans, also included an individual mandate. Massachusetts, the only state in the coun- try to require that everyone older than 18 years have health insurance, included an individual mandate as one way to achieve that goal. A number of other countries, including the Netherlands, Switzerland, Germany, Japan, and Australia, have some form of an insurance mandate in their healthcare systems (Eibner & Nowak, 2018). During the 2008 election, Obama originally supported a mandate for children to be covered but suggested waiting to see if a mandate was necessary for adults after implementing other major health reform changes. irresponsible to implement more permanent, whole- sale changes without more evidence. In any case, as sweeping as the ACA is, it is far from being the last step that needs to be taken to improve how health care is provided in the United States. President Trump’s proclamations about the ACA have vacillated from supporting efforts to repeal and then replace the law, to repeal and replace it simulta- neously, to let the ACA “implode” to force the Dem- ocrats to negotiate, to keep the existing law but make improvements to it (Graham, 2017). His administra- tion’s actions, however, have consistently undermined the ACA, making it more likely that the uninsured rate will increase, premiums will rise, and consumer protections will diminish. Examples of these actions are highlighted in BOX 10-2. In general, the adminis- tration’s strategy appears to focus on (1) providing states with flexibility to interpret ACA requirements and (2) weakening the marketplaces by deterring insurers from participating in the exchanges and increasing prices for consumers purchasing products through the exchanges (Tworney, Berger, & Brady, 2018). We turn now to a more detailed discussion of the ACA’s key components, including a review of how Source: Center on Budget and Policy Priorities, 2018. BOX 10-2 Select Trump Administration Executive Actions Relating to the ACA ■ Issued Executive Order ordering federal agencies to begin dismantling the ACA “to the maximum extent permitted by law” and to grant exemptions or delay implementation of ACA provisions that impose a tax, fee, or other costs (January 2017) ■ Issued an insurance regulation that made it more difficult for individuals to sign up for insurance during a special enrollment period, shortened the length of the enrollment period, lowered premium tax credits, made it easier for insurers to collect back premiums, and provided states more flexibility to define Essential Health Benefits (April 2017) ■ Ended contracts to navigators that provided one-on-one enrollment assistance to consumers, slashed funding for enrollment outreach efforts, and limited weekend access to online enrollment functions (July–August 2017) ■ Created an expanded option for employers who choose not to provide contraceptive coverage due to religious or moral reasons (October 2017) ■ Ceased cost-sharing reduction payments to insurers (October 2017) ■ Signed the Tax Cut and Jobs Act, which eliminated individual mandate penalties (December 2017) ■ Proposed Association Health Plan (AHP) rules that would allow these plans to offer insurance products that are exempt from many ACA provisions, such as the Essential Health Benefits provision and another one that limits the charging of higher premiums based on one’s age, gender, or occupation (January 2018) ■ Issued guidance allowing work requirements to be applied to Medicaid recipients. Approved Kentucky’s Medicaid waiver that includes work requirements, higher premiums, and coverage lockouts (January 2018) (Note that this waiver was subsequently vacated by a federal court and the question of whether states can mandate work requirements for Medicaid recipients is the subject of ongoing litigation.) ■ Proposed rules to extend short-term limited duration health plans (that do not need to meet many of the ACA’s requirements) from 3 months to 1 year (February 2018) ■ Filed a brief in Texas v. United States declining to defend the constitutionality of the ACA (June 2018) ■ Delayed risk-adjustment transfers that provide payments from insurers with low-risk pools to insurers with high-risk pools (July 2018) ■ Slashed the budget (again) for enrollment outreach and navigation efforts (July 2018) 204 Chapter 10 Health Reform in the United States While the individual mandate is not a new idea and has been championed by both Republicans and Democrats at different times in history, it has proven to be a politically perilous route to reducing the number of uninsured. Opposition to the individual mandate has softened over time, but public opinion remains split and partisan. A 2017 poll taken during the debate about the Republican ACA repeal and replacement efforts found that 50% of respondents supported retaining the individual mandate, while 48% preferred to eliminate this provision (Agiesta, 2017). This rep- resents a shift in favor of the mandate over a 2013 poll that found 58% of respondents opposed (Burke, 2013). Over half of Republicans (55%) opposed the individual mandate in 2017 as compared to 84% in 2013. Democrats remained supportive of the individ- ual mandated, with 60% preferring to keep the man- date in place in 2017, similar to the 57% who felt that way in 2013 (Agiesta, 2017). It appears that some individuals do not prefer to be told they have to purchase health insurance by the government, even if it is a choice they made on their own prior to the passage of the ACA. But issues such as affordability or difficulty using the federal exchange website were more likely to be cited as reasons for not having health insurance than political opposition to the mandate. A poll conducted shortly after the first enrollment period closed found that most people who remained uninsured cited affordability (39%) or job-related reasons (22%), while only 9% felt they did not want or need health insurance (Hamel, Firth, & Brodie, 2014). Understandably, affordability remains a top issue for the public. In a recent poll, all respon- dents (regardless of political leanings) ranked limiting the amount individuals pay for health care as their top priority (DiJulio, Kirzinger, Wu, & Brodie, 2017). Almost half (49%) were very worried or somewhat worried about not being able to afford healthcare ser- vices in the future (DiJulio et al., 2017). Individual mandates can be set up in a variety of ways, but usually individuals who do not comply will be required to pay some sort of penalty. The penalty is intended to provide both an incentive to comply with the law and to raise funds to cover the cost of health care for those individuals who choose not to carry health insurance. Individual mandates are considered to be a cornerstone of health reform efforts because they ensure that everyone covered by the mandate will be in an insurance pool to help cover costs and share risk. Starting in 2014, the ACA’s individual mandate required that almost everyone purchase health insur- ance or pay a penalty. This penalty is phased in over time, beginning at the greater of $95 or 1% of taxable income per person in 2014 and growing to the greater of $695 or 2.5% of taxable income per person in 2016 and 2017. In subsequent years, the penalty amount increases through cost of living adjustments. The maximum penalty is the cost of the national average bronze plan sold through the marketplace. The mandate is considered essential because with- out it people who are in poor health or otherwise expect to use more healthcare services will be more likely to purchase health insurance, whereas healthier people will be more likely to opt out of insurance cov- erage. This situation would lead to an insurance pool that is relatively sick and thus more expensive, a prob- lem referred to as adverse selection. Adverse selection leads to a so-called “death spiral” as the insurance pool gets continually sicker and more expensive, encourag- ing more healthy people to opt out of coverage. While there remains for now uncertainty about the exact impact of the recent decision to remove the penalties associated with the individual mandate, it is generally agreed that the uninsured rate and premi- ums will increase due to adverse selection. For exam- ple, the Congressional Budget Office estimates that eliminating the penalty associated with the mandate will reduce the number of people with insurance by 3 to 6 million and will increase individual market premiums by 10% between 2019 and 2021 (Eibner & Nowak, 2018). The Rand Compare microsimula- tion model found that by 2020 there would be 2.8 to 13 million fewer insured individuals and a premium change of a 1% decrease to a 13% increase, depending on the plan type and modeling assumptions (Eibner & Nowak, 2018). Some policy experts consider the ACA’s mandate to be too weak to be effective in any event, thus reduc- ing, in their view, the impact of eliminating the penal- ties. In 2016, 6.5 million people paid an average fine of $70 for lack of coverage (Scott, 2018). Under the ACA, the penalties may not have been significant enough, nor the premium subsidies generous enough, to com- pel people to buy insurance. In addition, the United States does not enforce the mandate as vigorously as other countries do (Scott, 2018). Due to fears of adverse selection, analysts have been closely watching how many young adults (ages 18–34 years), who are more likely to be healthy, sign up for health insurance. While ideally 40% of enrollees would be in this age range in order to prevent adverse selection, only about 28% of the 8 million enrollees signed up at the end of the first enrollment period in April 2014 were young adults (Galewitz, n.d.). About 45% of taxpayers who either paid a penalty for not Overview of the ACA 205 having insurance or claimed an exemption from the mandate that year were younger than 35 years (Mills, 2016). While young adults have experienced a dra- matic reduction in their uninsured rate, they still accounted for 37.9% of the uninsured in 2017 (Blum- berg et al., 2018). The individual mandate is also an essential fea- ture of health reform because healthy individuals who choose not to purchase health insurance but then later need health care will likely receive some care even though they are uninsured. This is especially true if the individuals have the resources to pay for health- care services. These individuals are referred to as free riders because they avoid paying premiums for health insurance during their healthy years but then enjoy the benefits of healthcare services when they become sick. In 2015, over 7 million people who earned more than $75,000 were uninsured (Census, 2015). Because it is likely that many of these individuals could have afforded to purchase health insurance, some analysts consider this evidence of the free-rider problem. Politically, the individual mandate was essential to passing the ACA because it was the carrot that enticed health insurers to support health reform. The ACA includes a prohibition against excluding individuals who have preexisting conditions as a way to make health insurance available for those with health needs. Health insurers would have balked at being forced to enroll sicker individuals without a mandate intended to draw in healthier consumers as well. In addition, the mandate guaranteed new premium dollars from the new enrollees. There are a number of exceptions to the indi- vidual mandate requirement. Individuals are exempt from purchasing insurance if their income is below the tax-filing threshold (in 2017 this was $10,400 for single people younger than 65 years and $20,800 for couples younger than 65 years), the lowest-cost plan option exceeds 8% of their income, they qualify for a religious exemption, they are incarcerated, they are undocumented immigrants, they were without cover- age for less than 3 months, they are Native Americans, or they qualify as having a hardship. Based on a June 2013 HHS rule, hardship exemptions must be granted for individuals who experience an event that resulted in an unexpected increase in expenses such that pur- chasing health insurance would make it impossible to pay for necessities, such as food and shelter. The rule cites circumstances that would be considered under this exemption: homelessness, eviction, domestic vio- lence, death of a close family member, bankruptcy, substantial recent medical debt, and disasters that sub- stantially changed the individual’s property (Exchange Establishment Standards, 2013). Hardship exemptions are also allowed for individuals who would have quali- fied for Medicaid had their state chosen to expand the program under the ACA, and other exemptions exist based on projected low income (Jost, 2013). In 2018, the Trump administration created four new exemp- tion categories (Center for Consumer Information, 2018; HHS Notice of Benefit and Payment Parameters [HHS Benefit and Payment Rule], 2018). Individuals may apply for a hardship exemption if they (1) live in counties without marketplace plans, (2) live in coun- ties with a single insurer, (3) object to abortion cov- erage, or (4) meet additional hardship circumstances, such as needing specialty care out-of-network (Keith, 2018b). Some have criticized the exemptions for being so broad as to swallow the individual mandate. To some, the individual mandate remains con- troversial. In addition to believing that it represents unwarranted government intrusion into private deci- sion making, opponents of the individual mandate argued after the ACA was passed that Congress did not have the legal authority to impose such a requirement. This argument is grounded in jurisprudence relating to the federal Constitution’s Commerce Clause, which gives Congress the power to “regulate commerce with foreign nations, and among the several states, and with the Indian tribes” (U.S. Const. art. I, §8). Since the 1940s, the Supreme Court has interpreted the Commerce Clause to permit Congress to regulate eco- nomic activity that carries across state lines or local concerns that substantially affect interstate commerce, and several Commerce Clause cases have allowed the regulation of individual conduct (for example, the Supreme Court has upheld laws that prohibit an individual from refusing to interact with a minority and laws that regulate an individual’s ability to grow wheat or marijuana for home consumption [Heart of Atlanta Motel v. United States, 1964]), and the regula- tion of health insurance has also been deemed within the scope of the Commerce Clause (Gonzales v. Raich, 2005; Wickard v. Filburn, 1942). Notwithstanding these cases, those who argued against the individual mandate contended that the Commerce Clause does not permit Congress to require an individual to purchase a service or good such as health insurance. In other words, the argument goes, an individual’s decision not to purchase health insurance cannot be considered “economic activity” that Congress may regulate. Instead, it is argued, Con- gress is trying to regulate economic inactivity—the decision not to purchase health insurance—and that this is not permitted under the Commerce Clause (Shapiro, 2010). 206 Chapter 10 Health Reform in the United States On the other hand, those who contend the Com- merce Clause permits Congress to establish an indi- vidual mandate to purchase health insurance argue that everyone uses healthcare services at some point in their lives. Decisions regarding health insurance are an economic activity because no one can opt out of the healthcare market; that is, the decision individ- uals make is not whether to participate but how to participate in it. People will participate by purchas- ing health insurance now to cover the cost of future services or by paying out-of-pocket later at the time services are needed. In the end, the Supreme Court upheld the individ- ual mandate as a valid exercise of congressional taxing power; the court did, however, agree with those who maintained that the mandate was not permitted under the Commerce Clause. This outcome is described more fully later, when we provide an overview of the Supreme Court’s June 2012 ruling on the constitution- ality of the ACA. State Health Insurance Exchanges/ Marketplaces The ACA established a new series of entities called health insurance exchanges (also referred to as market- places in federal documents) that are intended to create a more organized and competitive market for purchas- ing health insurance. These exchanges are state-based and geared toward those who purchase health insur- ance as individuals (through American Health Benefit Exchanges) or through small businesses (through the Small Business Health Options Program, or SHOP). The SHOP exchange struggled from the start with implementation delays and much lower than antic- ipated enrollment (Aron-Dine, 2017). The Trump administration announced a rule that will effectively end the federally facilitated SHOP exchange as of Jan- uary 2018 (HHS Notice of Benefit and Payment, 2018; Jost, 2017; Luhby, 2017b). The small employer tax credit will remain in place, but businesses will purchase SHOP-qualified plans directly from insurers instead of on the exchange. According to the new rule, Centers for Medicare and Medicaid Services (CMS) will be work- ing to find more efficient and effective ways to increase insurance coverage for small business employees. Starting in 2014, the exchanges for individuals began offering a variety of health insurance plans that meet ACA criteria regarding plan benefits, pay- ments, and consumer information. The Congres- sional Budget Office (CBO) projects that by 2028, 8 million individuals will purchase their own health insurance through an exchange (CBO, 2018). This is significantly lower than earlier CBO estimates. Much of the difference is because fewer individuals are now projected to purchase unsubsidized plans on the exchange instead of directly from insurers in the nongroup market (Centers for Medicare and Medicaid Services, 2017). Because fewer employers than anticipated dropped their employee coverage, CBO overestimated the number of individuals who would shift from employer coverage to marketplace plans (CBO, 2017c; Jost, 2016). In addition, CBO expects 5 million fewer individuals to purchase nongroup coverage, including marketplace cover- age, as a result of the individual mandate penalty repeal (CBO, 2017d). The exchanges are a critical component of health reform because it would be untenable to require indi- viduals to purchase health insurance without also mak- ing comprehensive and affordable health insurance options available. Individuals often face expensive and less comprehensive health insurance choices because their insurance pools are not extensive enough that the premiums paid by healthy individuals offset the costs associated with sicker individuals. The exchanges are intended to create a new market by bringing together large numbers of individuals to create wider insur- ance pools. Individuals are eligible to purchase health insurance through an exchange if they live in the state where the exchange operates, are U.S. citizens or legal immigrants, and are not incarcerated. Addi- tional requirements must be met, however, to obtain subsidies that reduce the cost of health insurance. Subsidies are available to individuals who meet the previously mentioned requirements and who also do not have access to affordable (as defined by the ACA) employer- sponsored insurance, meet specified income requirements, file taxes jointly (if married), and are not eligible for Medicaid, Medicare, or the Children’s Health Insurance Program (CHIP) (KFF, n.d.). Under the ACA, states have three main options when it came to exchanges: they can build their own, enter into a partnership with the federal government, or ignore the process altogether and thus default into BOX 10-3 Discussion Questions Are there alternatives to the individual mandate that accomplish the same goals without engendering so much political turmoil? Could policymakers have designed an incentive system that would be as effective as a mandate? What are the pros and cons of using a mandate versus an incentive? Can you think of incentives to encourage enrollment that have occurred in other parts of the healthcare system? Overview of the ACA 207 what is referred to as a federally facilitated market- place (FFM; this federally facilitated exchange was mandated by the ACA for states that were not willing or able to establish a state exchange or a partnership exchange). In a state-run exchange, the state either handles all functions or may use the federal infor- mation technology (IT) platform; in a partnership exchange, states may administer plan management functions, in-person consumer assistance functions, or both, with HHS performing remaining responsi- bilities; and in the FFM, HHS performs all functions. Whatever the structure, the exchanges for individu- als were required to be up and running by January 1, 2014. At the time of this writing, the breakdown is as follows: 17 states and the District of Colombia built their own exchange (with 5 of the states using the federal IT platform); 6 set up partnership exchanges; and 28 states defaulted to the FFM (KFF, 2018). States also may form a regional exchange with other states or allow multiple exchanges within one state as long as each exchange covers a distinct geographic area. In addition, the federal Office of Personnel Management is required to offer at least two multistate plans within each exchange to provide individuals and businesses with additional choices. The ACA requires the exchanges to ensure that plans meet other requirements of participating in the exchange. These requirements relate to marketing practices, provider networks, outreach and enroll- ment, insurance market regulations, and the provi- sion of information in plain language. In addition, the entity running the exchange must provide a call center for customers, maintain a website, develop uniform applications, provide information regarding eligibil- ity for public programs, assist individuals in calculat- ing their tax credits, and certify individuals who are exempt from the individual mandate requirement. As noted earlier, the Trump administration actions undermining the ACA have focused on strat- egies that weaken the ACA marketplaces. One way to accomplish this goal is to allow cheaper alternatives for individuals to purchase health insurance in the nongroup market outside of the exchanges. In gen- eral, a cheaper alternative is likely to have less com- prehensive benefits and/or higher cost-sharing for the individual. The administration’s rule expanding both Association Health Plans (AHPs) and short-term limited-duration plans are part of this strategy. AHPs allow business associations and other organizations to join together to provide fringe benefits, including health insurance (CBO, 2018). Short-term plans were designed to fill in a temporary insurance coverage gap and are not renewable (Pollitz, Long, Semanskee, & Kamal, 2018). Both types of plans are likely to “limit benefits, be priced on the basis of an individuals health status, and impose lifetime and annual spending limits, and insurers could reject applicants on the basis of their health and any preexisting condition” (CBO, 2018, p. 10). One review of short-term plans found that 71% did not cover outpatient prescription drugs, 62% did not cover substance abuse services, 43% did not cover mental health services, and no plans covered mater- nity care (Pollitz et al., 2018). By allowing insurers to offer nongroup plans that do not have to comply with these ACA provisions, it is possible to create cheaper and skimpier insurance products. As a result, adverse selection is likely to occur in the exchange plans as healthier individuals who do not believe they need a comprehensive plan—or do not want to pay a higher premium to participate in one—will leave the exchange plan and move to a cheaper nongroup option. CBO estimates that 6 million people will enroll in AHPs or short-term plans by 2023 (CBO, 2018). Another way to weaken ACA marketplaces is to make it more difficult to enroll in marketplace plans. Several Trump administration policies create barri- ers to enrollment. These policies include shortening the enrollment period, limiting advertising and other outreach during the enrollment period, reducing the budget for “navigators” who assist consumers in understanding and enrolling in marketplace plans, and limiting weekend online enrollment functions through the official HealthCare.gov website (Center for American Progress, 2018). Essential Health Benefit Requirement All qualified health plans that participate in an exchange (as well as individual and small-group plans outside of the exchanges) must offer a standard ben- efit package called essential health benefits (EHBs) (BOX 10-5) (Giovannelli, Lucia, & Corlette, 2014). This requirement represents the first time private health insurance plans have been subject to a federal stan- dard regarding what benefits must be offered. The ACA requires the secretary of HHS to ensure the scope of benefits is equal to the benefit level found in a “typical employer plan.” Plans may not design their benefit or reimbursement packages in ways that dis- criminate based on age, disability, or expected length of life (Rosenbaum, Teitelbaum, & Hayes, 2011). While the ACA outlines 10 categories of services that must be provided in the EHB package, the federal regulatory process left states with significant discretion about how they implemented this requirement. States have a choice of 10 federally approved health plans to serve as a benchmark to determine the breadth of http://HealthCare.gov 208 Chapter 10 Health Reform in the United States the services covered under the EHB categories. These approved benchmark plans include the largest three small-group plans available in the state, the largest three state-employee health plans in the state, the largest three Federal Employee Health Benefit Pro- gram plan options for federal employees, or the state’s largest commercial HMO (Giovannelli et  al., 2014). In 2017, 26 states did not choose a benchmark plan and were defaulted to the largest small-group plan offered in that state (Keith, 2017). Whether by choice or default, most states are using small-group plans, which are often less generous than large-group plans, as their benefit benchmark (Giovannelli, Volk, Lucia, William, & Connor, 2015). The Trump administration added another benchmarking option through its defi- nition of a “typical employer plan,” effective in 2020. In addition to the 10 benchmark plans discussed, states may also use any of the five largest (by enroll- ment) group health insurance products in the state that meet certain requirements (Keith, 2018b). The administration further expanded state choice in 2020 by allowing states to select annually whether to (1) use Source: Data from: McDermott Will & Emery. Challenges facing “narrow” provider networks on the ACA health insurance exchanges. http://www.mwe.com /files/Uploads/Documents/News /Challengs-Facing-Narrow-Provider-Networks . Published April 20, 2015. Accessed July 7, 2015. BOX 10-4 Provider Networks An emerging policy and care delivery issue has been the question of whether provider networks available in plans offered in the exchanges are adequate. Prior to the ACA, insurers could control costs through a variety of mechanisms, including limiting benefits, excluding consumers with preexisting conditions, and using medical underwriting to charge higher premiums to higher-risk individuals and groups. Plans would compete with each other based on price, benefits, cost-sharing, and other features. The ACA includes a variety of rules that eliminate these options, such as prohibition of exclusions based on preexisting conditions, guaranteed issue requirements, community rating requirements, essential health benefit requirements, and actuarial tiering of plans. As a result of ACA restrictions, many plans are trying to control costs by limiting provider networks and/or provider reimbursement. Of course, some providers may choose not to participate in exchange plans if the reimbursement is not sufficient. Many consumers who purchase plans in an exchange choose plans based on the premium price and indicate they would prefer cheaper plans with narrow networks as opposed to expensive plans with broader networks. On the other hand, consumers who purchase plans through employer-sponsored insurance often prefer broader networks, even if the coverage is more expensive. Complaints about narrow networks range from consumers being disappointed that their usual doctor or local hospital is not in network, to questions about access to care, network transparency, and quality of care. Several lawsuits have been filed against plans regarding network transparency and provider terminations. In 2014 the Office of the Insurance Commissioner issued federal rules regarding network adequacy in individual and small-group plans, and CMS continues to issue guidance regarding network adequacy for qualified health plans. State responses to network adequacy concerns have spanned the gamut, from Massachusetts requiring plans to develop tiered and narrow networks to promote cost savings, to several failed attempts by state legislatures to pass “any willing provider” laws that require insurers to include any provider willing to accept the insurers’ terms. BOX 10-5 Essential Health Benefits All plans in the state exchanges must offer the following benefits: ■ Ambulatory patient services ■ Emergency services ■ Hospitalization ■ Maternity and newborn care ■ Mental health services and substance use disorder services, including behavioral health treatment ■ Prescription drugs ■ Rehabilitative and habilitative services and devices (rehabilitative therapies improve, maintain, or prevent deterioration of functions that have been acquired [e.g., after an adult has surgery], whereas habilitative therapies are provided to achieve functions and skills never acquired [e.g., as with a developmentally disabled child]) ■ Laboratory services ■ Prevention and wellness services and chronic disease management services ■ Pediatric services, including vision and dental services http://www.mwe.com/files/Uploads/Documents/News/Challengs-Facing-Narrow-Provider-Networks http://www.mwe.com/files/Uploads/Documents/News/Challengs-Facing-Narrow-Provider-Networks Overview of the ACA 209 another state’s entire 2017 benchmark plan, (2) replace one or more of its EHB categories with another state’s EHB categories, or (3) choose a new EHB benchmark plan (Keith, 2018b). Benchmark plans are subject to minimum and maximum standards. At a minimum, the benchmark plans must meet the “typical employer plan” standard. At a maximum, also known as the generosity test, the benchmark plan cannot be more generous than the most generous comparison plan (Keith, 2018b). The compar- ison plans are the state’s 2017 benchmark and the state’s three or four largest (by enrollment) small-group health plans (Keith, 2018b). The federal government will defer to the state’s interpretation of plan benefits and limits (Keith, 2018b). The Trump administration has also changed the rules regarding substituting benefits. Under the Obama administration, insurers were allowed to sub- stitute benefits within an EHB category, but not across EHB categories, as long as the substitution was actuar- ially equivalent to the benefit it was replacing. Under the Trump administration, states may substitute actu- arially equivalent benefits both within and across EHB categories (Keith, 2018b). An example of a within EHB substitution could be replacing a blood screen (lab test) for ovarian cancer with coverage of a blood screen for high cholesterol, a different, but actuarially equivalent, laboratory test (Giovannelli et  al., 2014). An across EHB substitution would be replacing one type of service (e.g., an inpatient hospital service) with a completely different type of service (e.g., an outpa- tient physician service). Substitution is not permitted for prescription drugs. Critics of the across substitution rule are con- cerned that plans will substitute out select benefits so that they do not appeal to certain high-risk individ- uals. In addition, once a service is not considered an EHB, it is no longer subject to ACA protections, such as lifetime or annual dollar limits, nor is it used to cal- culate premium subsidies and cost-sharing reductions (Keith, 2018b). Nine states and the District of Colum- bia prohibited within category substitution in 2014 (Giovannelli et al., 2014). As with many of the Trump administration changes, states will have the final say over whether and how they choose to take advantage of this flexibility. Further variation across the states may occur with habilitative service coverage and state benefit mandates. Habilitative services assist individuals with gaining or maintaining functional skills (e.g., speak- ing, walking). Prior to ACA passage, coverage for and the definition of habilitative services varied signifi- cantly. As part of ACA implementation, federal regu- lators permitted states to use the habilitative services definition in their benchmark plan (if there was such coverage), create their own coverage definition, or let the insurers define the coverage benefit (Giovannelli et  al., 2014). As a result, the definition of habilitative services may differ across states and within states. Finally, some states passed laws that required insurers in their states to cover a particular benefit, such as obe- sity management services. Any benefit mandates that were in place before 2012 were incorporated into that state’s EHB package, meaning the variation that was in place prior to health reform is likely to continue. It is less likely that states will add new benefit man- dates at this time because if a state plans to include any services beyond the essential health benefits package that were not mandated prior to 2012, the state must defray the cost of the additional service through a pay- ment to the enrollee or the plan. In addition, the new generosity test means that it may be more difficult for states to choose a benchmark that includes an expen- sive mandate (Keith, 2018b). In the lead-up to passage of the ACA, there was significant debate about whether to allow or require plans to offer abortion and contraceptive services. In fact, the abortion debate was so divisive it almost doomed the entire health reform bill at the 11th hour. A compromise was reached with the intent of keeping the status quo regarding federal funding for abortion services (i.e., limit federal funding for abortion ser- vices to cases where the life of the pregnant woman is in danger or the pregnancy is a result of rape or incest). Under the compromise, states may enact a law that prohibits plans that participate in their state exchanges from providing abortion services. The ACA also provides coverage, without any cost-sharing, for all contraception methods approved by the Food and Drug Administration. While con- traception is considered a preventive service under the EHB standard, it is not specifically listed in the statute (nor are other preventive services; instead the statute references guidelines such as the U.S. Preven- tive Services Task Force A and B recommendations). Contraceptive coverage is part of a separate provision that includes women’s preventive services identified by the Health Resources and Services Administration. Because this guideline is created by an administrative agency, each successive administration has the power to change the list of approved women’s preventive ser- vices without needing congressional approval. The Obama administration exempted certain entities from being required to provide contraception coverage due to religious objections (Coverage Preventive Services, 2013). The required breadth of this exemption is the subject of numerous lawsuits and remains unsettled at this time. The Trump administration is considering 210 Chapter 10 Health Reform in the United States a new administrative rule that would significantly broaden the group of employers and insurers who would qualify for the exemption based on religious or moral grounds (Pear, 2017). Given the Trump administration’s policies intended to restrict access to abortion services (e.g., supporting the defunding of Planned Parenthood) and contraceptive devices (e.g., by broadening the religious objection exemption), it is worth noting what actions states have taken on these issues. As of June 2018, 11 states have enacted laws that restrict abortion cov- erage in all private plans in the state, 25 states restrict abortion coverage in private plans offered through their exchange, and 21 states restrict abortion cover- age in public employee plans (Guttmacher Institute, n.d.; Guttmacher Institute, 2018a). If a state does not enact such a law and a plan chooses to offer abortion services in other circumstances, the plan must create separate financial accounts to ensure that federal pre- mium and cost-sharing subsidies are not used toward those abortion services. In addition, at least one of the multistate plans is required not to provide abortion services beyond those that are currently allowed with federal funding. As with most compromises, neither side was entirely pleased with the outcome. Those who want more restrictive abortion policies found the separate accounting process to be a meaningless exer- cise, whereas those who want more permissive abor- tion policies were disturbed by the ability of states to prohibit plans from offering abortion services. As of June 2018, 29 states require insurance plans to cover the full range of contraceptive drugs, 9 states prohibit cost-sharing for contraceptives, and 5 states prohibit other restrictions and delays by insurers. At the same time, 21 states exempt select employers and insurers from providing contraceptive coverage based on reli- gious objections (Guttmacher Institute, 2018b). The ACA also created a “catastrophic coverage” option that must include EHBs (KFF, n.d.). A cat- astrophic plan may be offered only to individuals younger than 30 years who would be exempt from the individual mandate requirement due to hardship or affordability exemptions. These plans require cov- erage of EHBs, certain preventive services without cost-sharing, and at least three primary care visits each year before meeting the deductible (KFF, n.d.). Individuals may not use premium tax credits to subsi- dize catastrophic plans, which typically have low pre- miums but very high deductibles. Premium and Cost-Sharing Subsidies One key difference among the exchange plans is the cost to the enrollee. Four levels of plans may be offered, and they are distinguished by their actuarial value. Actuarial value is the average share of covered benefits generally paid by the insurer based on the cost-sharing provisions in the plan. The higher the actuarial value, the more the plan pays for a given set of services. For example, in a plan with 70% actuarial value, the plan pays 70% of the cost of services on average across all enrollees, while enrollees pay 30%. Actuarial value is set by average cost, but any single enrollee in that plan may pay more or less than 30% of the cost of services. In general, plans with a higher actuarial value will also have higher premiums to cover the cost of providing services to enrollees. A plan with lower premiums could have higher cost-sharing (co-pays or deduct- ibles) to offset the lower premium. The four ACA- approved plan levels by actuarial value are bronze (60% actuarial value), silver (70% actuarial value), gold (80% actuarial value), and platinum (90% actu- arial value). Plans must offer at least one silver-level and one gold-level option in each exchange in which they participate. The ACA includes premium tax credits and cost-sharing subsidies (CSRs) to help make it afford- able for people to purchase health insurance in a state exchange. Given the mandate to purchase insurance, it was necessary to include some assistance to make it possible for low-income individuals to comply with the new requirement. The tax credits and sub- sidies were available starting in 2014, the same year the individual mandate and the state health insurance exchanges went into effect. In 2017, 8.7 million people (84% of marketplace enrollees) received a premium tax credit, and 5.9 million people (57% of marketplace enrollees) received a CSR (KFF, 2017a). BOX 10-6 Discussion Questions There was a lengthy debate about whether to include a public option in health reform. A public option is some type of government-run health plan that would be available to compete with private plans. A public option could exist within the health exchange model or outside of it. Instead of a public option, Congress voted to require the Office of Personnel Management, which runs the Federal Employees Health Benefit Program, to contract with at least two multistate plans in every state health insurance exchange. What are the pros and cons of having a public option? Does the Office of Personnel Management compromise achieve all or some of the goals of having a public option? Why do you believe the Office of Personnel Management compromise was acceptable to legislators but the public option was not? Overview of the ACA 211 Premium tax credits are available to individuals who are eligible to purchase health insurance in state exchanges; have incomes between 100% and 400% of the federal poverty level; are not eligible for Med- icaid, CHIP, or Medicare; and do not have access to affordable employer-sponsored health insurance. (An employer plan is not considered affordable if it does not cover at least 60% of covered benefits or if the employee’s share of premium contributions exceeds 9.5% of the employee’s income.) In 2018, 400% of the poverty level was $48,560 for an individual and $100,400 for a family of four (Office of Assistant Sec- retary for Planning and Evaluation, 2018). The tax credits are advanceable and refundable, meaning they are available when health insurance is purchased and regardless of whether the individual owes any taxes. CSRs (i.e., federal funds provided to assist individuals with the purchase of insurance) are available to peo- ple who earn between 100% and 250% of the poverty level. Under the ACA, individuals with income less than 133% of the poverty level will be eligible for Med- icaid beginning in 2014 in those states that elected to implement the ACA’s Medicaid eligibility expansion. The amount of the premium tax credit is tiered based on income and set so individuals will not have to pay more than a certain percentage of their income on premiums (TABLE 10-1). The tax credit amount is based on the cost of the second-lowest-cost silver plan in the exchange and location where the individual is eligible to purchase insurance. Individuals who want to purchase a more expensive plan have to pay the difference in cost between the second-lowest-cost silver plan and the plan they prefer to purchase. Under the ACA, HHS will adjust the premium people are expected to pay to reflect that premium costs typically grow faster than income levels. For example, assume Bob’s income is 250% of poverty (about $31,000 for an individual), and the cost of the second-lowest-cost silver plan in Bob’s area is $5,700. Under the premium tax credit schedule, Bob will pay no more than 8.05% of his income, or $2,495. Bob’s tax credit is $3,205, which is $5,700 minus $2,495 (KFF, n.d.). CSRs are available to help low-income people reduce the amount of out-of-pocket spending on health insurance (TABLE 10-2). The subsidies are tiered by income level and set so that plans pay a higher per- centage of service costs. In other words, they are set to increase the actuarial value of the plan for low-income individuals. Under the ACA, insurers receive payments from the federal government to cover the expense of pro- viding CSRs to their low-income enrollees. Nearly 6 million enrollees qualified for CSRs in 2017, which was expected to cost the federal government $7 billion (Liptak, Luhby, & Mattingly, 2017). These payments to insurers have been the subject of litigation brought by House Republicans, originally during the Obama administration (the case was first known as House v. Burwell, then it was retitled House v. Price to account for a new HHS Secretary, and currently the case has been retitled House v. Azar for the same reason). Ini- tially, the federal trial court agreed with the plaintiffs’ claim that the subsidies should not be funded because Congress did not appropriate money for that purpose. The Obama administration appealed, after which the case was put on hold during multiple delays. In Octo- ber 2017, the Trump administration announced that it would no longer make CSR payments to insurers, and as a result the various parties to the lawsuit—House Republicans, the Trump administration, and several states (which had been granted a request along the way to intervene in the case)—started to negotiate a settlement. Having reached a conditional settlement in December 2017, the parties asked the original trial judge to issue an “indicative ruling” that she would vacate her original order on CSR payments if the case TABLE 10-1 Premium Tax Credit Schedule Income Level by Federal Poverty Level (FPL) Premium as a Percentage of Income 100–133% FPL 2% of income 133–150% FPL 3–4% of income 150–200% FPL 4–6.3% of income 200–250% FPL 6.3–8.05% of income 250–300% FPL 8.05–9.5% of income 300–400% FPL 9.5% of income TABLE 10-2 Cost-Sharing Subsidy Schedule Income Level by Federal Poverty Level (FPL) Actuarial Value 100–150% FPL 94% 150–200% FPL 87% 200–250% FPL 73% 212 Chapter 10 Health Reform in the United States were sent back to her from the appellate court (to which the Obama administration had appealed some years earlier) without a ruling on the merits. At the request of the parties, the appellate court did just that; it dismissed the appeal and sent the case back to the trial court. In turn, the trial judge vacated her initial decision. That said, the CSR saga is not over: several state attorneys general filed a lawsuit against HHS over its decision to end the CSR payments, and some insurers have done the same. The ACA requires insurers to offer low-income enrollees reduced deductibles and co-payments. With- out CSR payments to cover the costs of those reduc- tions, insurers will increase premiums to make up for lost revenue and/or leave the insurance market alto- gether (Liptak et al., 2017). While the amount varies by state, it is estimated that cessation of CSR payments led to an average premium increase of 19% in 2018 (Kamal, Semanskee, Long, Claxton, & Leavitt, 2017). Many insurers are targeting their premium increase just to the silver plan, a strategy known as “silver loading” (Keith, 2018c). By doing so, they are maximizing premium tax credits they receive, which are tied to silver plan costs. In addition, since consumers may use their tax credits for any plan, many could enroll in a bronze or gold plan at a lower cost than in prior years. While the Trump administration could prohibit silver loading, they have not done so to date (Keith, 2018c). Ironically, it is esti- mated that the cost to the federal government for not making the CSR payments is $2 billion more than it would be if it simply made the payments, because of the higher premium tax credits owed (Fise, 2017). In addition to the premium tax credits and CSRs, the ACA limits the overall amount of out-of-pocket costs paid by individuals with incomes up to 400% of poverty (TABLE 10-3). The limits are based on the max- imum out-of-pocket costs for health savings accounts ($6,650 for single coverage, $13,300 for family cover- age in 2018) and will be indexed annually. The insurance subsidies have been at the center of litigation and political maneuvering and are discussed later. These subsidies—and, in turn, the viability of the ACA overall—were at risk due to a lawsuit that chal- lenged the legality of subsidies provided to the millions of people in the states that use a federally operated insurance exchange instead of setting up a state-based exchange (Taylor, Saenz, & Levine, 2015). Congress wrote in the ACA that federal subsidies were available to individuals who purchased health insurance through exchanges that were “established by the State.” As part of the law’s implementation process, the Internal Revenue Service (IRS) issued a regulation indicating that federal subsidies were available to individuals who purchased health insurance in either state-run or federally oper- ated exchanges (Health Insurance Premium, 2012). The individuals who brought the lawsuit argued that the IRS regulation was unlawful because it contradicted the language of the ACA. In essence, the court case boiled down to the meaning of the four words “established by the State”: when read contextually against the rest of the ACA, were federally operated exchanges included in exchanges “established by the State,” or were federal subsidies reserved only for individuals in states that established their own state-run exchange? In a 6–3 decision in King v. Burwell, the U.S. Supreme Court upheld the ACA’s statutory and regulatory scheme, allowing federal subsidies to flow to individuals who purchase insurance in both state-run and federally operated exchanges. Instead of reading the four words in question in a vacuum, Chief Justice Roberts, writing for the majority, viewed the phrase “established by the State” in the context of the overall purpose of the law. Doing otherwise, according to the court, would bring about “the type of calamitous result [insurance market failure] that Congress plainly meant to avoid” in crafting the ACA in the first place. Noting that the court’s duty is to construe statutes as a whole, not “isolated provisions,” Chief Justice Roberts wrote the following: Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must inter- pret the [ACA] in a way that is consistent with the former, and avoids the latter. [The IRS TABLE 10-3 Out-of-Pocket Spending Limits Income Level by Federal Poverty Level (FPL) Out-of-Pocket Limit 100–200% FPL 2/3 of maximum 200–300% FPL 1/2 of maximum 300–400% FPL 1/3 of maximum BOX 10-7 Discussion Questions CBO estimates that premium subsidies and CSRs will cost the federal government $760 billion over the years 2019–2028 (CBO, 2018). Is this a good use of resources? Are these subsidies well designed? Are they sufficient to make health insurance affordable? Do they cover people with incomes that are too high? Should they cover more people? Overview of the ACA 213 regulation] can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt. (King v. Burwell, 2015) In upholding the subsidies, the court differed in its reasoning from some lower federal courts that none- theless also upheld the subsidies across all exchanges. These lower courts found the ACA’s subsidy language ambiguous and therefore deferred to the agency (the IRS) that was tasked with interpreting the statute. In a critical move, the Supreme Court instead ruled that because the availability of tax credits was an issue with “deep economic and political significance” to the country, the meaning of the subsidy language should be interpreted by the court itself, rather than left to agency discretion. This decision means that the only way the subsidy language can be altered in the future is through congressional action, rather than by a future president whose administration might reinterpret the language more narrowly. Thus, it is far more likely that the subsidies will remain available in all exchanges— regardless of whether a state or the federal govern- ment operates them—going forward. In addition to saving insurance subsidies for mil- lions of Americans, the decision in King v. Burwell could have additional ramifications. Taken in conjunction with NFIB v. Sebelius (the 2012 Supreme Court deci- sion upholding the constitutionality of the ACA), lower courts may read King’s direction to interpret the ACA as a congressional effort to improve insurance markets as a signal to forestall future litigation against the law. Furthermore, in states that have had difficulty setting up or operating their own exchange, the decision may encourage them to rely on the federal exchange appara- tus; because there is no longer the threat that insurance subsidies could be easily untethered from federally facilitated exchanges, the use of such an exchange could become relatively more attractive. Employer Mandate As written in the ACA, employers with 50 or more employees and at least 1 employee who qualifies for a tax credit were required to offer affordable health insurance or pay a penalty beginning in 2014. The Obama administration twice delayed implementation of the mandate to smooth the transition, but the man- date itself did not change. Under the mandate, covered employers have three options: (1) provide affordable health insurance and not pay a penalty, (2) provide health insurance not considered affordable and pay a penalty, or (3) do not provide health insurance and pay a penalty. The penalties are based on whether an employer offers health insurance and whether any full-time employees take a premium tax credit. The amount of the penalty increases over time based on the national increase in premium costs. The employer mandate was put in place to encourage employers to continue offering or start offering health insurance. Without such a mandate, employers may have found it profitable not to offer health insurance and let their employees purchase health insurance through state exchanges, shifting more of the costs of health reform to the public sector and taxpayers. For employers that do not offer health insurance and have at least one full-time employee who takes the premium tax credit, the penalty is $2,000 per employee after the first 30 employees. In other words, if such an employer has 50 employees, the employer would pay a $40,000 penalty ($2,000 × 20 employees). Employers that offer health insurance do not pay a penalty if the insurance is considered affordable. Insur- ance is affordable if the plan has an actuarial value of at least 60% or if the premiums do not cost more than 9.5% of an employee’s income. Employees who would have to pay more than 9.5% of their income on premi- ums have the option to purchase insurance through an exchange and receive a premium tax credit. Employers who provide unaffordable insurance have to pay a penalty for each employee who takes a tax credit, not counting the first 30 employees (the 30-employee exception was included in the law due to Congress’s concern about the impact of the employer mandate on small businesses). The penalty is $3,000 per employee who takes a tax credit but may not exceed $2,000 times the number of employees over 30. For example, if the employer has 50 employees and offers unaffordable coverage, the employer would pay a maximum penalty of $40,000 ($2,000 × 20). If only 10 employees take a tax credit, the penalty would be $30,000 ($3,000 × 10). If all 50 employees take a tax credit, the penalty would be $40,000, which is the max- imum penalty allowed, not $150,000 ($3,000 × 50). Given their smaller pool of employees, small busi- nesses have often found it quite expensive to offer health insurance to their employees. In addition to exempting businesses with fewer than 50 employees from the employer mandate (and creating a health insurance exchange for small businesses), Congress also included a small business tax credit to encourage these employers to provide coverage. Employers are eligible for the tax credit if they have fewer than 25 full-time-equivalent employees, average annual wages under $50,000, and pay for at least half of the cost of health insurance coverage for their employees. The tax credit covers a portion of the cost of the employer’s contribution toward employees’ premiums. The credit is capped based on the average premium costs in the 214 Chapter 10 Health Reform in the United States employer’s geographic area and phases out as firm size and annual wages increase. Because the employer mandate (and other provi- sions) will lead to increased costs for certain employ- ers, some of these employers may be influenced to offset new costs by employing more part-time work- ers (at the expense of full-time employment) and/or capping the number of workers they hire at 49 to avoid the mandate (Blumberg, Holahan, & Buettgens, 2014). While several analyses indicate that the ACA’s effects to the labor market may in fact be modest (Abraham & Royalty, 2017; Blumberg et al., 2014), the authors of one study (Blumberg et al., 2014) nonetheless go so far as to advocate for eliminating the employer mandate altogether. They argue that doing so would actually not reduce overall insurance coverage significantly, would eliminate any market distortions that could result from changes in employer hiring practices, and would have the added benefit of lessening employer opposition to the ACA (Blumberg et al., 2014). Changes to the Private Insurance Market In addition to creating a new marketplace for private insurance through state exchanges, the ACA includes a variety of changes to private health insurance rules and requirements. These requirements cover every- thing from rate setting, to benefits, to who must be covered. Although the overall health reform law is controversial, many of these private market reforms have overwhelming support. Together, these changes filled in gaps left by the private market that many peo- ple believed were unfair to consumers. The following coverage changes took effect in 2010: ■ Preexisting conditions: Individual and group plans may not exclude children due to their health status or based on preexisting conditions. ■ Dependent coverage: Individual and group plans must provide dependent coverage up to age 26 years. ■ Preventive services: New health plans may not impose cost-sharing for certain preventive ser- vices, including the following: • Preventive services with an A or B rating from the U.S. Preventive Services Task Force • Immunizations recommended by the Centers for Disease Control and Prevention’s Advi- sory Committee on Immunization Practice • Preventive care and screening for women based on guidelines to be issued by the Health Resources and Services Administration ■ Coverage limits: Individual and group plans may not impose lifetime dollar limits on coverage (and the ability to impose annual limits on the dollar value of coverage is prohibited as of 2014). ■ Rescission: Individual and group plans may not rescind coverage except in the case of fraud. ■ Appeals: New health insurance plans must have an effective appeals process that includes an exter- nal review option. Congress also focused on the issue of how insurers determine premium rates and what they spend those resources on within their plans. The ACA charged HHS with establishing an annual process to review “unreasonable” increases in premiums (ACA, 2010, §1003). The 2019 benefit and payment rules change the definition of “unreasonable” from a 10% to a 15% increase and exempt student health services from the review requirements (Keith, 2018d). As of 2016, 43 states and the District of Columbia had some type of rate review law in place for all of their insurance markets, and the federal process is intended to work with, not preempt, those state laws (National Confer- ence of State Legislators, 2016). These states must post all proposed increases at the same time and all final rate increases at the same time and must provide CMS with 5 days’ notice of rate increases (Keith, 2018d). In addition, the ACA requires that plans spend at least 85% (large-group plans) or 80% (small-group or individual plans) of their premium dollars on medical care and quality improvement services, not administra- tive or other expenses (e.g., profits). Regulations clari- fying this medical loss ratio (MLR), as it is called, took effect on January 1, 2011 (Health Insurance Issuers, 2010). Insurers must provide enrollees with a rebate if they do not spend the requisite percentage on clin- ical and quality improvement services. Initially, insur- ers paid significant rebates to consumers ($1 billion in 2011), but by 2016 only 1.5% of enrollees received rebates as insurers improved their MLR to 92% in the individual market and 86% in the small-group market (Keith, 2018d). Under the 2019 benefit and payment rules, insurers may automatically claim 0.8% of earned premiums for quality improvement without supplying verifying documentation. This will raise the MLR rate for most insurers (Keith, 2018d). The rule also eases standards for seeking an MLR adjustment in the indi- vidual market. CMS projects that 22 states will seek such an adjustment, resulting in consumer rebate reductions of $52 to $64 million annually (Keith, 2018d). A number of significant insurance changes took place in 2014 alongside implementation of the indi- vidual mandate and health insurance exchanges: ■ Guaranteed issue and renewability: Individual and group plans may not exclude or charge more to individuals based on preexisting conditions Overview of the ACA 215 or health status in the individual market, small- group market, and exchanges. ■ Rate variation limits: Premium rates may vary based only on age, geographic area, family com- position, and tobacco use in the individual mar- ket, small-group market, and exchanges. ■ Coverage limits: Individual and group plans may not place annual dollar limits on coverage. ■ Essential health benefits: Insurers providing cov- erage to small businesses or individuals and in the exchanges have to provide essential health bene- fits through one of four plan categories (bronze, silver, gold, or platinum) and adhere to annual cost-sharing limits. ■ Wellness plans: Employers may offer rewards that reduce the cost of coverage to employees for par- ticipating in a wellness plan. These private market changes do not affect all plans equally. Plans in small-group or nongroup mar- kets must follow these rules whether or not they are offered in an exchange. However, the ACA included two significant exceptions to these reforms. First, insurance plans that were in existence when the ACA was signed into law are referred to as “grandfa- thered plans” and are subject to some, but not all, of the new rules. The grandfathered plans must follow new requirements relating to preexisting conditions, lifetime and annual limits, waiting period limits, and dependent coverage rules. These plans are exempt, however, from having to provide essential health ben- efits, preventive services without co-pays, and limited cost-sharing, although many of the large employer plans already have some of these features (Healthcare. gov, n.d.). A plan may retain its grandfathered status as long as it does not make significant changes to plan benefits or cost-sharing rules. If it loses its grandfa- thered status, the plan will have to meet all applicable requirements. In 2017, 23% of all employers offered at least one grandfathered plan, and 17% of covered workers were enrolled in a grandfathered plan (KFF and Health Research and Educational Trust [HRET], 2017, Section 13). The second major exception is for self-funded plans. In these plans, an employer does not buy insurance from a company but instead takes on the insurance risk itself. Self-funded plans are exempt from state law and subject to federal rules under ERISA. Self-funded plans must adhere to ACA rules regarding dependent coverage, cost-sharing for pre- ventive services, annual and lifetime limits, and wait- ing period limits, but do not need to comply with essential health benefit requirements (Commercial Insurance, 2012) Financing Health Reform Congress financed health reform primarily through Medicare and Medicaid savings, excise taxes and fees on the healthcare industry, changes to the income tax code, a tax on some health insurance plans, and expected individual and employer payments for vio- lating insurance mandates. Several of these financing changes were made as part of the deals the Obama administration struck with various stakeholders. The ACA’s main financing features are as follows: ■ Medicare provider reimbursement: Reduces “market basket” or cost updates for inpatient and outpatient hospital reimbursement and reduces payments for preventable hospital readmissions and hospital-acquired infections. This feature includes productivity adjustments (an adjustment in the Medicare physician fee schedule pertaining to physician productivity) for certain providers that will result in lower reimbursement rates. ■ Medicare Advantage payments: Reduces reim- bursement rates and imposes cost-sharing limits for Medicare’s managed care plans. ■ Medicare Part A (hospital insurance): Increases Medicare Part A tax rate for high-income earners. ■ Medicare premiums: Reduces Medicare Part D (prescription drug) premium subsidy for high- income beneficiaries. ■ Medicare employer subsidy: Eliminates tax deduction for employers who receive a Medicare Part D (prescription drug coverage) subsidy. ■ Disproportionate share hospital (DSH) pay- ments: Reduces Medicare payments to DSH hos- pitals. Payments may increase over time based on the percentage of uninsured served and uncom- pensated care provided. This feature reduces Medi- caid DSH payments and requires HHS to develop a new funding formula. The effective date of the reduction was delayed until 2018, but the amount of reduction increased from $18 billion to $43 bil- lion through 2025 (Kardish, 2015). ■ Medicaid prescription drugs: Increases rebates that drug manufacturers give to state Medicaid programs ■ Income tax code provisions: Increases the thresh- old from 7.5% to 10% of adjusted gross income to claim deduction for unreimbursed medical expenses, prohibits purchasing over-the-counter drugs with tax-free savings accounts, increases the tax burden on distributions not used for qual- ified medical expenses, and limits the amount individuals may put in accounts toward medical expenses. http://Healthcare.gov http://Healthcare.gov 216 Chapter 10 Health Reform in the United States ■ Health industry fees: Imposes a 10% tax on indoor tanning services, 2.3% tax on all taxable medical devices, annual fees on the pharmaceu- tical manufacturing sector, and fees on the health insurance sector. ■ Health insurance plans: Imposes a tax on employer-sponsored health insurance plans with aggregate expenses that exceed $10,800 for indi- vidual coverage or $29,050 for family coverage. Although it is the responsibility of the CBO to estimate the cost of legislation as it is written, time- bound cost estimates (e.g., a 10-year estimate) have their limitations. First, the CBO must assume that all the provisions in the bill will be implemented as writ- ten. One of the most unpopular cost-saving tools—a tax on more generous health insurance plans—is not slated to take effect until 2018. Second, because the 10-year estimate, by design, does not consider costs beyond the first decade, some expected costs are not included in the estimate. Third, different method- ologies may be used to calculate costs. Fourth, cost estimates cannot account for provisions that are left out of a bill. For these reasons, cost estimates should not be taken as the final word on the cost of any bill, because changes in political will can undermine the best projections. Public Health, Workforce, Prevention, and Quality The ACA also includes a variety of programs and pilot projects that focus on improving quality of care and increasing access to preventive care. These pro- visions show both a commitment to these issues and the limitations of that commitment. For example, the Prevention and Public Health Fund was created to improve the nation’s public health and is sched- uled to provide $14 billion to support these activities from 2018 to 2027 (HHS, 2016). Congress, however, has the ability to redirect resources, and the preven- tion fund lost over $6 billion in 2012 when money intended for the fund was used to offset a scheduled reduction in Medicare physician payments, and it lost another $68 million in 2016 due to budget sequestra- tion (HHS, 2017; Trust for America’s Health, 2017). In addition, while task forces and pilot programs can be useful tools to try out new ideas and gather data to inform future changes, their temporary nature can also mean that progress ends once the experiment is over, especially in tight budget times. Whether these steps lead to lasting reform and needed change in the delivery of health care and in public health practice remains to be seen. The ACA includes a wide range of quality improvement activities that fall into three main cat- egories: evaluating new models of delivering health care, shifting reimbursement from volume to qual- ity, and improving the overall system (Abrams et  al., 2015). New models of healthcare delivery include accountable care organizations, which combine a variety of providers who collectively assume respon- sibility for the cost and quality of patient care, and patient-centered medical homes, which provide comprehensive and coordinated primary care. Reim- bursement reforms include strategies such as penal- izing hospitals with high rates of hospital-acquired infections or providing bonuses or penalties based on performance on quality measurements. Finally, overall system improvement efforts are highlighted by the National Strategy for Quality Improvement and the Patient-Centered Outcomes Research Insti- tute (PCORI). The priorities of the National Strategy for Quality Improvement include improving delivery of healthcare services, patient outcomes, and popula- tion health. PCORI, a comparative effectiveness insti- tute, was created to consider the clinical effectiveness BOX 10-8 Discussion Questions The ACA includes a tax on insurers for more generous health plans. Because it is likely insurers will pass on the cost of the tax to consumers, the idea behind the tax is to provide incentives for people to choose lower-cost plans. In theory, the less money employers spend on healthcare costs (and other fringe benefits), the more they will spend on wages. The income tax paid for by workers on their higher wages will provide revenue that can be used to pay for health reform. In addition, people may be less likely to obtain unnecessary care if fewer services are covered by their plan or if cost-sharing is higher. Is it likely that employers will trade lower benefits for higher wages? Are there times or industries where this trade-off is more or less likely to occur? In 2017 the average cost of premiums for an employer plan was $6,690 for single coverage and $18,764 for family coverage (KFF & HRET, 2017, Section 1). Beginning in 2020, plans that exceed $10,800 for individual coverage and $29,050 for family coverage are taxed. Congress rejected lower thresholds for the tax ($8,500/$23,000) that would have raised an estimated $149 billion. Did Congress pick the right thresholds for the tax? Should they be higher or lower? Why did Congress delay implementation of the tax until 2020? What are the pros and cons to having the tax start well after the main provisions of health reform are in place? 217The U.S. Supreme Court’s Decision in the Case of NFIB v. Sebelius of medical treatments. The idea behind compara- tive effectiveness is to determine which procedures, devices, and pharmaceuticals provide the best value for a given outcome. The institute is designed to sup- ply information to help providers, patients, and oth- ers make decisions; Congress has stipulated, however, that findings from the institute may not be construed as mandates or recommendations for payment, cover- age, or treatment decisions. The ACA also provides funds to promote public health, wellness, and a stable and high-quality health- care workforce. In addition to the Public Health and Prevention Fund, the law calls for the creation of a new regular corps and ready reserve corps to assist when public health emergencies occur. Also, a vari- ety of programs and incentives are in place to promote employer wellness programs. Finally, the workforce shortage is addressed through graduate medical edu- cation reforms that promote primary care training; increases in scholarships and loans to support primary care providers and workforce diversity; and education, training, and loan repayment programs to address the primary care nursing shortage. ▸ The U.S. Supreme Court’s Decision in the Case of National Federation of Independent Business v. Sebelius In November 2011, in the first of what would be sev- eral ACA-related decisions, the U.S. Supreme Court agreed to decide four issues related to the legality of the ACA, two of which remain relevant for purposes of this text: (1) whether Congress had the power under the federal Constitution to enact the individual insur- ance coverage requirement and (2) whether it was unconstitutionally coercive for Congress, through the ACA, to threaten to take away existing federal Med- icaid funding from states that did not want to imple- ment the Medicaid expansion. In June of the following year, the court handed down a remarkable 5–4 decision in the case of National Federation of Independent Business, et  al., v. Sebelius, Secretary of Health and Human Services, et al. The opinion was surprising for two reasons: it defied expectation—few people thought that the entirety of the ACA would be found constitutional by a major- ity of the court—and Chief Justice Roberts, a con- servative, ended up in the majority with the court’s relatively liberal members (Justices Ginsburg, Breyer, Sotomayor, and Kagan). The court first tackled the question of whether Congress exceeded its authority in effectively forc- ing most everyone to carry health insurance. It con- cluded, not totally unexpectedly given the outcome of the court’s more recent Commerce Clause decisions (United States v. Lopez, 1995), that the “individual Sources: United States Preventive Services Taskforce. (2016, January). Breast cancer: Screening. Retrieved from https://www.uspreventiveservicestaskforce.org/Page /Document/UpdateSummaryFinal/breast-cancer-screening1?ds=1&s=breast%20cancer; American College of Obstetricians and Gynecologists. (2016, January 11). ACOG statement on breast cancer screening guidelines. Retrieved from https://www.acog.org/About -ACOG/News-Room/Statements/2016/ACOG-Statement-on-Breast-Cancer-Screening -Guidelines; American Cancer Society (n.d.). American Cancer Society guidelines for the early detection of cancer. Retrieved July 19, 2018 from https://www.cancer.org/healthy /find-cancer-early/cancer-screening-guidelines/american-cancer-society-guidelines-for -the-early-detection-of-cancer.html BOX 10-9 Discussion Questions There is a debate about the proper age at which to start regular mammogram screenings to detect breast cancer in women who do not have specific risk factors for the disease. As of 2009, the U.S. Preventive Services Task Force recommends waiting until age 50 years to begin mammogram screening for breast cancer and further recommends that screening should occur every 2 years. It also stated, however, that the final decision about the initial timing and frequency of breast cancer screening should be made by the patient and her physician. In making its recommendations, the Task Force found that physicians would need to screen 1,000 women to save 1 woman’s life and concluded that earlier and/or more frequent screening was not worth the harm associated with false positives (anxiety, unnecessary biopsies, overtreatment). Other organizations disagree with the U.S. Preventive Services Task Force and conclude that the lifesaving effects of more routine mammogram screening outweigh the potential harm. Thus, the American Cancer Society recommends having routine annual mammograms from age 45 to 54 years (or 40 if the patient so chooses) and then every 2 years thereafter. The American College of Obstetricians and Gynecologists recommends starting annual mammograms at age 40 years. The idea of comparative effectiveness research is to provide information about the value of different tools. Once that information is available, however, who should make the decisions about whether to provide coverage and reimbursement for a particular good or service? Can one objectively assess the potential harms and benefits associated with mammograms or other services or medications? Should decisions be made solely by the patient and treating provider? Does it matter if decisions affect taxpayers (for example, if a patient is covered by a government program such as Medicare or the Veterans Administration)? https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/breast-cancer-screening1?ds=1&s=breast%20cancer https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/breast-cancer-screening1?ds=1&s=breast%20cancer https://www.acog.org/About-ACOG/News-Room/Statements/2016/ACOG-Statement-on-Breast-Cancer-Screening-Guidelines https://www.acog.org/About-ACOG/News-Room/Statements/2016/ACOG-Statement-on-Breast-Cancer-Screening-Guidelines https://www.acog.org/About-ACOG/News-Room/Statements/2016/ACOG-Statement-on-Breast-Cancer-Screening-Guidelines https://www.cancer.org/healthy/find-cancer-early/cancer-screening-guidelines/american-cancer-society-guidelines-for-the-early-detection-of-cancer.html https://www.cancer.org/healthy/find-cancer-early/cancer-screening-guidelines/american-cancer-society-guidelines-for-the-early-detection-of-cancer.html https://www.cancer.org/healthy/find-cancer-early/cancer-screening-guidelines/american-cancer-society-guidelines-for-the-early-detection-of-cancer.html 218 Chapter 10 Health Reform in the United States mandate” amounted to an unconstitutional reach on the part of federal legislators: The individual mandate . . . does not regulate existing commercial activity. It instead com- pels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate com- merce. Construing the commerce clause to permit congress to regulate individuals pre- cisely because they are doing nothing would open a new and potentially vast domain to congressional authority. (NFIB, 2012, p. 2587) Surprisingly, however, the court’s analysis of the constitutionality of the individual mandate did not end there. The court majority pivoted to Congress’s power to tax, and ruled that under this separate power, the individual mandate passed constitutional muster. The court wrote: The exaction the Affordable Care Act imposes on those without health insurance [i.e., the financial penalty assessed on those who do not obtain minimum health insur- ance coverage] looks like a tax in many respects. . . . In distinguishing penalties from taxes, this Court has explained that “if the concept of penalty means anything, it means punishment for an unlawful actor omission.” While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal con- sequences to not buying health insurance, beyond requiring a payment to the IRS. (NFIB, 2012, p. 2595) Read together, the Supreme Court’s analysis of the individual mandate under the Commerce Clause and the Taxing and Spending Clause leads to the follow- ing conclusion: although Congress could not outright command Americans to buy health insurance, it could tax those who choose not to. Next, the court turned its attention to whether the ACA’s Medicaid expansion was structured in a way that effectively, and unlawfully, coerced states into adopting it. Fully half of the states in the country—the 26 that sued to halt implementation of the ACA—believed the answer to be “yes.” As originally passed into law, the ACA allowed the secretary of HHS to terminate all of a state’s Medicaid funding in the event that the state failed to implement the Medicaid expansion—even those Medicaid funds that a state would receive that were unconnected to the expansion. This, the states argued, amounted to a coercively unacceptable choice: either adopt the ACA Medicaid expansion or poten- tially receive no federal Medicaid financing at all. As a result, they asked the court to rule that the Medicaid expansion itself was unconstitutional. The court responded to this argument in two ways. On the one hand, it determined that the Medic- aid expansion itself was perfectly constitutional; on the other hand, the court ruled that it was indeed unconsti- tutional for HHS to penalize states that did not adopt the expansion by terminating all Medicaid funding: The Constitution simply does not give Con- gress the authority to require the States to reg- ulate. That is true whether Congress directly commands a State to regulate or indirectly coerces a State to adopt a federal regula- tory system as its own. . . . When, for exam- ple, such conditions take the form of threats to terminate other significant independent grants, the conditions are properly viewed as a means of pressuring the States to accept pol- icy changes. . . . Nothing in our opinion pre- cludes Congress from offering funds under the Affordable Care Act to expand the avail- ability of healthcare, and requiring that States accepting such funds comply with the condi- tions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding. (NFIB, 2012, pp. 2602–2607) This twin ruling had the effect of making the ACA Medicaid expansion optional rather than mandatory, and states have been deciding individually whether to implement it. As of the time of this writing, 33 states and the District of Columbia have adopted the ACA’s Med- icaid expansion, while 17 states have not adopted the expansion (though note that the latter number is notice- ably lower than the number of states [26] that originally argued in NFIB v. Sebelius that the Medicaid expansion was unconstitutionally coercive) (Advisory Board, 2018). ▸ States and Health Reform Before the ACA and in the wake of numerous failed attempts at national health reform, states had been active players in health reform. Filling the gap left by the lack of federal action, states took steps to experi- ment with individual mandates, employer mandates, Key Issues Going Forward 219 small business pools, and programs to reduce the number of uninsured. Although the ACA is a federal law, it is full of state obligations and opportunities for state innovation. Even though governors in many states have expressed opposition to health reform, numerous states will expend significant efforts toward continued implementation of the ACA over the next several years. States will have their hands full devel- oping and running health insurance exchanges, reg- ulating the private health insurance market, and implementing Medicaid changes. The Supreme Court’s decision to transform the ACA’s Medicaid expansion from a mandatory program change to a state option has significant ramifications. As noted above, 33 states and the District of Colum- bia have chosen to expand Medicaid. As a result, by February 2017 there were 16 million more enrollees than prior to the ACA, with most new enrollment occurring in expansion states (Medicaid CHIP Pay- ment and Access Commission, n.d.). Not surprisingly, expansion states have witnessed significant increases in Medicaid enrollment, both among newly eligible enrollees and individuals who were previously eligi- ble but nonetheless unenrolled. This latter group is a result of the “welcome mat” or “woodwork” effect, when increases, incentives, and outreach result in more previously eligible individuals joining the pro- gram (Antonisse, Garfield, Rudowitz, & Artiga, 2018). The number of new Medicaid beneficiaries will ulti- mately depend on how many states eventually choose to expand their Medicaid program. The court’s decision drastically changed the blue- print of health reform. The ACA was designed assum- ing Medicaid expansion in every state, meaning there would be uniform coverage across the country for individuals earning below 138% of the federal pov- erty level. Under this plan, Medicaid would provide insurance for the lowest-income individuals, while state exchanges (with the assistance of federal subsi- dies) and employer-sponsored insurance would pro- vide coverage for those who had higher earnings. It is now estimated that in states that do not expand their Medicaid program, 2.2 million people with incomes below the poverty line will remain uninsured because their incomes are too high to qualify for the state’s tra- ditional Medicaid program, yet too low to be able to afford private insurance in the exchanges because they do not qualify for subsidies (because it was assumed Medicaid would be expanded nationally, premium subsidies are available only for individuals earning at least 100% of poverty). The vast majority of them (89%) live in the South, reflecting that region’s popula- tion demographics (e.g., more poor uninsured adults, higher uninsured rate) and resistance to Medicaid expansion (Garfield, Damico, & Orgera, 2018). As noted earlier, the Trump administration’s policy choices have put states at the center of health reform. The administration is providing states with a variety of tools that increase a state’s ability to mold its health insurance market and Medicaid program. For example, political leaders in states that embrace more liberal positions may counter the administra- tion’s policies by using state insurance regulations to block short-term plans, implement a state-based individual mandate, and maintain a generous defini- tion of EHBs. Discussions in some left-leaning states involve creating a public option to compete with pri- vate insurers and allowing uninsured individuals to buy into Medicaid (Brownstein, 2018). In states with more conservative leaders, it is likely that health insurance products that are not required to meet ACA requirements will flourish and that Medicaid waivers that include features such as work requirements and provisions that allow beneficiaries to be locked out for administrative reasons will be implemented (Brown- stein, 2018; Quinn, 2018). As a result, the health insurance landscape is moving closer to pre-ACA days, when the cost and content of one’s insurance plan depended on where one lived. ▸ Key Issues Going Forward At the time of this writing, the Republican effort to repeal and replace the ACA has stalled. Many in the party want to keep working toward that goal, while others, including the Senate leadership, appear ready to focus on other matters. President Trump appears to support efforts to continue to reform health reform but does not any longer seem to be making it a pri- ority. Of course, the political landscape could change dramatically after the 2018 midterm elections. If Dem- ocrats gain control of either the House or the Senate, or even gain a significant number of seats, it is unlikely Congress would pass a major reform bill. If Repub- licans maintain a sizeable majority in the House and pick up a few seats in the Senate, a new Congress may approve the bills that were defeated in 2017. Assum- ing Congress does not repeal and replace the ACA, it is unclear whether the Trump administration’s exec- utive actions will result in the ACA’s “death by 1,000 cuts,” or whether Congress’s inability to repeal the law will eventually cement the ACA as an accepted part of the fabric that holds together our healthcare and public health systems. Until the ACA’s future becomes clearer, we discuss here a few major political and 220 Chapter 10 Health Reform in the United States implementation issues that will likely dominate the health reform discussion in the near term. Congressional Activity The Republicans gained control of both chambers of Congress and of the White House in the 2016 election and spent the better part of the spring and summer in 2017 wrestling with ACA repeal and replacement bills. After 7 years of campaigning on (and winning with) a platform that included repealing and replacing the ACA, Republican legislators felt a strong obliga- tion to keep their promise. While the party was uni- fied in its opposition to the ACA, it was less successful agreeing on a replacement plan. With a slim major- ity in the Senate (52 Republicans, 48 Democrats) and no Democrats supporting this effort, Republicans found it impossible to meet the demands of moderate Republicans who wanted to protect the ACA’s insur- ance gains and conservative Republicans who wanted to eliminate as many ACA requirements, regulations, and taxes as possible. Republicans faced a similar dilemma in the House, but were able to succeed in passing a reform bill because they had a little more room for disagreement. They could tolerate 21 Repub- lican defectors and still pass a bill without support from the Democrats. Even though Republicans were not successful in 2017 in passing a bill the House and Senate could agree on, it is worthwhile to consider the substance and politics of that debate to understand what Republicans hope to achieve when altering the ACA and how the 2018 midterm elections could affect the future of health reform. After much political drama, including one failed vote, the House passed its ACA replacement bill, the American Health Care Act of 2017 (AHCA), on May 4, 2017 by a narrow 217–213 margin. Every Democrat and 20 Republicans voted against the bill. In the Sen- ate, Republicans drafted the Better Care Reconcilia- tion Act of 2017 (BCRA) as a substitution amendment to replace the AHCA. The BCRA followed the same general contours of the AHCA. After barely muster- ing sufficient support to proceed with debate on the bill, the Senate voted against the BCRA on July 25, 2017. All Democrats and nine Republicans opposed the bill (Fox, Lee, Mattingly, & Barrett, 2017). The next day, all Democrats and seven Republicans also voted against a bill that would have simply repealed the ACA (effective in 2 years) and did not include any type of replacement (Lee & Mattingly, 2017). This repeal-only bill actually passed Congress while President Obama was in office, but because members of Congress who voted for repeal knew that Obama would veto the bill, it was considered a protest vote more than an agree- ment on a policy position. During the 2017 Senate debate, Sen. John McCain (R-AZ), who at the time had been recently diagnosed with aggressive brain cancer (and who died in late August 2018 while still a member of the Senate), pro- vided a moment of high drama. His “no” vote was the third Republican vote (along with those of Sens. Lisa Murkowski [R-AL] and Susan Collins [R-ME]) that ultimately doomed what was referred to as the “skinny repeal” option (Fox, 2017). The skinny repeal option eliminated just the individual and employer mandates as well as a tax on medical devices. It was a bill that few actually wanted to become law, and it was projected to increase premiums and drastically reduce the number of insured individuals. Even the senators who voted for the bill did so only after assurances that the House would not pass it. Why, then, move forward with a bill few supported? The goal was to reach a “confer- ence committee” wherein the House and Senate could work to reach a repeal-and-replace compromise, which would then be sent back to each chamber for approval. At that point, the political pressure to sup- port a compromise bill would have been immense. The vote for the skinny repeal bill was a vote to keep the health reform debate alive, but risked a result that few desired. In voting against this strategy, the three Republican senators who voted “no” urged their col- leagues to move forward in a bipartisan manner and to follow regular order in the Senate (e.g., holding hearings, passing bills through committee). Even though the primary legislative bills—the AHCA and BCRA—did not have sufficient support across Congress to become law, and some of their pro- visions may not have been allowed under reconciliation rules, it is worth considering the main features of the bills to understand the type of health reform changes many Republicans support (TABLE 10-4). Overall, these bills reduced taxes, eliminated government mandates, lowered federal government spending, lowered pre- miums for some people while increasing them for others, phased out the Medicaid expansion under the ACA, and ended Medicaid as an entitlement program. According to the CBO, the effect of the bills would be to significantly increase the number of uninsured, sig- nificantly reduce the deficit, lower costs for young and healthy consumers, and increase costs for older and poorer consumers (CBO, 2017a; CBO, 2017b). Major industry players and a clear majority of the public opposed the proposed bills to repeal and replace the ACA. Industry groups such as hospitals, physicians, safety net providers, and insurers were concerned about the health and financial effects of Key Issues Going Forward 221 TABLE 10-4 Comparison of U.S. House and Senate Bills Designed to Replace the Affordable Care Act   American Health Care Act (House) Better Care Reconciliation Act (Senate) Premium tax credits Replaces with tax credits based on age only, not income or geographic area Keeps tax credits, lowers eligibility to 350% FPL, includes those under 100% FPL, tied to less expensive benchmark, changes individual contribution levels so older consumers pay more Individual mandate Eliminates penalties, replaces with 1-year 30% premium surcharge if lapse in coverage Eliminates penalties, replaces with 6-month waiting period if lapse in coverage Employer mandate Eliminates penalties Eliminates penalties Medicaid expansion Phases out at end of 2019 Phases out by end of 2024 ACA taxes Eliminates most key taxes Eliminates many key taxes, keeps Medicare surtax and investment tax on high-income earners Essential health benefits Allows state waivers to redefine Allows state waivers to redefine Medicaid program Changes to block grant or per- capita allotment in 2020, allows work requirements Changes to block grant or per-capita allotment in 2020, allows work requirements CSR funds Funds through 2019, repeals in 2020 Funds through 2019, repeals in 2020 Women’s health services Defunds Planned Parenthood for 1 year; redefines qualified plan to exclude plans that provide abortion services except for rape, incest, or life of mother in danger Defunds Planned Parenthood for 1 year; redefines qualified plan to exclude plans that provide abortion services except for rape, incest, or life of mother in danger Private market rules Keeps guaranteed issue, dependent coverage until 26; keeps preexisting condition protection Keeps guaranteed issue, dependent coverage until 26; keeps preexisting condition protection; permits sale of noncompliant plans as long as selling one ACA-compliant plan State stabilization pool Provides $123 billion over 9 years Provides $182 billion over 9 years Public health prevention fund Eliminates Eliminates Age rating band Changes to 5-to-1 but allows for state variation Changes to 5-to-1 but allows for state variation CBO estimate—uninsured 23 million more uninsured by 2026 22 million more uninsured by 2026 CBO estimate— federal savings $119 billion $321 billion ACA = Affordable Care Act; CBO = Congressional Budget Office; FPL = federal poverty level. 222 Chapter 10 Health Reform in the United States the bills, while key conservative groups (e.g., Heritage Foundation, Club for Growth) did not think the bills made sufficient changes (Watkins, 2017). While 64% of respondents in one poll indicated either a prefer- ence to keep the ACA as it is or to modify it, a clear partisan divide existed (Kirzinger, DiJulio, Wu, & Brodie, 2017). Nine out of 10 Democrats supported keeping or modifying the ACA, while only 3 out of 10 Republicans agreed. Most Republicans (about 75%) indicated they wanted the ACA repealed and replaced at some point (Kahn & Erhman, 2017). For these rea- sons, it is not surprising that many Republican legis- lators feared the ramifications of disappointing their conservative base and donors by not repealing the ACA more than they feared whatever hazards awaited if they supported a bill that was unpopular with their constituencies. One thing Congress has not tried yet is a bipar- tisan approach. A clear majority of the public (71%) strongly prefers for Republicans and Democrats to work together on health reform, and a number of leg- islators from both sides of the aisle have indicated a desire to do so (Kirzinger et al., 2017). While a parti- san divide remains here as well, 41% of all Republicans and 46% of Trump supporters would like to see the parties work together (Kirzinger et al., 2017). After the failed Senate efforts, Sen. Lamar Alexander (R-TN), Chair of the Senate committee on Health, Education, Labor and Pensions, agreed to open bipartisan hear- ings on fixing the individual marketplace (Park, 2017). In addition, a group of bipartisan legislators from the House announced a plan to improve the ACA. Their strategy includes paying low-income CSRs to insurers, providing federal funds to the states to create reinsur- ance funds and other programs to lower premiums, applying the employer mandate to employers with 500 (instead of 50) or more employees, redefining full- time employees as those who work 40 hours per week, obtaining clarification from HHS about a section 1332 waiver process, and repealing the medical device tax (Lee, 2017). They also recommend offsetting the fed- eral funds spent on these ideas, but do not indicate how current funding should be cut. The political difficulty of repealing and replacing the ACA is not surprising. It is always difficult to take away benefits once people have started to use them. Supporting a bill that would result in over 20 million people losing insurance is clearly more politically per- ilous than not supporting legislation (i.e., the ACA) that would deliver health insurance to 20 million people for the first time. This is particularly true for federal legislators who hail from states that (1) imple- mented the ACA’s Medicaid expansion and (2) have Republican governors. Why? Much of the savings from the House and Senate bills came from reduced Medicaid spending, both through the elimination of the expansion and by changing the entire program from an entitlement program to a block grant or per- capita allotment. In turn, states would either have had to absorb the federal spending reductions in their own budgets or absorb the healthcare costs of having more uninsured residents. Indeed, the proposed changes to Medicaid, which went well beyond repealing and replacing the ACA, resulted in many of the biggest criticisms from moderate Republicans. Also, Medicaid has become even more important to the nation now that it is grappling with an opioid epidemic, because Medicaid and CHIP cover approximately one-third of individuals with an opioid addiction. This is nearly double the share covered by Medicaid in 2005, and the increase is mostly due to the ACA Medicaid expan- sion (KFF, 2017d). The Senate Republican leadership also made a difficult political situation even harder by alienating several of their own members when the leadership decided that the ACA repeal bills would be drafted in relative secret, ignored regular process (by not holding hearings, debates, mark-ups), used reconciliation to avoid a filibuster, and expected their members to vote on bills they had little time to review. Sen. John Cornyn (R-TX), the second-ranking Republican in the Senate, went so far as to say that knowing prior to the start of debate which bill the Republicans would be voting on was “a luxury we don’t have” (Sullivan, 2017). This was a hard pill to swallow for many Republicans who vilified the Democrats for their partisan approach to passing the ACA and who mocked then-House Speaker Nancy Pelosi (D-CA) for saying, “we have to pass the healthcare bill so that you can find out what’s in it” (Capehart, 2010). While ultimately Republican leaders were not successful in getting the legislation passed, they decided that the negative ramifications of these hardball tactics were easier to survive than the negative publicity of a drawn-out process where oppo- sition groups could mobilize their resources. Insurance Plan Premium Rates One of the key issues to monitor going forward is the affordability of health insurance plans under the ACA. Most people were pleasantly surprised by premium rates for 2014 and 2015, although there was a lot of variation across the country. Insurers had incentive to keep premiums low because they wanted to encour- age people to enroll in their health plans. In addition, there was limited information about who would be in the insurance pools that could have assisted insurers with premium rate setting, and many plans contracted Key Issues Going Forward 223 with a narrower set of providers as a way to keep pre- miums low. After moving past the initial enrollment period, will insurance companies hike premiums in future years? Going into 2018, insurers were faced with signif- icant uncertainty due to the political landscape. With Congress reviewing a variety of repeal-and-replace plans and the Trump administration threatening to let ACA reforms fail, insurers did not know what to expect in the upcoming year, and uncertainty is not something that makes for a stable health insurance market. As a result, insurers asked for delays in sub- mitting premium rates, and some even submitted two rates depending on the outcome of certain political decisions (Mangan, 2017). Many insurers submit- ted requests for double-digit increases. For example, insurers in Maryland asked for rate increases ranging from 18% to 60%, and in Connecticut the range was 15% to 34%. Nevada requested an average rate hike of 38%, and Colorado’s request was similar, with an aver- age increase of 41% (Livingston, 2017; Luhby, 2017a). On average, 2018 premiums were expected to increase by 17% for bronze plans, 32% for silver plans, and 18% for gold plans (Semanskee, Claxton, & Leavitt, 2017). There is continuing uncertainty going into 2019. Insurers have to contend with the unknown effect of factors that might lead to higher costs. Primary con- cerns that could lead to premium increases include the individual mandate penalty repeal, the defunding of CSR payments, policy changes (e.g., expanded short- term limited duration plans) that may result in sicker marketplace pools as healthier enrollees leave plans, varying estimates of medical inflation, and changes to the ACA’s risk adjustment program (Corlette, 2018). Other factors may reduce premium costs, including suspension of a tax on health insurers, reduction of the corporate tax rate for insurers, the ability to offer less generous benefits, and state policies limiting short- term plans (Corlette, 2018). Based on limited early plan filings, it is estimated that silver plan premiums will increase 15% in 2019, with wide variation across the country. For example, the average silver plan is expected to decrease by 5% in Minnesota, increase by 16% in New York, and increase by 53% in Maryland (Brantley & Brooker, 2018). The fate of the risk adjustment program is an issue insurers are watching closely. This program was cre- ated to remove incentives for insurers to try to enroll healthy consumers over unhealthy ones. The program transfers funds from non-grandfathered plans in the small and individual market with healthier enrollees to those plans with less healthy enrollees. While states may choose to run their own risk adjustment program, none have chosen to do so at this time (Keith, 2018a). Due to conflicting court decisions regarding the risk adjustment formula, CMS suspended risk adjustment payment transfers from 2014 to 2018 (Keith, 2018a). About 3 weeks later, the Trump administration reversed course due to fears over the financial conse- quences for insurers. This type of uncertainty makes it difficult for insurers to establish viable operations in the health insurance market. Reinsurance is another tool that could help insur- ers reduce premiums. Insurers or companies may pur- chase reinsurance to protect themselves against losses from high-cost enrollees—losses that would lead to premium increases for everyone in the pool (Swartz, 2017). Essentially, insurers take out a policy to protect against costs in a certain segment of an individual’s coverage (e.g., costs between $100,000 and $200,000). As with most insurance, the health insurer will pay an annual premium for this reinsurance, a deduct- ible before reinsurance takes effect, and a co-payment once the deductible is met (Swartz, 2017). Even so, it is cheaper for the insurer to pay the costs of reinsurance instead of the full cost of care for a high-risk enrollee. By keeping costs down, insurers reduce not only pre- miums for enrollees, but also premium tax credits paid by the federal government. For that reason, the federal government has an incentive to promote reinsurance programs. The Trump administration appears to favor reinsurance programs and sent a letter to the governors encouraging them to establish one through an ACA section 1332 State Innovation waiver (Clark, n.d.). In the last few years, 19 states either introduced legislation to create their own reinsurance program (9 enacted) or applied for a §1332 waiver (Clark, n.d.). Section 1332 waivers allow states to finance part of the reinsurance program with a “federal pass-through” from the savings attributed to lower premiums (Clark, n.d.). As of July 2018, only Alaska, Minnesota, and Oregon have an approved waiver, with the federal government covering 97% (AK), 61% (MN), and 48% (OR) of the costs, respectively (Clark, n.d.). The pro- grams are effective, with premium increases in Alaska dropping from 42% to 7% and premiums in Minnesota going from a 67% increase to a 15% decrease (Clark, n.d.). While these results are promising, many states cannot afford to establish a program because they have to front the entire cost and wait for the federal govern- ment to reimburse its share. The programs are indeed expensive; Minnesota’s program cost $271 million and Oregon’s cost $90 million (Clark, n.d.). Even if states are able to establish a program and obtain federal funding, there is always the concern whether state and federal funding will be available in future years. In the end, the political uncertainty relating to the ACA, the various executive actions that have the 224 Chapter 10 Health Reform in the United States potential to undermine the marketplaces, and the uncertainty surrounding ongoing litigation have cre- ated a difficult business environment for health insur- ance plans. There remains debate about whether the exchanges are collapsing or stabilizing in the wake of these concerns. While several analyses show a stabiliz- ing market, continued subsidy support and increased enrollment of healthier individuals are key factors to the long-term success of the exchanges (National Academy for State Health Policy, 2018; Semanskee, Cox, & Leavitt, 2018; Zeitlin, 2017). ACA Litigation Legal challenges to and about the ACA have been a fixture since the law’s passage in 2010; there have been countless ACA cases brought in both state and fed- eral courts. A small handful of them even reached the U.S. Supreme Court, a rarity for a law that is relatively young. First there was the Supreme Court’s decision in NFIB v. Sebelius, which was described earlier in this chapter (NFIB v. Sebelius, 2012). Then the court decided a case that answered whether, under a fed- eral statute called the Religious Freedom Restoration Act (RFRA), closely held private corporations have a legal right to refuse to comply with provisions of the ACA that require them to provide certain con- traceptive coverage to employees (Burwell v. Hobby Lobby Sores, Inc., 2014). (A closely held corporation is one that has a limited number of shareholders; in the Hobby Lobby case, the plaintiffs were two private, for-profit companies owned by members of a single family—Hobby Lobby Stores [owned by Evangelical Christians] and Conestoga Wood Specialties [owned by Mennonites]). In a 5–4 decision, the court major- ity determined that the ACA’s contraception mandate imposed a significant enough burden on the plaintiff companies’ exercise of their beliefs so as to violate RFRA. Just a year later, the Supreme Court ruled that subsidies available under the ACA to help individu- als and small businesses buy insurance were available whether the insurance was purchased through a state- run or federally facilitated insurance exchange (King v. Burwell, 2015). Then just a year after that, the court heard a case that is an offshoot of its earlier decision in Burwell v. Hobby Lobby (Zubik v. Burwell, 2016). After the Hobby Lobby decision, the Obama administration offered an accommodation to religious entities that objected to the requirement to provide contraceptive coverage without cost-sharing: the religious organization could simply inform HHS of its objection and identify its insurer, at which point HHS would take responsibility for ensuring that contraceptive services are provided by the insurer without the involvement of the religious organization. The accommodation, however, was not acceptable to a number of religious entities, which filed their own RFRA lawsuits. Over time, nine federal appellate courts ruled that the accommodation did not substantially burden the entities’ exercise of religion; however, one appellate court ruled the opposite way, creating a division that the Supreme Court wanted to clear up. Eventually, the Supreme Court—likely split 4–4 on the merits by this time (i.e., after Justice Scalia died and the Senate failed to hold hearings on his replacement) and hoping to spark a compromise among the litigants—remanded the cases to the lower courts without a definitive answer. At the time of this writing, this issue is still being litigated. In October 2017, the Trump administration issued interim final rules offering any for-profit or nonprofit employer or insurer that objected to con- traceptives for religious reasons an absolute exemp- tion (i.e., without the need to notify the government or insurers) from providing contraceptive coverage to its employees. However, the legality of these rules has been called into question. One federal judge held (1) that the administration unlawfully bypassed a law (the Administrative Procedure Act, or APA) requiring federal agencies to adopt rules only after notice and an opportunity for public comment and (2) that the rules were likely substantively improper as well, because they lacked sufficient clarity and a proper legal basis. A different federal judge has also found that the rules violated the APA. Appeals by the Trump administra- tion are likely. At the time of this writing, two other ACA-related lawsuits bear mentioning (space limitations prevent us from discussing all of the ongoing ACA litigation). The first is a lawsuit brought by 20 Republican-led states that effectively contends that given the repeal of the individual mandate financial penalty (discussed previously), the entire ACA must fall (Texas v. United States, 2018). How do Texas and their counterparts reach this conclusion? They argue that absent the monetary fine for not having health insurance, the requirement to buy insurance has no legal basis, and because the insurance mandate is central to the ACA architecture, the entire law should be thrown out. As if the lawsuit itself was not enough of a threat to the ACA, a different type of threat emerged in June 2018 when the Trump administration alerted the federal trial court hearing the case that it would not defend the ACA in court. While politically speaking this might not seem like a big deal to most readers, this decision in fact represents a dramatic break from the executive branch’s tradition of defending existing stat- utes. While the Justice Department’s filing with the trial 225References References Abraham, J., & Royalty, A. B. (2017, January 19). How has the Affordable Care Act affected work and wages? Retrieved from https://ldi.upenn.edu/brief/how-has-affordable-care-act -affected-work-and-wages Abrams, M. K., Nuzum, R., Zezza, M. 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The effects of Medicaid expansion under the ACA: Updated findings from a literature review. Retrieved from https://www.kff.org/medicaid/issue-brief/the-effects-of -medicaid-expansion-under-the-aca-updated-findings-from -a-literature-review-march-2018/ Appleby, J. (2008, December 20). Health reform up in the air as economy sinks. USA Today. Retrieved from https://usatoday30 .usatoday.com/news/health/2008-12-18-health_N.htm Aron-Dine, A. (2017, May 30). CBO correctly predicted historic gains under ACA. Retrieved from https://www.cbpp.org/blog /cbo-correctly-predicted-historic-coverage-gains-under-aca Better Care Reconciliation Act of 2017, H.R. 1628, 115th Cong. (2017). Blake, C. H., & Adolino, J. R. (2001). The enactment of national health insurance: A Boolean analysis of twenty advanced court acknowledges that the decision not to defend an existing law deviates from history, it contends that its decision is not unprecedented. In turn, Democratic state attorneys general from 16 states and the District of Columbia have been allowed to intervene in the case to defend the ACA. Needless to say, this case will prob- ably be on the legal radar for the foreseeable future, given the likely appeals that will follow decisions in both the federal trial and appellate courts. The second case worth noting is perhaps more theoretical than Texas v. United States, but it is inter- esting because it stands in stark contrast to that law- suit. In early August 2018, four cities filed a lawsuit arguing that President Trump’s attempts to undermine the ACA violate his duties under the federal Consti- tution (City of Columbus v. Trump, 2018). According to the plaintiffs, a president’s obligation under Article II of the Constitution to “take Care that the laws be faithfully executed” is violated by President Trump’s “sabotage” of the ACA. Plaintiffs further contend that HHS is complicit in this sabotage, and that this vio- lates both the Administrative Procedure Act and Pres- ident Trump’s duty under the Constitution to ensure that laws passed by Congress are faithfully executed. To be sure, the Constitution’s “take care” clause, as it is known, is rarely invoked, much less success- fully. Cases of this sort are rare because the president is granted discretion with respect to how he and his administration enforce a law, and thus drawing lines that separate “faithful” from unreasonable discretion can be extremely difficult. Nonetheless, in these incred- ibly politicized times, this case is also worth following. Given these and other lawsuits (both pending and still to come), it is unlikely that the Supreme Court has cleared the ACA from its docket. However, irre- spective of whether the Supreme Court hands down ACA-related cases in the future, what bears keeping in mind is that judicial decisions may continue to shape the contours of the ACA for years to come. ▸ Conclusion After decades of trying and against the predictions of numerous experts, the United States passed a health reform law that provides insurance coverage on a more universal scale than ever before, includes protections for individuals who have been historically excluded from the insurance market, and shows a concern for improving healthcare quality and access to preventive care. From a philosophical perspective, the ACA moves America toward a society where (almost) everyone is expected to have adequate access to affordable health insurance. Under this perspective, health insurance is considered both an obligation and a right: individuals are required to obtain insurance and the government is obligated to make it affordable and accessible. At the same time, there remains in some quarters strong philosophical and political opposition to the ACA, which continues to be challenged both legis- latively and in the courts. The Republican control of both Congress and the White House, and the Trump administration’s policies undermining the ACA, have created a very uncertain future for health reform. 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https://www.advisory.com/daily-briefing/2017/02/16/death-exchange-market © Mary Terriberry/Shutterstock CHAPTER 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Describe the basic structure, administration, financing, and eligibility rules for: • Medicaid • The Children’s Health Insurance Program (CHIP) • Medicare ■ Understand how the Patient Protection and Affordable Care Act alters Medicaid, CHIP, and Medicare ■ Discuss key health policy questions and themes relating to each of these public programs BOX 11-1 Vignette Governor Jadyn is in a quandary. She believes everyone should have access to health care and would like to support state policies that make care accessible and affordable. While she supported President Obama’s goal of reducing the number of uninsured, she is concerned that some of the provisions in the Patient Protection and Affordable Care Act are too burdensome on the states, particularly in a fragile economy. The governor wonders how her state can afford the mandated Medicaid expansion when the recent trend has been to cut services across the board. How will state agencies cope with their new responsibilities when positions are being defunded and employees are being furloughed? Should she spend her state’s time and resources to establish a health insurance exchange when the federal government will step in if she does not act? At the same time, does she want to leave decisions about how the exchange will be operated in her state to bureaucrats in Washington, DC? 231 ▸ Introduction In prior chapters we discussed in detail the signifi-cant role of employer-sponsored health insurance in financing health care, the flexibility that private insurers have in designing health insurance coverage and selecting who they will cover, why private insur- ers do not have incentive to cover high-risk popula- tions, and how the Patient Protection and Affordable Care Act (ACA) has changed the health insurance and healthcare delivery landscape. Here, we focus on Medicaid, the Children’s Health Insurance Program (CHIP), and Medicare, which were established in part because the private health insurance market was not developing affordable, comprehensive health insur- ance products for society’s low-income, older, and disabled populations. Federal and state governments chose to fill some of those gaps through these public programs. The insurance coverage gaps were substan- tial, as shown by the over 130 million beneficiaries served by these three programs today (Department of Health and Human Services [HHS], 2017; Medicaid. gov, n.d.c). Due to the needs of vulnerable populations and the requirements necessary to make health insur- ance coverage for them viable, these programs are quite different from standard private health insurance plans. There are numerous other important health insur- ance and direct service programs funded by federal, state, and local governments. Just a few examples include the Ryan White Care Act, which provides HIV/AIDS services to infected individuals and their families; the Women, Infants, and Children Supple- mental Nutrition Program, which provides nutritional supplements and education to poor women and their children; and the Indian Health Service, which pro- vides federal health services to American Indians and Alaska Natives. Although these and many other health programs are vital to the health of our population, this chapter focuses only on the three major government health insurance programs in this country, because in addition to providing health insurance to millions, these programs are also influential in terms of setting healthcare policy. For example, when Medicare, a pro- gram serving almost 60 million people, makes a deci- sion to cover a certain treatment, private insurance companies often follow suit, establishing a new stan- dard for generally accepted practice in the insurance industry (HHS, 2017). Conversely, states may decide to try healthcare innovations with their Medicaid pro- grams that, if successful, may become commonplace across the country. Thus, understanding these three major programs is essential in terms of both how this country finances and delivers health care and how it makes health policy decisions. The ACA made wide-ranging changes to Med- icaid, CHIP, and Medicare. In general, the ACA included a significant Medicaid eligibility expansion, altered which children are eligible for Medicaid and CHIP, added new benefits to Medicare, and included a host of changes intended to produce savings in the Medicare program. Overall, the ACA expansion has created a two-tier Medicaid program, with newly eli- gible individuals falling under one set of eligibility, financing, and benefit rules, and the rest of Medicaid beneficiaries adhering to different standards. As you learn about specific rules for each program, keep in mind the numerous tensions that are present throughout the healthcare system as policymakers decide how to design and implement public insurance programs. This chapter touches on several recurring themes relating to these tensions, which were evident during the debate that led to passage of the ACA: choos- ing between state flexibility and national uniformity; determining the appropriate role for government, the private sector, and individuals in healthcare financing and delivery; defining a primary decision-making goal (e.g., fiscal restraint, equity/social justice, improved health outcomes, uniformity); and settling on the appropriate scope of coverage to offer beneficiaries. Before delving into the details of each program, it is necessary to explain the difference between enti- tlement and block grant programs. Medicaid and Medicare are entitlement programs, whereas CHIP is a block grant program. Some of the themes listed ear- lier, such as the appropriate role of government and primary decision-making goals, are implicated in the decision of whether to establish a program as an enti- tlement or a block grant. In an entitlement program, everyone who is eli- gible for and enrolled in the program is legally enti- tled to receive benefits from the program. In other words, the federal or state governments cannot refuse to provide program beneficiaries all medically neces- sary and covered services due to lack of funds or for other reasons. Because everyone who is enrolled has a legal right to receive services, there cannot be a cap on spending. The absence of a spending cap has the advantage of allowing funds to be available to meet rising healthcare costs and unexpected needs, such as increased enrollment and use of services during reces- sions or natural or man-made disasters. Opponents of entitlement programs focus on the open-ended budget obligation that entitlements create. With healthcare costs straining federal and state bud- gets, critics would prefer to establish a cap on the funds spent on entitlement programs such as Medicaid. It is impossible to determine how many people will enroll in the program or how many and what kind of healthcare 232 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare http://Medicaid.gov http://Medicaid.gov services they will use in any given year, so governments cannot establish exact budgets for their Medicaid pro- gram. In addition to these fiscal objections, many oppo- nents reject the notion that government should play a large role in providing health insurance, preferring to leave that function to the private market. Entitlement programs are often contrasted with block grant programs such as CHIP. A block grant is a defined sum of money that is allocated for a particular program (often, but not always, from the federal gov- ernment to the states) over a certain amount of time. If program costs exceed available funds, additional money will not be made available and program changes have to be made. Such changes could include terminating the program, capping enrollment in the program, reduc- ing program benefits, or finding additional resources. Unlike entitlement programs, individuals who qualify for block grant programs may be denied services or receive reduced services due to lack of funds. The arguments for and against block grant pro- grams are similar to those found with entitlement programs. Proponents of block grant programs laud the limited and certain fiscal obligation and reduced role of government in providing health insurance. Opponents of block grant programs object to the lack of legal entitlement to services and the finite amount of funds available to provide health insurance. ▸ Medicaid Medicaid is the country’s federal–state public health insurance program for the indigent. In this section, we discuss fundamental aspects of the Medicaid program, including its structure, eligibility, benefits, and financ- ing, as well as changes to Medicaid made by the ACA. Unlike private health insurance plans, which are based on actuarial risk, the Medicaid program is designed to ensure that funds are available to provide healthcare services to a poorer and generally less-healthy group of beneficiaries; to do so, Medicaid has several features not found in private health insurance plans. Program Administration Medicaid is jointly designed and operated by the fed- eral and state governments. The Centers for Medicare and Medicaid Services (CMS) is the federal agency in charge of administering the Medicaid program. Each state, the District of Columbia, and certain U.S. terri- tories,a as defined in the Social Security Act (SSA) of 1935, have the option to participate in the Medicaid program, and all have chosen to do so. The federal gov- ernment sets certain requirements and policies for the Medicaid program though statutes (SSA, Title 19), reg- ulations (Grants to States, 1988), a State Medicaid Man- ual (Medicaid.gov, n.d.e), and policy guidance such as letters to state Medicaid directors (Medicaid.gov, n.d.e). Each state has its own Medicaid agency that is respon- sible for implementing the program in the state. States file a Medicaid State Plan with the federal government outlining the state’s own eligibility rules, benefits, and other program requirements; this plan is effectively a contract between states and the federal government and between states and program beneficiaries. The federal and state governments jointly set rules concerning who is covered and which services are provided by Medicaid. The federal government out- lines which populations must be covered (mandatory populations) and which ones may be covered (optional populations), as well as which  benefits must be cov- ered (mandatory benefits) and which ones may be covered (optional benefits). Between these floors and ceilings, states have significant flexibility to determine how Medicaid will operate in their particular state. In general, states must cover mandatory populations and benefits, and they may choose to cover any com- bination of optional populations or benefits, including the choice not to offer any optional coverage at all. In addition, states may seek a waiver from federal rules, allowing states to experiment with coverage and ben- efit design while still drawing federal funds to operate their program. Given all of these possible permuta- tions, it is often said that “if you have seen one Med- icaid program, you have seen one Medicaid program”; in other words, within the broad federal parameters, every state (and territory) has a unique Medicaid structure—no two programs are exactly alike. As a result, similarly situated individuals in different states may have very different experiences in terms of the generosity of benefits they are entitled to or even if they are eligible for the program at all. BOX 11-2 Discussion Questions Do you think it makes more sense to structure government healthcare programs as entitlements or block grants? What are the economic and healthcare risks and benefits of each approach? Does your answer depend on who is paying for the program? Who the program serves? What kinds of benefits the program provides? Do you think various stakeholders would answer these questions differently? How might the answers change if you ask a member of the federal government, a governor, a state legislator, an advocate, or a tax-paying citizen who is not eligible for benefits under the program? Medicaid 233 http://Medicaid.gov http://Medicaid.gov Kaiser Family Foundation, Distribution of the non-elderly with Medicaid by Race/Ethnicity, 2016. Total Medicaid enrollees: 58.9 million White 43% Hispanic 30% Black 18% Other 9% Source: Kaiser Family Foundation, Distribution of the non-elderly with Medicaid by race/ethnicity, 2016. Retrieved from https:// www.kff.org/medicaid/state-indicator/distribution-by-raceethnicity-4/?currentTimeframe=0&selectedDistributions =white--black--hispanic--other&selectedRows=%7B%22wrapups%22:%7B%22united-states%22:%7B%7D%7D%7D&sort Model=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D Nonelderly below 100% FPL 55% 40% 38% 76% 17% 49% 20% 45% 42% 62% Percentage with Medicaid Coverage Nonelderly between 100% and 199% FPL All children Children below 100% FPL Parents Births (pregnant women) Medicare bene�ciaries Elderly and people with disabilities Families Nonelderly adults with a disability Nonelderly adults with HIV in regular care Nursing home residents Note: FPL = Federal Poverty Level. The U.S. Census Bureau’s poverty threshold for a family with two adults and one child was $19,318 in 2016. Source: KFF Analysis of 2017 Current Population Survey, Annual Social and Economic Supplement; Birth data - Implementing Coverage and Payment Initiatives: results from a 50-State Medicaid Budget Survey for State Fiscal Years 2016 and 2017, KFF, October 2016.; Medicare data - Medicare Payment Advisory Commission, Data Book: Beneficiaries Dually Eligible for Medicare and Medicaid (January 2018); 2013 data. Disability - KFF Analysis of 2016 ACS; Nonelderly with HIV - 2014 CDC MMP; Nursing Home Residents - 2015 OSCAR/ CASPER data. Retrieved from https://kaiserfamilyfoundation.files.wordpress.com/2015/05/medicaid_s-role-for-selected-populations Eligibility Traditionally, Medicaid has covered low-income pregnant women, children, adults in families with dependent children, individuals with disabilities, and older adults. About 43% of all Medicaid beneficiaries are children, and another 40% are individuals with disabilities and older adults (Rudowitz & Garfield, 2018). Approximately 11 million people are called dual enrollee or dual-eligible older adults, meaning they qualify for both Medicaid and Medicare (Accius, Flowers, & Finn, 2017). Although most dual enrollees are eligible for full Medicaid benefits, a small portion of them receives only premium and/or cost-sharing assistance to help them pay for Medicare, not full Medicaid benefits. Among all people with health insurance, mem- bers of ethnic or minority groups are more likely than Caucasians to have coverage through Medicaid. As shown in FIGURE 11-1, about 43% of Medicaid benefi- ciaries are white, non-Hispanic beneficiaries, 30% are Hispanic, and 18% are Black. FIGURE 11-2 shows that Medicaid provides assistance to a variety of vulnerable populations. BOX 11-3 Discussion Questions What are the benefits and drawbacks of having a health program that varies by state versus having one that is uniform across the country? Do you find that the positives of state flexibility outweigh the negatives, or vice versa? Does your analysis change depending on what populations are served? Does your analysis change depending on whose point of view you consider? Is it fair that similarly situated individuals may be treated differently in different states? Does this occur in other aspects of society? FIGURE 11-1 Medicaid Beneficiaries by Race/Ethnicity, 2016 FIGURE 11-2 Medicaid Plays a Key Role for Selected Populations, 2017 234 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare https://kaiserfamilyfoundation.files.wordpress.com/2015/05/medicaid_s-role-for-selected-populations https://www.kff.org/medicaid/state-indicator/distribution-by-raceethnicity-4/?currentTimeframe=0&selectedDistributions=white--black--hispanic--other&selectedRows=%7B%22wrapups%22:%7B%22united-states%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22s https://www.kff.org/medicaid/state-indicator/distribution-by-raceethnicity-4/?currentTimeframe=0&selectedDistributions=white--black--hispanic--other&selectedRows=%7B%22wrapups%22:%7B%22united-states%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22s https://www.kff.org/medicaid/state-indicator/distribution-by-raceethnicity-4/?currentTimeframe=0&selectedDistributions=white--black--hispanic--other&selectedRows=%7B%22wrapups%22:%7B%22united-states%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22s https://www.kff.org/medicaid/state-indicator/distribution-by-raceethnicity-4/?currentTimeframe=0&selectedDistributions=white--black--hispanic--other&selectedRows=%7B%22wrapups%22:%7B%22united-states%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22s While Medicaid covers both children and adults, coverage for children and pregnant women typically has been more generous than coverage for nonpreg- nant adults. Prior to ACA implementation, Medicaid covered 75% of children who lived below the poverty line, but only 35% of adults below that income level (Paradise, Lyons, & Rowland, 2015, p. 3). Of adults who were covered by Medicaid, states were more generous when it came to pregnant women. While half the states provided coverage to pregnant women up to 200% of the federal poverty level (FPL; BOX 11-4), the median income eligibility limit for working parents was 61%, and many states did not cover childless adults at all (Paradise, 2015, p. 8; Paradise et al., 2015, p. 3). Tradi- tionally left out of the program have been low-income adults without disabilities, women who are not preg- nant, and the near-poor who earn too much money to qualify for Medicaid. However, the ACA included a sig- nificant eligibility expansion. As of August 2017, there were 16 million more Medicaid enrollees than prior to passage of the ACA (Medicaid and CHIP Payment and Access Commission [MACPAC], n.d.a). States that adopted the ACA Medicaid expansion option experi- enced an average enrollment increase of 37% as com- pared to non-expansion states, with an average increase of 12.6%. In 2016, the newly eligible enrollees com- prised 20.4% of enrollees across all states (MACPAC, n.d.a). As discussed later in more detail, the expansion is designed to include the low-income groups that have been traditionally excluded from Medicaid. Traditional Medicaid Eligibility Requirements Eligibility requirements (as well as financing rules and benefits) differ for the groups that have been traditionally covered by Medicaid and those that are covered under the ACA expansion option. To help clarify these differences, when referring to the rules that existed prior to the ACA, we use the term tra- ditional Medicaid, and when referring to rules that attach to the ACA, we use the term expansion Medic- aid. It is important to remember that states may follow both traditional and expansion Medicaid rules; the ACA expansion did not replace traditional Medicaid, but rather added to it. Under traditional Medicaid rules, everyone must meet all five of the following requirements to be eligible: 1. Categorical: An individual must fit within a category (e.g., pregnant women) covered by the program. 2. Income: An individual/family must earn no more than the relevant income limits, which are expressed as an FPL percentage (e.g., 133% of the FPL). 3. Resources: An individual/family must not have nonwage assets (e.g., car, household goods) that exceed eligibility limits. 4. Residency: An individual must be a U.S. resident and a resident of the state in which they are seeking benefits. 5. Immigration status: Immigrants must meet certain requirements, including having been in the country for at least 5 years (for most immigrants). As shown in TABLE 11-1, under traditional rules it is necessary to consider both categorical eligibility and income limits for all populations to understand who is covered by Medicaid and which populations are mandatory and which are optional. The groups in Table 11-1 represent some of the larger and more fre- quently mentioned categories of Medicaid beneficia- ries, but it is not an exhaustive list. There are approx- imately 50  categories of mandatory and optional populations in the Medicaid program, with each state picking and choosing which optional populations to include and at what income level. Medically Needy Medicaid’s medically needy category is an option that has been picked up by 32 states and the District of Columbia as of 2016 (MACPAC, n.d.b). As its name implies, this category is intended to cover individ- uals who have extremely high medical expenses. These individuals fit within a covered category but earn too much money to be otherwise eligible for Medicaid. Given who is in this population, it is not surprising that the medically needy experience BOX 11-4 Federal Poverty Level Federal poverty guidelines are determined annually and calculated based on the number of individuals in a family. The guidelines are commonly referred to as the federal poverty level, but the U.S. Department of Health and Human Services (HHS) discourages the use of this term because the Census Bureau also calculates, using different methods, a figure referred to as the federal poverty thresholds. However, because the term federal poverty level is still commonly used when discussing eligibility for federal and state programs, we use it here. The poverty guidelines are somewhat higher for Alaska and Hawaii due to administrative procedures adopted by the Office of Economic Opportunity. Medicaid 235 high medical expenses: in 2009, this population accounted for only 5% of Medicaid beneficiaries but 11% of Medicaid expenditures (Kaiser Family Foun- dation [KFF], 2012b). Medically needy programs have both income and asset requirements. In terms of income require- ments, states subtract the costs of individuals’ medi- cal expenses from their income level. States have the choice of deducting the medical expenses as they are incurred each month, every 6 months, or any time in between. As soon as otherwise qualified individuals “spend down” enough money on medical expenses, they are eligible for Medicaid through the medically needy option based on their reduced income level for the remainder of the period. The following is a simplified example of how the “spend down” process works. Let’s say a state calcu- lates incurred medical expenses every 3 months to determine eligibility for the medically needy option, and in this state an individual (who we’ll call Peter) must earn no more than $8,500 a year to qualify as medically needy. Peter earns $11,000 per year and has $6,000 each year in medical expenses, incurred at a rate of $500 per month. After 3 months, Peter has spent $1,500 on medical expenses. Instead of con- sidering the income level to be the annual amount earned ($11,000), the state subtracts Peter’s medical expenses as they occur. So, after 3 months the state considers Peter to earn $9,500 annually ($11,000– $1,500). Because this amount is still over the $8,500 limit, Peter is not eligible under the medically needy option. In another 3 months, Peter will have spent $3,000 in medical expenses over the past 6 months. At that time, the state considers Peter to earn $8,000 annually ($11,000 – $3,000), making him eligible because he earns less than the $8,500 limit. For the rest of this period (i.e., 3 months), Peter is eligible for Medicaid. After another 3 months, the state recalcu- lates his earnings and medical expenses. Each year, this entire calculation starts over. In the end, Peter TABLE 11-1 Select Medicaid Mandatory and Optional Eligibility Groups and Income Requirements Prior to ACA Eligibility Category Mandatory Coverage Optional Coverage Infants <1 year ≤133% FPL ≤185% FPL Children 1–5 years ≤133% FPL >133% FPL
Children 6–19 years ≤100% FPL >100% FPL
Pregnant women ≤133% FPL ≤185% FPL
Parents Below state’s 1996 AFDC limit May use income level above
state’s 1996 AFDC limit
Parents in welfare-to-work families ≤185% FPL
Older adults and disabled SSI beneficiaries SSI limits Above SSI limits, below 100% FPL
Certain working disabled May not exceed specified
amount
Variable, SSI level to 250% FPL
Older adults—Medicare assistance onlya Variable, up to 175% FPL Variable up to 175% FPL
Nursing home residents Above SSI limits, below 300% SSI
Medically needy “Spend down” medical expenses
to state-set income level
aMedicare assistance only = payment for Medicare cost-sharing requirements.
Abbreviations: AFDC = Aid to Families With Dependent Children; FPL = federal poverty level; SSI = Supplemental Security Income (a federal program that provides cash assistance to older adults
and individuals who are blind or disabled who meet certain income and resource requirements).
236 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare

will not be eligible for Medicaid for the first 6 months
of the year but will be eligible for Medicaid for the
second 6 months of the year.
Immigrants
There are also special Medicaid eligibility rules relat-
ing to immigrants. The Personal Responsibility
and Work Opportunity Reconciliation Act of 1996
(PRWORA) severely restricted immigrant eligibility
for Medicaid (and most of the same rules in PRWORA
were later applied to CHIP eligibility in 1997). Prior to
PRWORA, legal immigrants followed the same Med-
icaid eligibility rules as everyone else, but undocu-
mented immigrants were not eligible at all. PRWORA
instituted a 5-year bar, meaning that most immigrants
who come to the United States after August 22, 1996,
are not eligible for Medicaid (or CHIP) for the first
5 years after their arrival. After 5 years, legal immi-
grants are eligible on the same basis as U.S. citizens,
while undocumented immigrants remain ineligible
for full Medicaid (or  CHIP) benefits. However, both
legal and undocumented immigrants who are oth-
erwise eligible for Medicaid may receive emergency
Medicaid benefits without any temporal restrictions.
Immigrant eligibility eased slightly when CHIP was
reauthorized through the Children’s Health Insurance
Program Reauthorization Act of 2009. States now have
the option to cover legal immigrant children and/or
pregnant women through Medicaid and CHIP in the
first 5 years that they are in the United States.
Proponents of the immigrant restrictions believe
they discourage people who cannot support them-
selves from coming to the United States and prevent
immigrants from taking advantage of publicly funded
programs they did not support through taxes before
their arrival. In addition, some proponents believe
that healthcare resources should go first to U.S. citi-
zens, not noncitizens.
Opponents of the restrictions assert that most
immigrants pay taxes once they arrive in this coun-
try and therefore deserve to receive the full benefits of
those taxes (Fremstad & Cox, 2004, p. 15). They also
find the restriction ill-suited as a deterrent because
immigrants often come to the United States for eco-
nomic opportunities, not social benefits (Passel,
2005). Furthermore, restricting immigrants’ access to
health care may be a public health hazard for all mem-
bers of the community because contagious diseases
do not discriminate by immigration status. Finally,
opponents contend that having higher numbers of
uninsured individuals in the United States will further
strain the ability of providers to care for all vulnerable
populations in a community and lead to rising health-
care costs because uninsured immigrants are much
less likely to obtain preventive care or early treat-
ment for illnesses or injuries (Fremstad & Cox, 2004,
p. 15). As of 2017, 31 states cover legal immigrant
children under Medicaid and/or CHIP, and 5 states
and the District of Columbia use state-only funds
to cover children who qualify based on income, but
not immigration status (Brooks, Wagnerman, Artiga,
Cornachione, & Ubri, 2017). Sixteen states use CHIP
funding to cover pregnant women under the unborn
child option, which allows for coverage regardless of
immigration status. Also, 23 states cover legal immi-
grant pregnant women under Medicaid without the
5-year bar. Two states and the District of Columbia
use state-only funds to cover pregnant women who
qualify based on income, but not immigration status
(Brooks et al., 2017). Even with these reforms and the
ACA, 16% of the 30 million individuals who remained
uninsured in 2017 were illegal immigrants (Blumberg,
Holahan, Karpman, & Elmendorf, 2018).
Medicaid Eligibility Expansion
Under the ACA
As mentioned earlier, the ACA significantly expanded
Medicaid eligibility. As of 2014, all non-Medicare-
eligible individuals younger than 65 years, with
incomes up to 133% FPL,b are eligible for Medicaid
in states that choose to expand its program. This eli-
gibility expansion option marks a drastic departure
from how Medicaid has generally been structured.
BOX 11-5 Discussion Questions
Does the medically needy category make sense to
you? Do you think it is a good idea to discount medical
expenses of high-need individuals so they can access
the healthcare services they need through Medicaid?
If so, is the process described above cumbersome and
likely to result in people being on and off Medicaid
(and therefore likely on and off treatment) because
their eligibility is based on their spending patterns?
Why should individuals with high medical needs have
an avenue to Medicaid eligibility that is not available
to other low-income people who have other high
expenses, such as child care or transportation costs?
Would it make more sense to simply raise the eligibility
level for Medicaid so more low-income people are
eligible for the program? Politically, which option
would likely have more support? Does your view
about the medically needy category vary depending
on your primary decision-making goal (e.g., fiscal
restraint, equity, improved health outcomes)?
Medicaid 237

Unlike  Medicaid’s traditional eligibility structure,
individuals eligible through the expansion only have
to satisfy an income threshold and do not have to meet
a resource test or fit within a preapproved category.
In addition, in traditional Medicaid, states have signif-
icant flexibility to determine how individual income
and other personal resources are calculated. Under
the ACA expansion, however, all states are required
to accept newly eligible individuals using the federal
income level calculation and without accounting for
other assets.
As discussed in detail in the Health Reform in
the United States chapter, the ACA Medicaid expan-
sion was intended to be mandatory in all states, but
the Supreme Court’s decision in National Federation
of Independent Business v. Sebelius held that the federal
government could not force states to expand Medicaid
in this way. As of June 2018, 33 states and the District
of Columbia have chosen to expand their Medicaid
program under the ACA, resulting in 16 million new
enrollees (Advisory Board, 2018; MACPAC, n.d.a.).
Lawmakers built the ACA coverage options
assuming that all states would be required to expand
Medicaid. After the Supreme Court ruled that Med-
icaid expansion was optional, coverage gaps emerged
in those states that have not chosen to expand their
Medicaid program. In non-expansion states there are
approximately 2 million poor adults who remain ineli-
gible for Medicaid and who are also too poor to obtain
subsidies to purchase health insurance through their
state exchanges (Garfield, Damico, & Orgera, 2018).
Eligibility for these subsidies begins at 100% FPL,
resulting in the illogical situation in which a poorer
individual (e.g., one who earns 75% FPL) cannot
obtain a subsidy while an individual who earns more
(e.g., 115% FPL) is able to purchase subsidized insur-
ance in the state exchange.
In addition to the Medicaid expansion rule just
described, the ACA also requires that children ages 6
to 19 years must be covered up to 133% FPL, instead of
up to only 100% FPL as under pre-ACA rules. Undoc-
umented immigrants, as well as legal immigrants who
have resided in the United States for fewer than 5 years,
will not be eligible for Medicaid under the expansion,
although states have the option to cover legal immi-
grant pregnant women and children who have been
in the country fewer than 5 years (matching the new
rules put in place under CHIP).
Benefits
Medicaid benefits are structured in the same way as
Medicaid eligibility: some are mandatory and some
are optional, and the newly eligible individuals under
the ACA expansion have their own set of rules. Again,
this means that no two Medicaid programs are alike,
as each state picks its own menu of optional benefits
to provide.
Traditional Medicaid Benefits
Historically, Medicaid programs have offered a rich
array of benefits, including preventive services, behav-
ioral health services, long-term care services, sup-
portive services that allow people with disabilities to
work, institutional services, family planning services,
and more. In fact, the coverage provided by traditional
Medicaid generally has been more generous than the
typical private insurance plan, particularly in the
case of children. While federal Medicaid regulations
exclude very few services, there are prohibitions. Since
1977, Congress has prohibited the use of federal funds
to pay for the costs of an abortion or mifepristone
(commonly known as RU-486), a drug that induces
BOX 11-6 Discussion Questions
Looking at Medicaid’s traditional eligibility rules, you
notice numerous value/policy judgments: pregnant
women and children are favored over childless adults,
the medically needy are favored over other low-
income individuals with high costs, non-immigrants
are favored over immigrants. Under the ACA expansion,
these distinctions mostly disappear and eligibility
depends purely on income level in the case of the
biggest expansion group. Which approach do you
prefer? If the ACA approach were expanded beyond
133% of FPL, the costs of the Medicaid program would
soar. Given limited resources, do you think it would be
better to cover more people at a higher poverty level
across the board or continue to favor some groups
over others through the categorical requirement?
Should we decide that, for some populations, the
government should step in and provide coverage
regardless of the cost? In other words, is there a point
where equity trumps financial constraints?
BOX 11-7 Discussion Questions
What are the implications of a two-tiered Medicaid
system? Is there justification for offering some
beneficiaries a less generous benefit package than
others? Is it fair to impose additional requirements
(categorical, asset test) on only some beneficiaries? Why
do you think policymakers created these distinctions?
Do you think they will remain in place over time?
238 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare

medical abortions. Also, drug addiction or alcohol
dependency may not be used as reasons to qualify an
individual as disabled under SSI (and therefore, under
Medicaid), though if an individual is eligible for Med-
icaid for another reason, Medicaid programs may pay
for substance abuse treatment.
All states provide the mandatory services listed
on the left side of TABLE 11-2 as part of their tradi-
tional Medicaid program, and states may provide the
optional services listed on the right side. In addition to
requiring a wide array of services, traditional Medic-
aid also defines many service categories quite broadly.
TABLE 11-2 Traditional Medicaid Benefits
Mandatory Optional
Acute Care Benefits
Physician services
Laboratory and X-ray services
Inpatient hospital services
Outpatient hospital services
Early and periodic screening, diagnostic, and treatment
services (EPSDT ) for beneficiaries <21 years Family planning services and supplies Federally qualified health center (FQHC) services Rural health clinic services Nurse–midwife services Certified pediatric and family nurse practitioner services Non-emergency transportation to medical care Prescription drugs Medical care or remedial care furnished by nonphysician licensed practitioners Rehabilitation and other therapies Clinic services Dental services, including dentures Prosthetic devices, eyeglasses, and durable medical equipment Primary care case management Tuberculosis-related services Other specified medical or remedial care Long-Term Care Benefits Nursing facility services for individuals ≥21 years Home healthcare services for individuals entitled to nursing facility care Intermediate care facility services for the mentally retarded (ICF/MR) Inpatient/nursing facility services for individuals ≥65 years in an institution for mental disease Inpatient psychiatric hospital services for individuals <21 years Home- and community-based waiver services Other home health care Targeted case management Respiratory care services for ventilator-dependent individuals Personal care services Hospice services Services furnished under a Program of All-Inclusive Care for the Elderly (PACE) New Benefits in ACA Tobacco cessation program for pregnant women Freestanding birth centers New state option for community-based care New state option for home health care New state option for family planning services Source: 42 U.S.C. 1396d; 42 CFR Parts 430–498. Medicaid 239 For example, under the category of medical or reme- dial services, a state may pay for diagnostic, screening, or preventive services provided in any settings that are recommended by a licensed practitioner “for the maximum reduction of physical or mental disability and restoration of an individual to the best possible functional level” (Grants to States, § 440.130, 1988). One of the broadest service categories is the early and periodic screening, diagnosis, and treatment (EPSDT) package of services for beneficiaries younger than 21 years. As the E in EPSDT indicates, this pack- age of benefits provides preventive care to children to catch problems before they advance and offers early treatment to promote healthy growth and develop- ment. EPSDT benefits include periodic and as-needed screening services, comprehensive health exams (to detect both physical and mental health conditions), immunizations, lab tests, health education, vision ser- vices, hearing services, dental services, and any other measure to correct or ameliorate physical or mental defects found during a screening, whether or not those services are covered under a state plan. In addition to these benefits, EPSDT also requires states to inform families about the importance of preventive care, seek out children in need of comprehensive care, and offer families assistance in securing care. The correct or ameliorate standard is very different from the medical necessity standard that is used for adults in Medicaid and is commonly found in private health insurance plans. Typically, medically necessary services are those that restore normal function after an illness or injury. Not only does this standard gen- erally preclude care before a diagnosis is made, but if recovery is not possible (e.g., as a result of blind- ness), services that improve the quality of life or pre- vent deterioration of a condition may be denied. By contrast, the EPSDT correct or ameliorate standard means a state must provide coverage for preventive and developmental treatment, as well as for services needed to treat a specific diagnosis. Combined with the requirement to provide services regardless of state plan limitations, the correct or ameliorate standard means that almost any accepted treatment should be covered under EPSDT. Benefits for Expansion Population Under the ACA Expansion Medicaid populations receive their ben- efits through an Alternative Benefit Plan (ABP). The ABP structure is based on a law called the Deficit Reduction Act (DRA) of 2005. As shown in BOX 11-8, states have a variety of options at their disposal to use for their “benchmark” or “benchmark-equivalent” package of services for certain populations, instead of following the mandatory and optional list of services identified in Table 11-2 (SSA, § 1937). These options include DRA benchmark options, DRA benchmark- equivalent options, and new benchmarks developed by the Trump administration (effective as of 2020). Benchmarks provide a state with a standard to follow when designing its Medicaid package of ben- efits; this system does not mean that Medicaid bene- ficiaries are enrolled in the plans identified as bench- marks. Furthermore, a state may instead choose to offer “benchmark-equivalent” coverage that includes certain basic services as shown in Box 11-8. These services must have the same actuarial value as the services provided by one of the three benchmarks listed above (i.e., the value of the services must be similar). States may choose to supplement their BOX 11-8 Benchmark Benefit Options DRA Benchmark Plans Federal Employee Health Benefits Plan State employee health plan Largest commercial non-Medicaid HMO in the state HHS secretary-approved plan DRA Benchmark-Equivalent Plan Full actuarial value for the following services: ■ Inpatient and outpatient hospital ■ Physician (surgical and medical) ■ Laboratory and X-ray ■ Well-baby and well-child ■ Other appropriate preventive services (defined by HHS secretary) Additional DRA Optional Benchmark-Equivalent Services 75% actuarial value for the following services: ■ Prescription drugs ■ Mental heath ■ Vision ■ Hearing New Benchmark Options Effective 2020 The 2017 essential health benefit (EHB) benchmark plan from any state An existing state benchmark with one or more EHB categories replaced by a benchmark from another state A new benchmark that meets the “typical employer plan” requirement Note: States must wrap around EPSDT coverage as necessary. 240 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare benchmark- equivalent plans with additional services, as listed in Box 11-8. These additional services are required to be worth only 75% of the actuarial value of the same service provided in a benchmark plan. Finally, while the DRA guaranteed the same set of EPSDT services for children younger than 19 years, these services may be more difficult to access if they are provided through wrap-around benefits that sup- plement the benchmark package instead of within the package itself. The DRA was later amended to require states to ensure that EPSDT services are available to children up to age 21 years, to cover non-emergency transportation to medical appointments, and to cover family planning services and supplies. The benefit changes allowed by the DRA may be applied only to certain populations, and these groups had to be part of a state plan prior to the law’s enact- ment to receive the new benefits package. DRA-eligible populations include most categorically needy children, as well as parents and caretakers who receive Medicaid but not Temporary Assistance to Needy Families (the new welfare program created by PRWORA). The list of populations excluded from the DRA is quite lengthy and includes medically frail beneficiary groups with high expenditures, such as the disabled, dual eligibles, and terminally ill hospice patients (SSA, § 1937). In states that choose to utilize the options pro- vided in the DRA, the potential exists for Medicaid benefits to be severely curtailed. While only a few states (Idaho, Kansas, Kentucky, Missouri, Washing- ton, Virginia, West Virginia, and Wisconsin) have taken the DRA option to reduce benefits and increase cost sharing, most states have used the DRA to increase the role of private long-term care insurance (American Association for Long-Term Care Insur- ance, n.d.; CMS.gov, 2018c). The ACA further amended the DRA benchmark options, which are now referred to as section 1937 State Flexibility in Benefits Packages (based on the section of the SSA that describes these plans). Under the ACA, ABPs are offered in accordance with section 1937 rules. The ACA requires section 1937 plans to provide EHB coverage and comply with the Men- tal Health Parity and Addiction Equity Act, which requires parity between physical and mental health/ substance abuse benefits (Medicaid.gov, n.d.b). As discussed in more detail in the Health Reform in the United States chapter, EHBs include coverage for 10 categories of services in a scope equal to that of a typical employer plan. Furthermore, ABPs must com- ply with additional Medicaid rules that include cov- erage for federally qualified health centers and rural healthcare services; compliance with traditional Med- icaid cost-sharing rules, which significantly limit the level of cost sharing required of beneficiaries; and a prohibition against coverage for beneficiaries in insti- tutions for mental diseases (Medicaid.gov, n.d.b.). Certain medically frail populations remain exempt from section 1937 plans and continue to have access to all traditional Medicaid benefits in their state. BOX  11-9 highlights the ABP requirements. Because ABPs are based on commercial plans, some benefits may be more generous than traditional Medicaid cov- erage, while others may be less generous. To simplify matters, most states have chosen to align their ABP coverage with the traditional Medicaid coverage for adults (Rosenbaum et al., 2015). Amount, Duration, and Scope, and Reasonableness Requirements Although states have a great deal of flexibility in designing their Medicaid benefit packages, states have always had to follow several federal requirements prior to the DRA. These rules, collectively referred to as “amount, duration, and scope” and “reasonable- ness” requirements, were intended to ensure that all Medicaid beneficiaries in a state received adequate, comparable, and nondiscriminatory coverage. Some of these rules changed through section 1937. Private insurers typically are not drawn to Med- icaid’s population because of the likelihood that these individuals would have relatively high healthcare needs. In addition, private insurers use a variety of tools (such as limited open-enrollment periods, experience rating, medical condition–based limitations, and narrow med- ical necessity standards) to limit their financial expo- sure. Medicaid, on the other hand, was designed as a BOX 11-9 Alternative Benefit Plan (Section 1973 Plan) Requirements ■ Align with an approved benchmark or benchmark equivalent ■ Provide EHBs ■ Include EPSDT to children up to age 21 years ■ Cover federally qualified health center/rural healthcare services ■ Cover non-emergency transportation to medical care ■ Cover family planning services and supplies ■ Comply with mental health parity law ■ Comply with traditional Medicaid cost-sharing rules ■ Do not cover care for beneficiaries in institutions for mental diseases ■ Exempt certain medically frail populations from benefit limits Medicaid 241 http://CMS.gov http://Medicaid.gov http://Medicaid.gov healthcare entitlement program, with the goal to provide services to a needy population that would otherwise be uninsurable through commercial plans (Rosenbaum, 2002). TABLE 11-3 identifies some of the requirements that help the Medicaid program achieve this goal, as well as any changes to them found in section 1937. Medicaid Spending Health policymakers are concerned with not only how much money Medicaid costs, but also the distribution of program spending. In 2016, Medicaid spent almost $565 billion, accounting for approximately 17% of total national health expenditures in the United States (CMS.gov, 2018a). Understanding which populations utilize the most services, which services are utilized most frequently, and which services and populations are most costly helps policymakers decide if they need to change the Medicaid program and, if so, what changes should be made. As you can see from FIGURE 11-3, not all populations and services are equal when it comes to cost. Generally, TABLE 11-3 “Reasonableness” and “Amount, Duration, and Scope” Requirements in Medicaid Requirement Requirement Purpose Section 1937 Changes to the Requirement Reasonableness State must provide all services to categorically needy beneficiaries in sufficient amount, duration, and scope to achieve its purpose. States have to meet only amount, duration, and scope requirements found in the named benchmark or benchmark- equivalent plan. Comparability All categorically needy beneficiaries in the state are entitled to receive the same benefit package in content, amount, duration, and scope. States may apply benchmark or benchmark-equivalent packages to some, but not all, populations. Statewideness In most cases, states must provide same benefit package in all parts of the state. States may apply benchmark or benchmark-equivalent packages to some, but not all, populations. Nondiscrimination States may not discriminate against a beneficiary based on diagnosis, illness, or type of condition by limiting or denying a mandatory service. DRA does not include language changing Medicaid nondiscrimination rules, and ACA includes nondiscrimination protections regarding age, expected life span, diagnosis, disability, medical dependency, quality of life, or other health condition (42 CFR 440.347(e)). BOX 11-10 Discussion Questions The DRA also included new rules on citizenship verification. Prior to the DRA, all but four states allowed beneficiaries to self-attest to their citizenship status. Under the DRA, Medicaid and CHIP applicants now have to prove their citizenship status by providing original or certified copies of citizenship documents, such as a U.S. passport, state-issued driver’s license, or birth certificate. The exact requirements depend on what type of document is submitted. Subsequent laws eased this burden by giving states the option to conduct a data match with the Social Security Administration’s database to verify citizenship. Under the ACA, the matching system must be used to verify citizenship for individuals purchasing insurance in an exchange. These rules were intended to ensure that only eligible beneficiaries received Medicaid benefits. Many individuals have had difficulty obtaining access to these documents and as a result were dropped from the program despite being eligible. Do you think these rules are a good idea? Do you think this requirement is a reasonable burden? Does it matter that evidence was not available to support the claim that noncitizens or ineligible immigrants were accessing Medicaid benefits? Or, is the possibility that ineligible immigrants might enroll in Medicaid concerning enough to warrant the new documentation requirements? 242 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare http://CMS.gov Source: Spending and enrollment estimates for FY2015 from the Congressional Budget Office’s March 2016 Medicaid baseline. Center on Budget and Policy Priorities. Retrieved from cbpp.org. Source: Data from Medicaid and CHIP Payment and Access Commission. (2017, December). MACSTATS: Medicaid and CHIP data book. Retrieved from https://www.macpac.gov/wp-content/uploads/2015/12/MACStats-Medicaid-CHIP-Data-Book-December-2017 Medicaid enrollment Medicaid spending Aged 8% Adults 36% Blind and disabled 13% Aged 14% Adults 32% Blind and disabled 34%Children 43% Children 19% To ta l ex pe nd itu re s Ho sp ita l c ar e Ph ys ici an / cli ni ca l s er vic es Ho m e he al th c ar e Nu rs in g ho m e Pr es cr ip tio n dr ug s 17% 17.9% 11% 36.1% 31.7% 9.8% 0 5 10 15 20 25 30 35 40children and adults are fairly inexpensive to cover, whereas older adults and individuals with disabilities use more, as well as more expensive, services. In 2015, almost half of spending went to care for older adult and disabled beneficiaries even though they constituted less than one-fifth of all enrollees (Center on Budget and Policy Priorities, 2016). One of the biggest reasons these groups account for a high proportion of Medicaid expenditures is their use of long-term care services, such as nursing homes and home- and community-based services, which takes up over 20% all Medicaid spend- ing (KFF, 2016a). In addition, they are heavy users of prescription drugs and are relatively more likely to be hospitalized. FIGURE 11-4 shows Medicaid’s significant role in funding home health and nursing home care in this country, along with a variety of other services. In addition to expanding eligibility, the ACA included a few changes to Medicaid benefits. States will have new options relating to community-based care, home health care, and family planning. Further, all states will have to cover tobacco cessation pro- grams for pregnant women. The ACA also includes a variety of demonstration programs that target key health issues such as obesity, high cholesterol, high blood pressure, diabetes, and tobacco use. Medicaid Financing The Medicaid program is jointly financed by the fed- eral and state governments, with about 63% of the total program costs paid for by the federal govern- ment and the rest by the states (KFF, 2016f ). Even with the federal government picking up over half the tab, states have found their share of Medicaid costs to be increasingly burdensome, accounting for over 25% of state funds nationally in 2016 (Rudowitz & Garfield, 2018). Program financing occurs through a matching payment system that divides the amount paid by the federal and state governments. The matching rate for most medical services, called the Federal Medical Assistance Percentage (FMAP), is determined by a formula that is tied to each state’s per-capita income. Poorer states—those with lower per-capita incomes— receive more federal money for every state dollar spent on Medicaid, while the wealthier states receive less. In addition, the ACA allows for a 1% increase in FMAP for states that cover certain preventive services and immunizations without any cost-sharing require- ments. The FMAP rate may not be lower than 50% for any state, meaning the costliest scenario for a state government is that it splits program costs evenly with the federal government. In 2016, FMAP rates ranged FIGURE 11-3 Enrollment and Spending in Medicaid FIGURE 11-4 Medicaid Percentage of National Spending by Type of Service, 2016 Medicaid 243 http://cbpp.org https://www.macpac.gov/wp-content/uploads/2015/12/MACStats-Medicaid-CHIP-Data-Book-December-2017 from 50% to 76.3% (KFF, 2016g). Given the variation in matching rates and state programs’ size, federal funds are not distributed evenly among the states. In fact, in 2016, four states (California, New York, Penn- sylvania, and Texas) accounted for over one-third of all federal Medicaid spending (KFF, 2016g). Medicaid is also partially financed through bene- ficiary co-payments, co-insurance, and premiums. In traditional Medicaid, cost sharing is extremely limited. States may not charge any cost sharing for emergency services, family planning services, pregnancy-related services, or preventive services for children. In addi- tion, states can charge only nominal cost sharing for individuals under 100% FPL, such as $4 for a physi- cian visit or $8 for non-emergency use of an emer- gency department (Medicaid.gov, n.d.d ). The DRA included drastic changes to Medicaid’s cost-sharing rules that now apply to ABPs through section 1937. These changes allow for higher cost sharing for indi- viduals who earn over 100% FPL, although out-of- pocket costs may not exceed 5% of a family’s income. For example, beneficiaries between 101% and 150% FPL can pay up to a 10% co-pay for a physician visit, and beneficiaries over 151% FPL can pay up to a 20% co-pay for the same service (Medicaid.gov, n.d.d.). Also, prior to the DRA, cost-sharing requirements were “unenforceable,” meaning health professionals could not refuse to provide services if a beneficiary did not pay a required cost-share amount. Now states can deny services if enrollees do not pay the higher out-of-pocket costs. As with the DRA benefit changes, many groups and services are excluded from the new cost-sharing options. As noted earlier, the federal government is picking up the bulk of the cost of the ACA Medicaid expansions. From 2014 to 2016, the federal government paid 100% of the cost of financing newly eligible enrollees. While the federal government’s share will lessen over time, it will still cover 90% of the cost in 2020 and beyond. It was also expected that the Medicaid expansion would reduce the uncompensated care burden of states— because fewer individuals will be uninsured—and this appears to be the case. Between 2013 and 2015, uncompensated care costs fell from 3.9% to 2.3% of hospital costs, for a savings of over $6  billion. Hospitals in expansion states treating the highest pro- portion of low-income and uninsured patients expe- rienced the largest savings (Dranove, Garthwaite, & Ody, 2017). Even so, many states are concerned about the financial burden of the Medicaid expansion, and greater-than-expected increases in enrollment already have several states reconsidering their commitment to the ACA Medicaid expansion. The ACA included a maintenance-of-effort (MOE) rule forbidding states from reducing their own eligibility rules. States must keep the eligibility rules they had in place in March 2010 (when the law was enacted) until 2019 in the case of children, and until 2014 in the case of adults. This requirement was included to prevent states from roll- ing back coverage expansions and from simply replac- ing state dollars with federal dollars without actually expanding coverage. There is, however, a significant exception to the MOE rule: states with a documented budget deficit may reduce eligibility for nonpregnant, nondisabled adults earning over 133% FPL. Medicaid Provider Reimbursement Medicaid’s complex design also extends to its provider reimbursement methodology. States have broad dis- cretion in setting provider rates. Not only do reim- bursement rates vary by state, but they also vary by whether services are provided in a fee-for-service BOX 11-11 Discussion Questions States have enormous flexibility in designing their Medicaid programs. States spend significant resources on optional services or mandatory services for optional populations. Yet, states complain that Medicaid expenditures are unsustainable and that significant reform, such as the DRA and expanded waiver options, are needed. If states have the ability to reduce Medicaid spending without any reforms, why do you think state politicians are focused on reforming the program? Why might states choose not to reduce their Medicaid program to cover only mandatory services and populations? Politically, what do you think is the most feasible way for states to reduce their Medicaid budgets? BOX 11-12 Discussion Questions What do you think of the MOE requirements? Is it fair for the federal government to impose new eligibility rules on states when the states are ultimately responsible for the cost of providing services? Does such a requirement violate a fundamental element of Medicaid to permit state flexibility? On the other hand, without an MOE requirement, wouldn’t many states simply reduce their eligibility rules, thwarting the intent of Congress to reduce the number of uninsured by expanding Medicaid coverage? Does the budget deficit exception undermine the rule? 244 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare http://Medicaid.gov http://Medicaid.gov (FFS) or managed care setting and by which type of provider (e.g., physicians, hospitals) renders a service.c FFS Reimbursement When reimbursing FFS care under Medicaid, states are required to set their payment rates to physicians at levels that are “sufficient” to ensure Medicaid patients have “equal access” to providers compared to the gen- eral population (SSA § 1396a(a)(30)(A)). Despite this language, Medicaid reimbursement is much lower than both Medicare and private practice rates, and a 2015 U.S. Supreme Court decision found that provid- ers cannot sue a state to raise Medicaid reimbursement rates (Armstrong v. Exceptional Child Center, 2015). Low reimbursement is one reason that many pro- viders are wary of treating Medicaid patients; in addi- tion, physicians decline to participate in Medicaid due to extensive program requirements, delays in payment, and the burden of treating a complex patient popu- lation (Rosenbaum, 2014). The Centers for Disease Control and Prevention reported that in 2013 68.9% of physicians would accept new Medicaid patients, as compared to 84.7% and 83.7% who would accept new privately insured and Medicare patients, respectively (Hing, Decker, & Jamoom, 2015). There was wide variation across the country, with only 38.7% of New Jersey providers indicating they would accept new Medicaid patients as compared to 96.5% in Nebraska (Hing et  al., 2015). Not surprisingly, providers have been more willing to accept Medicaid patients in states with higher reimbursement levels (Decker, 2012). Physicians who treat Medicaid patients are demo- graphically different from those who serve privately insured patients. Medicaid patients are more likely to be seen by physicians who are younger, work in large practices, are graduates of foreign medical schools, are graduates from lower-ranked medical schools, and are not board-certified (Decker, 2018). Overall, relatively few physicians see the bulk of Medicaid patients across the country: from 2013 to 2015, approximately 20% of physicians saw 60% of Medicaid patients (Neprash, Zink, Gray, & Hempstead, 2018). Prior to the ACA, Medicaid reimbursement was 59% of Medicare rates (Decker, 2018). The ACA included a temporary bump in primary care payment rates for services provided in both FFS and managed care settings. For 2013 and 2014, primary care pay- ment rates equaled 100% of Medicare payment rates, with the federal government covering the cost of the increased reimbursement. On average, this change resulted in a 73% increase in Medicaid payments, but there was wide variation across the country (Decker, 2018). While this measure was intended to support primary care providers and boost access to primary care services, its temporary nature means it is unlikely to have a lasting effect. While a few limited studies sug- gested there may have been a positive effect on access from the temporary fee bump, a recent study based on nationally representative data from the National Cen- ter for Health Statistics found no significant increase in physician participation in Medicaid after the fee bump (Decker, 2018). Hospital FFS plans are reimbursed at a rate that is “consistent with efficiency, economy, and quality of care” (SSA, § 1902(a)(30)(a)). However, there is no specified minimum reimbursement level that states are required to meet, resulting in rates that are lower than what hospitals receive from Medicare and pri- vate insurance. While it is difficult to estimate Med- icaid payments to hospitals due to data issues and differences in state payment methodologies, it appears Medicaid pays hospitals about 90% to 93% of costs on average, with significant variation across the country (Cunningham, Rudowitz, Young, Garfield, & Foutz, 2016). Hospitals that serve a high number of Medic- aid and uninsured individuals may receive additional Medicaid payments, called disproportionate share hospital (DSH) payments. Under the ACA, however, these payments will be reduced significantly. The effec- tive date of the reduction was delayed until 2018, but the amount of reduction increased from $18 billion to $43 billion through 2025 (Kardish, 2015). Managed Care Reimbursement As with the rest of the healthcare system, managed care has become an increasingly important part of the Medicaid program. In 2016, over two-thirds of all Medicaid beneficiaries—mostly children and parents—obtained their care through comprehensive managed care organizations (MCOs), including over half of enrollees in 37 states (FIGURE 11-5) (Medicaid. gov, 2018). In addition, almost 7% of enrollees used a “medical home” or primary care case management model that year (Medicaid.gov, 2018). These models pay a provider to coordinate care for beneficiaries, whether it is only primary care services or a range of services, such as physical, behavioral, long-term care, social supports, and so on. ACA expansion states also relied on MCOs to serve 12.5 million new beneficia- ries in 2016 (Medicaid.gov, 2018). States may require managed care enrollment for all beneficiaries except children with special healthcare needs, Native Ameri- cans, and Medicare recipients (SSA, § 1936u-2). MCOs that enroll Medicaid beneficiaries receive a monthly capitated rate per member and assume financial risk for providing services. In 2015, managed Medicaid 245 http://Medicaid.gov http://Medicaid.gov http://Medicaid.gov http://Medicaid.gov AK HI WA ID MT WY CO ND MN IA MO AR LA MS AL GA FL PR NJ DE MD DC SC NC TN KY INIL WI MI OH PA WV VA NY ME VT NH MA CT RI SD NE KS OK TX NMAZ UT NV OR CA Note: Comprehensive managed care includes risk-based managed care organizations (MCOs) and Programs of All-inclusive Care for the Elderly (PACE). 0 (5 states) 51–65% (5 states) 81–100% (16 states, including PR) >0–50% (11 states)
66–80% (15 states,
including DC)
U.S Overall = 68.1%
Source: Medicaid.gov. (2018). Medicaid managed care enrollment and program characteristics, 2016. Retrieved from https://www.medicaid.gov/medicaid/managed-care/downloads/enrollment/2016-medicaid-managed-care-enrollment-report
care payments to comprehensive MCOs accounted for
46% of Medicaid spending (CMS.gov, 2016). States
and MCOs agree upon a set of services the MCOs
will provide for the capitated rate. If there are any
Medicaid-covered services that are not included in a
state’s managed care contract with MCOs, states reim-
burse them an amount in addition to the capitated rate
or reimburse non-MCO providers on an FFS basis to
provide those services. In other words, beneficiaries
are still entitled to all Medicaid services, even when
they are enrolled in a managed care plan.
States are required to pay MCOs on an “actuarially
sound basis,” a term that is not defined in the Medicaid
statute (SSA, § 1396b(m)(2)(iii)). As with other types
of provider rates, capitation rates vary widely among
states. However, it is difficult to compare capitation
rates across states because of the variation in Medicaid
programs generally and in the types of services and
populations covered by the managed care contracts.
With the rapid growth of Medicaid managed care
services, CMS issued new rules in 2016 to improve the
managed care component of the program. These rules
covered a wide variety of issues, such as strengthening
beneficiary protections, aligning Medicaid and CHIP
requirements as necessary, improving payment provi-
sions and program integrity, promoting quality of care,
and creating network adequacy standards ( Paradise &
Musumeci, 2016).
FIGURE 11-5 State Comprehensive Managed Care Penetration as of July 1, 2016
BOX 11-13 Discussion Questions
Is higher Medicaid cost sharing a good idea? What are
the strongest arguments you can make for and against
higher cost sharing? Should Medicaid beneficiaries have
the same cost-sharing responsibilities as privately insured
individuals, or should the government bear more of the
cost because Medicaid beneficiaries are low-income
individuals? What is the primary decision-making goal
that led to the exclusion of so many populations and
services from the new cost-sharing options?
BOX 11-14 Discussion Questions
Who should determine Medicaid provider
reimbursement rates, and how should they compare
to other insurance programs or plans? Should the
federal government play a stronger role in setting
provider rates? Is this an area where it is better to
have state variation or national uniformity? Should
the federal or state governments be required to
ensure that Medicaid reimbursement rates match
private insurance reimbursement rates? What might
occur if poorer states were required to provide
higher reimbursement rates? What is the risk if
reimbursement rates are very low?
246 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare

http://Medicaid.gov

https://www.medicaid.gov/medicaid/managed-care/downloads/enrollment/2016-medicaid-managed-care-enrollment-report

http://CMS.gov

Medicaid Waivers
Much of the previous discussion about Medicaid
highlighted both the numerous requirements placed
on states and the enormous amount of flexibility states
have in operating their program. Medicaid waivers
provide still another level of flexibility for states. There
are several different types of waivers under Medicaid;
here, we focus only on the broadest one—the “section
1115” waiver. Under section 1115 of the SSA, states
may apply to the secretary of HHS to waive certain
requirements of health and welfare programs under
the SSA, including both Medicaid and CHIP. The
secretary may grant section 1115 waivers, also called
demonstration projects, as long as the proposal “assists
in promoting the objectives” of the federal program.d
This broad standard has not been defined and leaves
the secretary with enormous discretion to approve or
reject waiver applications.
The Medicaid statute describes one main purpose
of the program as furnishing medical assistance to those
who cannot afford necessary care (SSA, § 1901). CMS
developed criteria in 2015 to ensure waiver approv-
als meet this standard. Under this guidance, waiver
projects should (1) increase and strengthen coverage
for low-income individuals; (2) increase access to,
strengthen, and stabilize Medicaid provider networks;
(3) improve health outcomes for Medicaid beneficia-
ries and other low-income individuals; or (4) improve
efficiency and quality of care for Medicaid beneficiaries
and other low-income individuals through healthcare
delivery reforms (Solomon & Schubel, 2017).
The issue of defining the objectives of the Medic-
aid program has taken center stage under the Trump
administration. To achieve its goal of reshaping the
Medicaid program, the administration replaced the
2015 guidance with its own program objectives.
The administration acknowledges that the “core” mis-
sion of Medicaid is to “serve the health and wellness
needs of our nation’s vulnerable and low income” pop-
ulations (Medicaid.gov, n.d.a). As a means of achieving
this goal, the administration invited states to submit
waivers that “support upward mobility” and “greater
independence,” promote “responsible decision mak-
ing,” and prepare beneficiaries for private coverage
( Medicaid.gov, n.d.a). By identifying these goals as
meeting objectives of the program, the administra-
tion is trying to lay a foundation to support waivers
that limit eligibility and place additional requirements
on beneficiaries. For example, the administration has
approved or is considering approving waivers that
allow states to impose work requirements, require
drug screening, institute eligibility time limits, allow
coverage lockouts for failing to meet administrative
requirements, eliminate retroactive eligibility, and
charge higher premiums with disenrollment allowed
for nonpayment (KFF, 2018b).
As of July 2018, 37 states have been granted sec-
tion 1115 waiver approvals, and 21 states have waivers
that are pending (KFF, 2018b). The Trump adminis-
tration has approved four waivers (Arizona, Indiana,
Kentucky, and New Hampshire) that include work
requirements and other elements, but a federal court
recently vacated Kentucky’s waiver. In Stewart v. Azar,
the court held, in part, that the Secretary of HHS did
not consider how Kentucky’s waiver would promote
affordable coverage, a key objective of the Medicaid
program (Musumeci, 2018). The outcome of this and
other court decisions will dictate how much leeway
the administration has in changing the contours of the
Medicaid program.
BOX 11-15 Discussion Questions
Should states be allowed to impose work requirements
as a condition for receiving Medicaid benefits? Do
work requirements promote independence and
upward mobility, and, if so, are those two goals
legitimate objectives of the Medicaid program? Are
work requirements unnecessary barriers to care?
Those who oppose work requirements argue that
they do not further the objective of the program,
which is to provide coverage to those who cannot
afford it. As a practical matter, most beneficiaries
are already working, and most of those who are not
working are in poor health or disabled, are acting as
caregivers, or are students. Many of the nonworkers
would be exempt even under the recently approved
waivers. In addition, work requirements create
extensive administrative obligations for beneficiaries
and administrators alike. Of the 1 to 4 million
beneficiaries estimated to lose coverage if work
requirements are imposed broadly, most would be
disenrolled due to lack of reporting.
Those who support requirements contend that
everyone who can work should be working, both to
reduce the burden on the Medicaid program and to
support personal upward mobility. According to this
view, the ultimate goal should be to wean people off
of Medicaid and promote work requirements. Some
states with Republican legislatures, such as Virginia,
would not support expanding Medicaid under the
ACA without work requirements.
Do you support work requirements? Even if you
oppose work requirements, is it better to expand
coverage with work requirements than to not expand
coverage at all?
Medicaid 247

http://Medicaid.gov

http://Medicaid.gov

One of the most important aspects of a waiver
is the “budget neutrality” requirement. A state must
show that the waiver project will not cost the federal
government more money over a 5-year period than if
the waiver had not been granted. The MOE rule under
the ACA also applies to waivers. Although the amount
of money spent remains the same, by seeking a waiver,
a state is agreeing to use itself as a “policy laboratory”
in exchange for being able to operate its Medicaid
program with fewer requirements. Ideally, other states
and the federal government will learn from these
demonstration projects and incorporate their positive
aspects, while avoiding negative ones.
In 2001, the Bush administration created a specific
type of section 1115 waiver called the Health Insur-
ance Flexibility and Accountability (HIFA) demon-
stration. These waivers differ from traditional section
1115 waivers in that they encourage integration of
Medicaid and CHIP with private insurance through
premium assistance programs and other means. HIFA
waivers also allow states to achieve budget neutral-
ity by reducing the amount, duration, and scope of
optional benefits and increasing cost-sharing require-
ments for optional eligibility groups (changes that
may now be possible under section 1937 without the
need for a formal waiver). Although states may reduce
optional benefits and populations under HIFA, man-
datory populations must remain covered and manda-
tory benefits may not be reduced. Given these rules,
HIFA waivers often involve a trade-off between cov-
ering more people with fewer services or fewer people
with more services.
The Future of Medicaid
Due to the high cost of the Medicaid program, the
large federal deficit, other pressures on federal and
state budgets, and ideological differences among pol-
icymakers, Medicaid reform has been a hot topic in
recent years. Although the ACA included a signifi-
cant Medicaid expansion, the Supreme Court’s deci-
sion to make expansion optional has ensured that the
battle over Medicaid and other entitlement programs
will continue. Curtailing the Medicaid expansion and
transforming Medicaid from an entitlement program
to a block grant program were central features of the
recent Republican ACA repeal and replacement efforts.
Even if Medicaid remains effectively intact, with
the newly eligible Medicaid population operating
under different rules than traditional Medicaid enroll-
ees, the administrative complexity of running a two-
tiered system will undoubtedly lead to calls for further
reforms to simplify the program. It appears that many
policymakers are moving away from viewing Medicaid
as a social insurance program that provides a certain
set of healthcare benefits and specific legal protections
to vulnerable populations. Instead, they are envision-
ing Medicaid as a program that more closely mirrors
private insurance plans in terms of their use of risk,
cost sharing, and comparatively limited benefits and
in their lack of extra protections that ensure fairness
and access to care. As noted previously, some states are
implementing these types of changes through waivers
granted by HHS.
While the high number of Medicaid enrollees in
expansion states speaks to the need for an affordable
insurance option for many low-income individuals,
the cost of the expansion is already making states
question their ability to support a larger Medicaid
program. Nonetheless, Medicaid remains quite pop-
ular with the public, with 74% of respondents in one
poll indicating a favorable view of the program; there
is also relatively little support for curtailing funding
(Rudowitz & Garfield, 2018). These competing polit-
ical views about what form Medicaid should take
makes the future of the program uncertain at best.
▸ Children’s Health
Insurance Program
Congress created the Children’s Health Insurance Pro-
gram (CHIP) in 1997 as a $40 billion, 10-year block
grant program, codified as Title XXI of the SSA. When
the program expired in 2007, Congress tried to extend
it by passing two versions of the Children’s Health
Insurance Program Reauthorization Act (CHIPRA).
Despite the bipartisan support for these bills, then-
president George W. Bush vetoed both versions and
BOX 11-16 Discussion Questions
What type of Medicaid reform, if any, do you support?
Should Medicaid beneficiaries be treated like privately
insured individuals, meaning increased cost-sharing
requirements, fewer legal protections, and fewer
guaranteed benefits than in the current Medicaid
program? Is it fair to provide a more generous package
of benefits to publicly insured individuals than most
privately insured people receive? Can the country
afford a more generous Medicaid program? Can it
afford not to provide adequate health insurance and
access to care for the poor and near poor? Is it best
to let states experiment with new ideas? If you could
design a new Medicaid program, what would be your
primary decision-making goal?
248 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare

instead signed a temporary extension of the program.
In 2009, Congress again passed CHIPRA, and newly
elected President Obama signed it into law as one of
his first acts in office. CHIPRA included $33 billion in
federal funds for children’s coverage and extended the
program and its funding through 2013 (KFF, 2012a).
The ACA further extended the program until 2019,
but only included funding through fiscal year 2015. In
April 2015, Obama signed the Medicare Access and
CHIP Reauthorization Act of 2015, which provided
2  more years of funding (through 2017) for CHIP.
After a short lapse in funding, Congress extended
funding until 2023 through the HEALTHY KIDS Act
of 2018 and until 2027 through the Bipartisan Budget
Act of 2018.
CHIP is designed to provide health insurance to
uninsured low-income children whose family income
is above the eligibility level for Medicaid in their state.
Overall, CHIP has been successful at insuring low-
income children, enrolling more than 8.9 million chil-
dren in 2016 (MACPAC, 2018). Nonetheless, 5.4% of
children younger than 19 years remained uninsured as
of 2016, and many of them live in low-income families
(U.S. Census, 2017, p. 2).
CHIP Structure and Financing
CHIP is an optional program for the states, but all 50
have chosen to participate. States have three options
regarding how their CHIP is structured:
1. States may incorporate CHIP into their
existing Medicaid program by using CHIP
children as an expansion population.
2. States may create an entirely separate CHIP
program.
3. States may create a hybrid program in which
lower-income children are part of Medicaid
and higher-income children are in a sepa-
rate CHIP program.
In 2017, 2 states had a separate program, 8 states
and the District of Columbia had a Medicaid expan-
sion program, and 40 states had a hybrid program
(MACPAC, 2018).
As with Medicaid, federal CHIP funds are dis-
bursed on a matching basis, although the federal
match is higher for CHIP than for Medicaid. It is
known as the E-FMAP, for enhanced-FMAP. Histori-
cally, the CHIP match rate ranged from 65% to 81.5%
(MACPAC, 2018). The ACA included a significant
increase in the CHIP match for states from 2015 to
2019 that raised the minimum match from 65% to
88% (but not to exceed 100%). In 2018, the E-FMAP
matching rate ranged from 88% to 100%. The federal
government covered 92.5% of the $15.6  billion in
CHIP spending in 2016 (MACPAC, 2018). The
HEALTHY KIDS Act added a phase-down year for
the ACA E-FMAP, extending it through 2020. After
that, the E-FMAP reverts to the pre-ACA rate.
The matching formula is set by law and was
changed when CHIPRA was enacted. Originally,
allotments were for 3 years and were based on
state-specific estimates of the number of low-income
uninsured children, the number of low-income chil-
dren generally, and healthcare costs relative to other
states. Under CHIPRA, allotments are for 2 years and
state allotments will increase annually to account for
growth in healthcare spending, increases in the num-
ber of children in the state, and state program expan-
sions. Every 2 years, state allotments will be rebased to
reflect actual use of CHIP funds (Ryan, 2009). If states
exhaust their funding and they exceed target enroll-
ment levels, they are eligible for contingency funding
(MACPAC, 2011; MACPAC, 2018).
The changes to the CHIP allotment formula
were intended to allow for more predictable budget-
ing and to account for state program expansions. In
addition, they address a recurring problem under the
old formula. Previously, if states did not use their full
allotment, the unused money reverted to the federal
treasury and could be used by the federal government
for any purpose. This system led to frequent fights to
keep the money in the CHIP and over how the unused
funds would be redistributed. Many states became
dependent on receiving redistributed funds to keep
their CHIP afloat. The new formula and process should
help avoid this problem through better budgeting pre-
dictability and shorter allotment time frames. In addi-
tion, under CHIPRA, all unused funds are designated
to go to Medicaid performance bonuses for increased
enrollment and outreach, instead of reverting to the
federal treasury (MACPAC, 2011; Ryan, 2009).
TABLE 11-4 highlights a number of differences
between Medicaid and CHIP. One very important
difference is that whereas Medicaid is an entitlement
program, CHIP is a block grant. As mentioned ear-
lier, as a block grant, the federal matching funds are
capped (through the allotments). Thus, a state is not
entitled to limitless federal money under CHIP, and
children, even if eligible, are not legally entitled to ser-
vices once the allotted money has been spent. If a state
runs out of funds and operates its CHIP separate from
Medicaid, it will have to cut back its CHIP program
by eliminating benefits, lowering provider reimburse-
ment rates, unenrolling beneficiaries, or wait-listing
children who want to enroll in the program. A state
with a Medicaid expansion CHIP or a hybrid struc-
ture would not receive new CHIP money but would
Children’s Health Insurance Program 249

continue to receive federal funds for Medicaid-eligible
children as allowed under the Medicaid rules and at
the Medicaid matching rate.
CHIP Eligibility
Children are eligible for CHIP if they meet their state’s
income requirement, are younger than 19 years, do
not have other health insurance coverage, and are not
eligible for Medicaid (MACPAC, 2018). CHIP origi-
nally allowed states to cover children up to 200% FPL,
but CHIPRA expanded coverage to 300% FPL with
the enhanced matching rate (KFF, 2012a).e If states go
above 300% FPL, they receive the state’s regular Med-
icaid match rate instead of the enhanced CHIP rate.
Because CHIP coverage is built on a state’s Medicaid
eligibility rules, when CHIP eligibility begins depends
on when Medicaid eligibility ends. For example, if a
state covers a child up to 150% FPL, CHIP eligibility
in that state would start at over 150% FPL. If another
state Medicaid program covers children at 200% FPL,
CHIP eligibility would start at over 200% FPL. CHIP
eligibility ranges from 170% in North Dakota to 400%
in New York. Twenty-three states cover children in
families with income between 200% and 249% FPL,
and 25 states cover children in families with incomes
at or above 250% FPL (MACPAC, 2018). In 2013, most
CHIP children (88.8%) were in families with incomes
at or below 200% FPL (MACPAC, 2018).
Under the ACA, states must cover all children
ages 6 to 19 years up to 133% FPL in their Medicaid
program, and children in families with incomes up
to 133% who are currently in CHIP programs must
be moved to the state’s Medicaid program.b Varia-
tions may still exist above that level. As a result, chil-
dren in families with the same income levels could
be in CHIP in one state and in Medicaid in another
state. States also have an MOE requirement under
CHIP. They are required to maintain their 2010
eligibility levels through 2019. The MOE require-
ment remains in place from 2020 through 2027 for
children in families with income at or below 300%
FPL (MACPAC, 2018).
TABLE 11-4 Comparing Key Features of Medicaid and CHIP
Feature Medicaid CHIP
Structure Entitlement Block grant
Financing Federal–state match Federal–state match at higher rate than
Medicaid
Use of funds for
premium assistance
No (without a waiver) Yes
Benefits Federally defined, with option to use benchmark
or benchmark-equivalent benefits package;
broad EPSDT services for children
Benefits undefined; use benchmark
package; limited “basic” services required
Cost sharing Limited or prohibited for some populations
and services, higher amounts allowed for some
populations and services
Cost sharing permitted within limits, but
prohibited for well-baby and well-child
exams
Antidiscrimination
provision
Yes No
Abbreviations: CHIP = Children’s Health Insurance Program; EPSDT = early and periodic screening, diagnosis, and treatment.
BOX 11-17 Discussion Questions
Why do you think that Medicaid was created as
an entitlement program but CHIP was established
as a block grant? Both programs are federal–state
insurance programs for low-income individuals, so
does the distinction make sense? Does it matter that
one program is for children and the other is broader?
Should one program be changed so they are both
either entitlements or block grants? Which structure
do you prefer?
250 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare

Originally, pregnant women were not eligible
for coverage under CHIP without a waiver. CHIPRA
explicitly allows for coverage of pregnant women,
and 5 states have used that option as of January 2017
(MACPAC, 2018). In addition, 16 states have adopted
an option to cover unborn children as a way to indi-
rectly allow pregnant women to access the program
(MACPAC, 2018). As noted earlier in this chapter,
CHIPRA also expanded eligibility by allowing states
to cover lawfully residing immigrant pregnant women
and children, even if they have not been in the United
States for 5 years. Prior to CHIPRA, states could cover
these populations only with state dollars. As of 2018,
33 states cover immigrant children and 25 states cover
immigrant pregnant women without a 5-year waiting
period (KFF, 2018a).
CHIPRA included a number of provisions to
streamline enrollment and improve outreach. While
states must verify the citizenship status of CHIP enroll-
ees, just as they must for Medicaid enrollees, states
must do so through an electronic data match in most
cases. They may request paper documentation only
when electronic data are not available or are not “rea-
sonably compatible” with information provided by the
individual (Georgetown University, 2017). This option
eases the administrative burden of the citizenship ver-
ification and other documentation requirements and
makes it much less likely that eligible individuals will
be dropped from the program. CHIPRA also allows
states to use “express lane eligibility,” which permits
states to take information provided when individuals
apply for other public programs and use that infor-
mation to assess eligibility for CHIP. In addition, the
ACA limited eligibility determinations to once every
12 months and created a continuous eligibility option
that allows states to provide 12 months of coverage
regardless of changes in income (Georgetown Uni-
versity, 2017). Finally, CHIP includes performance
bonuses and other financial incentives to states that
adopt various enrollment simplification and outreach
policies (Ryan, 2009).
CHIP Benefits and Beneficiary Safeguards
States must provide “basic” benefits, including inpa-
tient and outpatient hospital care, physician services
(surgical and medical), laboratory and X-ray services,
well-baby and well-child care, and age-appropriate
immunizations. Under CHIPRA, states must now
provide dental coverage and may provide dental-only
supplemental coverage for otherwise eligible chil-
dren who have health insurance without dental cov-
erage. States may also choose to provide additional
benefits such as prescription drug coverage, mental
health services, vision services, hearing services, and
other services needed by children. CHIPRA requires
that states that choose to provide mental health or
substance abuse services offer the same level of cov-
erage as they do for medical and surgical benefits
(KFF, 2012a). States that use the Medicaid expansion
structure must provide full Medicaid benefits, includ-
ing EPSDT, and follow Medicaid cost-sharing rules
(MACPAC, 2018).
Various standards may be used for the CHIP ben-
efit package (Georgetown University, 2017). The law
outlines the following benchmarks that states may use
when designing their programs:
■ The health insurance plan that is offered by the
HMO that has the largest commercial, non-
Medicaid enrollment in the state
■ The standard Blue Cross Blue Shield preferred
provider plan for federal employees
■ A health plan that is available to state employees
■ A package that is actuarially equivalent to one of
the above plans
■ A coverage package that is approved by the HHS
secretary
(Do these benchmark plans sound familiar?
Clearly, the DRA revisions to Medicaid were modeled
on the existing CHIP program.) Under a stand-alone
CHIP program, the benefit package may be the same
BOX 11-18 Discussion Questions
When designing CHIP, policymakers chose to follow
the private insurance model instead of the Medicaid
model. Although states have the choice to create a
generous Medicaid expansion program for their CHIP
beneficiaries, they also have the choice to implement a
more limited insurance program with fewer protections.
Similar choices were made when the DRA options were
created for Medicaid. These decisions raise essential
questions about the role of government in public
insurance programs. Does the government (federal
or state) have a responsibility to provide additional
benefits and protection to its low-income residents?
Or, is the government satisfying any responsibility it
has by providing insurance coverage that is equivalent
to major private insurance plans? What if the standard
for private insurance plans becomes lower—does
that change your analysis? Is it fair for low-income
individuals to receive more comprehensive health
insurance coverage than other individuals? Is there
a point where fiscal constraints trump equity or
the likelihood of improved health outcomes when
designing a public insurance program?
Children’s Health Insurance Program 251

as the state’s Medicaid package or equal to one of these
benchmarks. States with separate CHIP programs
commonly create benefit packages that are less gen-
erous than the ones available in their Medicaid pro-
grams (Ryan, 2009).
In addition to the benefit package options, there
are other areas where CHIP provides states with
more program flexibility and beneficiaries with less
protection than is the case under Medicaid. CHIP
does not have the same standards regarding reason-
ableness, benefit definitions, medical necessity, or
nondiscrimination coverage on the basis of illness
(though, as noted earlier, states may opt out of or
alter some of these protections in Medicaid under
section 1937 plans). States, however, may not exclude
children based on preexisting conditions. Also, like
the section 1937 cost-sharing option, states with
separate CHIP programs may impose cost-sharing
requirements up to 5% of a family’s annual income
for families with incomes at or above 150% FPL
(MACPAC, 2018).
CHIP and Private Insurance Coverage
In devising CHIP, Congress was concerned that
Medicaid-eligible children would enroll in CHIP
instead of Medicaid without reducing the overall
number of uninsured children in a state. To avoid
this outcome, CHIP requires that all children be
assessed for Medicaid eligibility and, if eligible,
enrolled in Medicaid instead of CHIP (MACPAC,
2018). With Medicaid expansion under the ACA,
it is likely that some children in stand-alone CHIP
programs will now be eligible for Medicaid. In
addition, Congress wanted to make sure the gov-
ernment did not start funding health insurance
coverage that was previously being paid for in the
private sector. In other words, it did not want to
give individuals or employers an incentive to move
privately insured children to the new public pro-
gram. To avoid private insurance crowd-out, Con-
gress allowed states to institute enrollment waiting
periods and impose cost-sharing requirements as a
disincentive to switch to CHIP. As of 2017, 15 states
have established waiting periods before enrollment
( Georgetown University, 2017).
CHIP Waivers
States may apply to the secretary of HHS to waive
CHIP requirements in exchange for experimenting
with new ways to increase program eligibility or ben-
efits. Initially, the most common use of CHIP waivers
was to expand eligibility for uncovered populations,
such as childless adults and parents and pregnant
women who are not eligible under a state’s Medicaid
program. Using CHIP funds to provide coverage for
adult populations was controversial because the pro-
gram was designed to provide health insurance to
children. While CHIPRA expands eligibility options
for pregnant women, it also prohibits states from
obtaining new waivers to cover adults with CHIP
funds (Ryan, 2009).
In addition, seven states have used CHIP waiv-
ers and other pathways to create premium assistance
programs (CHIPRA and the ACA also provide pre-
mium assistance options) (Department of Labor,
2018). Premium assistance means that public subsi-
dies (in this case, CHIP funds) are available to help
beneficiaries cover the cost of private health insur-
ance premiums for employer-sponsored coverage
or other health insurance plans that are available to
them. States favor premium assistance programs as
a way to reduce the state’s cost of providing a child
with health insurance. Premium assistance programs
may also reduce crowd-out by providing an incentive
for people to keep their children in private coverage
instead of enrolling them in CHIP. States must abide
by numerous rules when creating a premium assis-
tance program, and the combination of these rules
and the high cost of private insurance has led to low
enrollment in CHIP premium assistance programs
in the states that have initiated them. The use of pre-
mium assistance programs may increase in the future,
as CHIPRA and the ACA include provisions to help
reduce these barriers (KFF, 2013).
The Future of CHIP
The future of CHIP is clouded by the politics ensnar-
ing the ACA. CHIP has been a very successful pro-
gram, with consistent bipartisan support. CHIP could
be strengthened by eliminating waiting periods for
lower-income beneficiaries, reducing cost sharing,
continuing to fund outreach efforts, and developing
policies to ensure seamless transitions as children move
among various insurance products (MACPAC, 2017).
Many policy experts argued that CHIP remained nec-
essary even with robust implementation of health
reform that was supposed to include widespread
expansion of Medicaid and strong marketplaces.
There are several reasons that CHIP remains vital
in an ACA era: CHIP was designed for children, and
CHIP providers specialize in treating children; CHIP
is needed to assist low-income families in states that
have not expanded Medicaid; CHIP is more affordable
252 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare

Source: Reproduced from 2013 Annual report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical insurance Trust Funds. Retrieved from https://www.kff.org/medicare/slide/projected-change-in-medicare-enrollment-2000-2050/
3.0%
2.4%
0.9%
0.4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
92.4
88.9
81.5
64.3
47.7
39.7
1.9%
205020402030202020102000
0
10
20
30
40
50
60
70
80
90
100
Average annual
growth in enrollment
Medicare enrollment
(in millions)
than many plans offered through state exchanges; and
an estimated 2 million children would live in families
who are not eligible for subsidies to purchase insurance
through an exchange due to the “family glitch,” which
considers the cost of coverage for individual workers,
not families, when assessing affordability (MACPAC,
2017; Vestal, 2014). The uncertainty surrounding the
future of the ACA, the extent of Medicaid expansion,
and the viability of the exchanges means the rea-
sons CHIP was created in the first place—to provide
insurance to uninsured low- to moderate-income
children—continues today.
▸ Medicare
Medicare is the federally funded health insurance
program for older adults and some persons with dis-
abilities. As a completely federally funded program
with uniform national guidelines, Medicare’s admin-
istration and financing is quite different from that
found in Medicaid and CHIP. This section reviews
who Medicare serves, what benefits the program
provides, how Medicare is financed, and how Medi-
care providers are reimbursed. As with Medicaid and
CHIP, the ACA included several provisions relating
to Medicare. These changes include new coverage for
preventive services, bonus payments for primary care
services, and assistance in paying for prescription
drugs. At the same time, a number of changes will
result in reduced reimbursement for providers. When
the ACA was passed, its Medicare-related provisions
were projected to result in $533 billion in savings
and $105 billion in new Medicare spending, for a net
reduction of $428 billion in Medicare spending over
10 years (KFF, 2010).
Medicare Eligibility
Medicare covers two main groups of people—older
adults and the disabled. In 2017, there were 58 mil-
lion enrollees, including 49 million older adults and
9 million persons with disabilities, end-stage renal
disease (ESRD), or amyotrophic lateral sclerosis (ALS,
also called Lou Gehrig disease) enrolled in Medicare
(HHS, 2017). These figures are expected to grow dra-
matically in the next few decades, as the “baby boom”
population will result in the share of people 65 years
and older increasing from 16% of the population in
2018 to 22% in 2048 (CBO, 2018, p. 19). As shown
in FIGURE 11-6, Medicare enrollment is projected to
exceed 90 million people by 2050.
To qualify for Medicare under the elderly category,
individuals must be at least 65 years old and a U.S. citi-
zen or permanent legal resident with at least 5 years of
continuous residency. To avoid paying premiums for
FIGURE 11-6 Projected Change in Medicare Enrollment, 2000–2050
BOX 11-19 Discussion Questions
Although many Medicare beneficiaries are poor,
there is no means test (income- or resource-specific
eligibility level) to determine eligibility as there is
with Medicaid and CHIP. Is there a good public policy
reason for this difference? What would be the basis for
making this distinction? Does the government have a
different role to play in providing health care based on
the population involved?
Medicare 253

Projected Change in Medicare Enrollment, 2000-2050

Source: Kaiser Family Foundation analysis of the Centers for Medicare & Medicaid Services Medicare Current Beneficiary 2013 Cost and Use file; Urban Institute/Kaiser Family Foundation analysis of DYNASIM data, 2017 (for income and savings). Retrieved from https://
www.kff.org/medicare/issue-brief/an-overview-of-medicare/
Note: ADL = activity of daily living.
Percent of total Medicare population
Age 85+
Long-term care
facility resident
Fair/poor health
5+ Chronic conditions
Savings below $74,450
Income below $26,200
Cognitive/mental
impairment
Functional implairment
(1+ ADL limitations)
Under age 65 with
permanent disabilities
50%
50%
36%
34%
4%
13%
17%
27%
30%
Part A, older adults or their spouse must be eligible
for Social Security payments by having worked and
contributed to Social Security for at least 40 quarters
(about 10 years). Individuals who are 65 years of age
but do not meet the work requirements may become
eligible for Medicare on the basis of their spouse’s
eligibility.
To qualify for Medicare as a person with disability,
individuals must be totally and permanently disabled
and receive Social Security Disability Insurance for at
least 24 months, or have a diagnosis of either ESRD or
ALS. There is no waiting period for individuals who
qualify with an ALS or ESRD diagnosis. The disability
categories do not have an age requirement, so these
Medicare beneficiaries may be younger than 65 years,
and Medicare beneficiaries younger than 65 years do
not have to pay Part A premiums.
Unlike Medicaid and CHIP, Medicare eligibility is
not based on an income or asset test; in other words,
individuals of any income level are eligible for Medi-
care once they meet the eligibility requirements. Even
though Medicare does not target low-income individ-
uals, a significant portion of Medicare beneficiaries
are indigent and in poor health (FIGURE 11-7). Half
of Medicare beneficiaries are in families with annual
incomes of $26,200 or less, and 34% had incomes
under 200% FPL (KFF, 2016b). Among all Medicare
beneficiaries, many have five or more chronic condi-
tions, are in poor or fair health, or have a cognitive
impairment (KFF, 2017a). In 2016, approximately
55% of beneficiaries were women (KFF, 2016c), 76%
were white, 10% were African American, and 8% were
Hispanic (KFF, 2016d). Women and racial and ethnic
minorities are more likely to have lower income and
fewer assets than their white, male counterparts.
In 2016, nearly 12 million low-income older
adults were considered dual eligibles, meaning they
were eligible for both Medicaid and Medicare (CMS.
gov, 2018b). Dual-eligible beneficiaries receive
most of their healthcare services through Medicare,
but Medicaid is available to assist with Medicare’s
cost-sharing requirements and provide services
not covered by Medicare, such as dental care and
long-term services and supports. Not surprisingly,
low- income beneficiaries tend to have significant
healthcare needs. Medicare’s dual eligibles are more
likely than other beneficiaries to be in poor health,
have several chronic conditions, and suffer from cog-
nitive impairments (Musumeci, 2017) ( FIGURE 11-8).
Among dual eligibles, 41% have at least one mental
health diagnosis, 68% have three or more chronic
conditions, and half use long-term care support
and services (CMS.gov, 2018b). Overall, 18% of
dual-eligible enrollees report being in poor health
FIGURE 11-7 Characteristics of the Medicare Program
254 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare

An Overview of Medicare

An Overview of Medicare

http://CMS.gov

http://CMS.gov

http://CMS.gov

Source: Kaiser Family Foundation analysis of CMS Medicarte Current Beneficiary Survey Cost & Use File, 2012.
65%
61%
33%
58%
29%
49%
21%
39%
11%
13%
1%
72%
In fair or poor health
Cognitive or
mental impairment
Require assistance
with 1+ self-care tasks
3+ Chronic conditions
Under 65 and disabled
Long-term care
facility resident
Medicare bene�ciaries who
receive Medicaid
Other Medicare bene�ciaries
as compared to 6% of other Medicare beneficiaries
(CMS.gov, 2018b).
Given their frequent use of the healthcare system,
dual eligibles consume a disproportionate share of
resources. In 2012, this group constituted only 20%
of Medicare beneficiaries but accounted for 34% of
expenditures (CMS.gov, 2018b). Similarly, they made
up 15% of the Medicaid population but were responsi-
ble for 33% of Medicaid spending (CMS.gov, 2018b).
To assist with this high-need, high-cost population,
the ACA created the Federal Coordinated Health Care
Office (referred to as the Medicaid–Medicare Coordi-
nation Office) within CMS to improve the integration
of services for dual eligibles (CMS.gov, 2018b).
Medicare Benefits
Medicare is split into several parts, each covering a
specified set of services. Beneficiaries are automati-
cally entitled to Part A, also known as Hospital Insur-
ance (HI). Part B services, also known as Supplemental
Medical Insurance (SMI), cover physician, outpatient,
and preventive services. The ACA added coverage
for certain preventive services without cost sharing,
including an annual comprehensive risk assessment,
provided without cost sharing when delivered in an
outpatient setting. Part B is voluntary for enrollees,
but 95% of Part A beneficiaries also opt to have Part
B. Beneficiaries may choose to receive their benefits
through Part C, Medicare Advantage (MA), which
includes the Medicare managed care program and a
few other types of plans. Part D is the new prescrip-
tion drug benefit. TABLE 11-5 lists Medicare benefits
by part, and FIGURE 11-9 illustrates current spending
on Medicare benefits. Significant growth is expected
in spending on outpatient prescription drugs over the
next 10  years. Although Medicare benefits are quite
extensive, the list excludes services that one might
expect to be covered in health insurance targeting
older adults, such as nursing home care, routine eye
care, dental care, and hearing exams and hearing aids
(Cubanski et al., 2015).
There was rapid growth of Medicare managed
care plans in the mid- to late 1990s, followed by a sig-
nificant decline. Recently, enrollment has rebounded
with 19 million enrollees (33% of Medicare benefi-
ciaries) in 2017 (KFF, 2017a). However, as shown in
FIGURE 11-10, enrollment is not spread evenly through-
out the country; 40% of MA enrollees are in plans in
6 states (California, Florida, Hawaii, Minnesota, Ore-
gon, Pennsylvania), while fewer than 20% are enrolled
in plans in 13 states and the District of Columbia
(Jacobson, Damico, Neuman, & Gold, 2017). In addi-
tion, many markets are highly concentrated. Insurance
giants United and Humana signed 41% of all enrollees
in 2017, and in 17 states one company accounted for at
least half of enrollment (Jacobson et al., 2017).
Although HMOs have participated in Medi-
care since the 1970s, Part C has evolved over the last
decade to include a number of new insurance options.
In 1997, Congress added private FFS plans,f medi-
cal savings accounts coupled with high-deductible
plans, county-based preferred provider organizations
(PPOs), and point-of-service plans (Cubanski et  al.,
FIGURE 11-8 Health and Functioning of Medicare Beneficiaries Who Receive Medicaid Compared to Other Medicare
Beneficiaries
Medicare 255

http://CMS.gov

http://CMS.gov

http://CMS.gov

http://CMS.gov

Skilled nursing
facilities
4%
Home health
3%
Hospital outpatient
services
7%
Physician
payments
10%
Part D
prescription drugs
14%
Note: *Consists of Medicare bene�t spending on hospice, durable medical equipment,
Part B drugs, outpatient dialysis, outpatient therapy, ambulance, lab, community mental
health center, rural health clinic, federally quali�ed health center, and other Part B services.
Total Medicare Bene�t Payments, 2016: $675 billion
Hospital
impatient
services
21%
Other
services*
11%
Medicare
Advantage
30%
Source: Congressional Budget Office, June 2017 Medicare Baseline.
2015). As  part of the Medicare Prescription Drug
Improvement and Modernization Act of 2003 (MMA),
Congress added regional PPOs and “special needs
plans” for the institutionalized and for beneficiaries
with severe and disabling conditions (Cubanski et al.,
2015). Most enrollees chose HMOs (11.9 million) or
local PPOs (4.9  million) in 2017, with much smaller
enrollment in the other types of plans (Jacobson et al.,
2017). MA plans must cover all Part A and B services,
and many offer additional services such as eyeglasses,
hearing exams, and gym memberships as an induce-
ment to enroll (Cubanski et  al., 2015). Recent policy
TABLE 11-5 Medicare Benefits
Part Services Covered
A Inpatient hospital, 100 days at skilled nursing facility, limited home health following stay at a hospital or skilled
nursing facility, and hospice care.
B Physician, outpatient hospital, outpatient mental health, X-ray, laboratory, emergency department, and other
ambulatory services; medical equipment; limited preventive services, including one preventive physical exam,
mammography, pelvic exam, prostrate exam, colorectal cancer screening, glaucoma screening for high-
risk patients, prostrate cancer screening, and cardiovascular screening blood test; diabetes screening and
outpatient self-management; bone-mass measurement for high-risk patients; hepatitis B vaccine for high-risk
patients; pap smear; and pneumococcal and flu vaccinations. New ACA benefits: cost sharing eliminated
for select preventive services; coverage for personalized prevention plan, including comprehensive health
assessment.
C Managed care plans, private fee-for-service plans, special needs plans, and medical savings accounts. The
plans provide all services in Part A and Part B and generally must offer additional benefits or services as well.
D Prescription drug benefit.
FIGURE 11-9 Medicare Benefit Payments by Type of Service, 2016
256 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare

Source: Reproduced from Jacobson, G., Damico, A., Neuman, T., & Gold, M. (2017, June 6). Medicare Advantage 2017 spotlight: Enrollment market update. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-advantage-2017-spotlight-enrollment
-market-update/
Share of Medicare Bene�ciaries Enrolled in Medicare Private Health Plans, by State, 2017
1%
45%
30%
31%
20%
3%
37%
17%
56%
18%
31%
21%
33%
16% 36% 34%
42%
21%
11%
11%
15%
24%
32%
36%
28%
26%21%
39%
34%
35%
41%
25
%
17%
38%
27%
8%
10%
21%
28%
37%
20%
12%
15%
18%
33%
33%39%
35%
35%
44%
40%
Note: Includes Medicare Medical Savings Accounts (MSAs) cost plans and demonstrations.
Includes special needs plans as well asother Medicare Advantage plans. Excludes beneficiaries
with unknown county addresses and beneficiaries in territories other than Puerto Rico.
< 10% (3 states) 10%–19% (10 states + D.C.) 30%–39% (19 states) 20%–29% (12 states) ≥40% (6 states) National average, 2017 = 33% changes allow MA plans to provide more supplemental benefits (e.g., portable wheelchair ramps, non-skilled in-home workers) to targeted beneficiaries, including chronically ill enrollees (Wynne & Horowitz, 2018). The MMA also created Part D, Medicare’s pre- scription drug benefit. The drug benefit was made available to recipients beginning in 2006, and 43  million beneficiaries were enrolled in Part D in 2018 (Cubanksi, Damico, & Neuman, 2018). In 2018, Medicare contracted with 782 private drug insurance plans (PDPs) in each of 34 regions (KFF, 2017b). Most Part D enrollees (58%) are in PDPs, with 42% in MA plans (Cubanski et al., 2018). Three firms— Humana, UnitedHealth, and CVS Health—have signed up over half of all Part D enrollees (Cubanski et  al., 2018). Part  D plans have flexibility to deter- mine their formulary (beyond the federally required minimum), formulary tiering, cost sharing, and uti- lization management options (Cubanski et al., 2015). If at least two plans are not available in a region, the government contracts with a fallback plan (a pri- vate plan that is not an insurer) to serve that area. All plans must cover at least two drugs in each ther- apeutic class or category of Part D drugs. PDPs must maintain a medical loss ratio of at least 85%, mean- ing no more than 15% of revenue may be spent on administrative expenses or profits (Cubanski et  al., 2015). Dual eligibles (individuals enrolled in both Medicaid and Medicare) may no longer obtain pre- scription drug coverage under Medicaid; they must receive their prescription drug benefit through Medi- care. In addition, low- income subsidies are available to those who need assistance paying for Part D. In 2018, 12  million enrollees received these subsidies (Cubanski et al., 2018). To obtain prescription drugs through Medicare, beneficiaries have the choice of remaining in tradi- tional FFS Medicare under Parts A and B and enroll- ing in a separate private prescription drug plan, or enrolling in a Part C plan through MA that includes prescription drug coverage. MA plans are required to offer basic prescription drug benefits and may offer supplemental prescription drug benefits for an addi- tional premium. Some beneficiaries may also have access to employer-sponsored health insurance that includes prescription drug benefits. These beneficia- ries may keep their employer coverage only, keep their employer coverage and enroll in Part D, or drop their employer coverage. Finally, beneficiaries may also choose not to obtain any prescription drug coverage. However, in certain circumstances, beneficiaries who decline to enroll in Part D during the allotted enroll- ment period and do not have other comparable pre- scription drug coverage will be charged a penalty of FIGURE 11-10 Enrollment in Medicare Advantage Plans Varies Across States Medicare 257 https://www.kff.org/medicare/issue-brief/medicare-advantage-2017-spotlight-enrollment-market-update/ https://www.kff.org/medicare/issue-brief/medicare-advantage-2017-spotlight-enrollment-market-update/ Source: KFF Analysis of Medicare spending data from 2008 and 2018 Annual Report of the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Table II.B1. 11% – $49 billion 2007 2017 41% – $176 billion 47% – $200 billion 42% – $293 billion $702 billion 44% – $309 billion 14% – $100 billion $425 billion Part A Part B Includes traditional Medicare and Medicare Advantage Part D 1% of the national average premium for every month they do not enroll (KFF, 2017b). Medicare Spending Medicare expenditures reached almost $702 billion in 2017, which accounted for 15% of the total federal budget and 20% of total personal health expenditures (Cubanski & Neuman, 2018). Medicare spending is projected to increase to $1.3 trillion in 2028, with an aggregate growth rate of 7.3%. In 2017, Medicare spent a greater share of its funds on services under Parts B and D than in prior years, with a reduced share going toward Part A services (FIGURE 11-11). In addition, pay- ments to MA plans for Parts A and B services almost doubled from 18% of benefit payments in 2007 to 30% in 2017 (Cubanski & Neuman, 2018). Spending levels would be even higher without savings created by the ACA. The growth in Medicare spending is expected to be slower in the next decade as compared to historical data, but spending rates are expected to rise in the long term due to increased use of services based on increased severity of illness, the aging population, and growth of healthcare costs (Cubanski & Neuman, 2018). Not all Medicare beneficiaries cost the same amount to care for because of the disparities in the amount and type of services they require. As shown in Figure 11-9, 21% of Medicare’s expenditures pay for hospital services, while physician and outpatient ser- vices combined account for another 17% of Medicare payments. As with Medicaid and private insurance, a relatively small group of beneficiaries use a high pro- portion of these and other services. In 2010, 10% of all beneficiaries accounted for 58% of Medicare expendi- tures (Cubanksi et al., 2015). The ACA established an Independent Payment Advisory Board, which has the task of submitting proposals to reduce the rate of Medicare spending if Medicare exceeds specified targets. The Secretary of Health and Human Services was required to imple- ment proposals submitted by the board unless Con- gress enacts alternative proposals that achieve the same level of savings. Congress limited the board’s options by prohibiting consideration of proposals that ration care, increase revenue, change benefits, change eligibility, or change cost sharing. This board, which was never constituted and was derided by policymak- ers and politicians from both sides of the aisle, was repealed as part of a budget bill in 2018. Medicare Financing Medicare is a federally funded program. Unlike Medic- aid and CHIP, state governments do not generally con- tribute to Medicare spending, and therefore a matching system is not required. Although Medicare financing is simpler than Medicaid financing in many respects, each Medicare part has its own financing rules, add- ing some complexity to the program ( FIGURE  11-12). In addition, beneficiary contributions in the form of premiums, deductibles, and co- payments contribute to financing Medicare expenditures. Part A (HI) benefits are paid from the HI Trust Fund, funded through a mandatory payroll tax. Employ- ers and employees each pay a tax of 1.45% of a worker’s earnings (self-employed persons pay both shares, for a total tax of 2.9%), which is set aside for the Trust Fund. The ACA increases this rate for higher-income tax pay- ers. Individuals who earn over $200,000 and couples who earn over $250,000 now pay a tax of 2.35% on their earnings (Cubanski & Neuman, 2018). In addition, beneficiaries pay a deductible for each inpatient hospi- tal episode, and co-insurance for hospital care beyond 60 days, skilled nursing care beyond 20 days, outpatient drugs, and inpatient respite care (Cubanksi et al., 2015). By relying on payroll taxes, Medicare Part A uses current workers and employers to pay for health ben- efits for the disabled and those older than 65 years, many of whom are already retired. This formula is problematic in the face of the looming retirement of those from the baby boom generation; while the number of enrollees is expected to grow to more than FIGURE 11-11 Medicare Payments for Parts A, B, and D, 2007–2017 258 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare Source: Reproduced from Cubanski, J. & Neuman, T. (2018, June 22). The facts on Medicare spending and financing. Retrieved from https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/ 45% 87% 75% 23% 78% 36% 13% 3% Total $710.2 billion Note: Data are for the calendar year. $290.8 billion $313.2 billion $106.2 billion Part A Part B Part D 8% 1% 1% 1% <1% 1% 1% 1% 1% 13% 9% General revenue Payroll taxes Premiums Transfers from states Taxation of social security benefits Interest Other 3% 90 million by 2050, the country will not experience a similar growth in workers to support those enroll- ees. As shown in FIGURE 11-13, from 2010 to 2050, the number of workers supporting each enrollee is expected to decline from 3.4 to 2.3. Because of this and for other reasons, the 2014 Medicare Board of Trust- ees estimated that the Part A HI Trust Fund would be exhausted by 2026 (Cubanski & Neuman, 2018). Part B (SMI) is financed through general federal tax revenues and monthly premiums, deductibles, and cost sharing paid by beneficiaries. Beneficiaries with incomes over $85,000 (or $170,000 for a couple) will pay a higher income-related monthly premium than other beneficia- ries. Instead of increasing each year, this income thresh- old was frozen from 2009 to 2019 as part of the ACA, meaning more beneficiaries will be subject to the higher premium during those years. In addition to the monthly premium, beneficiaries pay an annual deductible for physician and medical services and have co-insurance requirements for outpatient hospital care, ambulatory surgical care, clinical diagnostic services, outpatient mental health services, and most preventive services. Despite the federal government’s and beneficia- ries’ investment in Medicare benefits, beneficiaries still face out-of-pocket expenses due to cost-sharing and service-related costs. In 2013, beneficiaries in traditional FIGURE 11-12 Sources of Medicare Revenue, 2016 BOX 11-20 Discussion Questions Lawmakers were concerned that adding a prescription drug benefit to Medicare would encourage employers to drop prescription drug coverage to the beneficiaries who receive prescription drugs through retiree health plans. In an effort to avoid a shift in older people who rely on public insurance instead of private insurance for their prescription drug coverage, Congress included in the MMA a tax-free subsidy to encourage employers to maintain prescription drug coverage. While the ACA eliminates the tax deduction, the subsidy remains in place. The amount of the subsidy is based on the prescription drug costs of individuals who remain with the employer’s plan and do not enroll in Part D. In 2017, approximately 2 million beneficiaries purchased coverage through employer retiree plans and employers received a subsidy of 28% of their costs between $405 and $8,350 per retiree (KFF, 2017b). Is this subsidy a good idea? Is the proper role of government to pay private companies to maintain insurance coverage? If so, should it occur for other benefits? Do you have a preference regarding giving incentives for private entities to provide insurance coverage versus the government financing the coverage directly? Medicare 259 https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/ Source: Kaiser Family Foundation based on the 2014 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Source: Kaiser Family Foundation. (2017a). An overview of Medicare. Retrieved on July 25, 2018 from https://www.kff.org/medicare/issue-brief/an-overview-of-medicare/ 39.7 47.7 64.4 81.8 89.2 92.8 4.0 3.4 2.8 2.3 2.2 2.3 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 10 20 30 40 50 60 70 80 90 100 2000 2010 2020 2030 2040 2050 Number of beneficiaries (in millions) Number of workers per beneficiary In m ill io n s Total Medicare Enrollment, 2013: 49 million Note: Analysis excludes bene ciaries enrolled in Part A or Part B only. Share of Traditional Medicare Enrollees, by Type of Supplemental Coverage: Employer- Sponsored 34% Medicaid 22% Medigap 23% Other – 2% None 19% Traditional Medicare 66% Medicare Advantage 34% Medicare paid just over $6,000 on average for out-of- pocket Part A and B services. Enrollees in MA plans may pay up to $6,700 in out-of-pocket costs (KFF, 2017a). As a result, many beneficiaries have some type of sup- plemental insurance. These “Medigap” policies, as they are known, are sold by private insurers and are intended to cover the cost of payments required by Medicare, such as premiums and co-payments. In addition, some Medigap policies offer benefits that are not covered by Medicare. FIGURE  11-14 illustrates the most common type of supplemental options, and FIGURE 11-15 shows that the highest proportion of out-of-pocket spending was attributed to long-term care services. Older, sicker, and female Medicare beneficiaries experience the high- est out-of-pocket costs (KFF, 2017a). Part C MA plans provide services from Parts A and B and receive their funding from the sources described above. The federal government contracts with private plans and pays them a capitated rate to provide Medicare benefits to program participants. The plans charge ben- eficiaries varying premiums and co-payments. In addi- tion, enrollees pay their regular Part B premiums. Most enrollees (81%) have a choice of a zero-premium plan, but only half choose to enroll in such plans, indicating FIGURE 11-13 Number of Medicare Beneficiaries and Number of Workers per Beneficiary, 2000–2050 FIGURE 11-14 Distribution of Medicare Advantage and Traditional Medicare Enrollment and Types of Supplemental Coverage Among Medicare Beneficiaries, 2013 260 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare https://www.kff.org/medicare/issue-brief/an-overview-of-medicare/ Source: Kaiser Family Foundation. (2017a). An overview of Medicare. Retrieved on July 25, 2018 from https://www.kff.org/medicare/issue-brief/an-overview-of-medicare/ Source: Kaiser Family Foundation. (2017b). The Medicare Part D prescription drug benefit. Retrieved from https://www.kff.org/medicare/fact-sheet/the-medicare-prescription-drug-benefit-fact-sheet/ Average Total Out-of-Pocket Spending on Services and Premiums, 2013: $6,150 Note: Analysis excludes bene ciaries enrolled in Medicare Advantage plans those enrolled in Part A or Part B only. Share of spending by type of service: 18% 12% 9% 5% 4% 4% Services 53% $3,257 Premiums 47% $2,893 Long-term care facility Medical providers/supplies Prescription drugs Dental services Hospital services Skilled nursing facility and home health services Note: Some amounts rounded to nearest doller. 1Amount corresponds to the estimated catastrophic coverage limit for non-Low- Income Subsidy (LIS) enrollees ($7,509 for LIS enrollees), which corresponds to True Out-of-Pocket (TrOOP) spending of $5,000, the amount used to determine when an enrollee reaches the catastrophic coverage threshold in 2018. $8,000 Enrollee pays 5% Plan pays 15%; Medicare pays 80% Total drug spending:Bene�t phase: Coverage gap Catastrophic coverage Initial coverage period Deductible $7,000 Catastrophic coverage threshold = $8,418 in estimated total drug costs1 ($5,000 in true-out- of-pocket spending) Initial coverage limit = $3,750 in total drug costs Deductible = $405 Plan pays 75% Generic drugs Enrollee pays 44% Plan pays 56% Enrollee pays 25% Brand-name drugs Enrollee pays 35% Plan pays 15% 50% manufacturer discount$6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 other features are also important to enrollees (e.g., pro- vider network, extra services) (Jacobson et al., 2017). Part D, Medicare’s prescription drug benefit, is financed through an annual deductible, monthly pre- miums, general revenues, and state payments for dual enrollees. Generally, premiums are set to cover 25.5% of Part D costs. As with Part B, enrollees pay a tiered pre- mium based on their income. Individuals with incomes over $85,000 and couples with incomes over $170,000 pay a surcharge that ranges from 35% to 80% of Part D, depending on their income. Just over 3 million enroll- ees are expected to pay this surcharge in 2017 (KFF, 2017b). As shown in FIGURE 11-16, beneficiaries pay an annual deductible ($405 in 2018), 25% of the cost of FIGURE 11-15 Average Out-of-Pocket Spending on Services and Premiums by Medicare Beneficiaries, 2013 FIGURE 11-16 Standard Medicare Prescription Drug Benefit, 2018 Medicare 261 https://www.kff.org/medicare/issue-brief/an-overview-of-medicare/ https://www.kff.org/medicare/fact-sheet/the-medicare-prescription-drug-benefit-fact-sheet/ drugs up to a set amount ($3,750 in 2018) during the initial coverage period, 35% of the cost of brand-name drugs and 44% of the costs of generic drugs above that amount to a catastrophic threshold ($8,418 in 2018), and 5% of the cost above the catastrophic threshold. When Part D was first created, the coverage gap in Medicare between the initial coverage period and the catastrophic coverage period was referred to as the doughnut hole because beneficiaries had to pay 100% of the costs of drugs. The ACA included provisions to close the doughnut hole such that beneficiaries will pay only 25% cost sharing in that range of drug spending by 2020. Beneficiaries received a $250 rebate for pur- chases made in the doughnut hole in 2010. To close the coverage gap, beneficiaries will receive a phased-in discount for generic and brand-name drugs purchased in the doughnut hole going forward. In addition, the amount of out-of-pocket spending needed to reach the catastrophic level was reduced from 2014 to 2019, but will revert back to its original level in 2020 without fur- ther congressional action (Cubanski et al., 2015). In 2018, most Part D plans will charge a co- payment, often varied by drug, and over 60% will charge a deductible. In addition, 65% of plans do not offer cov- erage in the gap beyond what is required by the ACA (KFF, 2017b). Under Part D, deductibles, premiums, benefit limits, and catastrophic thresholds are not fixed, but indexed to increase with the growth in per-capita Medicare spending for Part D. To offset these charges, the MMA included provisions to assist low-income beneficiaries by reducing or eliminating cost-sharing requirements and the doughnut hole. There are three low-income assistance tiers for beneficiaries who earn up to 150% FPL (Cubanski et al., 2015). The MMA also requires that dual enrollees receive their prescription drug benefit through Medicare, not Medicaid. Under the MMA, states are now required to help fund Medicare’s prescription drug benefit for dual enrollees through a MOE or “clawback” provi- sion. This provision requires states to pay the federal government a share of expenditures the states would have made to provide prescription drug coverage to dual enrollees. The state share begins at 90% in 2006 and tapers down to 75% in 2015 and beyond. Many states are resisting these requirements, and some are threatening not to pay their share. To the extent states adhere to the clawback provision, it represents the first time that states are assisting with Medicare financ- ing. If states choose to provide dual enrollees with prescription drug coverage through Medicaid, states must use 100% of their own dollars to finance the cov- erage, even if the beneficiary does not enroll in Part D. TABLE 11-6 provides a summary of Medicare financing provisions. Because Part C is financed by parts A and B and is an alternative to A and B, it is not included in the table. Whether beneficiaries have cost sharing and other requirements under Part C depends on the specifics of each managed care plan. Medicare Provider Reimbursement Medicare’s reimbursement rules vary by provider type and by whether care is provided through an FFS arrangement or an MA (i.e., managed care) plan. This section reviews physician and hospital reimburse- ment methodologies under both payment systems. Physician Reimbursement Physicians who are paid by a managed care plan to provide Medicare services to beneficiaries follow the same general rules for managed care reimbursement. TABLE 11-6 Medicare Financing by Part Medicare Part Government Financing Scheme Annual Deductible Monthly Premium Cost Sharing A Trust fund through mandated employer and employee payroll taxes Yes No, if Social Security work requirements are met Yes B General federal tax revenue Yes Yes—tiered by income Yes D General federal tax revenue and state clawback payments for dual enrollees Yes—except some low- income beneficiaries Yes—tiered by income (some low-income beneficiaries do not pay premiums) Yes—except some low-income beneficiaries 262 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare However, physicians providing care on an FFS basis are paid according to the Medicare fee schedule, although the ACA included a 10% bonus payment from 2011 to 2015 for primary care providers who operated in Health Professional Shortage Areas. The fee schedule assigns a relative weight to every ser- vice to reflect the resources needed to provide the service. These weights are adjusted for geographic differences in costs and multiplied by a conversion factor (a way to convert the relative value that defines all medical services on the fee schedule into a dol- lar amount) to determine the final payment amount. Payment rates are changed through upward or downward shifts in the conversion factor. Although the ratio of Medicare physician fees to private insur- ance varies considerably by location, overall, Medi- care physician fees are about 75% of those provided by private insurers (Medicare Payment Advisory Commission [MedPAC], 2018, p. 95), but about 44% higher than reimbursement rates provided by Med- icaid (CBO, 2015). In 1997 Congress established a formula for reim- bursing physicians, referred to as the Sustainable Growth Rate (SGR), as a way to control spending on physician services. The formula set an overall tar- get amount for spending on physician services (and related services such as laboratory tests) in Part B. Pay- ment rates were adjusted to reflect actual spending as compared to the target level—if actual spending was higher than the target level, payment rates were cut, but if actual spending was lower than the target level, payment rates were raised. From 1997 to 2001, physi- cian spending was slightly below the target (MedPAC, 2015). Since 2003, however, spending has exceeded the target level. Congress has not had the political will to impose reimbursement cuts called for by the for- mula. Since 2003, Congress suspended the formula annually because it would have resulted in rate reduc- tions, and instead legislated rate increases for physi- cians. Deferring reimbursement cuts year after year has led to an untenable situation. If the SGR formula had been followed in 2015, physician fees would have been cut 21% that year (CBO, 2015). In March 2015, Congress passed and President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). This bipartisan bill scrapped the SGR formula, provided physicians additional reimbursement, and created a new payment structure tying reimbursement to qual- ity. MACRA includes a 0.5% annual update for phy- sician reimbursement from 2015 to 2019 and then maintains level reimbursement from 2019 to 2025. In addition, physicians will be given the opportunity to supplement their reimbursement if they partic- ipate in a new Merit-Based Incentive Payment Sys- tem (MIPS) or alternative payment model (APM) (e.g., bundled payments or accountable care orga- nizations) (National Law Review, 2015). After 2026, physicians participating in an APM will receive a 1% reimbursement update, instead of a 0.5% increase for nonparticipants. The MIPS program is an attempt to streamline three existing programs that tie physician reimburse- ment to improved quality and use of electronic health records: the Physician Quality Reporting System, the Value-Based Modifier, and the Promoting Interoper- ability (originally named Meaningful Use) program for electronic records (National Law Review, 2015). Based on their scores, physicians can receive cuts or additions to their reimbursement updates, up to a capped amount. As of 2018, physician cost is included in the MIPS score (Wilensky, 2018). Physicians who choose not to participate in MIPS must pay a penalty. It is estimated that 3% of physicians were penalized for the 2017 reporting year (Wilensky, 2018). Many interested stakeholders believe MIPS is not working as intended. In its 2017 report, the Medicare Payment Advisory Commission proposed scrapping MIPS for a new system because MIPS was not helping benefi- ciaries choose physicians, was not helping physicians improve their quality of care, and was not helping CMS identify and reward physicians who provide BOX 11-21 Discussion Questions The clawback provision is controversial and highlights some of the tensions about state flexibility and national uniformity that policymakers face when designing public programs. The clawback seems to contradict the prior decision to provide states with flexibility and program design responsibilities under Medicaid. In addition, it changes the decision to use only federal funds to pay for Medicare. Given decisions made by states prior to the MMA, there are many variations among state prescription drug benefits that will be “frozen” in place with the clawback provision. At the same time, the MMA creates a uniform rule about how all states finance prescription drug funding in the future, which could impact state-level decisions about dual enrollee coverage. Is the clawback provision a good idea? Should states help pay for federal prescription drug coverage? Is there a better design? Should states or the federal government control Medicaid prescription drug coverage that is provided to dual enrollees? Should dual enrollees be treated differently than other Medicaid beneficiaries? Medicare 263 high-value care (Wilensky, 2018). Medical associations and the American Hospital Association agree MIPS is not working well but prefer that CMS fix the program instead of replace it (Wilensky, 2018). CMS released its final rule implementing MACRA in November 2016. These rules included a transition period in 2017 that gave providers more flexibility and fewer reporting requirements in the MIPS program, additional models to qualify as an APM, and eligibility thresholds that may exempt more physicians (Patel, Darling, & Ginsberg, 2016). CMS estimated that over half of physicians would be exempt from MIPS because they do not have patient contact, they have low Medicare revenue or patient volume, they are new Medicare providers, or they participate in an APM (Patel et  al., 2016). Under MACRA, physicians who participate in and receive a significant amount of their revenue through APMs that include the risk of financial loss and a quality improvement component will receive a 5% bonus from 2019 to 2024. In addition, participation in an APM releases physicians from the requirement to participate in MIPS and most Promoting Interoper- ability programs (National Law Review, 2015). CMS continues to explore APM structures, including cre- ating the Bundled Payments for Care Improvement Advanced model that pays a retrospective amount for services over a 90-day period (Geilfuss & Romano, 2018) and allowing MA providers to qualify as APMs (Dickson, 2018). Hospital Reimbursement Hospitals are paid for acute inpatient services on a pro- spective basis using diagnostic-related groups (DRGs). DRGs sort patients into more than 500 groups based on their diagnoses. Various diagnoses are grouped together if they have similar clinical profiles and costs. Each DRG is assigned a relative weight based on charges for cases in that group as compared to the national average for all groups. In addition, the part of the DRG covering hospitals’ cost of labor is adjusted by a wage index to account for different geographic costs (MedPAC, 2005, p. 43). Hospitals may also receive additional payments for providing high-cost outlier cases; incurring costs associated with use of new tech- nology; incurring indirect medical education costs; serving a high proportion of low- income patients; or being a qualified sole community provider, a rural referral center, a small Medicare- dependent hospital, a rural hospital treating fewer than 200 admissions, or a critical access hospital (a qualified rural hospital that provides critical care services) (MedPAC, 2005, pp. 43–44). For outpatient care, hospitals are reimbursed by Medicare using a different prospective system. Each outpatient service is assigned to one of about 800 ambulatory payment classification (APC) groups. APCs have a relative weight based on the median cost of the service as compared to the national aver- age. Again, a conversion factor is used to calculate the specific dollar amount per APC, and the labor cost portion is adjusted based on a hospital wage index to account for geographic cost differences. APC pay- ments may be adjusted when hospitals use new tech- nologies or biologics and when they treat unusually high-cost patients (MedPAC, 2005, p. 44). The ACA included a number of provisions that reduced reimbursement for hospitals and other Medi- care providers, including skilled nursing facilities and hospices. These rate reductions include “market bas- ket” updates, which set the prices for a mix of goods and services, and a lowering of DSH payments, which are given to hospitals that provide services to a rela- tively high proportion of Medicaid and uninsured patients. In addition, hospitals will receive reduced payments for services connected to preventable read- missions and hospital-acquired conditions. MA Reimbursement MA plans are paid a capitated rate by the federal gov- ernment to provide Parts A, B, and D benefits to each enrollee in their plan. Plans submit a bid to the federal government that estimates their cost per enrollee, and these bids are compared to benchmarks established BOX 11-22 Discussion Questions Controlling Medicare spending is a difficult task. Even if provider reimbursement rates are reduced, physicians and hospitals may increase volume and intensity of services to make up for lost revenue. The ACA included a number of pilot programs and demonstration projects to experiment with reforming the way health care is financed and delivered, and MACRA increased the incentives for physicians to participate in these experiments. Some of these projects include bundling payment for acute care services; using value-based purchasing, which ties payments to quality outcomes; and creating accountable care organizations that bring together providers across the healthcare spectrum and reward organizations with better outcomes. The ACA created the CMS Innovation Center to oversee these and other reform projects. What approach to reducing costs and improving quality do you prefer? What are the advantages and disadvantages of these ideas? 264 Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare by statute and that vary by county. The benchmark is the maximum Medicare will pay for Part A and B ser- vices in that county. If the bid is below the benchmark, Medicare and the plan split the difference and the por- tion returned to the plan is referred to as a rebate and must be used to provide additional benefits to enroll- ees (Cubanski et  al., 2015). Once a bid is accepted, a contract between plans and the federal government details the services the plan will provide and the pre- miums, deductibles, and cost sharing it will charge beneficiaries. The ACA includes significant reductions in MA payments. On average, MA plans had become 14% more expensive than FFS providers for comparable services (Cubanski et  al., 2015). The ACA phases in reduced payments that bring MA plans closer to the benchmark payment for traditional Medicare services in their county. Additional reductions will occur due to changes in the risk-adjustment formula. On the other hand, plans that provide high-quality care may be eligible for additional payments under the new law (Cubanski et  al., 2015). MA plans are also required to follow the 85% medical loss ratio rule, limiting the amount of revenues that can be used for profits and administration. The Future of Medicare While the Republican leadership in Congress included Medicare reform in its agenda for overall entitlement reform and reduced federal government spending, serious Medicare reform efforts have yet to materialize. The focus of its efforts to date has been to repeal and replace the ACA and to reform Medicaid. While there is broad agreement across the political spectrum that Medicare’s financing is unsustainable going forward, there is less accord about how to address that problem. If Medicare is altered dramatically, one of the options frequently discussed is turning it into a premium sup- port program. In this type of program, the federal gov- ernment provides beneficiaries with a set amount of funds to purchase health insurance, with the benefi- ciary making up the difference between the allotment and the cost of the premium (Glied, 2018). Of course, both the amount of savings for the federal government and the burden on beneficiaries would depend on the size of the premium support provided to beneficiaries. In any case, by shifting from an entitlement program to a specific allotment, much of the financial risk of rising healthcare costs would fall on beneficiaries, not the federal government (Glied, 2018). While it is doubtful that a significant restructuring will happen anytime soon, other policy changes—such as simpli- fying the program structure, increasing future bene- ficiaries’ share of costs, increasing the eligibility age, and encouraging the use of private plans through competition—are more likely to become part of the debate over Medicare’s future. ▸ Conclusion This chapter provided you with an overview of the three main public programs that provide health insurance coverage to millions of people in the United States and raised a series of policy questions for your consideration. Based on the size of the programs, their costs to the federal and state governments, and their importance to millions of (often low-income) individuals, the role and structure of Medicaid, CHIP, and Medicare are constantly being debated. Some people would like to see coverage expanded to ensure that everyone has adequate access to health insur- ance, others would like to dismantle the programs in the interest of eliminating government-funded entitlements, and still others suggest incremental changes to the programs. The debate continues even with the passage of the ACA. Some want to repeal the law, while others are discussing cuts to entitle- ment programs as a way to reduce the federal deficit. Each of these decisions, and many others, reflect the recurring themes that have been discussed through- out this chapter: choosing between state flexibility and national uniformity; determining the appro- priate role for government, the private sector, and individuals in healthcare financing and delivery; defining a primary decision-making goal (e.g., fiscal restraint, equity/social justice, improved health out- comes, uniformity); and settling on the appropriate scope of coverage to offer beneficiaries. Given these programs’ expected increase in beneficiaries and the complementary increase in their cost, it is likely that the debates over Medicaid, CHIP, and Medicare will continue vigorously in the foreseeable future. References Accius, J., Flowers, L., & Flinn, B. (2017, March). Low-income Medicare beneficiaries rely on Medicaid for critical help. 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Retrieved from https://www .commonwealthfund.org/blog/2018/great-power-comes - g re at - re sp ons ibi l it y - me d i c are - a dv ant age s - ne w fou nd -supplemental-benefit ▸ Endnotes a. Puerto Rico, the U.S. Virgin Islands, Guam, Northern Mariana Islands, and American Samoa participate in Medicaid. However, financing rules are different in these territories than in the 50 states. 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http://www.commonwealthfund.org/publications/issue-briefs/2015/may/medicaid-benefit-designs-newly-eligible-adults-state-approaches?redirect_source=/publications/issue-briefs/2015/may/medicaid-benefit-designs-for-newly-eligible-adults http://www.commonwealthfund.org/publications/issue-briefs/2015/may/medicaid-benefit-designs-newly-eligible-adults-state-approaches?redirect_source=/publications/issue-briefs/2015/may/medicaid-benefit-designs-for-newly-eligible-adults http://www.commonwealthfund.org/publications/issue-briefs/2015/may/medicaid-benefit-designs-newly-eligible-adults-state-approaches?redirect_source=/publications/issue-briefs/2015/may/medicaid-benefit-designs-for-newly-eligible-adults http://www.commonwealthfund.org/publications/issue-briefs/2015/may/medicaid-benefit-designs-newly-eligible-adults-state-approaches?redirect_source=/publications/issue-briefs/2015/may/medicaid-benefit-designs-for-newly-eligible-adults https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-medicaid-setting-the-facts-straight/ https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-medicaid-setting-the-facts-straight/ https://www.nhpf.org/library/background-papers/BP68_CHIPFundamentals_04-23-09 https://www.nhpf.org/library/background-papers/BP68_CHIPFundamentals_04-23-09 https://www.nhpf.org/library/background-papers/BP68_CHIPFundamentals_04-23-09 https://www.cbpp.org/research/health/medicaid-waivers-should-further-program-objectives-not-impose-barriers-to-coverage#_ftn7 https://www.cbpp.org/research/health/medicaid-waivers-should-further-program-objectives-not-impose-barriers-to-coverage#_ftn7 https://www.cbpp.org/research/health/medicaid-waivers-should-further-program-objectives-not-impose-barriers-to-coverage#_ftn7 http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/12/4/childrens-health-program-faces-cloudy-future-under-aca http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/12/4/childrens-health-program-faces-cloudy-future-under-aca http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/12/4/childrens-health-program-faces-cloudy-future-under-aca https://www.commonwealthfund.org/blog/2018/great-power-comes-great-responsibility-medicare-advantages-newfound-supplemental-benefit https://www.commonwealthfund.org/blog/2018/great-power-comes-great-responsibility-medicare-advantages-newfound-supplemental-benefit https://www.commonwealthfund.org/blog/2018/great-power-comes-great-responsibility-medicare-advantages-newfound-supplemental-benefit https://www.commonwealthfund.org/blog/2018/great-power-comes-great-responsibility-medicare-advantages-newfound-supplemental-benefit b. A special 5% adjustment allowed by law effec- tively brings the eligibility rate to 138% FPL. c. Community health centers have their own per- visit prospective payment system for reimburse- ment under Medicaid. d. Although federal law does not elaborate on the specifics of section 1115 waivers, other federal guidance does. In 1994, HHS prepared a non- binding notice, “Demonstration Proposal Pur- suant to Section 1115(a) of the Social Security Act,” 59 Fed. Reg. 49249 (1994), and then the Health Care Financing Administration (now CMS) published “Review Guide for Section 1115 Research and Demonstration Waiver Pro- posals for State Health Care Reform.” The State Medicaid Manual also contains information relating to Section 1115 waivers. e. Because New Jersey and New York had already expanded coverage to children beyond 300% FPL prior to CHIPRA, those states are allowed to use their enhanced CHIP match up to their capped allotment. f. Private FFS plans, usually offered at the county level, provide the standard Medicare coverage, but beneficiaries may see only physicians who participate in the plan and must pay premi- ums and co-payments or co-insurance to the private plan instead of to individual providers. In return, the private plan may offer additional services not covered by Medicare. Endnotes 269 271 Credit line FPO© Mary Terriberry/Shutterstock CHAPTER 12 Healthcare Quality Policy and Law LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Discuss licensure and accreditation in the context of healthcare quality ■ Describe the scope and causes of medical errors ■ Describe the meaning and evolution of the medical professional standard of care ■ Identify and explain certain state-level legal theories under which healthcare professionals and entities can be held liable for medical negligence ■ Explain how federal employee benefits law often preempts medical negligence lawsuits against insurers and managed care organizations ■ Describe efforts to measure and incentivize high-quality health care ▸ Introduction This chapter steps away from the topics of health-care access and coverage to focus on healthcare quality. As with access and coverage, health- care quality has various dimensions, and the topic of healthcare quality has increasingly been a focal point of researchers, analysts, health professionals, and con- sumers. For instance, in the span of only a couple of years, the influential Institute of Medicine (IOM, which is now called the National Academy of Medi- cine) released two major reports pertaining to health- care quality: To Err Is Human: Building a Safer Health System (Kohn, Corrigan, & Donaldson, 2000), which focused on the specific quality concern of patient safety, and Crossing the Quality Chasm: A New Health System for the 21st Century (Committee on Quality of Health Care in America, 2001), which described how the healthcare delivery system should be overhauled to improve care. Like healthcare access and coverage issues, health- care quality is a key concern in health policy and law. For example, long-standing problems related to the administration of health care—like racial and ethnic health disparities, and the geographic variation in the amount or type of care provided to patients—have drawn responses from policymakers and the legal sys- tem. Furthermore, policy and legal responses are often needed as healthcare quality is affected by changes in the marketplace or by advances in medical technology. For instance, institutional payers for healthcare services— traditional insurers, employers, and managed care 272 Chapter 12 Healthcare Quality Policy and Law companies—are more involved in healthcare practice now than was the case historically (Furrow, Greaney, Johnson, Jost, & Schwartz, 2001, p. 26), a fact that spurred policymakers and courts to reconsider tradi- tional notions of healthcare quality and liability. The role of law as a monitor of the quality of health care was on display in the context of the no- duty-to- treat principle and the case of Hurley v. Eddingfield (1901). Indiana’s physician licensure law was described as a filter to weed out individuals without the requi- site skills to safely and adequately practice medicine. Licensure, in theory, permits a second healthcare quality function as well: it allows state regulators to monitor the conduct of medical practitioners even after they have been licensed—although, as discussed later, this function has not been performed with much vigor over the years. Holding healthcare professionals and entities lia- ble for substandard care is another (and perhaps the most well-known) legal tool used to promote quality in health care. Physicians have no legal duty to accept a patient into their practice or to provide care upon request, except in limited circumstances. However, a doctor’s decision to treat a patient establishes a legally significant physician–patient relationship, under which the physician owes the patient a reasonable duty of care. Failure to meet what is termed the pro- fessional standard of care—the legal standard used in medical negligence cases to determine whether health professionals and entities have adequately discharged their responsibility to provide reasonable care to their patients—can result in legal liability for reasonably foreseeable injuries.a As you will soon discover, the laws and legal principles that define the circumstances under which aggrieved individuals can successfully sue an MCO for substandard care or coverage determinations are complex. This complexity stems from multiple facts. First, the legal framework applied to medical negli- gence cases was developed long before the advent of managed care. Second, the hybrid nature of managed care (combining as it does the financing and delivery of care) defies easy categorization and makes applica- tion of the legal framework challenging. And third, a federal law (the Employee Retirement Income Secu- rity Act, or ERISA) pertaining to employee benefit plans preempts (i.e., precludes) many typical state- level legal claims against MCOs. The next section of this chapter provides a brief overview of healthcare licensure and accreditation in the context of healthcare quality. The chapter then turns to an overview of errors in health care. Although medical errors are only one small component of the broad subject of healthcare quality, they are com- monly included in the quality discussion and serve as a jumping-off point for a discussion of healthcare liability. The chapter then turns to a full discussion of the professional standard of care and its evolution, followed by a description of some of the state legal theories under which hospitals, traditional insurers, and MCOs can be held liable for substandard med- ical professional conduct. It then explores the com- plex area of how ERISA preempts lawsuits premised on these same legal theories. Finally, the chapter describes the concepts of measuring and incentiviz- ing healthcare quality. ▸ Quality Control Through Licensure and Accreditation The licensing of healthcare professionals and insti- tutions is an important function of state law. As noted previously, healthcare licensure is centrally about filtering out those who may not have the requisite knowledge or skills to practice medicine; in other words, states exercise their police powers when applying licensure laws in order to protect res- idents from being subjected to substandard health care. State licensure laws both define the qualifica- tions required to become licensed and the standards that must be met for purposes of maintaining and renewing licenses ( Rosenbaum, Frankford, Law, & Rosenblatt, 2012). As important as the licensing function is, how- ever, historically it has been used in the promotion of healthcare quality in only the bluntest sense. This stems from the fact that in most states, the only method BOX 12-1 Vignette Michelina Bauman was born on May 16, 1995, in New Jersey. The managed care organization (MCO) through which her parents received healthcare coverage had precertified coverage for 1 day in the hospital postbirth, and both Michelina and her mother were discharged from the hospital 24 hours after Michelina was born. The day after the discharge, Michelina became ill. Her parents telephoned the MCO, but they were neither advised to take Michelina back to the hospital nor provided an in-home visit by a pediatric nurse as promised under the MCO’s “L’il Appleseed” infant care program. Michelina died that same day from meningitis stemming from an undiagnosed strep infection. Medical Errors as a Public Health Concern 273 by which to promote quality through licensure is, simply, the granting or denial of the license to prac- tice medicine. In other words, there exists no mid- dle ground between being granted a license and not being granted (or renewed for) a license, no ongoing monitoring or application of standards intended to promote quality and ensure competence in the face of evolving medical care practices. In designing licens- ing laws, most state legislatures assume that medical professional trade associations (e.g., the American Medical Association) and/or accrediting bodies have sufficient ethical and practice standards to effectively regulate healthcare practitioners and that the pur- pose of licensure as a quality control measure is to identify and deal with a relatively small number of cases of individual provider deviation from those standards (Rosenbaum et al., 2012). This assumption is correct, to a point; private professional and indus- try standards do indeed exist, though their effect on day-to-day quality is debatable. Some commentators maintain that accreditation amounts to little more than self-serving indicia of individual or institutional exceptionalism, while others argue that accreditation plays an important and useful role alongside licen- sure. There are many examples of healthcare accred- itation bodies: The Joint Commission (formerly the Joint Commission on Accreditation of Healthcare Organizations), which may be best known for its review and accreditation of hospitals; the National Medical Errors as a Public Health Concern Commit- tee for Quality Assurance, which accredits MCOs; the Healthcare Facilities Accreditation Program; the Commission on Accreditation of Rehabilitation Facilities; the Community Health Accreditation Pro- gram; the Utilization Review Accreditation Commis- sion; and others. A second historical fact related to licensure’s effect (or lack thereof ) on healthcare quality—one that plays into detractors’ claims about the self- serving nature of today’s industry-designed accredi- tation processes—is that state licensing schemes were designed not with healthcare quality, per se, in mind, but rather with an eye toward protecting the medi- cal professions from unscrupulous or incompetent providers and bad publicity. Thus, the laws tended to focus on preventing relatively rare instances of grossly poor-quality care, rather than on long-term promotion of high-quality care. One final topic pertaining to licensure that bears mentioning is the immensely important role it plays in defining the permissible “scope of practice” of the various types of healthcare providers. It is one thing for state legislators to define the meaning of practice for various broad medical fields (e.g., there is not so much overlap between, say, medicine and dentistry as to cause a huge number of policy and legal disputes), but quite another for legislators to define the lawful activities of doctors as compared to physician assis- tants as compared to nurses, and even more specif- ically of advanced practice nurses as compared to licensed practical nurses as compared to registered nurses. It is in delineating permissible scopes of prac- tice within fields and subspecialties that fierce policy disputes take place. Yet, it is not surprising that these disputes take place. Licensure laws define who has the power to engage in medical practice, who gets to practice specific types of health care, and how and when professional standards of conduct are enforced. In short, licensure laws have the power to determine who is in, as they say, and who is out. Some states are relatively more inclusive in their approach to the licensing of healthcare professionals, while others hew closely to a more traditional approach in which physicians are granted broad scope of practice pow- ers while other professionals (e.g., nurses) have far less ability to diagnose and treat patients. The lat- ter approach is being hotly contested, as nurses and other nonphysician healthcare professionals decry their inability to practice to their full education and training, particularly in light of the healthcare workforce shortages that plague the nation (Igle- hart, 2013) and the large number of individuals who were newly able to access health insurance (and thus more likely to seek care) under the Affordable Care Act (ACA). ▸ Medical Errors as a Public Health Concern Notwithstanding licensure laws and accreditation standards, medical errors are bound to, and often do, occur. And while medical errors are obviously not a new problem, framing the issue as a public health problem is a relatively new phenomenon, and health- care providers, public health professionals, and poli- cymakers have in recent years committed increased attention to the problem of medical errors. The regularity with which medical errors occur and the resulting extent of adverse health outcomes and mortalities indicate that the problem is not con- fined to one ethnic or racial population, socioeco- nomic group, or geographic area. One study indicates that medical errors in hospitals and other healthcare facilities may now be the third-leading cause of death in the United States (Makary & Daniel, 2016), behind 274 Chapter 12 Healthcare Quality Policy and Law only heart disease and cancer. This prevalence sug- gests that factors such as unskilled or poorly trained doctors and poor communication systems within facilities contribute to more deaths annually than do respiratory disease, accidents, strokes, Alzheimer disease, diabetes, flu and pneumonia, kidney dis- eases, and suicide, which round out the top 11 causes of death (Makary & Daniel, 2016). The negative effects of medical errors on individual patients and on society as a whole—including associated reduc- tions in work productivity, lost income, and the costs associated with correcting injuries resulting from errors—support the conclusion that medical errors are properly classified as a public health problem requiring a strong response from policymakers and the legal system. There are various causes of medical errors. Some causes are, relatively speaking, concrete—such as failure to complete an intended medical course of action, implementation of the wrong course of action, use of faulty equipment or products in effecting a course of action, failure to stay abreast of one’s field of medical practice, or health profes- sional inattentiveness. For example, according to the previously mentioned IOM reports, errors in the prescribing, administering, and dispensing of medications result in at least 1.5 million injuries or deaths annually in the United States (Kaufman, 2006). Furthermore, “mistakes in giving drugs are so prevalent in hospitals that, on average, a patient will be subjected to a medication error each day he or she occupies a hospital bed” (Kaufman, 2006). Yet according to the IOM reports, “at least a quarter of the injuries caused by drug errors are clearly pre- ventable” (Kaufman, 2006). Some of the errors are spawned by something as simple as name confusion among pharmaceuticals; for example, it is easy to see how physicians, nurses, and pharmacists could eas- ily confuse the arthritis drug Celebrex, the anticon- vulsant drug Cerebyx, and the antidepressant drug Celexa when prescribing, administering, and filling medications (Nordenberg, 2000). There are more abstract causes of medical errors, as well. For example, they can result from the fact that “much of medical treatment is still primitive: the eti- ologies and optimal treatments for many illnesses are not known [and] many treatment techniques, such as cancer chemotherapy, create substantial side effects” (Furrow et al., 2001, p. 30). Also, many people argue that the culture of medicine—including its history of elitism, its focus on memorization in both diagnosing and treating illness, and its dedication to secrecy when adverse medical outcomes occur—helps to explain the extent of medical errors. Just as there are multiple causes of medical errors, so are there various strategies—some broad and sys- temic, others more incremental—for preventing and reducing their occurrence. For instance, hospi- tals usually employ two vehicles to minimize medi- cal errors and assure quality care for patients: risk management programs and peer review processes. Risk management programs monitor risks associ- ated with nonphysician personnel and with facilities under the direct control of hospital administrators; peer review processes entail a secretive evaluation of hospital-based physician practices by physicians themselves. Most physicians encounter the peer review process when they apply for “staff privileges” at a hospital, which grant doctors the ability to use the hospital for their own private practice, includ- ing the ability to admit patients and use the hospi- tal’s resources in treating patients. Once a doctor is granted such privileges, he or she is subject to ongoing peer review. Many analysts maintain that the secretive manner in which the peer review process is conducted stifles meaningful improvements to patient safety and that it is too reactive, responding to errors only after they have occurred. Recently, public and private policymakers have begun shifting their attention to medical error reforms that are less reactive and more centered on error prevention and patient safety improvements. There are two primary objectives of these reforms: to redesign healthcare delivery methods and struc- tures to limit the likelihood of human error and to prepare in advance for the inevitable errors that will occur in healthcare delivery regardless of the amount and types of precautions taken. Medi- cal error reform could entail various approaches, including improving standardization of medical procedures, enforcing mandatory reporting of med- ical errors, reducing reliance on memory in medical care, increasing and improving medical informa- tion technology systems, encouraging patients to be more participatory in their own medical care, and establishing a national focus on the topic of patient safety (Furrow et al., 2001, pp. 43–64). For example, the federal Patient Safety and Quality Improvement Act (PSQIA) was signed into law in 2005 in response to the To Err Is Human report. PSQIA created a sys- tem for use by healthcare providers to anonymously report medical error data for systematic analysis. The hope is that by aggregating, analyzing, and dis- seminating the data analyses to healthcare provid- ers nationwide, healthcare professionals and entities will increase their knowledge about what leads to adverse medical outcomes and alter their practice methods accordingly. Promoting Healthcare Quality Through the Standard of Care 275 ▸ Promoting Healthcare Quality Through the Standard of Care Not all medical errors rise to the level of being con- trary to law. This section details the measure used by the legal system to determine which errors trigger legal protections: the professional standard of care. The standard of care is key both to the provision of high-quality health care and to legal claims that a health professional’s, hospital’s, or MCO’s negligence in rendering medical care resulted in injury or death. This type of liability falls under the law of torts, a term that derives from the Latin word for “twisted” and that applies to situations where the actions of an individual or entity “twist away” from being reason- able and result in harm to others. Generally speaking, proving tort liability is not easy, and this task is no less difficult in the specific context of medical care. A patient seeking to hold a health professional or entity responsible for substandard care or treatment must demonstrate the appropriate standard of care, a breach of that standard by the defendant, measurable damages (e.g., physical pain or emotional suffering), and a causal link between the defendant’s breach and the patient’s injury.b The Origins of the Standard of Care The professional standard of care has its origins in 18th-century English common law. Courts in England had established that a patient looking to hold a physi- cian legally accountable for substandard care had to prove that the doctor violated the customs of his own profession, as determined by other professionals within the profession. In other words, no objective standard was used by courts to measure the adequacy of phy- sician practice.c Furthermore, courts were not in the habit of making searching analyses of whether the customs and standards proffered by the profession as defensible were at all reasonable. This type of physi- cian deference was incorporated into America’s legal fabric, as policymakers and courts delegated key deci- sions about medical practice—including determina- tions as to whether a specific practice undertaken in the treatment of a particular patient was acceptable or negligent—to the medical profession itself. The law’s reliance on health professionals to deter- mine the appropriate standard of medical care was not without its problems. In effect, this laissez-faire approach made it virtually impossible for an injured patient to successfully recover monetary damages from a negligent doctor, because the patient was required to find another health professional willing to testify that the doctor’s treatment violated the cus- tomary standard of care. (This type of testimony was certainly uncommon, as health professionals rarely openly questioned the practices of other members of the profession.) Moreover, using professional custom as the touchstone for determining legal liability had the effect of thwarting the modernization of medical care, because practicing physicians knew they would be judged, in essence, based on how other physicians customarily practiced. Furthermore, establishing a violation of profes- sional custom was not the only hurdle injured patients had to clear in their effort to hold their physicians legally accountable for substandard care. English courts also developed what became known as the “locality rule,” which held that testimony provided on behalf of a patient as to whether a physician’s actions met the standard of care could come only from phy- sicians who practiced within the same or similar locality as the physician on trial. Thus, not only did aggrieved patients need to find a physician willing to testify that a fellow member of the profession violated customary practice, they needed to find this expert witness within the (or a similar) locality in which the defendant-doctor actually practiced. As they did with the professional custom rule, U.S. courts gradually adopted the English locality rule. For example, the Supreme Judicial Court of Massachusetts ruled that a small-town physician was bound to possess only the skill that physicians and surgeons of ordinary ability and skill, practicing in similar localities with opportu- nities for no larger experience, ordinarily possess, and that he was not bound to possess the high degree of art and skill possessed by eminent surgeons practicing in larger cities and making a specialty of the practice of surgery (Small v. Howard, 1880). Courts’ application of the locality rule severely limited patients’ ability to bring medical malpractice BOX 12-2 Discussion Questions What do you think of the term medical error as a descriptor of adverse medical outcomes? After all, there are many medical procedures (e.g., invasive surgeries) and treatments (e.g., chemotherapy) that not only are inherently risky, but also cause painful and dangerous (and often unpreventable) side effects (i.e., that lead to “adverse” medical results). Given this fact, is it conceivable that the healthcare delivery system could ever operate free of “error”? Can you think of other terms that better (or more fairly) convey the range of adverse outcomes attending healthcare practice? 276 Chapter 12 Healthcare Quality Policy and Law actions against their physicians. Indeed, some injured patients were prevented from even initially mounting a case, because they were unable to convince a “geo- graphic colleague” of their own physician to serve as an expert witness. (This problem was particularly acute in rural communities where there were fewer doctors to begin with, and where collegiality was the norm.) Furthermore, the locality rule likely resulted in at least a few local medical standards that were set by doctors who were less than completely skilled. The rule had another effect, as well: it led to a gulf among localities and cities in the standard of medical care practiced, and thus to different standards of care for similarly situated patients. Imagine, for example (not- withstanding the fact that the professional custom rule generally discouraged advancements in the stan- dard of medical care), that physicians in a large town or city upgraded their practice techniques to reflect new medical technologies. Small-town practitioners had little incentive to model their big-city colleagues in the improvement of their own practice techniques, because the locality rule limited testimony as to the reasonableness of a physician’s care to practitioners in the same or similar locality as the doctor on trial and their own actions would never be measured against the elevated techniques of their big-city counterparts. By the 1950s, policymakers and courts grew wary of a healthcare system effectively in charge of polic- ing itself; not surprisingly, this view was reflective of society more broadly, which during the civil rights era adopted a set of values heavily influenced by social justice and circumspect of concentrated institutional power. It also reflected the fact that no matter how chilling the effects of the professional custom and locality rules, the practice of medicine—particularly the dissemination of medical research findings—had obviously evolved from the 1800s. These facts both vastly altered the law’s approach to measuring phy- sician care and promoted higher-quality health care (Rosenbaum et al., 2012). The Evolution of the Standard of Care Under the law’s modernized approach to the standard of care, both legal pillars of the physician autonomy era—the professional custom rule and the locality rule—were more or less razed. The Professional Custom Rule Courts no longer defer to professional custom as solely determinative of whether a physician’s actions reached the accepted standard of care. Instead, courts now analyze whether the custom itself is reasonable in light of existing medical knowledge and technology.d Although evidence of professional custom remains probative in determining whether the standard of care has been met, courts consider a range of other relevant evidence as well. Thus, the benchmark courts employ today to determine whether a health professional’s treatment of a particular patient rose to the standard of care is whether it was reasonable given the “totality of circumstances.” Furthermore, it is no longer the case that evidence as to what is and is not customary medical practice is limited to what medical professionals themselves testify. Although evidence as to medical custom may still be introduced by medical professionals, objec- tive clinical and scientific evidence—such as scientific research and clinical trial results—are now consid- ered relevant in determining medical negligence. For example, the well-known case of Helling v. Carey (1974) shows how advances in medical knowledge can obliterate long-standing medical customs and replace them with new requirements. In Helling, a 32-year-old woman sought treatment from a series of ophthalmol- ogists for glaucoma-type symptoms. The ophthalmol- ogists, however, refrained from screening the patient for glaucoma, on the ground that professional custom called for the screen only in patients beyond the age of 40 years because the incidence of glaucoma in younger people was low. The State of Washington’s Supreme Court ruled that notwithstanding the fact that the ophthalmologists had properly adhered to accepted custom, the custom itself was outdated based on cur- rent medical knowledge and was therefore unrea- sonable. The court effectively determined that a new treatment standard was required of the ophthalmol- ogy profession and held that the defendant- physicians were liable for the patient’s blindness. The key legal principle at work in Helling is that courts can (and do, in rare circumstances) determine for an entire industry (medical or otherwise) what is legally required of them, despite long-standing indus- try practices. This principle is premised on the famous case of T. J. Hooper v. Northern Barge Corp. (1932), in which the U.S. Second Circuit Court of Appeals held that a tugboat company was liable for damages to cargo it was shipping because the company failed to maintain radio-receiving equipment that could have warned the crew of a storm that battered the boat. The company argued that it should not be liable for the damage because at the time it was not typical practice in the tugboat industry to carry radio equipment. In response, the court wrote the following: There are, no doubt, cases where courts seem to make the general practice of the calling the Promoting Healthcare Quality Through the Standard of Care 277 standard of proper diligence. . . . Indeed in most cases reasonable prudence is in fact com- mon prudence; but strictly it is never its mea- sure; a whole calling may have unduly lagged in the adoption of new and available devices. It never may set its own tests, however per- suasive be its usages. Courts must in the end say what is required; there are precautions so imperative that even their universal disregard will not excuse their omission. (T. J. Hooper v. Northern Barge Corp., 1932) Essentially, the court determined that the tugboat company was not acting reasonably under the circum- stances, but was instead hewing too closely (and fool- ishly) to what should have been considered an outmoded industry practice. This same view appeared to drive the court in Helling v. Carey. Indeed, the idea that the quality of health care provided by a health professional should be measured by an objective standard based on reason- ableness under the circumstances—rather than by other professionals cloaked in the protections of outright autonomy—is today considered the norm. Furthermore, this view extends to big cities and small towns alike, and to both well-off and indigent patients. The Locality Rule Just as professional custom was transformed by the courts from being conclusive evidence of proper med- ical practice to being merely one piece of the eviden- tiary puzzle, so too was the locality rule mostly undone by more modern judicial thinking. Based in part on the fact that medical education and hospital-based care were becoming increasingly standardized under national accreditation efforts, courts stopped restrict- ing evidence regarding the appropriate standard of care to the locality in which a physician practiced. Instead, most states have adopted what could be termed the “reasonably competent physician” stan- dard, described as that degree of care and skill which is expected of a reasonably competent practitioner in the same class to which he belongs, acting in the same or similar circumstances. Under this standard, advances in the profession, avail- ability of facilities, specialization or general practice, proximity of specialists and special facilities, together with all relevant consider- ations, are to be taken into account. (Shilkret v. Annapolis Emergency Hospital Ass’n, 1975) Under this revised standard, the practice of medicine nationally is key, because for purposes of determining medical liability, a physician’s actions are now measured objectively against those of a reasonably prudent and competent practitioner under similar cir- cumstances, not against the actions of physicians who practice within a particular defendant’s locality. Thus, in the eyes of most state laws, local medical practice customs have properly given way to higher expecta- tions where health quality is concerned. At the same time, some states still retain the local- ity rule as the appropriate standard for the admissibil- ity of medical evidence, and some states use a modified rule that takes into account local resources and other factors in determining whether a defendant-doctor was able to meet the standard of care. For an example of the latter point, see Hall v. Hilbun (1985), in which the Mississippi Supreme Court determined that the locality rule still had relevance to the extent that a physician’s imperfect care resulted not from his sub- standard medical knowledge and skills, but from the fact that he did not have access to needed resources and equipment. In this type of situation, the court rea- soned, health professionals who genuinely attempt to meet the requisite standard of care should not be held legally responsible when factors outside their control prevent them from doing so. The court in Hall went on to explain that under these circumstances, a physi- cian is required to be aware of extant limitations and to actively demonstrate an effort to assist patients as best he can by, for example, referring them to doctors and facilities better able to care for them. For purposes of determining legal liability for substandard treatment, the notion of distinguishing between medical knowledge and skills on the one hand and medical resources and outside factors on the other has particular relevance when the treat- ment involves an indigent patient whose care impli- cates broad contextual problems, such as poor living conditions or insufficient access to providers. Here, again, many courts look to see whether the treating physician’s actions demonstrate an understanding of the proper level of care and a sincere effort to reach that level. However, do not confuse the fact that the  law does not generally hold physicians liable for the consequences of resource problems attending the healthcare system, or of poverty, with the idea that different standards of care exist for the well-off and for the poor. As far as the law is concerned, there is a unitary standard of care to be applied regardless of a patient’s socioeconomic status, and physicians can certainly be held legally responsible for mistreating an indigent patient. Together, the revamped legal rules pertaining to medical custom and local practice were combined to create what is called the national standard of care. 278 Chapter 12 Healthcare Quality Policy and Law We turn now to a discussion of how this standard is applied to healthcare institutions and insurers. ▸ Tort Liability of Hospitals, Insurers, and MCOs Just as physicians are now held to a national standard of care in cases challenging the quality of their care and treatment, so too have courts moved to apply this same standard to hospitals, traditional health insurers, and MCOs. The following sections consider each par- ty’s liability considerations in turn. Hospital Liability By the early 1900s, the healthcare industry began to rely much more heavily than had been the case previously on hospitals (as opposed to physicians’ offices or patients’ homes) as a focus of patient care. As with all healthcare settings, hospital-based medi- cal practice created circumstances that led patients to challenge the quality of care provided. Out of neces- sity, the legal system (specifically, state-level courts) responded to these challenges by applying theories of liability— premised on the national standard of care— meant to hold hospitals accountable for negligence that occurred within their walls. Two theories—one premised on hospitals’ relationship with doctors and one based on the actions and decisions of hospitals themselves—dominate the field of hospital liability. The former theory is called vicarious liability; the lat- ter is termed corporate liability. Vicarious Liability The concept of vicarious liability, which maintains that one party can be held legally accountable for the actions of another party based solely on the type of relation- ship existing between the two parties, is premised on the long-standing principles of “agency” law. Under this field of law, where one party to a relationship effectively serves (or is held out to society) as an agent of another party, a court can assign legal responsibility to the other party where the agent’s actions negligently result in injury to a person or damage to property. For example, vicarious liability allows a hospital to be held responsible in some situations for the negligent acts of the doctors that practice medicine under its roof—not because the hospital itself somehow acted negligently, but rather because the doctor is (or is viewed as by the law) an agent of the hospital. One relatively easy way for a plaintiff to win a lawsuit premised on vicarious liability is to establish through evidence that the two parties at issue are engaged in an employer–employee relationship, and that the employee (i.e., the agent) was acting within the normal scope of her professional duties when the act of negligence occurred. In these instances, courts frequently look to the employer to adequately supervise the employee while on the job and hold the employer responsible when an employee’s negligent acts occur within the parameters of the employee’s job responsibilities. However, many “agents” of the companies they are hired to work for are not formal employees; rather, they are hired as independent contractors. Indeed, this is true of most hospital–physician relationships. Historically, agency law respected hiring entities’ decisions to hire individuals as independent contrac- tors rather than as employees, and the general legal rule is that employers are not accountable for the ille- gal actions of these contractors. Nonetheless, there are exceptions to this rule, and courts have devel- oped theories of vicarious liability—such as actual agency, apparent agency, and nondelegable duty—that are more concerned with the scope of an employer– independent contractor relationship than with the for- mal characterization of the relationship as determined by the parties themselves. In other words, employers cannot avoid legal liability simply by labeling a hired worker as an independent contractor, because courts will analyze the relationship to determine whether it operates at the end of the day like a typical employer– employee relationship. Actual agency exists—and the negligence of an independent contractor can be imputed to his employer—when the employer exercises de facto supervision and control over the contractor. Thus, for example, agency can be shown to exist between a healthcare corporation and a health professional when the particular facts pertaining to the relationship reveal that the corporation actually exercises control over the professional, even though the professional is BOX 12-3 Discussion Questions Give some thought to the term national standard of care. What do you think it means, from both a healthcare quality and legal (i.e., evidentiary) perspective? Are you aware of any national body— governmental or otherwise—that determines the efficacy of new diagnostic protocols or treatment modalities? In the absence of such an entity, how are health professionals put on notice that a new medical care standard for a particular procedure or treatment has emerged? Tort Liability of Hospitals, Insurers, and MCOs 279 not technically an employee. Similarly, the doctrine of apparent agency (also called ostensible agency) is another exception to the general rule that employers should not be legally exposed for the negligence of their independent contractors. In the context of health care, this type of agency exists, for example, when a patient seeks care from a hospital emergency depart- ment (rather than from any particular physician working in that department) and the hospital has led patients to believe that physicians are employees of the hospital, such as via a billboard extolling the skills of the physicians who practice in its emergency depart- ment (Mehlman v. Powell, 1977). Finally, courts have also associated the doctrine of vicarious liability with certain duties considered so important to society as to be legally “nondelegable.” For example, the impor- tance of a hospital’s obligation to maintain control over the care provided in its emergency department led one court to rule that it would be improper for the hospital to claim immunity from vicarious liability when its independent contractor furnished substan- dard medical care (Jackson v. Power, 1987). Corporate Liability As opposed to vicarious hospital liability, which is predicated on the negligence of individual health pro- fessionals, corporate liability holds hospitals account- able for their own “institutional” acts or omissions. In other words, a hospital can also be held liable when its own negligent acts as a corporation cause or contrib- ute to a patient’s injury. Several general areas give rise to litigation around hospitals’ direct quality of care duties to patients: failure to screen out incompetent providers (i.e., negligence in the hiring of clinicians), failure to maintain high-quality practice standards, failure to take adequate action against clinicians whose practices fall below accepted standards, and failure to maintain proper equipment and supplies (Rosenbaum et al., 2012). The most famous hospital corporate liability case is Darling v. Charleston Community Memorial Hospital (1965). In Darling, the Illinois Supreme Court found Memorial Hospital liable for negligent treatment pro- vided to plaintiff Dorrence Darling, an 18-year-old who suffered a broken leg while playing in a college football game. The poor treatment Darling received by the hospital’s emergency department staff—his leg cast was not properly constructed and its application cut off blood circulation—ultimately resulted in amputa- tion of Darling’s leg below the knee. The court held the hospital liable not for the actions of the emergency department staff, but for its own negligence: accord- ing to the court, Memorial Hospital did not maintain a sufficient number of qualified nurses for post– emergency department bedside care (when Darling’s leg became gangrenous), and it neither reviewed the care provided by the treating physician nor required the physician to consult with other members of the hospital staff. Insurer Liability Like hospitals, conventional (i.e., indemnity) health insurers historically were not susceptible to being sued under tort principles; rather, they were sub- ject mainly to breach of contract lawsuits when they failed to reimburse medical claims for services cov- ered under beneficiaries’ health insurance policies. This protection from tort liability stemmed from two related facts: first, normative insurer practice was to leave medical judgments and treatment decisions in the hands of doctors, meaning it was rare for an insurer-related action to lead to the type of injury cov- ered by tort law; second, to the extent that an insurer did deny a beneficiary’s claim for insurance coverage, it did so retrospectively—in other words, after the beneficiary received needed diagnostic tests, treat- ments, medications, and so on. This effectively meant that when beneficiaries sued their health insurer, they did so not because they had been physically or emo- tionally injured by the insurer’s decision to deny an insurance claim, but because there was a dispute as to whether the insurer was going to pay for the already- received medical care.e Thus, although coverage deni- als had potentially enormous economic implications for affected beneficiaries, they did not tend to raise healthcare access or quality issues. In the years following the Darling decision, how- ever, courts began to apply tort liability principles to traditional indemnity insurers when their coverage decisions were at least partially responsible for an individual’s injury or death,f which had the effect of opening insurers to a fuller range of potential dam- ages (e.g., pain and suffering) than had been the case previously (when, under breach of contract principles, insurers were liable only for the actual cost of care they had initially declined to cover). This increased expo- sure to liability grew out of the fact that insurers were becoming more aggressive in their use of prospective coverage decisions, and courts were aware of how these types of coverage determinations could impact access to and the quality of health care. The advent of managed care as the primary mechanism for deliv- ering and financing health care only magnified this concern, given managed care’s use of techniques such as utilization review, and opened the door to one of the most contentious aspects of health services quality 280 Chapter 12 Healthcare Quality Policy and Law today: the extent to which patients can sue MCOs for negligent coverage or treatment decisions. Managed Care Liability Just as state courts were important in the extension of tort principles to health professionals, hospitals, and insurers, so too did they inaugurate application of these principles to MCOs. Modern MCOs are complex structures that heavily regulate the prac- tices of their network physicians. Indeed, perhaps the most defining aspect of managed care is its over- sight of physician medical judgment through various mechanisms— utilization review, practice guidelines, physician payment incentives, and so on. A function of managed care’s oversight of physi- cian practice is that there is no longer any doubt that application of the professional standard of care for the purpose of determining negligence extends beyond the literal quality of health care delivered and reaches the very coverage of that care. This is because managed care has so altered coverage decision-making prac- tices to focus on prospective decisions; where this type of coverage determination used to be the exception, it is now the rule. Instead of coverage denials leading to disputes over who was going to pay for an already- received medical service, prospective managed care coverage decisions more or less determine whether an individual receives treatment at all (Rosenbaum, Frankford, Moore, Borzi, 1999). Needless to say, the negative impact of prospec- tive coverage decisions on individuals’ ability to access necessary, high-quality care is no small policy matter. At the same time, in one critical legal sense it does not particularly matter whether a dispute between an MCO and one of its beneficiaries is framed as one of negligence in healthcare quality or healthcare cover- age; either way, the key issue is whether the medical judgment exercised by the MCO met the professional standard of care. In applying this standard, courts have had little trouble finding MCOs liable under state law both for the negligence of their network physicians and for their own direct negligence. (However, as dis- cussed in the next section, these court decisions pre- sume the nonapplicability of ERISA, a federal law that often precludes individuals from suing their managed care company under state tort laws.) There have been a number of cases in which courts have determined that MCOs can be held vicar- iously liable for the negligent actions of their network physicians where a patient can prove an agency rela- tionship under one of the theories (actual agency, apparent agency, or nondelegable duty) described previously. In these cases, courts perform an exhaus- tive examination of the facts to determine the specific relationship between the treating physician and the MCO or the ways in which the MCO portrays and obligates itself to its beneficiaries. For example, in the case of Boyd v. Albert Einstein Medical Center (1988), a Pennsylvania court closely analyzed the literature of a health maintenance organization (HMO) for evi- dence of a contractual relationship to its beneficiaries to determine whether the HMO could be held vicari- ously liable under a theory of apparent agency for the treatment of a woman who died after physicians neg- ligently treated her for a lump in her breast. Among other things, the court noted that the HMO’s contract with its beneficiaries agreed to “provide healthcare services and benefits to members in order to protect and promote their health” and that the patients’ con- tractual relationship was with the HMO, not with any individual physician in the HMO’s network. In the end, the court determined that because the patient looked to the HMO itself for care and the HMO held itself out as providing care through its network physi- cians, the HMO was vicariously liable for the patient’s negligent treatment. Similarly, courts have applied the doctrine of cor- porate liability to MCOs. Courts have given various reasons for subjecting MCOs to this type of liability: at least in their role as arrangers or providers of health care, MCOs are much like hospitals; MCOs have the resources to monitor and improve the quality of healthcare delivery; and MCOs maintain tremendous authority over the makeup of their physician networks. The case of Jones v. Chicago HMO Ltd. of Illinois (2000) is a good example of the application of corporate lia- bility principles to managed care. In Jones, the plain- tiff called her MCO-appointed physician (Dr. Jordan) after her 3-month-old daughter (Shawndale) fell ill with constipation, fever, and other problems. Both an assistant to Dr. Jordan and, eventually, Dr. Jordan him- self explained that Shawndale should not be brought to the physician’s office but should instead be treated at home with castor oil. A day later, Shawndale was still sick and her mother took her to a hospital emergency department, where she was diagnosed with bacterial meningitis secondary to an ear infection. Shawndale was permanently disabled as a result of the menin- gitis. It emerged through pretrial testimony that the defendant MCO had assigned 4,500 to 6,000 patients to Dr. Jordan, far more than its own medical director deemed acceptable under the professional standard of care. The Illinois Supreme Court agreed, ruling that MCOs breach a legal duty as a corporate entity by assigning an excessive number of patients to any Federal Preemption of State Liability Laws Under ERISA 281 single network physician, because doing so can affect the quality of care provided to beneficiaries. This section reviewed generally the application of the professional standard of care to hospitals, insurers, and MCOs and described certain state- level theories of liability that are implicated when patients claim that the care they received fell short of this standard. However, as alluded to earlier, ERISA often preempts (i.e., supersedes) these kinds of state law liability claims against insurers and MCOs. This chapter now turns to a discussion of ERISA and its preemptive force. ▸ Federal Preemption of State Liability Laws Under ERISA Generally speaking, ERISA prohibits individuals from recovering damages for death and injuries caused by substandard medical professional conduct to the extent that the individual receives her health cov- erage through a private employer–sponsored benefit plan. (Among others, individuals who work for fed- eral, state, and local public employers are not covered by ERISA’s rules.) Because approximately 150 million workers and their families in the United States receive this type of health coverage, and because managed care represents the dominant structure of healthcare delivery, the issue of whether individuals with pri- vate employer–sponsored managed care coverage can recover damages for substandard medical professional conduct is paramount. Overview of ERISA One of the most complex areas of federal civil law, ERISAg was established in 1974 mainly to protect the employee pension system from employer fraud. How- ever, the law was drafted in such a way as to extend to all benefits offered by ERISA-covered employers, including health benefits. Because ERISA does not distinguish among employers based on size, essen- tially all employees in this country who receive health and other benefits through a private employer can be said to work for an “ERISA-covered” employer. ERISA employs two main devices to pro- tect employee pensions and other benefits. First, it imposes “fiduciary” responsibilities on those indi- viduals or entities that administer various types of employer-sponsored benefit plans (in the case of health benefits, these are often conventional insurers or MCOs, or the employers themselves). A person or entity with fiduciary responsibilities is analogous to a trustee, who is expected to act primarily for another’s benefit in carrying out his or her duties. Put differently, a fiduciary is one who manages money or property (like a pension fund or healthcare benefit) for another person and who is expected to act in good faith in that management. One critical fiduciary responsibility is to act with an eye toward the best interests of the person who has placed his or her trust in the fiduciary, rather than seeking personal enrichment through trustee activities. The second tool used by Congress in ERISA to regulate employee benefits is a set of uniform, nation- wide rules for the administration of employee benefits. However, although ERISA closely regulates the struc- ture and operation of pension plans, the law includes few substantive standards governing the design or administration of health (or other) employee bene- fits. This stems mainly from the fact that Congress’s main purpose in passing ERISA was to confront the  employer fraud and underfunding evident in the pension system in the early 1970s (after all, the title of the law hints that its purpose is to specifically pro- tect employee retirement income), not to regulate all employee benefit plans. However, the language used by ERISA’s drafters is both broad and ambiguous, and courts have interpreted the statute as applying well beyond the field of pensions (Rosenbaum et al., 2012). As a result of the dearth of substantive standards per- taining to employee health benefits, employers enjoy discretion under ERISA to decide whether to offer health benefits at all and, if they do, to offer a benefit package of their choosing. This discretion allows the employer to design the benefit plan itself or buy an “off the shelf ” insurance policy from a health insurer. If the employer chooses the latter, it also must decide whether to use a conventional insurer or a managed care company; if using a managed care company, it must decide whether to include physician incentive schemes in its benefit plan. ERISA’s lack of substantive health benefit regula- tions is compounded by the fact that the law contains few avenues for employees to remedy negligent benefit plan administration, including substandard conduct in the administration of health plan benefits. As men- tioned, ERISA precludes the recovery of monetary BOX 12-4 Discussion Questions What do you think about the role and success of tort law in promoting high-quality health care? Does it help to deter errors? If not, why? 282 Chapter 12 Healthcare Quality Policy and Law damages under state law theories of liability when employer-sponsored benefits are improperly denied; Congress was of the opinion in fashioning ERISA that payment of these types of damages would drain employer benefit plans of needed resources. How- ever, one might assume that when Congress broadly displaces state laws aimed at remedying negligence (as it did with ERISA), it would put in place mean- ingful enforcement provisions in the federal law. Yet the remedies available under ERISA are dramatically more limited than those available under state law. Under ERISA (1974), employees and their beneficia- ries are effectively limited to suing to prospectively force a plan administrator to grant a covered benefit, to recover payment retrospectively when a covered benefit was improperly denied, and to enforce a plan administrator’s fiduciary responsibilities. The upshot of these rights is that they allow an employee injured by an action or decision of his benefit plan to recover nothing beyond the actual cost of the benefit due in any event. Furthermore, in Pilot Life Insur. Co. v. Dedeaux (1987), the U.S. Supreme Court held that ERISA’s enforcement provision constituted not merely a rem- edy for negligent administration of an employee ben- efit plan, but rather the exclusive remedy. This means that all other state remedies generally available to indi- viduals to remedy corporate negligence are preempted (and thus not available) to employees whose health benefits are provided through an ERISA-covered plan. ERISA Preemption To ensure the uniform regulation and administra- tion of employee pension plans (and, as it turned out, other employee benefits) across the nation, Congress included in ERISA one of the most sweeping preemp- tion provisions ever enacted under federal law. The uniqueness of the scope of ERISA’s preemptive force is underscored by the fact that the states in America’s governmental structure maintain broad authority to regulate many fields (including the fields of health care and health insurance) as they see fit, and federal law generally supplements, but does not replace, state law. Furthermore, ERISA actually implicates two dif- ferent types of preemption. The first, known as “con- flict preemption,” occurs when specific provisions of state law clearly conflict with federal law, in which case the state law is superseded. The second form of preemption triggered by ERISA is “field preemption,” which the courts employ when they interpret federal law to occupy an entire field of law (e.g., employee benefit law), irrespective of whether there are any conflicting state law provisions (this is the type of preemption at work in ERISA’s remedial provisions, described earlier). The practical import of this second type of preemption is that a wide range of state laws are preempted by ERISA even though they do not directly conflict with it. All in all, it is little wonder that ERISA is considered to function as a “regulatory vacuum.” The length of ERISA’s conflict preemption provi- sion belies its preemptive scope, and its wording belies the enormous amount of litigation it has engendered. The substantive entirety of the preemption clause reads: “[ERISA] shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” Courts have grappled with the meaning of this language for decades. For exam- ple, the term relate to has been interpreted by the U.S. Supreme Court to include any state law that has “a connection with or reference to” an employee benefit plan (Shaw v. Delta Air Lines, Inc., 1983), but not those that have only a “remote and tenuous” relationship to benefit plans (New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insur. Co., 1995). Thus, the former types of state laws are preempted, while the latter are not. The Supreme Court has also weighed in on the meaning of “employee benefit plan” (Fort Hali- fax Packing Co. v. Coyne, 1987). In addition to the preemption clause itself, how- ever, there are two additional pieces to the ERISA conflict preemption puzzle that only add to the law’s complexity. The second piece is referred to as the “insurance savings” clause, which says that the pre- emption clause shall not “be construed to exempt or relieve any person from any law of any State which regulates insurance.” This essentially means that even where a state law relates to an employee benefit plan, it is saved from preemption if it regulates insurance (Metropolitan Life Insur. Co. v. Massachusetts, 1985). The Supreme Court has interpreted this provision to mean a state law is saved from preemption if it is spe- cifically directed toward entities engaged in insurance and substantially affects the risk-pooling arrangement between an insurer and its beneficiaries (Kentucky Ass’n of Health Plans, Inc. v. Miller, 2003). The prac- tical effect of the savings clause, then, is to narrow the reach of the preemption clause, because state laws that meet the “regulates insurance” test fall outside the scope of ERISA preemption. The final element of ERISA conflict preemption is the “deemer” clause, which addresses the distinction between fully insured and self-insured employee health benefit plans. A fully insured health plan (sometimes referred to simply as an insured plan) is one in which an employer purchases health insurance coverage (i.e., pays premiums) to a conventional insurance company Federal Preemption of State Liability Laws Under ERISA 283 or MCO, and in return the insurance company or MCO accepts the financial risk of paying claims for covered benefits. A self-insured health plan (also called a self-funded plan) exists when an employer retains some or all of the financial risk for its employ- ees’ claims for covered benefits. Nearly one-half of all U.S. employers self-insure their health benefit plans. ERISA’s deemer clause reads in pertinent part: “An employee benefit plan shall [not] be deemed to be an insurance company or other insurer, . . . or to be engaged in the business of insurance . . . for purposes of any law of any State purporting to regulate insurance companies.” The purpose of this clause is to prohibit states from deeming employee benefit plans as the functional equivalent of health insurers, and its practi- cal effect is critical for the tens of millions of employees who receive their health benefits under self-insured plans: the deemer clause prevents state laws that meet the “regulates insurance” test from applying to self- insured employee health benefit plans (Metropolitan Life Insur. Co. v. Massachusetts, 1985). In other words, even state laws “saved” from preemption do not apply to self-insured plans because under ERISA these types of plans are “deemed” not to be insurance companies. The ultimate result of the deemer clause’s application is to exempt completely self-funded employee benefit plans from state insurance law. This exemption allows sponsors of self-funded plans enormous discretion to design the plans as they choose. The Intersection of ERISA Preemption and Managed Care Professional Medical Liability The final matter to discuss in the context of ERISA preemption has been one of the most unstable over the past several years: the extent to which ERISA preempts state tort law claims by individuals against managed care companies for negligent coverage deci- sions and substandard provision of care. This issue has played out over a series of federal court decisions attempting to define with some precision ERISA’s application in the context of employer-sponsored managed care plans. In the 1992 case of Corcoran v. United HealthCare, Inc., the Fifth Circuit Court of Appeals ruled that Florence Corcoran’s state law claim against United HealthCare for the wrongful death of her fetus had to be dismissed under ERISA, regardless of any medical negligence on the part of the MCO. The court held that even if the company improperly denied cover- age of preterm labor management services for Mrs. Corcoran, her state lawsuit seeking damages for a negligent coverage decision was preempted because the company’s determination was, in the language of ERISA, sufficiently “related to” Mrs. Corcoran’s employee benefit plan. Three years later, the Third Circuit Court of Appeals ruled in Dukes v. U.S. Healthcare, Inc. (1995) that although individuals in ERISA-covered health benefit plans may not be able to sue under state law for an MCO’s negligent coverage denial (i.e., for a compa- ny’s decision as to the quantity of care covered under the plan), they can seek state law damages where a managed care company’s negligence is connected to the quality of care actually provided. The Third Cir- cuit essentially ruled that Congress did not intend in passing ERISA to supersede state laws aimed at the regulation of healthcare quality, historically a subject area under the states’ purview. Instead, according to the court, federal policymakers enacted ERISA to alleviate national companies’ concerns over abiding by many different state pension and employee benefit laws and to instead subject them to a uniform set of funding and administration rules. Whatever Congress meant by a “state law that relates to an employee ben- efit plan,” the Dukes court did not interpret ERISA’s preemption provision to sweep in laws pertaining to the quality of medical care provided to beneficiaries of employer-sponsored health benefit plans. In the 5 years after Dukes was decided, federal court decisions applying ERISA to managed care plans more or less subscribed to this quantity/qual- ity distinction. However, the Supreme Court stepped into the fray in 2000 in the case of Pegram v. Her- drich, seemingly altering the approach lower courts had been taking when analyzing ERISA preemption of state law negligence claims against MCOs. The main issue in Pegram was whether physician incentive arrangements were violative of the fiduciary responsi- bility rules contained in ERISA (incidentally, the court ruled they were not). However, the court included several paragraphs in its decision about the role of the treating physician in the case, who also happened to be one of the owners of the managed care company being sued for negligently failing to order a diagnos- tic test. In so doing, the court described two different kinds of decisions made by MCOs: What we will call pure “eligibility decisions” turn on the plan’s coverage of a particular con- dition or medical procedure for its treatment. “Treatment decisions,” by contrast, are choices about how to go about diagnosing and treating a patient’s condition: given a patient’s constel- lation of symptoms, what is the appropriate medical response? These decisions are often 284 Chapter 12 Healthcare Quality Policy and Law practically inextricable from one another. . . . This is so not merely because . . . treatment and eligibility decisions are made by the same per- son, the treating physician. It is so because a great many and possibly most coverage ques- tions are not simple yes-or-no questions, like whether appendicitis is a covered condition (when there is no dispute that a patient has appendicitis), or whether acupuncture is a cov- ered procedure for pain relief (when the claim of pain is unchallenged). The more common coverage question is a when-and-how ques- tion. Although coverage for many conditions will be clear and various treatment options will be indisputably compensable, physicians still must decide what to do in particular cases. . . . In practical terms, these eligibility decisions cannot be untangled from physicians’ judg- ments about reasonable medical treatment. (Pegram v. Herdrich, 2000) Importantly, the court went on to suggest that these intertwined decisions fall beyond ERISA’s reach and that state laws implicated when these decisions are negligently made are not preempted, though the court provided no clear guidance as to when managed care decisions tipped sufficiently toward coverage or care to pull them out of the realm of being “mixed.” Following the decision, many federal courts faced with ERISA’s application to claims by managed care beneficiaries adopted Pegram’s approach over the one developed in Dukes. Courts favored Pegram’s approach because it opened the door to state law remedies for individuals (like Florence Corcoran) who were injured as a result of managed care negligence but who otherwise had no way to recover for their loss. In the 2004 case of Aetna Health, Inc. v. Davila, however, the Supreme Court appeared to close the door it seemed to open in Pegram, suggesting that lawsuits premised on the intertwined or “mixed” decisions made daily by MCOs escape ERISA’s pre- emptive force only when the decisions include actual treatment by an MCO medical employee. The Davila decision actually represented a pair of cases (the other one originally called Cigna v. Calad) consolidated by the court due to the similarity of the respective plain- tiffs’ claims. Both Juan Davila and Ruby Calad were members of ERISA-covered employee health benefit plans. Davila was injured when Aetna chose to sub- stitute a less expensive medication for the one he nor- mally took to control his arthritis pain; Calad suffered complications after being prematurely discharged from the hospital subsequent to Cigna’s decision to cover just 1 day of hospitalization postsurgery. Rather than filing appeals directly with their insurance com- panies, Davila and Calad sued under a state law called the Texas Health Care Liability Act. They argued that their respective insurer’s decision breached a duty under the Texas law to exercise reasonable care in healthcare decision making and that the breach caused their injuries. In rejecting both plaintiffs’ claims, the Supreme Court ruled that ERISA preempts lawsuits for dam- ages against ERISA-covered plans for negligent healthcare coverage decisions, even when the cov- erage decision was predicated on flawed medical judgment. Thus, Davila makes clear that when an individual covered by an ERISA plan complains only of negligent coverage decision making (including the wrongful denial of a benefit) on the part of an MCO, ERISA shields the MCO from liability beyond the actual value of the benefit itself.h However, the Supreme Court in Davila also explained that not- withstanding ERISA, MCOs remain liable under state tort laws for negligence when acting in their capacity as providers or arrangers of health care. Although this ruling sustains the general distinction made by the federal court of appeals in the Dukes decision, its effect on the legal remedies available to injured patients is likely to be limited, given that policymakers and courts still view coverage decision making, rather than the provision of health care, as the primary aim of MCOs. ▸ Measuring and Incentivizing Healthcare Qualityi We turn now to the final topics in this chapter: what exactly is meant by healthcare “quality,” how is it measured, and how should policy be designed in order to encourage and reward it? Given the explosive growth in healthcare costs in the United States over the past few decades, combined with BOX 12-5 Discussion Questions The critical intersection between health care and health insurance as exemplified by the Davila decision leads to an important question: is it reasonable to treat a healthcare coverage decision as having nothing to do with health care itself? Put another way, given the expense of health care today, do you believe that individuals and families can afford necessary health care if there is no third party responsible for covering at least some of the cost? 285Measuring and Incentivizing Healthcare Quality evidence from leading researchers and expertsj that collectively points to the disconnect between high spending and healthcare quality and to serious deficiencies in healthcare quality overall, these are important questions. To analyze these questions, focusing on the Medicare program is particularly instructive. As the single largest payer (in terms of dollars spent) in the  U.S. health system, Medicare is a major national driver of policy in other markets (both public and pri- vate). Therefore, how the Medicare program addresses issues pertaining to quality is not only important to Medicare beneficiaries and providers but also to other purchasers and stakeholders whose policies and pro- cedures are often driven, or at least influenced, by Medicare policy. The remainder of this section will focus on how the Medicare program, as authorized by federal legislation, is working to improve the qual- ity and lower the cost of healthcare delivery. It also addresses similar efforts of other payers and stake- holders, including the role of health information tech- nology in facilitating quality improvement. Traditionally, the Medicare program has paid for healthcare services on a fee-for-service (FFS) basis, with the exception of inpatient hospital services, which are paid based on diagnosis-related groups under the prospective payment system (PPS), and the Medi- care Advantage and Prescription Drug plans, which are  paid on a capitated basis. All payment systems (public and private) tend to incentivize something; in the case of FFS, it is indiscriminate increases in the volume of treatments and services, while in case- based or capitation systems, it is indiscriminate reduc- tions in volume. Whatever the payment arrangement, the challenge is to promote both quality and value while also apportioning financial risk appropriately. However, because Medicare has historically lacked a programwide and deliberate approach to promoting quality and value, and because it has relied principally on an FFS approach to payment for physician and other services, the program has experienced incredi- ble growth in the volume of services for which it pays. Over the years, Congress has passed a series of laws designed to move both the Medicare and Medicaid programs from passive purchasers of volume-based health care to active purchasers of high-quality, high- value health care based in large part on successful demonstration projects. For example, as authorized under the Medicare Prescription Drug and Mod- ernization Act of 2003 (MMA) and extended by the Deficit Reduction Act of 2005 (DRA), hospitals that reported on specific quality measures receive the full annual payment update, while failure to partic- ipate resulted in a decrease in the annual payment update. Similarly, as authorized by the Tax Relief and Health Care Act of 2006 (TRHCA) and extended by the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), and made permanent by the Medi- care Improvements for Patients and Providers Act of 2008 (MIPPA), the Physician Quality Reporting System (PQRS) offered bonus payments to Medicare physicians who reported on specific quality measures. The Health Information Technology for Economic and Clinical Health Act (HITECH), enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA), provided significant financial incen- tives to Medicare and Medicaid providers for “mean- ingfully using” electronic health records to improve the quality of care delivery. Incentives to improve the quality of Medicare- covered care were also a focus of the ACA. The ACA set forth a broad vision for quality measurement, report- ing, and financial incentives in Medicare, including quality measure development, quality measurement (including payment incentives), public reporting, and value-based purchasing. The ACA also called for other payers and stakeholders to align their efforts with fed- eral efforts. In short, the ACA greatly expanded the existing efforts noted previously while introducing new tools for the Medicare program to identify, mea- sure, and pay for high-quality care, while encourag- ing other payers and stakeholders to do the same. The ACA also moved the country toward implementing a “national quality strategy” that would work to align quality improvement and value-based purchasing initiatives among and across payers, both public and private. Since passage of the ACA, several other pieces of healthcare-related legislation have extended and refined its quality improvement initiatives. The American Taxpayer Relief Act of 2012 (ATRA) made several changes to quality and utilization-based pay- ment adjustments created or modified by the ACA, revised reporting requirements under the PQRS, and established a commission to develop a plan for delivering high-quality long-term care services. The Improving Medicare Post-Acute Care Transforma- tion Act of 2014 (the IMPACT Act) required that long-term care hospitals, skilled nursing facilities, home health agencies, and inpatient rehabilitation facilities report specific, standardized data on quality and resource-use measures. Most notably, the Medi- care Access and CHIP Reauthorization Act of 2015 (MACRA) established a new payment methodology to reward physicians either for quality improvement or the adoption of an alternative value-based pay- ment model, provided additional funding for quality measure development, and expanded the availability 286 Chapter 12 Healthcare Quality Policy and Law of Medicare data to support public and private quality improvement efforts. Quality Measure Development Residing at the core of public and private efforts to improve the quality of care in the United States are measures used to evaluate the quality of providers’ clinical care. But what constitutes quality clinical care? The answer to this question varies by stakeholder. A patient is likely focused on a good outcome and good relationship with his or her provider. A health plan is likely focused on whether the provider achieved a good outcome at the lowest cost (based on time and resources used). A  provider is likely focused on whether the desired outcome was achieved and pay- ment was made. Given the diversity of stakeholders involved in healthcare delivery, there is great variation in the definition of quality, even between and among different types of providers (e.g., primary care physi- cians and specialists). To address the varying perspectives on quality, the U.S. Department of Health and Human Services (HHS) uses a multistakeholder approach to design and approve quality measures that are specific to provider types (e.g., hospital-specific measures). This approach, mandated by the ACA and MACRA, requires that HHS select an organization (currently the National Quality Forum, or NQF) to convene multistakeholder groups to provide consensus-based input on quality measures. HHS considers the measures endorsed by the NQF when selecting quality and efficiency mea- sures for use in public reporting, performance-based payment, and other programs applicable to Medi- care and Medicaid providers. Most public and private quality improvement efforts also use the measures that are approved by the NQF. Specialty groups rep- resenting specific types of providers and other stake- holders develop and endorse quality and performance measures applicable to their members prior to NQF review; these include the Ambulatory Quality Alliance (AQA), Pharmacy Quality Alliance (PQA), National Committee for Quality Assurance (NCQA; health plan measures), and Hospital Quality Alliance (HQA). The ACA also provided some clarification for defining quality measures. It defines a “quality mea- sure” as a “standard for measuring the performance and improvement of population health or of health plans, providers of services, and other clinicians in the delivery of healthcare services.” The HHS Secretary, acting through its Centers for Medicare and Medicaid Services (CMS), is required to identify gaps where no quality measures exist and any existing quality mea- sures that need to be improved, updated, or expanded for use in federal healthcare programs (including Medicare, Medicaid, and CHIP). Identified gaps are reported on a publicly available website, and the HHS Secretary provides grants to organizations to develop, update, or expand quality measures. Priorities for new measures include those that assess outcomes, functional status, care coordination across episodes, shared decision making, use of health information technology, efficiency, safety, timeliness, equity, and patient experience. The Secretary also develops (and updates) outcome measures for acute and chronic dis- eases and primary and preventive care for hospitals and physicians. Quality Measurement The ACA reauthorized and developed quality mea- surement programs for multiple types of providers participating in the Medicare program. For example, the ACA reauthorized incentive payments under the PQRS through 2014 and instituted a penalty for phy- sicians who do not report PQRS measures beginning in 2015. The PQRS (along with other performance- related programs) was replaced under MACRA’s Quality Payment Program (QPP) Merit-Based Incen- tive Payment System (MIPS) track as of January 2017. Physicians participating in MIPS are evaluated on their performance across four categories, includ- ing quality (the category that replaced the PRQS), and receive a reduction or a bonus beginning in the 2019 payment year. MACRA provides funding for development and selection of MIPS quality measures and requires that selected measures address several quality domains (clinical care, safety, care coordina- tion, patient and caregiver experience, and popula- tion health and prevention), with priority given to outcome, patient experience, care coordination, and resource utilization measures, emphasizing outcome measures where feasible. The ACA required the HHS Secretary to provide feedback to eligible professionals on their performance on reported quality measures under PQRS, and MACRA similarly requires the Sec- retary to provide feedback on performance related to selected quality measures and resource utilization. Public Reporting In addition to informing providers about the quality of care they deliver, quality information enables con- sumers to make more informed provider choices. The CMS currently posts a significant amount of quality and cost of care information on their suite of Com- pare websites (e.g., Hospital Comparek). The ACA also expanded required public reporting to Medicare 287Measuring and Incentivizing Healthcare Quality physicians and several other provider types, includ- ing long-term care hospitals, inpatient rehabilitation hospitals, psychiatric hospitals, hospice programs, and non-PPS cancer hospitals. Information reported must include the quality measures as well as assessments of patient health outcomes, risk-adjusted resource use, efficiency, patient experience, and other relevant infor- mation deemed appropriate by the HHS Secretary. Beginning in 2013, CMS also made several changes to their data release policy, publishing data sets contain- ing physician-identifiable information on utilization and payment in the Medicare Part B and Part D pro- grams. As of early 2018, CMS further enhanced trans- parency by providing Medicare Part C program claims data to researchers upon request and announced plans to release Medicaid and CHIP encounter data. Value-Based Purchasing The voluntary quality improvement programs described previously focused on developing provider- specific quality measures and incentivizing provid- ers to report specific quality information. Typically, the programs began with providers collecting and reporting information to CMS and then transitioned to linking incentive payments to the reporting. While these “pay for reporting” programs have been success- ful in encouraging providers to assess the quality of care they are delivering through the reporting mecha- nisms, they do not take into account individual patient outcomes or population health outcomes (i.e., they do not “pay for performance”). However, CMS’s End- Stage Renal Disease Quality Incentive Program (QIP) began reducing payments to facilities that do not meet or exceed certain performance benchmarks in 2012. In addition, as authorized by the DRA, CMS has implemented a similar type of payment program that reduces payments to hospitals that have the highest rates of certain hospital-acquired conditions (HACs). (HACs stand in contrast to conditions that were pres- ent on admission.) It is worth noting that these pro- grams are not unique to the Medicare program; many state Medicaid programs and private payers have also developed and implemented similar programs.l Until passage of the ACA, CMS was not able to move beyond “pay for reporting” programs or the HAC Reduction Program because it did not have the necessary legal authority to vary payments based on actual provider performance. Specifically, the ACA required the implementation of Medicare value-based purchasing programs for most hospitals subject to the inpatient PPS. Value-based purchasing programs for home health agencies and skilled nursing facilities were respectively implemented in 2016 and 2018, and, as required by the ACA, a program for ambulatory surgical centers is in development. These value-based programs require the Medicare program to financially reward and penalize providers based on their perfor- mance on specified quality measures and other indi- cators, such as rates of readmission and HACs. For example, through the hospital value-based purchasing program, eligible hospitals began receiving incentive payments for discharges after October 1, 2012, that met certain performance standards. Quality domains on which hospital performance is evaluated include patient- and caregiver-centered experience (based on the hospital’s HCAHPS score, which stands for Hos- pital Consumer Assessment of Healthcare Providers and Systems), clinical process of care, patient safety (measured by rates of certain healthcare-associated infections), and efficiency and cost reduction (based on spending per Medicare beneficiary). Information regarding the performance of individual hospitals under the program is available online through the Hospital Compare website. The ACA authorized a physician and physician practice group value-based purchasing program that provided differential payments to physicians and phy- sician practice groups under the fee schedule based on the quality of care furnished compared to cost. MAC- RA’s Quality Payment Program replaced the ACA’s value-based payment modifier for physicians partic- ipating in the MIPS track with the “cost” performance category beginning in 2018. The MIPS cost category evaluates physician performance on cost of care and resource utilization measures relevant to specific epi- sodes of care. In early 2015, HHS announced its goals of mak- ing 30% of FFS Medicare payments to alternative payment models, such as accountable care organi- zations (ACOs) or bundled payment arrangements, and of tying 85% of FFS payments to quality or value through programs such as hospital value-based pur- chasing and hospital readmissions reduction by the end of 2016. It achieved both goals ahead of schedule in early 2016 and announced its intention to make 50% of payments to alternative payment models and to tie 90% of payments to quality or value by the end of 2018. These new goals were halted in early 2018 to allow the new administration time to review the impact of these new payment models and programs, though HHS remains publicly committed toward value-based payment reform. Similarly, MACRA’s Quality Payment Program includes the Alternative Payment Model participation track, which offers an incentive payment to physicians participating in certain alternative payment models who meet volume-based thresholds. 288 Chapter 12 Healthcare Quality Policy and Law National Quality Strategy To better align quality improvement initiatives across payers, the ACA also required the development of a national quality strategy to improve the delivery of healthcare services, patient health outcomes, and population health. HHS released its initial report to Congress, titled “National Strategy for Quality Improvement in Health Care,” in March of 2011, out- lining aims and priorities for quality improvement. The Strategy was updated in 2014 with levers representing core business functions, resources, and/or actions that stakeholders could use to align to the Strategy. What follows is a summary of the updated Strategy (Agency for Healthcare Research and Quality, 2016): ■ Adopting national aims: The National Quality Strategy will pursue three broad aims that will be used to guide and assess local, state, and national efforts to improve healthcare quality. These aims include the following: • Better care: Represents efforts to improve the overall quality of health care by making care more patient centered, reliable, accessible, and safe. • Healthy People/Healthy Communities: Encompasses efforts to improve the health of the population by supporting interventions that address behavioral, social, and environ- mental determinants of health. • Affordable care: Seeks to reduce the cost of quality health care for individuals, families, employers, and government. ■ Setting priorities: To advance these three aims, the strategy focuses on six priorities: • Making care safer by reducing harm caused in the delivery of care. • Ensuring that each person and family is engaged as partners in his or her care. • Promoting effective communication and coordination of care. • Promoting the most effective prevention and treatment practices for the leading causes of mortality, starting with cardiovascular disease. • Working with communities to promote wide use of best practices to enable healthy living. • Making quality care more affordable for indi- viduals, families, employers, and governments by developing and spreading new healthcare delivery models. ■ Using levers to achieve improved health and health care: In addition to adopting one or more of these aims and priorities, stakeholders can align to the National Quality Strategy using any of the following nine levers: • Payment: Payment arrangements should reward and incentivize high-quality, patient-centered care. • Public reporting: Public reporting initiatives compare costs, treatment outcomes, and patient experience for consumers. • Technical assistance: These efforts foster learning environments that offer training, resources, tools, and guidance to help orga- nizations achieve quality improvement goals. • Certification, accreditation, and regulation: These activities ensure that providers adopt or adhere to approaches to meet safety and qual- ity standards. • Consumer incentives and benefit designs: These are designed to help consumers adopt healthy behaviors and make informed decisions. • Measurement and feedback: These activities provide performance feedback to plans and providers to improve care. • Health information technology: These tools improve communication, transparency, and efficiency for better coordinated health and health care. • Workforce development: These activities involve investing in people to prepare the next generation of healthcare professionals and support lifelong learning for providers. • Innovation and diffusion: This lever aims to foster innovation in health care, in quality improvement, and within and across organi- zations and communities. Annual reports have provided an update on quality improvement in the national tracking mea- sures and highlighted public and private accomplish- ments in the six priority areas at the federal, state, and local levels. For the Strategy’s fifth anniversary update in 2016, the annual report was combined with the annual National Healthcare Quality and Dispar- ities Report to describe the nation’s progress toward improving healthcare access, quality, and disparities. The report found that while quality had continued to improve since adoption of the National Quality Strategy, wide variation existed across its six prior- ities (the annual reports are available on the AHRQ website). In addition to the National Quality Strategy, multiple HHS agencies, as well as several state health departments, have their own quality strategies, many of which use the National Quality Strategy as their foundation. 289Measuring and Incentivizing Healthcare Quality Private Payer Efforts While the federal government drives much of the quality improvement activity in the United States, private payers also make significant contributions to quality measurement and improvement and to related payment initiatives. For example, payers have created set payments for care during specific periods (i.e., a modified global payment arrangement) that connect payments to quality goals and provide bonuses to par- ticipants that meet or exceed set benchmarks. Oth- ers use NQF, NCQA, and similar measures to assess providers’ performance and resource consumption; providers achieving set thresholds in both metrics are designated as high-quality performers online, for consideration by beneficiaries and other stakehold- ers. These are not unique examples; most payers post quality information about their network providers to enable their enrollees to make more informed deci- sions. Other efforts focus on incentives to ensure patient satisfaction, such as offering refunds to any patient who reports a negative healthcare encoun- ter, or aim to achieve compliance with best practice guidelines, such as agreeing to bear the costs of any care associated with complications arising after a pro- cedure. Organizations develop, implement, refine, and expand on these innovative approaches, which can encourage others to adapt and adopt successful mod- els and methods of quality improvement. It is important for private payers to be involved in quality improvement initiatives. Absent common standards across payers for provider quality and value, systemwide delivery and payment reform will be ham- pered. Because providers typically contract with fed- eral payers (e.g., Medicare) as well as multiple private payers, they will likely be subject to different defini- tions of quality and different requirements for demon- strating value. This makes it a challenge for providers to align their quality improvement efforts. Multipayer efforts enable more efficient quality measurement and validate the importance of systemwide quality improvement. Underscoring the importance of multi- stakeholder involvement, HHS established the Health Care Payment Learning and Action Network in 2015. This network virtually convenes thousands of stake- holders (including payers, providers, employers, patients, states, and consumer groups) to set goals related to payment reform, share best practices, and decrease variation in payment methodologies. Inter- ested individuals and organizations can register to participate in the network via the CMS Innovation Center’s website. In addition, across the country, multi-stakeholder collaboratives and community groups are partnering with employers, payers, providers, and consumers to further public/private efforts to improve quality. For example, Aligning Forces for Quality, a signature Rob- ert Wood Johnson Foundation initiative from 2007 to 2015, established alliances in 16 communities across the United States. These multi-stakeholder alliances collected and reported provider performance data, tested new care delivery and payment reform mod- els, and disseminated best practices. Providers used the information provided by the alliances to improve quality of care for the nearly 40 million residents of those 16 communities, demonstrating the value of multi-stakeholder partnerships in healthcare delivery transformation. Role of Health Information Technology Health information technology, or health IT, provides critical support for quality improvement and payment reform. Health IT includes electronic features that facilitate care delivery, such as decision support tools, electronic health records, and electronic prescribing functions. Health IT enables instant sharing of health information throughout a facility, among providers in different locations, and with the patient. Health IT can prevent clinical errors that may have dire con- sequences, such as by alerting providers of potential adverse drug interactions or treatment contraindica- tions. These features facilitate quality improvement across clinical settings. Beyond clinical functions, health IT can also facilitate quality improvement efforts by collecting and analyzing data related to out- comes and process measures for use by a provider in required reporting or conducting quality improve- ment initiatives. However, connecting health IT sys- tems and allowing providers to communicate across different health IT systems remains a challenge. HHS’s Office of the National Coordinator for Health Infor- mation Technology is working with other stakeholders to foster a health IT environment where patient infor- mation can be shared electronically across the entire care spectrum, regardless of the technology used. The value of health IT is demonstrated through federal efforts to encourage its adoption. For example, the meaningful use program, created in 2009 by the HITECH Act, established incentives for providers and hospitals to adopt electronic health records. The Cen- ter for Medicare and Medicaid Innovation, established by the ACA, tests new payment and delivery models and must consider whether a model uses technology in making its selections. MACRA’s Quality Payment 290 Chapter 12 Healthcare Quality Policy and Law Program phased out the meaningful use program and replaced it with the Promoting Interoperability (for- merly Advancing Care Information) performance cat- egory for MIPS-participating physicians beginning in 2017. This dimension’s name change was designed to emphasize the importance of improving interoperabil- ity, flexibility, and patient access to information. This new category requires use of certified electronic health record technology (CEHRT); incentive payments for this category are calculated based on performance in measures related to use of CEHRT to engage patients and exchange health information. ▸ Conclusion This chapter introduced the concept of healthcare quality generally, briefly described the concepts of licensure and accreditation, discussed the specific quality concern of medical errors, detailed the topic of legal liability for substandard healthcare provi- sion and decision making, and covered measure- ment of healthcare quality. While the majority of the chapter was dedicated to legal accountability for negligence in healthcare delivery, this is of course just one method used to promote high- quality care. Policymakers, health services researchers, the health professions themselves, and others have proposed or implemented several additional strategies (e.g., related to the healthcare system’s organizational structure, or to evidence-based medicine, or to information technology) aimed at remedying exist- ing quality concerns and improving the quality of care going forward, some of which are reflected in federal legislation. Many of these strategies have yet to take hold on a national scale, however, and find- ing effective ways to mesh them with existing legal rules—and navigating the legal system’s responses to them—are issues with which the country will con- tinue to grapple. References Aetna Health, Inc. v. Davila, 542 U.S. 200 (2004). Agency for Healthcare Research and Quality. (2016). National Strategy for Quality Improvement in Health Care. Retrieved from https://www.ahrq.gov/workingforquality/about/agency -specific-quality-strategic-plans/nqs3.html Boyd v. Albert Einstein Med. Ctr., 547 A. 2d 1229 (Pa. Super., 1988). Canterbury v. Spence, 464 F.2d 772 (D.C. Cir. 1972). Committee on Quality of Health Care in America. (2001). Crossing the quality chasm: A new health system for the 21st century. Washington, DC: National Academy Press. Corcoran v. United Healthcare Inc., 965 F.2d 1321 (5th Cir. 1992). Darling v. Charleston Cmty. Mem. Hosp., 211 N.E.2d 253 (Ill. 1965). Dukes v. U.S. Healthcare, Inc., 57 F. 3d 350 (3d Cir. 1995). Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1132, 1144(a)-(b)(2)(A) & (B) (1974). Fisher, E. S., Wennberg, D. E., Stukel, T. A., Gottlieb, D. J., Lucas, F. L., & Oinder, E. L. (2003). The implications of regional variations in Medicare spending. Part 1: the content, quality, and accessibility of care. Annals of Internal Medicine, 138, 273–287. Fisher, E., Goodman, D., Skinner, J., & Bronner, K. (2009). Health care spending, quality and outcomes: More isn’t always better. Retrieved from http://www.dartmouthatlas.org/downloads /reports/Spending_Brief_022709 Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). Furrow, B. R., Greaney, T. L., Johnson, S. H., Jost, T. S., & Schwartz, R. L. (2001). Health law: Cases, materials and problems. St. Paul, MN: West Group. Gruenberg v. Aetna Insur. Co., 510 P. 2d 1032 (Cal. 1973). Hall v. Hilbun, 466 So.2d 856 (Miss. 1985). Helling v. Carey, 519 P.2d 981 (Wash. 1974). Hurley v. Eddingfield, 59 N.E. 1058 (Ind. 1901). Iglehart, J. K. (2013). Expanding the role of advanced nurse practitioners: Risks and rewards. New England Journal of Medicine, 368, 1935–1941. Integrated Healthcare Association. (n.d.). AMP commercial HMO. Retrieved from https://www.iha.org/our-work/accountability /value-based-p4p Jackson v. Power, 743 P. 2d 1376 (Alaska, 1987). Jones v. Chicago HMO Ltd. of Illinois, 730 N.E. 2d 1119 (2000). Kaufman, M. (2006, July 21). Medication errors harming millions, report says. Washington Post. Retrieved from http://www .washingtonpost.com/wp-dyn/content/article/2006/07/20 /AR2006072000754.html Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003). Kohn, L. T., Corrigan, J. M., & Donaldson, M. S. (Eds.). (2000). To err is human: Building a safer health system. Washington, DC: National Academy Press. Kuhmerker, K., & Hartman, T. (2007). Pay-for-performance in state Medicaid programs: A survey of state Medicaid directors and programs. Retrieved from https://www.commonwealthfund .org/publications/fund-reports/2007/apr/pay-performance -state-medicaid-programs-survey-state-medicaid Makary, M. A., & Daniel, M. (2016). Medical error—The third leading cause of death in the U.S. The BMJ. Retrieved from https://www.bmj.com/content/353/bmj.i2139 McGlynn, E. A., Asch, S. M., Adams, J., Keesey, J., Hicks, J., DeCristofaro, A., & Kerr, E. (2003). The quality of health care delivered to adults in the United States. New England Journal of Medicine, 348, 2635–2645. Mehlman v. Powell, 378 A. 2d 1121 (Md. 1977). Metropolitan Life Insur. Co. v. Massachusetts, 471 U.S. 724 (1985). New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insur. Co., 514 U.S. 645 (1995). Nordenberg, T. (2000). Make no mistake: Medical errors can be deadly serious. Retrieved from https://permanent.access.gpo .gov/lps1609/www.fda.gov/fdac/features/2000/500_err.html Patient Protection and Affordable Care Act (Pub. L. 111-148) § 3013 (2010), adding Public Health Service Act § 931. Patient Safety and Quality Improvement Act of 2005, 42 U.S.C. § 299 et seq. (2005). https://www.ahrq.gov/workingforquality/about/agency-specific-quality-strategic-plans/nqs3.html https://www.ahrq.gov/workingforquality/about/agency-specific-quality-strategic-plans/nqs3.html http://www.dartmouthatlas.org/downloads/reports/Spending_Brief_022709 http://www.dartmouthatlas.org/downloads/reports/Spending_Brief_022709 https://www.iha.org/our-work/accountability/value-based-p4p https://www.iha.org/our-work/accountability/value-based-p4p http://www.washingtonpost.com/wp-dyn/content/article/2006/07/20/AR2006072000754.html http://www.washingtonpost.com/wp-dyn/content/article/2006/07/20/AR2006072000754.html http://www.washingtonpost.com/wp-dyn/content/article/2006/07/20/AR2006072000754.html https://www.commonwealthfund.org/publications/fund-reports/2007/apr/pay-performance-state-medicaid-programs-survey-state-medicaid https://www.commonwealthfund.org/publications/fund-reports/2007/apr/pay-performance-state-medicaid-programs-survey-state-medicaid https://www.commonwealthfund.org/publications/fund-reports/2007/apr/pay-performance-state-medicaid-programs-survey-state-medicaid https://www.bmj.com/content/353/bmj.i2139 https://permanent.access.gpo.gov/lps1609/ http://www.fda.gov/fdac/features/2000/500_err.html Endnotes 291 Pegram v. Herdrich, 530 U.S. 211 (2000). Pilot Life Insur. Co. v. Dedeaux, 481 U.S. 41 (1987). Rosenbaum, S., Frankford, D. M., Law, S. A., & Rosenblatt, R. E. (2012). Law and the American health care system (2nd ed.). Westbury, CT: The Foundation Press. Rosenbaum, S., Frankford, D. M., Moore, B., & Borzi, P. (1999). Who should determine when health care is medically necessary? New England Journal of Medicine, 340(3), 229–233. Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983). Shilkret v. Annapolis Emergency Hospital Ass’n, 349 A. 2d 245, 253 (Md. 1975). Slater v. Baker and Stapleton, 95 Eng. Rep. 860, 862 (King’s Bench 1767). Small v. Howard, 128 Mass. 131 (1880). T. J. Hooper v. Northern Barge Corp., 60 F.2d 737 (2d Cir. 1932). Van Vector v. Blue Cross Ass’n, 365 N.E. 2d 638 (Ill. App. Ct., 1977). Wennberg, J. (Ed.) (1996). The Dartmouth atlas of health care in the United States 1996. Hanover, NH: American Hospital Publishing, Inc. Wennberg J. E., Fisher, E. S., & Skinner, J. S. (2002). Geography and the debate over Medicare reform. Health Affairs, (suppl.), W96–W114. ▸ Endnotes a. For example, in the lawsuit stemming from the facts described at the outset of this chap- ter, the parents of the infant who died alleged that their MCO’s decision to precertify only 24 hours of hospital care coverage did not meet the requisite standard of care in several health- care quality respects: it was not medically appropriate and was motivated by financial profit, not Michelina’s health and well- being; it forced Michelina’s premature discharge from the hospital; it was made despite the MCO’s knowledge that newborns are particularly at risk for developing illnesses; and it discour- aged physicians participating in the MCO’s provider network from readmitting infants to the hospital when problems arose after discharge. b. Because the law’s evolving view of the standard of care closely mirrors its view of the medical profession more generally, it is worth pausing for a moment to reflect on the health policy and law conceptual framework that is focused on historical, social, political, and economic views. This framework includes three perspec- tives: professional autonomy, social contract, and free market. The first perspective, dominant from about 1880 to 1960, argues that physicians’ scientific and medical expertise leaves them in the best position to determine whether care rendered to patients is of adequate quality, and thus that legal oversight of the medical profes- sion should be driven by the profession itself. The second perspective guided policymaking and legal principles for roughly 20 years begin- ning around 1960 and maintains that healthcare delivery and financing should be governed by enforcement of a “social contract” that gen- erally elevates patient rights and societal val- ues over physician autonomy and control. The free market perspective—dominant since the 1990s—contends that healthcare services are most efficiently delivered in a deregulated mar- ketplace controlled by commercial competition. Bear in mind the first two perspectives specifi- cally as you read this section. c. One of the most commonly cited English cases for this rule is Slater v. Baker and Stapleton (1976), in which the court ruled that the appro- priate legal standard for determining a surgeon’s liability was “the usage and law of surgeons . . . the rule of the profession” as testified to by prac- ticing surgeons. d. An example of this shift can be seen in the case of Canterbury v. Spence (1972), which is often dis- cussed in the context of a patient’s right to make informed healthcare decisions. The Canterbury court ruled that a professional-oriented stan- dard for measuring the legality of a physician’s disclosure of information to a patient should be replaced by an objective standard predicated on what a reasonable patient would need to be told to effect the aforementioned right. e. For example, see Van Vector v. Blue Cross Ass’n (1977). f. For example, see Gruenberg v. Aetna Insur. Co. (1973). g. Even citations to ERISA are complicated, because the law’s section numbers in the U.S. Code (where much of ERISA can be found under Title 29) do not always correspond to the section numbering in the original act as written by Congress. For a helpful website effectively decoding where ERISA provisions are located in the U.S. Code, go to http://benefitslink.com/ erisa/crossreference.html. h. Note how this outcome can reasonably be viewed as incentivizing ERISA plans to arbitrarily deny patients’ claims for healthcare coverage, because even in the event that plans are found to have acted negligently, they are responsible for pay- ing only the cost of the denied benefit, but noth- ing more. http://benefitslink.com/erisa/crossreference.html http://benefitslink.com/erisa/crossreference.html 292 Chapter 12 Healthcare Quality Policy and Law i. We are deeply grateful to professors Jane Thorpe and Elizabeth Gray, our colleagues in the Department of Health Policy and Management and experts in healthcare quality promotion, for the drafting of this section. j. There is extensive literature on this topic. See, for example, Fisher, Goodman, Skinner, & Bronner, 2009; Fisher et al., 2003; McGlynn et  al., 2003; Wennberg, 1996; Wennberg, Fisher, & Skinner, 2002. k. Go to www.medicare.gov/hospitalcompare /search.html? to see the hospital comparisons, and to www.medicare.gov/ to access other Compare websites. l. See, for example, Integrated Healthcare Associ- ation, n.d.; Kuhmerker & Hartman, 2007. http://www.medicare.gov/hospitalcompare/search.html?to http://www.medicare.gov/hospitalcompare/search.html?to http://www.medicare.gov/ Credit line FPO© Mary Terriberry/Shutterstock CHAPTER 13 Public Health Preparedness Policy Rebecca Katz and Claire Standley LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Describe what public health preparedness is and understand the scope of events that can lead to a public health emergency ■ Understand the threats from and history of the use of weapons of mass destruction ■ Define public health threats from biologic agents and naturally occurring diseases ■ Describe key policies and laws that support public health preparedness and the infrastructure that has been built to support preparedness activities at the federal, state, and local levels ▸ Introduction The last 15 years have seen many changes in terms of how the United States views home-land security and the role of the public health community in maintaining that security. There is an ever-evolving threat of the terrorist use of weapons of mass destruction (WMDs)—including the use of a biologic weapon—against the population. Infectious diseases continue to emerge and reemerge around the world, and the globalization of our food supply and the speed and volume of international travel make us all vulnerable to the emergence of a new agent anywhere in the world. Media reports include constant remind- ers of the devastating effects of natural disasters—such as hurricanes, fires, and earthquakes—and the lack of infrastructure and resources in many parts of the world leave many regions particularly vulnerable to natural disasters and epidemics. All of these factors—and mounting evidence that large-scale catastrophes and epidemics can dramati- cally affect the economic, social, and security founda- tions of a nation—have led to the rapid emergence at the federal, state, and local levels of a new subdisci- pline within public health: public health preparedness. Public health preparedness refers to the ways in which nations, states, and communities identify, prepare for, respond to, contain, and recover from emergen- cies. When this approach is applied around the world, it is often referred to as “global health security.” It is imperative that public health students and profession- als develop an awareness of the threats to population 293 health and to the stability of societies, and the activities and frameworks developed to address these threats. Public health students must also be able to identify and work with other sectors with relevant responsibil- ities, as effective coordination among multiple sectors is essential to true public health preparedness. The goal of this chapter is to introduce readers to the field of public health preparedness by providing an overview of the complex issues that must be con- sidered by public health professionals in designing preparedness and response plans, policies, and laws. This chapter begins by defining public health pre- paredness and examining the types of threats that can lead to public health emergencies. It then describes possible policy responses to public health threats and emergencies, including a discussion of preparedness infrastructure, engagement, guidance documents, and some key pieces of U.S. legislation. The chapter closes by explaining the multitude of actors—from local to international—involved in public health preparedness and global health security. ▸ Defining Public Health Preparedness Public health preparedness is a term that represents concerns and actions that have occurred throughout history. The term itself, however, and the field devoted to thinking about, preparing for, and mobilizing resources to respond to public health emergencies are relatively new. The Association of Schools and Programs of Pub- lic Health (2012) defines public health preparedness as “a combination of comprehensive planning, infra- structure building, capacity building, communication, training, and evaluation that increase public health response effectiveness and efficiency in response to infectious disease outbreaks, bioterrorism, and emerging health threats.” A group at the RAND Cor- poration, however, proposed a definition in 2007 that is a broader and better characterization of the field: Public health emergency preparedness . . . is the capability of the public health and health care systems, communities, and individuals, to pre- vent, protect against, quickly respond to, and recover from health emergencies, particularly those whose scale, timing, or unpredictability threatens to overwhelm routine capabilities. Preparedness involves a coordinated and con- tinuous process of planning and implemen- tation that relies on measuring performance and taking corrective action. (Nelson, Lurie, Wasserman, & Zakowski, 2007) This definition raises the question, what exactly is a public health emergency? According to the RAND definition, it is an event “whose scale, timing, or unpre- dictability threatens to overwhelm routine capabili- ties.” These types of events fit into four basic categories: 1. The intentional or accidental release of a chemical, biologic, radiologic, or nuclear (CBRN) agent 2. Natural epidemics or pandemics, which may involve a novel, emerging infectious disease, a reemerging agent, or a previously con- trolled disease, or that may occur in areas with limited infrastructure or resources 3. Natural disasters, such as hurricanes, earth- quakes, floods, or fires 4. Man-made environmental disasters, such as large-scale oil spills For any of these categories of events to be classi- fied as a public health emergency, it is not just enough for the event to occur, but it also must pose a high probability of large-scale morbidity or mortality, or a risk of future harm. According to the health policy organization Trust for America’s Health, public health preparedness requires the basic functions of a public health system, such as epidemiology, laboratory capacity, and event- based surveillance capacity (Levi, Segal, Lieberman, May, & Laurent, 2014). These core functions need to be supplemented by specialized training, procedures, laws, regulations, and planning so that all relevant sectors can operate effectively and in a coordinated fashion during a crisis. Preparedness also requires the development of systems for surge capacity and distribution of medical countermeasures, with the goal of promptly detecting a crisis and managing a response to rapidly mitigate the consequences of the crisis and move toward recovery. At the global level, the World Health Organization’s (WHO’s) Revised International Health Regulations, adopted in 2005, define a public health emergency of international concern as “an extraordinary event which is determined . . . to constitute a public health risk to other States through the international spread of disease and to potentially require a coordinated inter- national response” (WHO, 2016). Such an emergency can involve any of the above four types of public health events, as long as it is unusual, is unexpected, and has the potential to cross international borders. Some public health issues that have been called “emergencies” do not meet the criteria of any of the previous definitions. Public health preparedness refers 294 Chapter 13 Public Health Preparedness Policy to planning for and responding to acute events, as opposed to chronic conditions that evolve over time. The prevalence of breast cancer, for example, may be a “public health crisis,” but it is not considered an emer- gency within the purview of public health prepared- ness (Harford, Azavedo, Fischietto, & Breast Health Global Initiative Healthcare Systems Panel, 2008). Effective public health preparedness spans a wide range of activities. This chapter focuses primarily on the policy and legal actions to support preparedness, and application of the principals of emergency man- agement to public health operations, but a “prepared community” also entails the ability to do the following (Nelson et al., 2007): ■ Perform health risk assessments. ■ Establish an incident command system or related structure. ■ Actively engage and communicate effectively with the public. ■ Have functional epidemiologic and laboratory capacity to perform surveillance, detect emerging events, and appropriately diagnose patients. ■ Deploy rapid response teams to investigate outbreaks. ■ Develop, stockpile, and distribute medical countermeasures (e.g., drugs and vaccines). ■ Have “surge capacity” within the medical system to provide care for large populations during an emergency. ■ Maintain appropriate workforces, financial resources, communication systems, and logistics to detect, respond to, and recover from events. The responsibility of the public health community to prepare for and address acute health emergencies is thus extensive and can be a challenge, particularly in environments where the public health system is under-resourced. ▸ Threats to Public Health As noted previously, there are four main categories of threats the public health community must be prepared to address. The first is the intentional or accidental release of a CBRN agent, followed by naturally occur- ring infectious diseases, natural disasters, and finally man-made environmental disasters with serious pub- lic health consequences. This section provides a brief overview of each of these threats. CBRN Threats The release of chemical, biologic, radiologic, or nuclear agents into a population center can have dev- astating consequences to the public’s health. These agents may be released intentionally through an act of warfare or terrorism or unintentionally through human or mechanical error. For example, an explo- sion at a nuclear plant may not be intentional, yet it obviously can still expose workers or nearby pop- ulations to harmful radiation (Cerezo, 2011). An improperly disposed-of piece of medical equipment may be found by children, passed around a neighbor- hood, and result in multiple deaths from radiation sickness (WHO, 2007). A train carrying industrial chemical agents may derail, subjecting local commu- nities to lethal doses of agents (Wenck et al., 2007). A laboratory worker may discover that a protocol intended to kill anthrax spores prior to transfer to a lower-level biosafety laboratory was not success- ful, potentially exposing dozens of staff to the agent (Centers for Disease Control and Prevention [CDC], 2014a). What leads a CBRN agent to be released into a population varies greatly, but the consequences of fear, disruption, sickness, and death result regardless. Public health preparedness plays an essential role in mitigating the consequences of CBRN events. Chemical Threats There is a wide variety of chemical agents and toxins capable of causing injury or death to humans, ranging from chemicals found in cleaning supplies purchased at a local drug store to carefully developed weapons designed to incapacitate and kill (BOXES 13-2 and 13-3). Toxins are nonliving poisons produced by living entities, such as plants, fungi, insects, and animals. Because they are chemical by-products of biologic agents, they occupy a conceptual gray area between chemical and biologic weapons, and countries do not always agree on how toxins should be categorized for the purposes of arms control and legal international obligations, although they are covered under the Bio- logical and Toxin Weapons Convention. Chemical agents may be highly toxic and can enter the body through inhalation or through the skin. Adding to the complexity of treatment of a chemical agent injury is the fact that illness or death can come within minutes BOX 13-1 Discussion Questions What is public health preparedness? How do you define it? What is the role of the public health professional in detecting, responding to, and recovering from a public health emergency? Threats to Public Health 295 of exposure, or take as long as several hours (Ganesan, Raza, & Vijayaraghavan, 2010). There are several main categories of chemical war- fare agents: blister (e.g., mustard gas), blood (e.g., cya- nide), choking (e.g., chlorine), and nerve (e.g., sarin). Toxins are also a major category of agents, as are psy- chotomimetic agents, which can alter mental status. In addition, there is a class termed riot control agents, which produce temporary, usually nonfatal irritation of the skin, eyes, and respiratory tract. Riot control agents, Source: Ganesan et al. (2010). BOX 13-2 Types of Chemical Agents ■ Nerve agents primarily act on the nervous system, causing seizures and death. Examples of this category include sarin, VX, tabun, and soman. This category also includes fourth-generation chemical weapons, known as novichok agents, which are thought to be much more lethal than VX. ■ Blister agents or vesicants primarily cause irritation of the skin and mucous membrane. Examples of this category include mustard gas and arsenical lewisite. ■ Choking agents or pulmonary toxicants primarily cause damage to the lungs, including pulmonary edema and hemorrhage. Examples include phosgene, diphosgene, and chlorine. ■ Blood agents primarily cause seizures and respiratory and cardiac failure in high doses. Examples include hydrogen cyanide and cyanogen cyanide. ■ Riot control agents cause incapacitation due to irritation of eyes and respiratory system. Examples include CN, CS, PS, and CR. ■ Psychotomimetic agents, in low doses, cause psychiatric effects. An example is lysergic acid diethylamide (LSD). ■ Toxins cause symptoms that range from death to incapacitation, depending on the agent. Examples include ricin and saxitoxin. Sources: BBC (2018a, 2018b), Brunning (2018), Holmes and Solomon (2013), United Nations (2013), Vale, Mars, and Maynard (2018). BOX 13-3 Examples of Chemical Agents Impacting Public Health Khan al-Assal Chemical Attack, Syria On March 19, 2013, a rocket landed in the village of Khan al-Assal, in the Aleppo region of Syria. Upon impact, a gas was released, ultimately leading to over 20 fatalities and wounding many dozens more. Samples analyzed by both Russia and the United States identified the agent as sarin. The Syrian government and the opposition faction were quick to trade accusations of responsibility, and the Syrian government requested that the United Nations investigate the incident further. After lengthy delays due to a lack of access and disagreement over the scope of the investigation, a United Nations team finally arrived in August 2013, only to have their mandate quickly overshadowed by a second sarin attack at Ghouda. The team eventually concluded that the perpetrators “likely” had access to the Syrian military’s chemical weapons stockpile but the “evidentiary threshold” for assigning responsibility was not met. At the time of the attack, Syria was not a signatory to the Chemical Weapons Convention. This example demonstrates the challenges of preparing for, responding to, and attributing responsibility for chemical incidents in the midst of a conflict situation. Salisbury Novichok Poisonings, 2018 On March 4, 2018, Sergei Skripal, a former Russian military intelligence officer and double agent for the United Kingdom, and his daughter Yulia collapsed while sitting on a public bench in Salisbury, England. It was quickly determined by the local hospital that they had been poisoned by a toxic agent. Testing at the United Kingdom’s Defence Science and Technology Laboratory at Porton Down identified the cause as a novichok nerve agent, a potent organophosphate believed to have been developed by the Soviet Union during the Cold War. This finding was further confirmed by the Organization for the Prohibition of Chemical Weapons. A police officer involved in the initial response on March 4 was also exposed and required hospitalization. All three victims eventually recovered fully. After trace elements of the agent were found at public sites visited by the Skripals earlier in the day, Public Health England was forced to reassure the public of the “very low risk” of exposure and restricted access to nine locations for decontamination. On April 13, the United Kingdom’s National Security Advisor, Sir Mark Sedwill, stated the government’s assertion that only Russia possessed the technical and operational means, as well as motive, to carry out the attack. On June 30, a British couple without known links to the Skripals fell ill at their house and were also determined to have been exposed to novichok. Police believed they had possibly handled a contaminated item, highlighting the challenges of controlling even a small, likely targeted, poisoning attack with a lethal nerve agent. 296 Chapter 13 Public Health Preparedness Policy often known as “tear gas,” include chloroacetophenone (CN), chlorobenzylidenemalononitrile (CS), chloro- picrin (PS), and dibenzoxazepine (CR). The Chemical Weapons Convention and the U.S. government do not consider this class of agents to be chemical weapons. Other nations, however, disagree (Hu et al., 1989). The public health response to chemical events will range depending on the event itself, its origin, and the location. Possible activities may include the following (Melnikova, Wu, & Orr, 2015): ■ Issuing shelter-in-place orders ■ Evacuating populations ■ Organizing decontamination efforts ■ Restricting entry to particular areas ■ Ensuring food and water are safe for consumption ■ Monitoring both immediate and long-term health effects Nuclear Threats A nuclear weapon that involves fission (the splitting of atoms)—such as the bomb that the United States dropped on Hiroshima, Japan, during World War II, or the weapons created and stockpiled by a small number of nations since—leaves a limited role for the public health community. Such weapons, if released, would instantly destroy people, buildings, and any- thing else in the vicinity. There would be no need for a public health response, because the chances of survival would be minimal. The explosion, however, would leave behind large amounts of radioactivity, a threat to which we now turn. Radiologic Threats A radiologic event is an explosion or other release of radioactivity. Such an event might be caused by any of the following: a simple, nonexplosive radiologic device, an improvised nuclear device designed to release large amounts of radiation with a large blast radius (such as a “suitcase bomb”), a dispersal device that combines explosive materials and radioactive material (such as a “dirty bomb”), or damage to a nuclear reactor that results in the release of radiation (Durham, 2002). Even a small dose of radiation can cause some detectable changes in blood. Large doses of radiation can lead to acute radiation syndrome (ARS). First signs of ARS are typically nausea, vomiting, headache, diarrhea, and some loss of white blood cells. These signs are followed by hair loss, damage to nerve cells and to cells that line the digestive tract, and severe loss of white blood cells. The higher the dose of radiation, the less likely the person will survive. Those who do survive may take several weeks to 2 years to recover, and survivors may suffer from leukemia or other can- cers (CDC, 2017). The public health implications of radiologic expo- sure can be significant. In addition to all other func- tions, the public health community will be responsible for the following (CDC, 2014c): ■ Participating in shelter-in-place or evacuation decisions ■ Identifying exposed populations through surveil- lance activities ■ Conducting or assisting with environmental decontamination ■ Determining safety requirements for working in or near the site of the incident ■ Conducting near- and long-term follow-up with exposed populations Biologic Threats Biologic warfare is the military use of a biologic agent to cause death or harm to humans, animals, or plants. In warfare, the targets of biologic agents are typically governments, armed forces, or resources that might affect the ability of a nation to attack or defend itself. Similarly, bioterrorism is the threat or use of a biologic agent to harm or kill humans, plants, or animals. Unlike biologic warfare, though, the target of bioterrorism is typically the civilian population or resources that might affect the civilian economy. Agroterrorism refers to the knowing or malicious use of biologic agents to affect the agricultural industry or food supply (Monke, 2004). For a biologic agent to be an effective weapon, it should ideally (from the perpetrator’s perspective) have high toxicity; be fast acting; be predictable in its impact; have a capacity for survival outside the host for enough time to infect a victim; be relatively indestruc- tible by air, water, or food purification; and be sus- ceptible to medical countermeasures available to the attacker, but not the intended victim(s). Of the many biologic agents that exist in nature (including parasites, fungi and yeasts, bacteria, Rickettsia, viruses, prions, and toxins), most effort is directed at a small group of bacteria, viruses, and toxins as the primary source of potential biologic weapons (BOXES 13-4 and 13-5). BOX 13-4 Biologic Agents in Nature Bacteria Free-living unicellular organisms Viruses Core of DNA or RNA surrounded by a coat of protein; require host cell in order to replicate; much smaller than bacteria Toxins Toxic substances produced by living organisms Threats to Public Health 297 There have been a series of attempts to classify and characterize biologic threat agents over the past 15 years. Here we present two of the major classifica- tions, as well as a list of major biologic threats. This first classification was used primarily by pol- icy planners at the federal level between 2005 and 2010 (The White House, 2007). It looks at the spectrum of agents and defines them as follows: ■ Traditional: These are naturally occurring microorganisms or toxins that have long been connected with bioterrorism or biologic warfare, either because they have been used in the past or they have been studied for use. There are a finite number of agents that are relatively well under- stood. The policy and public health community has devised specific plans to address the potential use of these agents. Examples include smallpox and anthrax. ■ Enhanced: Enhanced agents are traditional bio- logic agents that have been altered to circumvent medical countermeasures. This group includes agents that are resistant to antibiotics. ■ Emerging: This category includes any natu- rally occurring emerging organism or emerging infectious disease. Examples include severe acute respiratory syndrome, H5N1, and novel H1N1. ■ Advanced: The final category on the spectrum of biologic threats encompasses novel pathogens and other artificial agents that are engineered in labo- ratories. It is virtually impossible to plan for the specific threats posed by this category of agents, thus forcing policymakers to address biologic threats with a much broader strategic approach. The second classification method for biologic threat agents is the Category A, B, and C list. This cate- gorization originated with a 1999 CDC Strategic Plan- ning Workgroup, which looked at the public health impacts of biologic agents, the potential of those agents to be effective weapons, public perception, and fear and preparedness requirements. The Workgroup also examined existing lists, including the Select Agent Rule list, the Australia Group list for export control, and the WHO list of biologic weapons (Elrod, 2011). The resulting list begins with Category A, which includes the highest-priority pathogens with the perceived highest threat. They can cause large-scale morbidity and mortality and often require specific preparedness plans on the part of the public health community. Category B includes the second-highest threat group. Most of the agents in this category are waterborne or foodborne. These agents have been used intentionally in the past or were part of offensive research programs. The morbidity and mortality from these agents are not as significant as from Category A agents, but they are still considerable and they require enhanced surveillance and diagnostic capacity. The last group is Category C, which encompasses emerg- ing pathogens or agents that have become resistant to medical countermeasures. These agents may cause high morbidity and mortality, and may be easily pro- duced and transmitted (CDC, 2018a). There is a long history of the intentional use of biologic agents. One regularly cited example derives from the 1346–1347 siege of the city of Kaffa (now Feodosija), Ukraine, by the Mongols. The Mongols reportedly catapulted corpses contaminated with plague over the walls of the city, causing an outbreak of Yersinia pestis (Wheelis, 2002). Another historical example comes from 1767, when British troops gave smallpox-infested blankets to Native Americans, which may have directly led to a massive outbreak of smallpox among this immunologically naïve popula- tion (Ranlet, 2000). The most well-known bioterrorism event in the United States occurred in the fall of 2001, just weeks after the World Trade Center attacks. That event, even- tually named “Amerithrax” by the Federal Bureau of Source: CDC (2018a). BOX 13-5 Major Biologic Threat Agents Anthrax (Bacillus anthracis) Botulism (Clostridium botulinum toxin) Brucellosis (Brucella species) Food safety threats (e.g., Salmonella species, Escherichia coli O157:H7, Shigella) Glanders (Burkholderia mallei) Melioidosis (Burkholderia pseudomallei) Plague (Yersinia pestis) Psittacosis (Chlamydia psittaci) Q fever (Coxiella burnetii) Ricin toxin Smallpox (Variola major) Staphylococcal enterotoxin B Tularemia (Francisella tularensis) Typhoid fever (Salmonella Typhi) Typhus fever (Rickettsia prowazekii) Viral encephalitis (alphaviruses [e.g., Venezuelan equine encephalitis, eastern equine encephalitis, western equine encephalitis]) Viral hemorrhagic fevers (filoviruses [e.g., Ebola, Marburg] and arenaviruses [e.g., Lassa, Machupo]) Water safety threats (e.g., cholera [Vibrio cholera], Cryptosporidium parvum) Emerging infectious diseases such as Zika virus, Nipah virus, and hantaviruses 298 Chapter 13 Public Health Preparedness Policy Investigation (FBI), targeted political figures and media outlets through the use of finely milled anthrax (Bacillus anthracis) that was sent through the mail. Twenty-two people became ill, and five died. Thou- sands of post office workers, congressional staff, and other potentially exposed individuals received pro- phylactic antibiotics and were offered vaccines. The total disruption caused by what was, in the end, the equivalent of about a sugar packet amount of anthrax demonstrates how destructive and disruptive biologic weapons can be. In fact, they have been called “weapons of mass disruption.” Vast infrastructure and funding came in response to the Amerithrax attack. Public health preparedness against biologic weap- ons threats spans a wide range of activities. These activities include pre-event surveillance and detec- tion, research and development of medical counter- measures, preparedness planning, and community engagement. Post-event, the public health communi- ty’s responsibilities include mitigating the event’s con- sequences through containment of the agent (using pharmaceutical and nonpharmaceutical interven- tions), delivering medical countermeasures in a timely manner, providing mass-casualty care, performing environmental decontamination, issuing messages to the public, and ensuring community resilience. Naturally Occurring Disease Threats Naturally occurring diseases can have both direct and indirect impacts on national security and require the same attention in terms of public health prepared- ness as CBRN agents (BOX 13-6). The direct impact of disease on national security arises from the potential proliferation or use of a biologic weapon, or the inten- tional spread of disease within specific populations. In addition, the impact of disease on the armed forces directly affects security because morbidity and mor- tality affect “readiness”—the ability of the nation to defend itself militarily and to engage in armed battles around the world. Until World War II, more soldiers died from infectious diseases than from direct com- bat injuries (Murray, Hinkle, & Yun, 2008). Disease altered the outcomes of conflicts and affected the bal- ance of power among states. Even today, troop expo- sure to diseases affects morbidity and mortality, which then impacts overall military readiness. Hospital admissions from disease continue to outnumber inju- ries and wounds during U.S. military deployments. As a result, the military has invested significant resources in infectious disease research, building diagnostic laboratory capacity around the world, disease surveil- lance infrastructure, and vaccine development (Global Emerging Infections Surveillance, 2018; Murray et al., 2008; Walter Reed Army Institute of Research, 2018; Writer, DeFraites, & Keep, 2000). Indirectly, disease affects security because it can create large-scale morbidity and mortality, leading to massive loss of life and affecting all sectors of soci- ety. Such morbidity and mortality could result in Sources: CDC (2014a, 2014b, 2014d), Kaiser (2014), Maron (2014), Sun (2014). BOX 13-6 U.S. Biosafety Incidents in 2014 Over the summer of 2014, three significant biosafety incidents occurred involving U.S. government facilities. The first incident took place in early June at the Centers for Disease Control and Prevention’s (CDC’s) Roybal Campus in Atlanta. On June 5, a laboratory worker used an improper method to deactivate anthrax spores that were being transferred to several lower biocontainment laboratories on the same campus. The mistake was discovered over a week later, when culture plates left in the original laboratory showed signs of bacterial growth. Thirty-five staff and 67 visitors were considered at risk of exposure to anthrax as a result of the error. The second incident also involved the CDC. On July 9, it was discovered that a sample of low- pathogenic avian influenza shipped to the U.S. Department of Agriculture from the CDC was contaminated with highly pathogenic H5N1. Because the sample was assumed to be of low risk, safety and security precautions required for shipping of select agents were not carried out. All handling of the sample at both institutions took place under BSL-3 conditions, minimizing the risk of accidental exposure. The contamination was determined to have taken place at the CDC influenza laboratory, and the discovery was made by the USDA on May 23. However, the incident was not reported for another 6 weeks. The third incident occurred in mid-July, when several vials labeled as smallpox were discovered on the National Institutes of Health (NIH) campus in Bethesda, Maryland. The vials dated from the 1950s, when smallpox was still widespread, and are believed to have been part of a previous Food and Drug Administration (FDA) facility on the site. While some of the viral contents were shown to still be viable, the vials were well sealed and the risk of exposure was deemed to be very low. While no casualties resulted from any of these incidents, they highlight the potential risks of accidental exposure to dangerous biologic agents as a result of poor bio-risk management practices. In January 2016 an expert review, commissioned by the CDC, found that while the agency had made some progress, “considerable work” remained to be done to achieve a culture of safety. Threats to Public Health 299 economic loss and even long-term deterioration of economic viability. Fear of disease, in addition to disease itself, can lead to societal disruption, which can lead to civil disorder, political unrest, and, ulti- mately, destabilization. Chronic diseases, now the leading cause of morbidity and mortality around the world, already have a substantial global economic impact, with lower- and middle-income countries, already more vulnerable to financial shocks, increas- ingly heavily impacted (Abegunde, Mathers, Adam, Ortegon, & Strong, 2007). Globalization; movement of people, animals, and goods; rapid urbanization; and changing human behaviors and land use all create opportunities for the emergence of infectious diseases. These diseases emerge from every corner of the world and, because of rapid transportation networks, can spread from international airports around the world in 24 to 48 hours. Pathogens with differing routes of exposure will spread at varying rates, but it has been estimated that a respiratory virus could spread globally and kill as many as 30 million people in a single year (Gates, 2018). While disease can emerge anywhere and spread everywhere, it tends to adversely affect regions and countries that are least able to address the threat (WHO, 2007). Over the past four decades, there has been a fourfold increase in the number of emerging infectious diseases, and these diseases continue to emerge in all corners of the world (Doucleff & Green- halgh, 2017; Fauci, 2017). Additionally, researchers have conducted “hot spot analyses” to identify con- ditions such as the presence of vectors, land use, and climate characteristics to identify where particular types of disease (like ones that are mosquito-borne) are likely to occur (Allen et al., 2017). The regions where public health emergencies are most likely to emerge are the same regions expe- riencing critical shortages of healthcare personnel and that tend to have the least developed healthcare infrastructure (National Intelligence Council, 2008; WHO, 2007). On top of this problem, many of the current and developing megacities (cities with a pop- ulation of 10 million people or more) can be found in the same regions that have poor healthcare infra- structure, understaffed healthcare workforces, and the most public health emergencies (National Intel- ligence Council, 2008). These conditions mean it is possible that a public health emergency will emerge in a place that is understaffed, under-resourced, and overpopulated—all conditions that may contribute to the spread of disease. Public health preparedness for naturally occur- ring diseases must focus on basic scientific research to better understand the threats and work to design effective drugs, vaccines, and other therapeutics, and ensure the existence of sufficient production capac- ity for these tools. Effective, comprehensive, global surveillance systems are essential for early detection of disease to enable rapid response and containment efforts. Medical, community, and public sector coor- dination are necessary for distribution of countermea- sures, surge capacity for mass care, mortuary services when necessary, and nonpharmaceutical interven- tions, including isolation and quarantine. Public health officials are also responsible for ensuring that a sufficient workforce is available to detect, report on, and respond to emergencies and to help bring about a recovery as quickly as possible. Natural Disasters It is an absolute certainty that natural disasters will occur all over the world: hurricanes will form, earth- quakes will occur near fault lines, active volcanoes will erupt, tornadoes will sweep through regions, snow will fall, fire will spread, and low-lying regions will flood (BOX 13-8). Public health emergency preparedness is as much about planning for and responding to these types of disasters as it is about responding to terrorist events. In fact, the public health community is much more likely to engage in a response to a natural disas- ter than to an intentional or accidental one, based on probability of events. Natural disasters have the potential to impact very large populations. They can lead to morbidity and mortality, disrupt basic services, pose environmen- tal challenges, and completely unhinge a community. TABLE 13-1 illustrates the magnitude, as measured in mortality, of major natural disasters. Public health professionals have long been engaged in disaster response; as long as there have been emergencies, there have been medical person- nel attending to the needs of populations. The CDC started responding officially to disasters in the 1960s, when an Epidemic Intelligence Service team traveled to Nigeria to help maintain public health programs in the midst of a civil war. Over the decades, the CDC has developed public health and epidemiologic tools to address the realities of disaster situations and BOX 13-7 Discussion Question How can a naturally occurring disease event lead to a public health emergency? Describe how disease can impact national, regional, or international security. 300 Chapter 13 Public Health Preparedness Policy Sources: Barron (2017), Einbinder (2018), Greenough and Kirsch (2005), Greshko (2017), Lister (2005), Philipps (2017), The White House (2006). BOX 13-8 Recent U.S. Response to Hurricanes Hurricane Katrina and the Public Health Response On August 29, 2005, Hurricane Katrina landed on the Gulf Coast of the United States, reaching Mississippi, Louisiana, and Alabama. It came ashore with winds of 115 to 130 miles per hour and brought with it a water surge that in some locations rose as high as 27 feet. The surge pushed 6–12 miles inland and flooded approximately 80% of the city of New Orleans. Some 93,000 square miles were affected, resulting in 1,300 fatalities, 2 million displaced persons, 300,000 destroyed homes, and almost $100 billion in property damage. Katrina was the worst domestic natural disaster in recent history, but the consequences of the event were made worse by a faltering levee system designed by the U.S. Army Corps of Engineers and a failure of government at all levels to properly prepare for and respond to the disaster. First, long-term warnings went unheeded. It was clear that a hurricane of this type would eventually hit the region, yet local and state officials, even after running exercises based on such a scenario, failed to properly prepare. Local and state officials were unable to evacuate all of the citizens, struggled with logistics, and did not make proper preparations for dealing with vulnerable populations, including nursing home residents. The federal government failed to adequately anticipate the needs of the state and local authorities, and the insufficient coordination resulted in a lack of resources and a too-slow response. The public health and medical response coordinated by the federal government followed the traditional response to a flood or hurricane: focus on sanitation and hygiene, water safety, surveillance and infection control, environmental health, and access to care. Katrina, though, also presented unique challenges, such as the inability of displaced persons to manage chronic disease conditions and access medications, death and illness from dehydration, and mental health problems, all associated with the widespread devastation among those affected. Almost all offices and branches of the federal Department of Health and Human Services (of which the CDC is a part) eventually became involved in the response to Katrina. The CDC sent staff to the affected areas, deployed the Strategic National Stockpile to provide drugs and medical supplies, and developed public health and occupational health guidance. The FDA issued recommendations for handling drugs that might have been affected by the flood. The NIH set up a phone-based medical consultation service for providers in the region. The Substance Abuse and Mental Health Services Administration set up crisis counseling assistance and provided emergency response grants. In addition, the National Disaster Medical System deployed 50 Disaster Medical Assistance Teams to try to accommodate and treat hurricane victims. Disaster Mortuary Operational Response Teams also deployed to help process bodies. The Department of Defense set up field hospitals at the New Orleans International Airport and aboard naval vessels. The Department of Veterans Affairs evacuated both of its local hospitals—one prior to the storm, one afterward. The 2017 Atlantic Hurricane Season: The Response to Hurricanes Harvey, Irma, and Maria A combination of climatic conditions, including warmer-than-usual sea temperatures in the tropical Atlantic, led the 2017 Atlantic hurricane season to be the most devastating since 2005, and the fifth most active since recordkeeping began in the 1930s. In particular, three storms—Hurricanes Harvey, Irma, and Maria—had a substantial impact on the U.S. mainland and Puerto Rico. Along the Gulf Coast of Texas, Louisiana, and Florida, Hurricanes Harvey and Irma hit within 2 weeks of each other, causing an estimated $175 billion of damage. Ten days later, Hurricane Maria slammed directly into Puerto Rico, which had already been heavily impacted by Irma. The federal response was rapid, with President Trump immediately approving disaster declarations for all three storms. However, there were significant differences between the impact of the three storms, as well as the federal responses. The Federal Emergency Management Agency (FEMA) already had supplies and personnel stationed in Texas before Hurricane Harvey made landfall, and leveraged existing memoranda of understanding with local and state authorities, as well as the National Guard, to coordinate response efforts closely. Local and federal responders had even previously trained together, under the $2 billion invested by FEMA in training of local authorities since 2005. Similarly, within 4 days of Hurricane Irma’s landfall in Florida, FEMA had deployed more than 2,650 staff (out of a total of more than 40,000 federal response personnel) to support response efforts. In contrast, the federal response to Hurricane Maria in Puerto Rico was criticized by the United Nations and other observers for being sluggish and inadequate. Already stretched thin by the Harvey and Irma responses, only 10,000 federal response personnel were initially deployed, many of whom were trainees or lacked previous response experience. Few supplies were in place ahead of time, and being an island, FEMA faced considerable logistical challenges in sending provisions, tarpaulins, and other key supplies to Puerto Rico, leading to major shortages of food and shelter, particularly as Maria had destroyed more than one-third of homes on the island. The Army Corps of Engineers, deployed to help repair homes destroyed by the hurricane, managed to put up just over 400 roofs in the month following the storm, whereas they had repaired more than 10 times that many in Florida in the same time frame after Irma. The hurricane also crippled Puerto Rico’s electricity grid; as late as May 2018, over 100,000 residents were still without power, highlighting the slow recovery faced by the island. Threats to Public Health 301 displaced populations. The public health community enters a disaster situation and establishes preven- tion and control measures, collects critical data to support response, and works to meet the short- and long-term needs of the population (Gregg, 1989; Noji, 1997). Often, the most experienced public health and medical professionals on the ground during an emer- gency come from the nongovernmental organization (NGO) community, which has decades of experience responding to and helping populations recover from disasters. In fact, the American Red Cross, an NGO, has a federal charter to engage in disaster relief, and has specific responsibilities outlined in the National Response Framework based on its recognized exper- tise in this area (Department of Homeland Security [DHS], 2013). In addition, military assets are used during emergencies to get qualified personnel to the event site quickly and, most importantly, provide logistical support, because some disasters require resources only the militaries of the world possess (e.g., the ability to reach isolated populations, bring supplies to remote regions, and establish care and living centers in harsh environments) (VanRooyen & Leaning, 2005; Wiharta, Ahman, Halne, Löfgren, & Randall, 2008). TABLE 13-1 Major Natural Disasters, 1900 to Present Date Event Location Approximate Death Toll June–November, 2017 Hurricanes Caribbean Basin Up to 8,750 April 25, 2015 Earthquake Gorkha, Nepal 9,000 March 11, 2011 Earthquake/tsunami Tohoku, Japan 15,800–18,500 January 12, 2010 Earthquake Port-au-Prince, Haiti 170,000–230,000 May 2, 2008 Cyclone Myanmar 138,000 December 26, 2004 Tsunami (Indian Ocean) Indonesia, Thailand, Sri Lanka, India, and more 220,000 (+) July 28, 1976 Earthquake Tangshan, China 242,000–655,000 November 13, 1970 Cyclone Bangladesh 500,000 May–August 1931 Yellow River and Yangtze River floods China 1–3.7 million May 22, 1927 Earthquake Xining, China 200,000 September 1, 1923 Earthquake and fires Tokyo, Japan 143,000 December 16, 1920 Earthquake Haiyuan, China 200,000 Sources: Associated Press (2010), CBC News (2010), Kishore et al., (2018), Noji (1997), Office of U.S. Foreign Disaster Assistance (1993), U.S. Geological Survey (2004). BOX 13-9 Discussion Questions How did the public health community respond to Hurricane Katrina? What lessons can be learned to better prepare for future response efforts? To what extent did the response to the 2017 hurricane season reveal improvements to public health preparedness for natural disasters, versus gaps still remaining? 302 Chapter 13 Public Health Preparedness Policy Man-Made Environmental Disasters The fourth category of public health emergencies is man- made environmental disasters. These are events where human intervention, accident, or other engagement leads to an environmental disaster with direct implications for population health (BOX 13-10). Long-term human con- duct that degrades the environment could conceivably fall into this category, but for purposes of studying public health preparedness, the more important concern is with acute events, such as the 2010 oil spill disaster in the Gulf of Mexico, primarily affecting the Gulf Coast, which resulted from an explosion on an oil rig. This and similar disasters required the public health community to team with a variety of sectors at the local, state, and federal lev- els, understand the consequences to human health, and take actions to mitigate the consequences and address the health concerns of the community. ▸ Public Health Preparedness Policy While government officials have long been aware of public health emergencies and the need for coordi- nated action to detect, report, and respond appropri- ately, the U.S. preparedness infrastructure did not truly take shape until after the attacks on U.S. soil on Septem- ber 11, 2001 (commonly referred to as 9/11). Almost immediately after the World Trade Center, Pentagon, and subsequent anthrax letter attacks, the United States embarked on a series of changes that resulted in the most massive reorganization of the federal govern- ment since World War II. The first significant organi- zational change was announced on October 8, 2001, when Executive Order 12338 established both the fed- eral Office of Homeland Security and the Homeland Security Council within the White House. This was followed by the Homeland Security Act of 2002, which created the Department of Homeland Security (DHS) by reorganizing multiple existing agencies under a single department and creating new responsibilities around homeland security and preparedness. Within DHS, the main office created to address public health preparedness is the Office of Health Affairs. This office has several divisions. The Health Threats Resilience Division oversees biodefense activities, including Project BioWatch, the National Biosurveillance Integration Center, and state and local initiatives. The Workforce Health and Medical Support Division works to strengthen national med- ical emergency response capacity (DHS, n.d.). Impor- tantly, FEMA, responsible for much of the emergency disaster response activities at the federal level, is also part of DHS. In addition to the creation of DHS, in the wake of the 9/11 attacks, Congress passed new statutes and many existing government departments and agencies established new regulations, directives, and offices, expanded existing offices, and redirected resources toward preparedness and homeland security. The fol- lowing agencies and offices are most directly linked to public health preparedness policy at the federal level. Federal Response Agencies and Offices Department of Health and Human Services (HHS) HHS is the primary federal agency charged with ensuring the health of Americans. It comprises several offices that are key to U.S. health policy, public health, and healthcare provision. Sources: Kaufmann and Penciakova (2011), Secretariat of the Investigation Committee on the Accidents at the Fukushima Nuclear Power Station (2012), Tanter (2013), Wheatley, Sovacool, and Sornette (2017). BOX 13-10 Fukushima Nuclear Disaster The most serious radiation accidents have been associated with nuclear power plants. While the total number of accidents occurring at nuclear power plants is a matter of debate, at least 33 significant accidents are believed to have taken place since the 1950s. The most recent serious incident occurred at Fukushima Nuclear Power Plant in Japan, starting on March 11, 2011. The incident began when the facility was struck by a tsunami, itself caused by the magnitude 9.0 Tohoku earthquake. Seawater flooding the nuclear facility caused the plant’s power (including backup generators) to fail. With no mechanism for continued cooling, the reactors began to heat up; eventually, three out of the facility’s six nuclear reactors melted, resulting in a massive release of radioactive material, and the largest nuclear incident since Chernobyl in 1986. Investigations into the Fukushima disaster concluded the catastrophe must be considered “man-made”: the findings of a 2008 tsunami risk assessment had been ignored by the facility’s management; there was institutionalized “corruption, collusion, and nepotism” between the nuclear industry and regulatory authorities; and the Japanese government’s eventual response to the disaster was thoroughly criticized for its poor crisis command, inadequate legal structure for nuclear crisis management, and lack of communication and transparency. While there were no immediate casualties from the incident, more than 100,000 people were evacuated from their homes and an estimated 1,000 died as a result of maintaining the evacuation. Concerns over the long-term impact of radiation exposure remain. Public Health Preparedness Policy 303 Office of the Assistant Secretary for Prepared- ness and Response (ASPR). The Office of the Assis- tant Secretary for Preparedness and Response was created by the Pandemic and All-Hazards Prepared- ness Act of 2006 and replaced the office previously known as the Office of Public Health Emergency Preparedness. ASPR is composed of multiple compo- nents, including the Biomedical Advanced Research and Development Authority (BARDA), the Office of Emergency Management, and the Office of Policy and Planning (HHS, 2014). ASPR is responsible for lead- ing the nation’s “medical and public health prepared- ness for, response to, and recovery from disasters and public health emergencies” (HHS, 2018a). In addi- tion to policy development, the office supports state and local capacity during emergencies by providing federal support. This support includes deployment of clinicians through the National Disaster Medical System. ASPR also hosts a series of preparedness pro- grams, including the Hospital Preparedness Program (HHS, 2018b). As of July 2018, the Trump adminis- tration planned to transfer oversight of the Strategic National Stockpile to ASPR, with it having previously been managed by the CDC (Sun, 2018). Centers for Disease Control and Prevention (CDC). The CDC has a vast array of offices and subject-matter expertise that would be used during a public health emergency. Many of the prepared- ness and response activities are consolidated in the Office of Public Health Preparedness and Response. This office coordinates and responds to public health threats through a multitude of programs, including an emergency operations division that constantly maintains situational awareness of potential threats; a division dedicated to supporting preparedness at the state, local, tribal, and territorial level through cooper- ative agreements providing funding to state and local entities for preparedness for all-hazard threats; and a division devoted to regulating the federal Select Agent program (CDC, 2018b). National Institutes of Health (NIH). The NIH is engaged in public health preparedness through a variety of offices. The Office of Science Policy houses the National Science Advisory Board for Biosecurity, which is a committee of experts focused on advancing biotechnology. The National Institute of Allergy and Infectious Diseases hosts a robust research agenda, both intramural and in support of extramural pro- grams, that supports the research and development of medical countermeasures against radiologic, nuclear, and chemical threats, and supports biodefense activities (NIH, 2015). Additionally, divisions across NIH support research programs that might focus on special-population or clinical outcomes from public health emergencies, such as mental health, children’s health, or disease mapping for preparedness. The Food and Drug Administration (FDA). The FDA has multiple offices that focus on emergency preparedness and response. These offices are respon- sible for ensuring regulatory oversight, monitoring infrastructure, and facilitating the delivery of appro- priate countermeasures. Specifically, the Office of Crisis Management coordinates emergency and crisis response, as related to FDA-regulated products. The Center for Biologics Evaluation and Research oversees safety and effectiveness of biologic products, includ- ing CBRN medical countermeasures. The Office of Counterterrorism and Emerging Threats works on policies, strategies, and interagency communication relating to counterterrorism. It also oversees Emer- gency Use Authorization for medical countermea- sures (FDA, 2018a). Department of Agriculture (USDA) The Animal and Plant Health Inspection Service (APHIS) at USDA has a broad mission to protect and promote U.S. agricultural health. APHIS also works with DHS and FEMA to provide assistance and coor- dination during emergencies. This assistance ranges from containing disease in poultry, such as in cases of avian influenza, to protecting the health of live- stock and crops from foreign disease. The Agricultural Research Service provides research support that can be essential during an emergency (USDA, n.d.). Federal Bureau of Investigation (FBI) The FBI, which operates under the Department of Justice, created a new WMD Directorate in 2006. This Directorate works in several areas, including counter- measures and preparedness, investigations and oper- ations, and intelligence analysis. The investigative component directs the WMD threat credibility assess- ments and manages all WMD criminal investigations. On preparedness, the FBI works with field compo- nents, as well as with other agencies. In particular, the FBI works closely with the CDC using the “Crim-Epi” model, in which law enforcement and epidemiolo- gists cooperate in the investigation of potential WMD events in a way that enables the FBI to collect infor- mation that will lead to a prosecution, but that also enables epidemiologists to investigate, treat, and min- imize morbidity and mortality (FBI, n.d.). 304 Chapter 13 Public Health Preparedness Policy Department of Defense (DoD) The DoD has a massive infrastructure designed to address threats of any nature, including public health emergencies. The military is trained in emergency response and preparedness as critical components of an effective armed forces. While most DoD pro- grams focus on protecting the war fighter, several also have implications for the broader civilian population. There is an active chemical and biologic defense pro- gram that involves research, development, and testing defense systems and equipment, including medical countermeasures. The Cooperative Threat Reduction programs work to reduce the threat of WMDs around the world, while building global capacity for detection and response to biologic threats. There is a large-scale laboratory network both in the United States and abroad engaged in basic scientific research for infec- tious diseases, as well as epidemiologic response to public health emergencies. There is also a robust sur- veillance and response program for naturally occur- ring diseases (Sandor, 2011). Preparedness Statutes, Regulations, and Policy Guidance Statutes, regulations, and policy guidance documents form the foundation of public health preparedness. In the always-evolving, operations-based field of public health preparedness, the legal and regulatory frame- work creates the baseline from which all policymak- ing, planning, and action is taken. As this is a relatively new discipline, the statutes, regulations, and policy guidance are also relatively new, changing to meet evolving threats, incorporating lessons from previ- ous experiences, and adapting to feedback from those directly involved with implementing the relevant pol- icies and laws. The following is a brief description of the key laws (both statutory and regulatory) and policy documents that currently guide preparedness efforts. Public Health Improvement Act of 2000 (Public Law 106-505) The Public Health Improvement Act of 2000 has 10 titles, or sections, 9 of which address traditional pub- lic health interests such as sexually transmitted dis- eases, Alzheimer disease research, organ donation, clinical research, and laboratory infrastructure. Title 1, however, addresses emerging threats to the public’s health. This section authorizes the Secretary of HHS to take appropriate response actions during a public health emergency, including investigations, treatment, and prevention. The act established the Public Health Emergency Fund to support response activities and directed the HHS Secretary to establish a working group to focus on the medical and public health effects of a bioterrorist attack. USA PATRIOT Act of 2001 (Public Law 107-56) The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act was passed by Con- gress and signed into law in October 2001 immediately following the 9/11 attacks, and during the height of the anthrax letters scare. This law includes a multitude of terrorism-related policies. Among them are provi- sions related to acquiring, handling, and transporting particularly dangerous pathogens; assistance to first responders; and funding for substantial new invest- ments in bioterrorism preparedness and response. Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (Public Law 107-188) Signed into law in June 2002, the Bioterrorism Act (as it is known) was the first major piece of legislation dedicated entirely to public health preparedness. The act has five titles: 1. National Preparedness for Bioterror- ism and Other Public Health Emergen- cies: Addresses national preparedness and response planning by calling for the development and maintenance of medical countermeasures, creation of a national disaster medical system, support for com- munications and surveillance among all levels of public health officials, creation of a core academic curriculum concern- ing bioweapons and other public health emergencies, improvements to hospital preparedness, and measures to address workforce shortages for public health emer- gencies. Also codifies what had already been established—a strategic national stockpile of medical countermeasures. 2. Enhancing Controls on Dangerous Bio- logical Agents and Toxins: Addresses the control over select agents. 3. Protecting Safety and Security of Food and Drug Supply: Addresses bioterror- ist threats to the food supply, and what the FDA is permitted to do to address this threat. It also touches on the importance of Public Health Preparedness Policy 305 ensuring the safety of drugs imported into the United States. 4. Drinking Water Security and Safety: Directs communities to do a full assessment of the vulnerabilities of the water supply to terrorist attacks. 5. Additional Provisions: Addresses miscel- laneous provisions, including some focused on prescription drug user fees and Medi- care plans. Smallpox Emergency Personnel Protection Act of 2003 (Public Law 108-20) In December 2002, the Bush administration announced a program to vaccinate both military personnel and civilian emergency health workers against smallpox. The vaccine program for the mil- itary was obligatory, while the civilian vaccination program was voluntary. The Smallpox Emergency Personnel Protection Act, which became law nearly 3 months after the vaccination program started, focuses on compensation related to medical care, lost income, or death resulting from receipt of the smallpox vaccine. The Project Bioshield Act of 2004 (Public Law 108-276) While the Bioterrorism Act of 2002 codified into law the requirement for a Strategic National Stockpile, there remained in practice a problem: because of the vast costs involved with producing and no guaranteed market in which to sell CBRN medical countermea- sures (drugs and vaccines), pharmaceutical companies were reluctant to develop and bring to market these countermeasures. As a result, the National Stockpile remained under-resourced. The Bioshield Act of 2004 aimed to create a guaranteed government-funded market for medical countermeasures, and included funding to purchase the products while they are still in the final stages of development. The act also allowed HHS to expedite spending to procure products, hire experts, and award research grants pertaining to CBRN, and to allow for emergency use of counter- measures even if they lacked final FDA approval. How- ever, most of the funds were used to target only three pathogens—anthrax, smallpox, and botulism—which led some to criticize the Obama administration for diverting funds that could have been used to develop therapeutics against other biologic agents, such as the Ebola virus. (For more about this act, see Box 13-13 at the end of the chapter.) Public Readiness and Emergency Preparedness Act of 2005 (Division C of the Department of Defense Emergency Supplemental Appropriations; Public Law 109-148) Because the Project Bioshield Act allowed the Sec- retary of HHS to force the use of medical counter- measures for emergency purposes without final FDA approval, manufacturers, distributors, program administrators, prescribers, and dispensers expressed concern to policymakers that they could be held lia- ble for any negative consequences associated with the use of unapproved countermeasures. In response, Congress and the Bush administration passed the Public Readiness and Emergency Preparedness Act (PREP Act), which limits liability associated with public health countermeasures used on an emergency basis. The only exception is in the event of “willful misconduct.” Pandemic and All-Hazards Preparedness Act of 2006 (Public Law 109-417) The Pandemic and All-Hazards Preparedness Act, known as PAHPA, reauthorized the Bioterrorism Act of 2002 and added broad provisions aimed at prepar- ing for and responding to public health and medical emergencies, regardless of origin. PAHPA is organized into the following four main titles: 1. National Preparedness and Response, Leadership, Organization, and Plan- ning: This title makes the HHS Secretary the lead person for all public health and medical responses to emergencies covered by the National Response Framework (the act actually refers to the National Response Plan, which was later updated and renamed the National Response Framework). It also established the position of Assistant Secre- tary for Preparedness and Response at HHS and required HHS to create a National Health Security Strategy. 2. Public Health Security Preparedness: This section of the act focuses on devel- oping preparedness infrastructure, pri- marily at the state and local level, to include pandemic plans, interoperable networks for data sharing, and telehealth capabilities. It also addresses laboratory security and the need to ensure readiness of the Commissioned Corps of the Public Health Service to respond to public health emergencies. 306 Chapter 13 Public Health Preparedness Policy 3. All-Hazards Medical Surge Capacity: This title has several key provisions, including the transfer of the National Disaster Med- ical System (NDMS) back to HHS from DHS. Thus, HHS is responsible for evalu- ating capacity for a medical patient surge during a public health emergency and is required to establish a Medical Reserve Corps of volunteers to assist during such emergencies. Title III also requires HHS to develop public health preparedness curric- ula and establish centers for preparedness at schools of public health. 4. Pandemic and Biodefense Vaccine and Drug Development: The final title of PAHPA builds on the Bioshield Act of 2004 by requir- ing the establishment of BARDA within HHS to coordinate countermeasure research and development. Although the Bioshield Act enticed manufacturers to develop counter- measures, it did not do enough to assist com- panies during the expensive years of product research and development. Through payment structure reform, Title IV permits BARDA to better enable countermeasure development and production. Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (Public Law 113-5) The PAHPA was reauthorized in 2013 as the Pandemic and All-Hazards Preparedness Reauthorization Act (PAHPRA). PAHPRA is organized into the following four main titles: 1. Strengthening National Preparedness and Response for Public Health Emergencies 2. Optimizing State and Local All-Hazards Preparedness and Response 3. Enhancing Medical Countermeasures Review 4. Accelerating Medical Countermeasure Advanced Research and Development At the time of this writing, a bill has been intro- duced to reauthorize PAHPA until 2023, but has not yet been passed into law. Implementing Recommendations of the 9/11 Commission Act of 2007 (Public Law 110-53) In August 2007, Congress passed the Implement- ing Recommendations of the 9/11 Commission Act, which, as the title suggests, focuses on implementing the recommendations from the 9/11 Commission Report. The act includes numerous specific provi- sions pertaining to preparedness, such as prepared- ness grants to state and local entities, improving the incident command system, improving the sharing of intelligence information across the federal govern- ment, enhancing efforts to prevent terrorists from gaining entry into the United States, increasing the safety of transportation, and improving generally the preparedness infrastructure. It also includes sections on diplomatic engagement and advancing democratic values abroad. Specific to public health, Title XI of the act addresses enhanced defenses against WMDs, par- ticularly the need to maintain a National Biosurveil- lance Integration Center that reports to Congress on the “state of . . . biosurveillance efforts.” National Defense Authorization Act of Fiscal Year 2017 (Public Law 114-328) In December 2016, Congress passed the National Defense Authorization Act for Fiscal Year 2017. Title X of the act (subtitle G, section 1086) calls for the Sec- retaries of Defense, HHS, DHS, and USDA to jointly develop a national biodefense strategy and an associ- ated implementation plan, including a review of all biodefense policies, practices, programs, and initia- tives. The strategy was to be submitted to Congress no later than 275 days after December 23, 2016, and then revised biennially. As of this writing, the biode- fense strategy has been drafted, but not yet submitted to Congress. Presidential Directives Biodefense for the 21st Century: National Security Presidential Directive 33/ Homeland Security Presidential Directive 10, April 2004 In 2004 the Bush administration released Homeland Security Presidential Directive (HSPD) 10, which provided a strategic overview of the biologic weapons BOX 13-11 Discussion Questions The PAHPRA of 2013 included changes to each of the four main titles of the previous PAHPA law. Looking back at PAHPA (2006), how significant do you think these changes were, and what might have been the rationale behind the revisions? How does this act compare to the current reauthorization? Public Health Preparedness Policy 307 threat and the administration’s approach to framing biodefense initiatives. The directive described four essential pillars of the national biodefense program: threat awareness, prevention and protection, sur- veillance and detection, and response and recovery. This document remained the primary policy direc- tive concerning biodefense until the National Strat- egy for Countering Biological Threats was released in late 2009. Public Health and Medical Preparedness: Homeland Security Presidential Directive 21, October 2007 Building upon HSPD 10, and in accordance with HSPD 18 (released early in 2007, it pertained to the development of medical countermeasures, led by HHS but with DoD retaining control over devel- opment specific to the armed forces), HSPD 21 was released in the fall of 2007 and defines four critical components of public health and medical prepared- ness. The four components are a robust and integrated biosurveillance system, the ability to stockpile and distribute medical countermeasures, the capacity to engage in mass-casualty care in emergency situations, and resilient communities at the state and local levels. The directive also mandates the creation of task forces, studies, and plans to meet public health and medical preparedness needs. Establishing Federal Capability for the Timely Provision of Medical Countermeasures Following a Biological Attack, Executive Order 13527, December 2009 In the last days of 2009, President Obama released Executive Order 13527, establishing a policy of timely provision of medical countermeasures in the event of a biologic attack and tasking the federal government with assisting state and local entities in this endeavor. The order also spells out the role of the U.S. Postal Service in the delivery of medical countermeasures and calls on HHS to develop continuity of operations plans in the event of a large-scale biologic attack. National Strategy for Countering Biological Threats, Presidential Policy Directive 2, November 2009 The National Strategy for Countering Biological Threats was released in time for Undersecretary of State Ellen Tauscher to share it with the international community at the December 2009 Meeting of States Parties of the Biological Weapons Convention. The strategy, the first major policy statement by the Obama administration on the topic of biologic threats, spells out seven major objectives: ■ Promote global health security. ■ Reinforce norms of safe and responsible conduct. ■ Obtain timely and accurate insight on current and emerging risks. ■ Take reasonable steps to reduce the potential for exploitation. ■ Expand our capability to prevent, attribute, and apprehend. ■ Communicate effectively with all stakeholders. ■ Transform the international dialogue on biologic threats. While many of the Bush administration directives focused on policies for responding to a biologic threat, the Obama strategy directive placed more emphasis on prevention, with particular stress on the importance of working with international partners, reinforcing norms of responsible scientific conduct, and engaging scientists so that they can continue beneficial work in the life sciences (National Security Council, 2009). National Preparedness Presidential Policy Directive 8, March 2011 In early 2011, the Obama administration released Presidential Policy Directive (PPD) 8, replacing HSPD 8. The PPD required the development of a national preparedness goal (as did HSPD 8) and the creation of a National Preparedness System to integrate guid- ance, programs, and processes to build and sustain capabilities essential for preparedness. PPD 8 takes an “all-of-nation” approach, identifying the importance of collaboration between governments at all levels and the private and not-for-profit sectors as well as the public in order to enhance resilience. International Agreements In addition to domestic statutes, regulations, and for- mal policy guidance documents, there are a host of formal international agreements that attempt to coor- dinate global efforts to respond to the threats posed to populations by WMDs and infectious diseases. These international agreements include a series of arms con- trol treaties, including the Geneva Protocol, the Bio- logical and Toxin Weapons Convention, the Chemical Weapons Convention, and the Nuclear Nonprolif- eration Treaty. In addition, United Nations Security Council Resolution 1540 obligates Member States of 308 Chapter 13 Public Health Preparedness Policy the United Nations (including the United States) to ensure they do not support nonstate actors in their efforts to develop, acquire, possess, or use nuclear, chemical, or biologic weapons. As mentioned previously, the WHO’s World Health Assembly adopted the International Health Regulations in 2005. This agreement recognizes the threat of emerging infectious diseases, the globaliza- tion of society, and the need for improved surveil- lance, response, communication, and coordination to effectively detect and respond to public health threats. A primary purpose of the regulations is to improve global health security through international collabo- ration and communication by detecting and contain- ing public health emergencies at the source. Explicitly linking public health objectives with the security implications of international disease threats, the Global Health Security Agenda (GHSA) was launched in 2014 as an effort to elevate and accelerate progress toward a world free from infectious disease threats. While focused on preventing, detecting, and responding to epidemics—rather than all public health emergencies—the GHSA encourages the development of many of the same preparedness and response capac- ities that would be needed to address any manner of public health hazard. Depending on the type of public health emergency, there are a range of global actors that become involved to aid, augment, or help gov- ern national response efforts. These actors range from Interpol, to WHO, to the Food and Agriculture Orga- nization, to organizations connected to arms control efforts, such as the Organization for the Prohibition of Chemical Weapons and the International Association for Atomic Energy. In addition, there are networks of laboratories, regional cooperation organizations, and a vast conglomeration of nongovernmental organiza- tions that may become involved in the detection of, response to, and recovery from global public health emergencies. BOX 13-12 Discussion Questions Describe the federal preparedness infrastructure that evolved after 9/11. Are there things about the departments, agencies, and offices that to you represent improvements over the pre-9/11 infrastructure? Are there aspects that seem redundant or misplaced? BOX 13-13 Policy Case Study: Domestic Response to the 2014–2016 Ebola Outbreak Several of the federal preparedness laws and regulations of the early 2000s focused on the need to develop and stockpile a ready supply of medical countermeasures to be deployed in the event of a public health emergency. However, many pathogens of concern are relatively rare, or occur endemically only in lower-income or resource- constrained countries. As such, there was reluctance from the pharmaceutical and drug manufacturing industries to commit significant research and development dollars to products that might not have a commercially viable market. The Project Bioshield Act of 2004 sought to change that by establishing a government-funded market for such countermeasures, and thus incentivize the development of vaccines and therapeutics that would not otherwise be cost-effective. Subsequent legislation changed how the development of medical countermeasures were funded to better incentivize private sector companies to remain committed and financially viable during the lengthy process between initial development of a product and final approval by the FDA. Given the length of time required for a product to come to market, the Project Bioshield Act also allowed for HHS to authorize the emergency use of countermeasures even if they had not yet been approved by the FDA. Of course, FDA approval processes are critical for determining safety and efficacy, so the concern was raised about liability in the event that a non-FDA-approved countermeasure, used for a legitimate public health emergency, produced a severe side effect or failed as a treatment. Manufacturers feared that liability in these situations would fall on them, leading to a reticence to even engage in the development of the product. In response, Congress passed the PREP Act, which provides immunity from liability for any claims resulting from the use of a medical countermeasure approved for use during a public health emergency. There have been eight PREP Act Declarations since its inception, addressing countermeasures for smallpox, pandemic influenza, botulinum toxin, and anthrax, as well as for nonbiologic threats such as radiation. Starting in late 2013, erupting in 2014, and continuing into 2015 and 2016, Ebola virus disease spread through Guinea, Sierra Leone, and Liberia, infecting and killing thousands more people than any previous Ebola outbreak. The virus spread to countries outside of West Africa, including the United States, through global travel and the return of infected medical volunteers. The scale of the outbreak prompted several pharmaceutical companies to accelerate research and development of Ebola vaccines and therapeutics; despite such products being incentivized under the (continues) Public Health Preparedness Policy 309 ▸ Conclusion The United States has made great strides in public health preparedness in the past decade. This success was due in no small part to a massive influx of funding to support federal, state, and local entities in build- ing capacity, planning, and response efforts. Between 2003 and 2007, DHS alone awarded over $27 billion in preparedness grants to state and local governments, although this represents only a small fraction of total state and local preparedness expenditures (Schnir- ring, 2011). However, budgets steadily decreased from highs in 2002–2003, and after the financial crisis of 2008, preparedness budgets were reduced further as the nation and its individual states grappled with debt, deficits, and reduced revenues (Murthy, Molinari, LeBlanc, Vagi, & Avchen, 2017; Watson, Watson, & Sell, 2017). For example, funding for CDC’s domes- tic Centers for Public Health Preparedness program dropped from an average of over $25 million per year between 2004 and 2007 to less than $15 million for 2008 and 2009 (Richmond, Hostler, Leeman, & King, 2010). Reduced funding means that policy- makers and program managers have to make dif- ficult decisions about how best to allocate and plan for preparedness activities in a resource-constrained environment. High-profile public health incidents, including the 2009 H1N1 pandemic, the handful of Ebola cases identified in 2014, and the identification of domestic transmission of Zika virus during the 2015–2016 global outbreak have thus far resulted in only one-off appropriations of funding, rather than substantial long-term investments. Yet even these allocations may prove transient. In fiscal year 2015, the CDC received $1.77 billion earmarked for Ebola preparedness and response, including more than $500 million for domestic preparedness and response activities (CDC, 2015); in 2016, however, facing con- gressional deadlock over allocation of new funds to fight the emerging Zika epidemic, the Obama admin- istration diverted over $500 million of Ebola funds toward Zika research, prevention, and control efforts (McNeil, 2016). Assuming sufficient funding, there are several areas of public health preparedness that should be tar- geted for further development, both domestically and internationally. These include the following: ■ Comprehensive disease surveillance: The devel- opment of a fully integrated, national disease surveillance system capable of early detection of events should be supported. This may involve integration of electronic health records and exploration of other information and technology opportunities. ■ Workforce: The public health workforce, particu- larly epidemiologists and laboratory workers, and encompassing both human and animal health, must be developed and sustained. ■ Resilience and community planning: The public health community must continue to engage com- munity members and work with local entities to develop recovery and resilience plans. ■ Countermeasures: Continued investment must be made in the basic research and development of medical countermeasures, as well as in exploring ways to store and disperse such countermeasures during a public health emergency. Project Bioshield Act, virtually no companies had focused on Ebola virus, and few countermeasures were at an advanced stage of testing. There was tremendous public fear and pressure mounted on public health and medical officials to ensure that U.S. patients with Ebola were given every available treatment, even if experimental. In August 2014, the media widely reported on the remarkable recovery of two American Ebola patients in Liberia, who had been given doses of an experimental drug called ZMapp. It is not clear if and what liability protections were waived for the initial use of this and other experimental Ebola therapeutics on U.S. patients, though the provision of these treatments were sanctioned under the auspices of the FDA’s “compassionate use exemption” whereby a patient may receive unapproved treatment outside of already-approved clinical trials. However, HHS subsequently issued a PREP Act declaration providing immunity from liability for the manufacturing, administration, and use of Ebola-related vaccines, including several Ebola vaccines under development, and later issued a declaration for therapeutics such as ZMapp. This example demonstrates the importance of establishing a legal framework for preparedness to ensure the appropriate and timely use of medical countermeasures in the event of a public health emergency. Having a process in place to protect manufacturers allowed them to move forward with getting potentially lifesaving products to a frightened, at-risk population. Sources: FDA (2018b), HHS (2017), Health Resources and Services Administration (2017), Kadlec (2013), Monahan and Halabi (2015). 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This analysis of the content of health policy and law is paired in Part III with a tutorial covering one of the most important skills in the field of health policy: writing a health policy analysis. 317 © Mary Terriberry/Shutterstock CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis LEARNING OBJECTIVES By the end of this chapter you will be able to: ■ Understand the concept of policy analysis ■ Analyze a health policy issue ■ Write a health policy analysis ■ Develop descriptive and analytic side-by-side tables ▸ Introduction Imagine you work for the governor of a state that recently received a large sum of federal money for antibioterrorism efforts and your boss asks you how it should be spent. How will you respond? Or, assume you are an assistant to the director of a state nutrition program for low-income children and the program’s budget was slashed by the legislature. The program’s director needs to reduce costs and turns to you for help. How will you approach this problem? Finally, pretend you work in the White House as a domestic policy advisor and the president is consid- ering revising the administration’s methane emissions guidelines. What guidance will you offer? While the substance of health policy and law has been discussed in detail up to this point, this chap- ter teaches you what policy analysis is and the skill of addressing complex health policy questions through a written policy analysis. We use the following definition to describe a policy analysis: an analysis that provides informed advice to a client that relates to a public policy deci- sion, includes a recommended course of action/inac- tion, and is framed by the client’s powers and values. We briefly review each element of this definition in this chapter. ▸ Policy Analysis Overview In this section we define policy analysis and review the purposes for developing one. In the following section, we provide a step-by-step process detailing how to create a written health policy analysis. Client-Oriented Advice The client is the particular stakeholder that requests the policy analysis, and the analysis must be developed to suit the client’s needs. (The client, for example, could 318 CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis be a policymaker who hires you, a fictional policy- maker in an exercise developed by your professor, or an employer who asks you to analyze a problem.) In general, a stakeholder refers to an individual or a group that has an interest in the issue at hand. There may be many stakeholders related to a particular policy issue. Of course, the client requesting an analysis is also a stakeholder because that person or entity has an inter- est in the issue. However, to avoid confusion, we refer to the person or group that requests the analysis as the client, and the other interested parties as stakeholders. Informed Advice Providing informed advice means the analysis is based on thorough and well-rounded information. The information included in the analysis must convey all sides of an issue, not just the facts and theories sup- porting a particular perspective. If a decision maker is presented with evidence supporting only one course of action or one side of a debate, it will be impossi- ble for the client to make a well-informed decision. In addition, to be effective in persuading others to favor the recommended policy, your client must be able to understand and, when necessary, refute alternative solutions to the problem. Public Policy Decision Policy analyses involve public policy decisions. A pub- lic policy problem goes beyond the individual sphere and affects the greater community. Providing Options and a Recommendation A key component of any policy analysis is providing the client with several options to consider, analyzing those options, and settling on one recommendation. In other words, a policy analysis is not simply a back- ground report that identifies a variety of issues relat- ing to a particular problem; instead, it gives the client ideas about what steps to take to address the problem and concludes by recommending a specific course of action. Your Client’s Power and Values Finally, the analysis should be framed by the client’s power and values. Framing the analysis based on the client’s power is fairly straightforward and uncontro- versial: the options presented and the recommenda- tion made must be within the power of the client to accomplish. On the other hand, the notion of fram- ing an analysis according to the client’s values is more controversial. In most conceptualizations of policy analysis, including the one discussed later in this chapter, the process is roughly the same: define the problem and provide information about it, analyze a set of alternatives to solve the problem, and imple- ment the best solution based on the analysis (Patton & Sawicki, 1993, p. 3). As new information is uncovered or the problem is reformulated, analysts may move back and forth among these steps in an iterative pro- cess (Stone, 2002, p. 47). However, although there is general agreement that politics and values play a role in policy analysis, there is disagreement over at which stage of the analysis they come into play. To understand this controversy, it is necessary to discuss two models of policy analysis: the rational model and the political model. The rational model was developed in an attempt to base policy decisions on reason and science rather than the vagaries of politics (Stone, 2002, p. 7). In the traditional rational model, the analyst does not consider politics and values. Instead, he or she should recommend the “rational, logical, and technically desirable policy” (Stone, 2002, p. 51). According to the rational model, the decision maker infuses the analysis with politics and values once the analyst’s work is complete. Professor John Kingdon and others have moved away from the rational model and toward a political model. Kingdon suggests that policy analysis occurs through the development of three streams: problems, policies, and politics (Kingdon, 1995). The problem stream is where problems are defined and noticed by decision makers. The policy stream is where solutions are proposed. These proposals may be solutions to identified problems, but they are often favored projects of policymakers or advocates that exist separate from specific problems that have garnered attention. Finally, the political stream refers to the ever- changing polit- ical mood. As a general matter, these streams develop separately, only coming together at critical junctures when the problem reaches the top of the agenda, the solutions to that problem are viable, and the political atmosphere makes the time right for change (Weissert & Weisser, 2002, p. 87). Kingdon’s approach discusses occurrences the rational model does not consider, such as why some problems are addressed and others are not, why some solutions are favored even if they are not tech- nically the best approach, and why action is taken at some junctures but not at others (Kingdon, 1995). In addition, the rational model refers to only one cycle of problems. As Kingdon and others have noted, solu- tions to one problem often lead to unintended conse- quences that create other problems to be addressed, Structuring a Policy Analysis 319 resulting in an ongoing policy analysis cycle instead of an event with a start and a finish (Weissert & Weissert, 2002, p. 260). Professor Deborah Stone also focuses on the role of politics and values in analysis (Stone, 2002, pp. 1–4). She argues that the idea of the rational policy analy- sis model misses the point because “analysis itself is a creature of politics” (Stone, 2002, p. 8). According to Stone, every choice, from defining a problem, to selecting analytic criteria, to choosing which options to evaluate, to making a recommendation, is political and value-laden. As she states, “Rational policy anal- ysis can begin only after the relevant values have been identified and . . . these values change over time as a result of the policymaking process” (Stone, 2002, p. 32). She contends that policy analysis should do the very things that the rational model does not permit— allow for changing objectives, permit contradictory goals, and turn apparent losses into political gains (Stone, 2002, p. 9). The goal of the rational model founders—to divorce analysis from the vagaries of politics—is simply not possible in Stone’s view. Having differentiated these models, we now return to our definition of policy analysis: an analysis that provides informed advice to a client that relates to a public policy decision, includes a recommended course of action/inaction, and is framed by the client’s powers and values. You can see that this definition follows Stone’s political model of policy analysis, requiring the analysis to be developed with a particular client’s values in mind. After reviewing the numerous exam- ples provided in the following section, it will be evi- dent that client values permeate all aspects of a policy analysis. Only after you take into account your client’s values, combine it with the information you have gathered, place it in the prevailing political context, and understand your client’s powers, can you make an appropriate policy recommendation. Multiple Purposes The ultimate product of a policy analysis is a recom- mendation to a specific client about how to address a problem. However, a policy analysis has several other purposes as well. It provides general information nec- essary to understand the problem at hand and may be an important tool to inform stakeholders about a policy problem. In addition, the analysis may be a vehicle for widespread dissemination of ideas and arguments. Although your analysis is targeted to the client requesting advisement, it may also be used to inform and persuade other supporters, opponents, the media, the general public, and others. Finally, it will help you, the policy analyst, learn how to think through problems and develop solutions in an orga- nized, concise, and useful way. Policy analyses can take many forms—a memo- randum, an oral briefing, a report, and so on—and, correspondingly, have varying degrees of formality. This chapter explains how to construct a short, writ- ten analysis because it is a commonly used, highly effective, and often practical way to provide a pol- icy analysis to your client. In addition, the principles embedded in a policy analysis can then be used in whatever other format(s) your client prefers. Whether you are aiding a governor, the director of a state pro- gram, the CEO of a private business, or any other decision maker, you often will not have the oppor- tunity to discuss issues in person or for a significant length of time. Furthermore, given time pressures, the demands on high-level policymakers, the need for rapid decision making, and the variety of issues most policymakers deal with, many clients will not read a lengthy analysis. That is why it is essential for anyone who wants to influence policy to be able to craft a clear and concise written analysis. ▸ Structuring a Policy Analysis We now turn to a five-step method for writing a thor- ough yet concise policy analysis. Regardless of the subject matter, you can use this structure to analyze the question your client is considering. As you review each part of the analysis, notice the various disciplines and tools that may be part of writing an effective policy analysis. Analysts draw from a variety of disciplines— law, economics, political science, sociology, history, and others—and use a number of quantitative and qualitative tools when explaining issues, analyzing options, and making recommendations. Although policy analyses come in various formats and use different terminology, they will all contain these essential elements: ■ Problem identification: Defines the problem addressed in the analysis ■ Background: Provides factual information needed to understand the problem ■ Landscape: Reviews the various stakeholders and their concerns ■ Options: Describe and analyze several options to address the problem ■ Recommendation: Offers one option as the best action to pursue The following sections discuss each of these ele- ments in detail. 320 CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis Problem Identification Define the Problem The first step in writing a policy analysis is to clearly define the problem you are analyzing. A problem iden- tification should be succinct and written in the form of a question that identifies the problem addressed in the analysis. It usually consists of a single sentence, though it may be two sentences if you are analyzing a particularly complex issue. Although a problem iden- tification is simple to define, it is often one of the most difficult parts of the analysis to do well. It is also one of the most important. The problem identification is the key to your anal- ysis because it frames the problem at hand. Indeed, some policy battles are won or lost simply by how the problem identification is crafted. For example, con- sider the different questions asked in these problem identifications: Problem identification 1: What type of tax credit, if any, should the presi- dent include in the next budget proposal? Problem identification 2: What type and size of health insurance tax credit should the president include in the next budget proposal? The first problem identification asks what type of tax credit, if any, should be considered. One possible answer to that question is that no tax credit of any kind should be considered. Another answer could involve a tax credit, but not one related to health insurance. The second problem identification suggests that the option of not proposing a health insurance tax credit is unac- ceptable. Instead, the second problem identification lends itself to an analysis of identifying the pros and cons of various health insurance tax credit options. In other words, one option that may be considered based on the first problem identification (no tax credit) is excluded based on the second problem identification. Consider another example: Problem identification 1: Which health issue should be the governor’s top priority? Problem identification 2: Should the governor’s priority of reducing the number of obese residents be accomplished by relying on currently existing programs? Again, the first problem identification asks an open- ended question about identifying the governor’s top priority. The answer may be obesity, but it may be any other health issue as well. The second problem identifica- tion starts with the governor committed to reducing the obesity rate and asks how to best accomplish that goal. Again, these problem identification lead to very different analyses and (most likely) different recommendations. It is possible that your client’s values will be evident from the way the problem identification is phrased. For instance, in the second example, the second pol- icy statement clearly reflects the governor’s desire to reduce the obesity rate. Consider another example. You have been asked to write a policy analysis about the merits of importing low-cost prescription drugs from Canada. How might the problem identifica- tion differ if your client is a pharmaceutical lobbying group versus if your client is an elder rights associa- tion? Here are two possible problem identifications. An acceptable way to identify the problem for the pharmaceutical lobbying firm: How can this firm help improve medical care quality in the United States by reducing the importation of dangerous prescription drugs from Canada? An acceptable way to identify the problem for the elder rights association: How can this association help seniors obtain low- priced prescription drugs from Canada? The vast differences in these problem identifi- cations reflect differing viewpoints regarding the importation of prescription drugs. A pharmaceutical lobbying firm is more likely to be concerned about reduced profits for its drug company clients and therefore would want to deter or restrict importation, which could lead to more competition in the market. One way to accomplish that goal is to phrase the issue as a safety/quality-of-care concern. An elder rights association is more likely to be concerned with high- priced prescription drugs in the United States and would therefore want to promote drug importation (assuming, of course, there is no actual safety concern with the drugs). One way to accomplish that goal is to phrase the issue as one of cost reduction. It is also possible to identify the problem in a neu- tral manner. From the immediately previous exam- ple, analysts for both groups could use the following phrasing. Neutral problem identification: What action should [the client] take in response to recent congressional proposals relating to import- ing prescription drugs from Canada? Structuring a Policy Analysis 321 Neutral wording is not necessarily better or worse than value-driven phrasing. The value-driven phrase provides additional information about the direction of the policy analysis and clearly limits some of the options that might otherwise be considered. Neutral wording is often broader, leaving more options on the table at the outset. Yet, even if neutral phrasing is used, the options the analyst considers and the recommen- dation the analyst makes will still be constrained by the client’s values and needs. Because it is possible to identify problems numer- ous ways for any issue, how do you develop the best one? In general, you want to use the one that provides the best fit for your analysis. If you decide to focus on all safety- related concerns, for example, the pharmaceutical lobbying firm example would be a good fit. If, however, the firm chose to have one safety-related option, one state government-focused option, and one convenience- centered option, then you would want a broader prob- lem identification that allows for all types of options. For example, “How can this firm help improve consum- ers’ experience purchasing prescription drugs?” would allow for various types of options. In addition, you want to make sure your problem identification is analytically manageable and does not include your recommendation. Make the Problem Identification Analytically Manageable Acceptable phrasing can be broad or narrow. One is not better than the other; they suit different purposes. Policy analyses with broad problem identifications may require more diverse information in terms of background and may consider a wider range of issues in the paper’s landscape section. Also, the recommen- dations may promote “big picture” changes instead of specific and tailored ideas. Narrower wording may require less extensive background and landscape infor- mation, but they may not capture big picture, systemic concerns relating to the problem under consideration. Reflect on the following examples. They both may be acceptable problem identifications, depending on the needs of your client. A broad problem identification: What action should the U.S. Department of Health and Human Services take to avoid another flu vaccine shortage? A narrow problem identification: How can the U.S. Department of Health and Human Services create incentives for additional manufac- turers to supply flu vaccine to the United States? The first one could result in a variety of rec- ommendations, such as improving surveillance to lower the incidence of flu in the future, developing new vaccines that have longer-lasting immunity, or finding ways to entice additional manufacturers to provide supplies to the United States. It is a broad problem identification that will lead to an analysis that could recommend a wide variety of actions. The second one focuses on one particular way to decrease a flu vaccine shortage—increasing the number of suppliers. Although the analysis will also provide a number of options, all of the options will address the specific issue of increasing suppliers. Again, there is no single right or wrong way to phrase a problem. Whether it is more useful to have a broad or narrow problem will depend on the needs and concerns of your client. However, it is possible to make a problem iden- tification so vague that it will be impossible to write a sound policy analysis. Unfortunately, there is no easy way to differentiate an acceptably broad problem phrasing from an unmanageably vague one when you begin your analysis. You will know your wording is too vague, however, if you find it impossible to write a complete and concise policy analysis and you can think of too many diverse options to include (if  you can think of 5 to 10 possible options your statement is probably workable; if you can think of 15 or more options, your statement is probably too broad). Your paper will require too much information in the back- ground and landscape sections if you draft an overly vague problem identification. In addition, you will find that you cannot devise a coherent series of options addressing the problem because the problem identifi- cation is too broadly defined. Instead of a concise and useful policy analysis, you will end up with a lengthy and unfocused paper. If you believe your problem identification may be so vague that it is analytically unmanageable, ask yourself if you are addressing one specific problem that may be countered with a few specific options. If you are having trouble narrowing your problem iden- tification, you can try including limitations based on geography (e.g., refer to a particular state or city), time (e.g., focus on the next year or over the next 5 years), or numerical boundaries (e.g., use a goal of reducing a figure by a certain percentage or a budget by a specific dollar amount). Consider this example: An unmanageably vague problem identification: What is the best use of the Centers for Disease Control and Prevention’s resources to improve the health status of our citizens? 322 CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis This phrasing is not analytically manageable. It is extremely broad and unfocused. Using this problem identification, your analysis could address any health issue, such as access to care problems, the need to improve vaccination rates, racial disparities in health care, or many others. The list is endless and your pol- icy analysis will be as well. A manageable problem identification: What preventive health issue should be the top priority for the Centers for Disease Control and Prevention next year? This one is analytically manageable. It is focused on preventive measures specifically and is limited to determining the top priority. In addition, the problem is focused on what can be done in the upcoming year. This second problem identification allows for a much more concise and directed policy analysis. Do Not Include the Recommendation in Your Problem Identification Another pitfall when identifying problems is crafting a problem in a way that suggests a particular solution to the issue. A problem identification should define a specific problem; it should not indicate how that prob- lem should be solved. If the answer is preordained, why bother with the analysis? When phrasing your problem , ask yourself if you can imagine four, five, or six potentially viable options to address the problem. If you cannot, then you have not defined the problem well. For example, assume you’ve been asked to address how to reduce medical malpractice insurance premi- ums. Here is a problem identification that leads the reader to one conclusion: A leading problem identification: To what extent should jury awards be limited in malpractice cases in order to reduce malpractice premiums? This phrasing leads to one very specific solution (limiting jury awards) as a way to counter a broad problem (reducing malpractice premiums). The only question presented by this problem identification is what the award limit should be. It does not provide a range of options for reducing malpractice premiums (one of which may be limiting jury awards) for your client to consider. (Of course, if you were specifically asked to address how to limit jury awards in malprac- tice cases, this would be an appropriate problem iden- tification.) A better way to word the problem would be, “What action should be taken to stem the rise in malpractice premiums nationwide?” This problem identification lends itself to an analysis that considers several options. Possible alter- natives include limiting jury awards, enacting regu- lations that limit the amount insurance companies can increase premiums each year, and a host of other options. This wording also narrows the focus of the analysis to national solutions. Once you have written your concise and precise problem identification, you have set the framework for your analysis. Every other section of the analysis should relate directly to the problem you identified. Remember that writing a policy analysis is an itera- tive process; you must review, revise, and tighten the information and arguments throughout the writing process. As you review the other components of your policy analysis, it may become evident that what you thought was the best way to describe the problems can be further improved. There is nothing wrong with revising your wording as you craft your analy- sis, as long as you remain true to your client’s values and power. The Background Section The first substantive information your analysis pro- vides is in the background section. The background informs the reader why the particular problem has been chosen for analysis. This section should make clear why the issue is important and needs to be addressed now. In addition to providing general information about the topic, your background and landscape (discussed next) sections provide the information necessary to assess the options you lay out. Much of the information in the background will be relevant regardless of who assigned the analysis. How- ever, because the background provides information necessary to understand the problem, it is essential to understand the knowledge level of your client when constructing the background. For example, assume you are writing an analysis relating to state prepared- ness planning for smallpox vaccination in the event of a bioterror attack. Regardless of your client, your back- ground would likely include information about why a smallpox attack is a threat, including (but not limited to) the following: ■ Reference to the September 11, 2001, attacks on the World Trade Center and subsequent events ■ The belief that although smallpox has been erad- icated as a natural disease, it is likely that samples of the virus still exist ■ Reference to any information provided by the fed- eral government or other sources relating to the possibility of a bioterror attack Structuring a Policy Analysis 323 If your client does not have knowledge relating to smallpox, you would also include details about smallpox transmission, the effects of the disease, the vaccination procedure, and the risks associated with vaccination. In addition, your background should include whatever factual information is necessary to fully assess the options discussed. Remember, your client needs a complete picture, not just the information that supports the recommended action or your client’s viewpoint. By the time the reader reaches your paper’s options section, all of the information necessary to evaluate the options should have been presented in your background or landscape. For example, assume one of your options for the smallpox vaccination state preparedness analy- sis is immediate compulsory vaccination of all first responders and establishment of a protocol for vacci- nating the remaining population if there is a smallpox outbreak. In that case, your background (and possibly the landscape) should provide information regarding who first responders are, where they are located, how many there are, legal issues relating to compulsory vaccination, and so on. Because the background section is an informational—not analytical—part of the analysis, the material provided in it should be mostly factual. The tone of the background is not partisan or argumenta- tive. It should simply state the necessary information. The Landscape Section Together, the background and landscape sections frame the context of the analysis for your client. Whereas the background provides factual informa- tion to assist the client in understanding what the problem is and why it is being addressed, the land- scape provides the overall context for the analysis by identifying key stakeholders and the factors that must be considered when analyzing the problem. In the following discussion, you will read about numer- ous types of people, groups, and issues that might be included in a landscape. These examples are meant to provide suggestions and provoke thought about what should be included in an analysis. It would be impos- sible to include everything discussed here in any sin- gle landscape section. It is the job of the policy analyst to choose among these options—to be able to identify whose views and which factors are the most salient ones in creating a complete landscape. Identifying Key Stakeholders Up to this point, the policy analysis discussion has focused on just one stakeholder: the client who asked for the policy analysis. The landscape brings in other stakeholders who have an interest in the issue. Although it is often impossible to include every pos- sible stakeholder in a single analysis, it is necessary to identify the key stakeholders whose positions and concerns must be understood before a well-informed decision can be made. How do you identify the key stakeholders particular to your issue? Unfortunately, there is no magic formula. The best approach is through research and thinking. Also, bear in mind that the stakeholders and issues discussed in the landscape must relate to your overall policy analysis. Your options must address the problem identified initially, and all of the information necessary to assess the options must be presented in the back- ground and landscape. As you learn about the problem to be analyzed and think about options for addressing the problem, it should become apparent which stake- holders have a significant interest in the issue. For example, assume your analysis relates to pro- posed legislation regulating pharmacists and pharma- ceuticals. Who are possible key stakeholders regarding this issue? They may include several parties: ■ Democratic and Republican politicians (you might need to distinguish among those in Con- gress, state legislatures, and governors) ■ Pharmaceutical industry ■ Health insurance industry ■ AARP and other elder rights groups ■ Advocacy groups for the disabled ■ Pharmacists’ lobby ■ Foreign pharmaceutical companies ■ Internet-based pharmaceutical companies Can you think of others? Deciding which stakeholders must be included in an analysis depends on the exact problem being analyzed and which options are included in the anal- ysis. For example, assume you are writing an analy- sis about requirements relating to how pharmacists inform consumers about their medications. If your problem deals with face-to-face encounters only, Internet-based pharmaceutical companies would not be a key stakeholder. Alternatively, if the prob- lem definition deals with purchasing limitations over the Internet, Internet-based pharmaceutical companies must be included in the analysis. If one of your options focuses on comprehension among older adults, elder rights groups should be included in the analysis. If your client is someone running for public office in a county where the health insur- ance industry is a major employer, the views of those companies would be essential to include. In other words, although it is possible to make a generic list of the types of individuals and groups that could be 324 CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis landscape as the portion of the analysis that provides the overall context of the issue. The “overall context” refers to the mix of factors that are relevant when any decision is being made. These factors are used to analyze stakeholder positions. Although there is not one comprehensive list of context factors and not all factors are relevant to all analyses, the list in BOX 14-1 includes some common factors that could be discussed. included, the specific list for any policy analysis will depend on the client for whom the analysis is being written, the specific problem being addressed, and the options being considered. Identifying Key Factors Once you have settled on a list of key stakeholders, it is necessary to analyze their position on the issue at the center of the analysis. Earlier, we described the BOX 14-1 Possible Factors to Include in a Landscape Section Political Factors What is the political salience of the issue? Is this a front-burner issue? Is this a controversial issue? Are your client, legislators, and the general public interested in addressing this issue? Has this or a similar healthcare issue been addressed recently? Do key constituents, opponents, interest groups, or other stakeholders have an opinion about the issue? Who is likely to support or oppose change? Is there bipartisan support for the issue? Is there a reason to act now? Is there a reason to delay action? Social Factors Who is affected by this problem? According to the client who assigned the analysis, are influential or valued people or groups affected by this problem? Is there a fairness concern relating to this issue? Is there a stigma associated with this issue? Economic Factors What is the economic impact of addressing this problem? Of not addressing it? Are various people or groups impacted differently? Are there competing demands for resources that relate to this issue? What is the economic situation of the state or nation? How does this affect the politics relating to this issue? How will addressing this issue affect healthcare costs/healthcare spending? Practical Factors Is it realistic to try to solve this problem? Do others need to be involved to be able to solve this problem? Is the technology available to solve this problem? Would it be more practical to solve this problem later? Are other people in a better position to solve this problem? What do we know about solutions that do or do not work? If this problem cannot be solved, is it still necessary (politically, socially) to act in some way to address the problem? Is evidence available to support potential solutions? Legal Factors Are there legal restrictions affecting this problem? Is there a need to balance public health concerns and individual legal rights? Are there legal requirements that impact the analysis? Is new legislative authority necessary to solve the problem? Is there legal uncertainty relating to this problem? Is future litigation a concern if action is taken? Structuring a Policy Analysis 325 The list of factors in Box 14-1 is by no means exhaustive, but rather is intended to provide a sense of the types of questions that are often relevant to under- standing the context of a problem. Just as it would be impossible to discuss every stakeholder who might be connected to the problem, it would be impossible to include in a concise analysis of all the issues raised by the five factors listed in Box 14-1. It is the policy ana- lyst’s job to identify not only which key stakeholders must be included, but also which key factors must be discussed. Consider again the example relating to limiting prescription drug purchases made over the Internet. The following key factors would likely be included: ■ Political factor: Who supports or opposes the limitation and how influential are they? ■ Economic factor: Would it be costly to imple- ment this limitation or costly to key constituents who may need more prescription drugs than are allowed by the limit? Would it provide an eco- nomic benefit to some stakeholders? ■ Practical factor: Is it possible to implement and enforce a restricted purchasing system over the Internet? ■ Legal factor: Are there legal barriers to limiting Internet prescription drug purchases? For each factor, the analysis should discuss rele- vant views of the stakeholders you included in your analysis. For example, when discussing economic fac- tors, the analysis might explain that Internet-based pharmaceutical companies would experience a loss of revenue, some consumers would pay more for pre- scription drugs if they needed more than the limited amount, and storefront pharmaceutical companies would make money because consumers probably would have to fill more of their orders in person. Depending on the political situation, the analysis might explain that the client’s most influential con- stituents are older adults who use many prescrip- tion drugs and are likely to oppose any restriction, or that storefront pharmaceutical companies are large campaign contributors and would support a restriction. Structuring the Landscape Section The landscape may be organized by stakeholder or by factor. In other words, it is acceptable to identify stakeholder 1 and then describe that stakeholder’s views based on various concerns, and then identify stakeholder 2 and describe that stakeholder’s views, and so on. Alternatively, the landscape could be struc- tured based on factors described in Box 14-1. Within that structure, the landscape would address one set of factors (e.g., economic), then another set (e.g., social), and so on. Some stakeholders may not have relevant views for all of the factors, but each stakeholder must be addressed as often as necessary to convey their policy position. For  example, the economic factors section would identify various stakeholders and their views based on economic concerns. It would include information such as “Canadian companies would oppose regulating Internet pharmacies because it would increase the cost of doing business with Amer- icans, while U.S. storefront pharmacists would sup- port regulating Internet pharmacies because it may increase prices for their competitors’ products.” When you discuss a particular view, it is import- ant to identify which stakeholders hold that view. At the same time, do not insert opinions unattached to individuals or groups. For example, it would not be helpful to write, “Some oppose legislation regulating Internet pharmacies.” Such a statement does not iden- tify who opposes the legislation or why they oppose the legislation. If your client will be able to assess the polit- ical, practical, and ethical feasibility of taking a partic- ular action, the client needs to understand where the various groups stand and why they hold those views. Thus, a more helpful sentence would be: “RxData, a large software company that assists Internet pharma- cies and is a major employer in your congressional district, opposes legislation regulating Internet phar- macies because it will add costs to its business and may result in future employee layoffs.” That sentence tells your client who is opposed to the legislation, why they are opposed to it, and why they are a key stakeholder. The tone of the landscape should be neutral and objective. The landscape is not an argumentative Quality-of-Care Factors Does this problem address quality-of-care issues? Do some solutions focus on quality of care more than others? Do quality-of-care concerns vary based on which provider is involved? Is evidence available about the best ways to improve quality of care? Has the client already taken any actions to improve quality of care? 326 CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis section to persuade the reader that one view is better than another. Its purpose is to identify all of the key stakeholders and their concerns so the decision maker is well-informed before assessing options. The Options Section Once your client finishes reading the background and landscape sections, he or she should have a thorough understanding of the policy problem and the overall context in which a decision will be made. The time has come for him to consider what action to take. This is where your paper’s options section comes in, providing three to five alternatives for your client to consider. This section is more than a recitation of var- ious choices; it provides an analysis of each option by stating the positive and negative aspects of pursuing each path. Identifying Options The first step to writing your options section is to iden- tify the various options you could analyze. Although you may develop a new option not previously consid- ered by others, it is likely that you will find numerous possibilities that others have already suggested. Some places to find already-considered options include the following: ■ Media ■ Scholarly articles ■ Interest group recommendations ■ Think tanks/experts in the field ■ Congressional testimony ■ Legislation (passed or proposed) ■ Agency reports Another approach to developing options is to consider several major actions that policymakers often take to deal with a policy problem. For exam- ple, depending on the circumstances, the following actions could be added, eliminated, or altered by a policymaker in response to a policy problem: ■ Taxes ■ Subsidies ■ Grants ■ Laws ■ Regulations ■ Programs ■ Government organizations ■ Information ■ Outreach Once you have compiled a list of options, how do you choose the best three to five options to include in the analysis? As always, the guiding principle underlying your decision is to base your decision on your client’s values and powers. You should not sug- gest an option that clearly violates your client’s values because your client will not seriously consider that option. For example, if your client has rejected spend- ing new state money to solve a problem, you should not include an option that would cost the state money (or if you do, you would need to be clear about how these funds would be offset). Also, it is important to remember the extent of your client’s power. For exam- ple, on one hand, an analyst might recommend that a member of Congress introduce or sponsor a bill, or that an interest group submit a comment as part of the public notice and comment period before a reg- ulation is finalized. On the other hand, an analyst should not recommend that a member of Congress force a state to pass a particular law, because that action is not within Congress’s power (the responsi- bility of passing state laws falls to state legislatures). Similarly, an interest group cannot issue an executive order or force an administrative agency to craft a reg- ulation in a particular way. In other words, any option you include must be within the ability of your client to undertake. In addition, you will probably want to include in your analysis any major proposals that are currently being considered. You may also choose to include pro- posals backed by key allies and constituents. Even if your client does not act on these proposals, it is import- ant to be able to explain why “mainstream” options are being rejected. Also, it may be appropriate to con- sider the status quo (the “do-nothing” approach) as an option. The status quo option works best when there is a specific reason for waiting to act; otherwise, it may appear to be an option because the analyst ran out of ideas. For example, if there is an evaluation under way of a key program, a valid status quo option would be to wait until the evaluation is complete and then recon- sider the issue based on the findings. Simply suggest- ing to do nothing without a rationale is not acceptable. Even when considering the do-nothing tactic, it is necessary to evaluate the pros and cons of this option. In addition, your options should be different enough from one another to give your client a real choice. For example, if all of your options involved creating a big, new federal program and your client does not prefer that strategy, then the analysis is not useful. There is one final rule to follow: whichever alternative you ulti- mately recommend must be analyzed in the options section of your analysis. All of the options included in the analysis must directly address the problem identified in your prob- lem identification. For example, if your problem identification involved ways to reduce the number Structuring a Policy Analysis 327 of uninsured individuals, an option that promotes increasing access to care for insured residents would be inappropriate because it does not directly address the problem. Indeed, everything in your analysis must flow from your problem identification, from what is included in the background and the issues discussed in your landscape, to the alternatives suggested in the options section, and (as discussed later) your final recommendation. Assessing Your Options Your options analysis must include a discussion of the pros (what is useful) and the cons (what is prob- lematic) of each option. Although policymakers often seek a “silver bullet” that solves a problem without any negative effects, it is highly unlikely that such an option exists. As a result, an analysis must include the positive and negative aspects of an option. Also, all options must be analyzed equally. Do not provide more analysis for the option you decide to recommend even though it is your preferred option. Your client can make a fully informed decision only if you analyze what is both good and bad about each proposal. To draft your pros and cons, you must identify the appropriate criteria for the analysis of the pros and cons and apply each criterion to all of the options. Many possible criteria could be used, so you must pick the ones that best fit your client’s values and that address the key issues relating to the policy problem. Sometimes your client will provide you with criteria; other times you must deduce the correct criteria based on what you know about your client and the problem. Generally you should choose between three and five criteria for your evaluation of the pros and cons in this type of analysis. Typically, fewer than three will not allow for a full analysis, and more than five are difficult to assess in a relatively short analysis. Your choice of criteria should reflect the concerns discussed in the landscape, where you identified the key factors relating to the problem. For example, if economic burden was an important aspect of the issue being considered, costs should be one of the crite- ria used to analyze the options. If the need for quick action was an important aspect of the issue, timeliness and administrative ease might be important criteria to consider. In general, cost and political feasibility are usually important criteria to include in your analysis. However, the specific criteria that are best for your analysis will depend on your client, the specific prob- lem identification being addressed, and the landscape of the issue. BOX 14-2 provides some criteria that could be considered when analyzing options. Can you think of others? Structuring the Options Section When structuring your options section, you may find it helpful to use headings or bullets delineating each option. Your headings should clearly label each option. Also, it is generally useful to separate out the options by paragraph instead of having a continuous page or two assessing all of the options. The first sen- tence or two of each options paragraph should be a clear description of that option so the client under- stands what is being proposed and exactly what action your client would be taking; then assess the pros and cons of the option based on the criteria you identified. You should explicitly state the criteria prior to your options description. For example, assume you are writing a policy analysis for the Secretary of the Department of Health and Human Services about how to increase access to care for immigrants. After drafting the necessary background and landscape information, you decide to assess the following options: (1) creating a public edu- cation campaign, (2)  providing grants to states, and (3) increasing funding to community health centers. BOX 14-2 Sample Options Criteria Cost: How much does this option cost? (You may have to break this down: how much does it cost the federal government, state government, individuals, etc.?) Cost–benefit: How much “bang for the buck” does this option provide? (This is a difficult criterion to assess in shorter, less complicated policy analyses because you often do not have the information necessary to make this determination.) Political feasibility: Is this option politically viable? Is it likely to become law? Even if it is not likely to become law, is it likely to help your client politically? Legality: Is this option legal? If so, are there any restrictions? Administrative ease: Does this option have steep implementation hurdles? Fairness: Are people affected by this option treated fairly/equally? Timeliness: Can this option be implemented in an appropriate or useful amount of time? Targeted impact: Does this option target the population/issue involved? Effectiveness: How well does this option accomplish the goal set out in the problem identification? Healthcare-specific criteria: Does this option improve quality of care, lower healthcare spending, reduce the incidence of a particular disease, etc.? 328 CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis care, or address concerns in the immigrant community about being deported if they par- ticipate in public programs. You would write a similar analysis for each of the options under consideration. Side-by-Side Tables You may choose to assess your options with the help of a side-by-side table. This table may be descriptive or analytic. A descriptive table would provide a descrip- tion of each option but not provide any analysis. An analytic table would assess the options based on the criteria chosen. In either case, the table should be appropriately labeled and easy to read. As a general matter, a side-by-side table should supplement, not replace, your textual analysis because it is difficult to provide sufficient information within the space pro- vided by a table. However, a table is a useful visual aid that may enhance the reader’s understanding of your options and overall analysis. TABLES 14-1 and 14-2 pro- vide examples of side-by-side tables. As you can see from both tables, additional infor- mation is necessary for a complete analysis. In the text of your options section, you would need to pro- vide a more complete explanation of each option. It is difficult (but not impossible) to provide sufficient depth of analysis in a chart without creating a busy, difficult-to-read table. Although the second table uses the terms low, medium, and high to assess the options, other terms or symbols (e.g.,+, −) may be used. In addition, you may choose to include phrases instead of single words or symbols. Whatever choice you make, be sure that it You decide the best criteria to use are cost to the fed- eral government, political feasibility, and degree of increase in the number of immigrants who seek care. In your options section, you would have three differ- ent parts—one for each option—assessing the pros and cons based on the criteria you chose. Although the structure of the analysis may vary, you might have a paragraph looking something like this: Option 1: Create a Public Education Cam- paign. The Secretary of the Department of Health and Human Services should order the Centers for Disease Control and Preven- tion to create a public education campaign to alert immigrants to the various ways they can access health care in their area. The campaign will be delivered in English and the most com- mon immigrant languages in the area and will occur on television, over the radio, and in public (e.g., billboards). In these difficult eco- nomic times, this is a relatively low-cost option (although if immigrants access more care, the cost of providing care will increase). In addi- tion, the political feasibility is somewhat high because this option does not call for any pol- icy changes, but rather merely alerting indi- viduals to policies that already exist. On the other hand, the political feasibility is tempered because the option focuses on helping immi- grants, a group that has been under attack politically in recent times. The most signifi- cant disadvantage of this option is that it may not be very effective in increasing the number of immigrants who access care because it does not increase access points, reduce the cost of TABLE 14-1 Descriptive Side-by-Side Table Increasing Access to Care for Immigrants—Options Description Public Education Campaign Grants to States Health Center Funding General description Campaign on radio, television, and public areas Federal government provides funds to states to increase access to care for immigrants Federal government provides funding to health centers for services Populations affected All will hear, focus on immigrants in community Only immigrants in the state All health center patients, including immigrants Length of option 1 year 5 years, subject to annual appropriations 2 years Payer Federal Federal Federal Structuring a Policy Analysis 329 is clear which assessment is positive and which is nega- tive. When necessary, provide a legend explaining your terms. Also, some people prefer to use numerical assess- ments (e.g., 1 = low, 2 = medium, 3 = high). Although debates exist regarding the value of this type of quan- titative assessment in a side-by-side chart, we strongly discourage it. Policy analysis is both an art and a sci- ence, and using a numerically based table can obscure that balance. An attempt to use quantitative measures may lead readers to assume a simple summation will suffice—just add up the columns and choose the best one. Overall, reducing the analysis to numerical labels hides the value judgments that are part of every analy- sis, fails to address whether certain criteria should be weighted more than others, and makes the optimal solution appear more certain than it probably is. TABLE 14-2 Analytic Side-by-Side Table Increasing Access to Care for Immigrants—Options Assessment Options Criteria Public Education Campaign Grants to States Health Center Funding Cost to federal government Low Medium High Political feasibility Medium Low High Increase in access for immigrants Low High Medium BOX 14-3 Checklist for Writing a Policy Analysis 1. Problem Identification Is my problem written as one sentence in the form of a question? Can I identify the focus of my problem ? Can I identify several options (but not too many) for solving the problem? 2. Background Does my background include all necessary factual information? Have I eliminated information that is not directly relevant to the analysis? Is the tone of my background appropriate? 3. Landscape Does the landscape identify all of the key stakeholders? Are the stakeholders’ views described clearly and accurately? Is the structure of the landscape consistent and easy to follow? Is the tone of the landscape appropriate? Does the reader have all the information necessary to assess the options? 4. Options Do my options directly address the issue identified in the problem identification? Did I assess the pros and cons of each option? Did I apply all of the criteria to each option’s assessment? Are the options sufficiently different from each other to give the client a real choice? Are all of the options within the power of my client? 5. Recommendation Is my recommendation one of the options assessed? Did I recommend only one of my options? Did I explain why this recommendation is the best option, despite its flaws? 330 CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis References Kingdon, J. (1995). Agendas, alternatives, and public policies (2nd ed.). New York, NY: Addison-Wesley Educational Publishers. Patton C. V., & Sawicki, D. S. (1993). Basic methods of policy analysis and planning (2nd ed.). Englewood Cliffs, NJ: Prentice Hall. Stone, D. (2002). Policy paradox: The art of political decision making. New York, NY: W. W. Norton. Weissert, C. S., & Weissert, W. G. (2002). Governing health: The politics of health policy (2nd ed.). Baltimore, MD: Johns Hopkins University Press. The Recommendation Section The time has finally arrived in your policy analysis to make a recommendation. You should choose one of your options as your recommendation. Although it is possible to make more than one recommendation or a hybrid recommendation of multiple options, we discourage those approaches. Making multiple recom- mendations might make it necessary for your client to conduct further analysis to choose among the options, and making a hybrid recommendation (a combina- tion of two or more options) is not appropriate unless the hybrid option was analyzed separately as a single option. In general, it is the analyst’s job to organize and clarify the issues and place them in the context of the client’s views and power. Ultimately, this approach should result in one path that you believe best suits your client. The recommendation section should begin by clearly identifying which option is favored and why this option is preferred over the other ones. As mentioned in the options section, every alternative will have pros and cons. The recommendation section does not simply repeat the analysis in the options sec- tion. Instead, this portion of the analysis must explain why, despite the drawbacks, this is the best action to take based on your client’s values and power. In addi- tion, the recommendation section identifies what, if any, actions may be taken to mitigate or overcome the negative aspects of your recommendation. ▸ Conclusion You now have a basic understanding of what policy analysis is and an introduction to the tools necessary to analyze a policy problem. Additionally, thinking through the process described in this chapter should train you to evaluate your options when you become the decision maker. The checklist in BOX 14-3 provides examples of what should be included in each section of a written policy analysis. © Mary Terriberry/Shutterstock accountable care organization (ACO) A group of healthcare providers that is collectively reimbursed for a single patient’s care. This arrangement is meant to give providers an incentive to deliver high-quality, cost-effective care. accreditation A process applied to healthcare institutions to ensure that all necessary and required processes, stan- dards, competencies, ethics, and so on are up to par. administrative law The body of law produced by execu- tive (i.e., administrative) agencies of federal, state, and local governments. Administrative Procedures Act A federal law that gov- erns the way in which administrative agencies of the federal government may propose and establish regulations. adverse selection A means of forming an insurance pool based on the idea that individuals with a higher-than- average risk of needing health care are more likely to seek health insurance coverage. annual aggregate limit A cap imposed by health insur- ance companies on the amount a policy will pay during a single year. bioterrorism The threat or use of a biologic agent, typi- cally by a nonstate actor, to cause death or harm to humans, animals, or plants and specifically targeting civilian popula- tions or resources. block grant A large sum of money granted by the national government to a regional government with only general provisions as to how the money is to be spent. bundling An arrangement by which providers are paid a predetermined amount for all services related to treating a specific condition, as opposed to compensating health- care providers separately for every service performed. This arrangement is meant to give providers an incentive to deliver cost-effective care. “Cadillac” healthcare plans Health insurance plans and other products whose value exceeds a stated annual dollar threshold. cafeteria plans Employer-sponsored health benefit plans under which employees may set aside wages to be used for medical expenses not otherwise covered by their basic health insurance. Also referred to as flexible spending accounts (FSAs). capitation A method of payment for health services in which a fixed amount is paid for each person served without regard to the actual number or nature of services provided. catastrophic coverage A health insurance coverage option with limited benefits and a high deductible, intended to protect against medical bankruptcy due to an unforeseen illness or injury. Centers for Disease Control and Prevention (CDC) The federal agency within the Department of Health and Human Services charged with disease prevention, educa- tion, and public health activities. Centers for Medicare and Medicaid Services (CMS) The federal agency within the Department of Health and Human Services that administers the Medicare and Medicaid programs. Children’s Health Insurance Program (CHIP) A health insurance program targeted to low-income children, estab- lished in 1997 and reauthorized in 2009, that is adminis- tered by states and funded through a combination of federal and state payments. COBRA The nickname for a law, enacted as part of the Consolidated Omnibus Budget Reconciliation Act of 1985, that allows individuals to continue to purchase employee health benefits for a period of 18 to 36 months following a “qualifying event” such as unemployment, death of a wage earner, divorce, or termination of minor dependent coverage. co-insurance A form of beneficiary cost-sharing for cov- ered health insurance benefits and services, expressed as a percentage of the approved payment amount for the benefit or service (e.g., 20% of the payable amount). community health center A type of community clinic that provides a broad range of healthcare services and that charges on a sliding-scale fee basis. See also federally quali- fied health center. community rating A method for setting a premium that requires health insurance providers to offer health insur- ance policies within a given territory at the same price to all persons without medical underwriting, regardless of indi- vidual health status. comparative effectiveness research (CER) A type of health services research that compares different approaches to treating medical conditions in order to determine which methods are most likely to produce the best outcomes. Glossary 331 coordination of benefits A process by which health ser- vices are paid for by more than one health insurance plan. For example, if a child is insured through both parents, one insurer is generally considered the primary policy, and the secondary policy reimburses for services not covered under the primary policy. co-payment A form of beneficiary cost-sharing for cov- ered health insurance benefits and services, expressed as a flat dollar payment (e.g., $5.00 for a prescription drug). cost-sharing A requirement that insured patients pay a portion of their medical costs, either as co-insurance or as a fixed co-payment. culturally and linguistically appropriate care A fed- eral standard designed to eliminate ethnic and racial dis- parities in health care. deductible The amount patients must pay out of their own pocket before their health insurance policy begins con- tributing to the cost of their care. Department of Defense (DoD) A federal agency that, among other functions, administers healthcare programs for active military and their dependents through a publicly funded and privately administered health program called TriCare. Department of Health and Human Services (HHS) A federal agency that administers federal health and welfare programs and activities. Department of Labor (DoL) A federal agency responsi- ble for administration and enforcement of ERISA, a federal law that sets requirements for employer-provided health benefits that are not offered through state-licensed health insurance plans. dependent coverage Health insurance coverage of a spouse, child, or domestic partner of an insured individual. diagnostic-related group (DRG) A system used to clas- sify patients (particularly under Medicare) for the purpose of reimbursing hospitals. Hospitals are paid a fixed fee for each case in a given category, regardless of the actual costs of providing care. discrimination in health care Failure by providers to treat patients equitably for any of a number of reasons, including race, gender, age, ability to pay for care, or sever- ity of illness. This term can also be used to describe the insurance company practice of medical underwriting and rating. doughnut hole A gap in prescription drug coverage under Medicare Part D, for which beneficiaries pay 100% of their prescription drug costs after their total drug spend- ing exceeds an initial coverage limit until they qualify for catastrophic coverage. The coverage gap will be gradually phased out under the Affordable Care Act by 2020. dual eligibles Individuals who are eligible for both Med- icaid and Medicare. electronic medical record (EMR) An individual medical record that is stored electronically. Employee Retirement Income Security Act (ERISA) A 1974 federal law that establishes standards governing both pension plans and “welfare benefit plans” (such as health benefits, dependent care benefits, and other types of ben- efits and services) and that is applicable to non-federal employers, multi-employer arrangements, and union plans. employer responsibility A requirement that employ- ers assist in covering workers and their dependents, either through the provision of a health plan or through a contri- bution toward coverage that may be expressed as payment of a flat dollar charge (e.g., $500 per worker), a percentage of payroll, a percentage of an annual insurance premium, or some other amount. Also referred to as an “employer man- date.” employer-sponsored insurance (ESI) A health benefit plan offered by an employer to its employees (and often to employee dependents). Some employers purchase plans from a traditional insurance company, while other (pri- marily large) employers may choose to directly insure their employees through their own plan. entitlement program An insurance program that guar- antees access to benefits or services based on established rights or by legislation (e.g., the Medicaid program). epidemic A situation in which new cases of a certain dis- ease, in a given human population during a given period, substantially exceed what is expected based on recent expe- rience. epidemiology The study of patterns of health and illness and associated factors at the population level. essential benefits A list of core benefits established under the Affordable Care Act that must be included under any health insurance plan in order to meet minimum coverage requirements. exchange-eligible employer An employer that is per- mitted to enroll in a health insurance exchange in order to offer health benefits to its employees. exchange-eligible individual An individual who is permitted to obtain coverage through a health insurance exchange. exchange-participating health benefit plan A health insurance plan offered to individuals and small employers through health insurance exchanges. They must meet fed- eral insurance market and benefit requirements. excise tax A tax on health insurance and health benefit plans whose annual dollar value exceeds a specified limit, as well as on the sale of specified healthcare items and services such as medical devices and equipment. exclusion The practice by which an insurer or health benefit plan classifies certain otherwise-covered items and treatments as ineligible for coverage. Common exclusions include “experimental,” “educational,” and “cosmetic” treat- ments and services. 332 Glossary executive order A presidential directive, with the author- ity of a law, that directs and governs actions by executive officials and agencies. fair marketing A term used to encompass a range of health insurance market reforms to protect consumers from medical underwriting and other practices designed to limit the amount an insurer pays for medical claims. Federal Emergency Management Agency (FEMA) A federal agency responsible for responding to national emer- gencies, including natural disasters. federalism A system of government in which sovereignty is constitutionally divided between a central governing authority and constituent political units (e.g., states), and in which the power to govern is shared between the national and state governments. federally qualified health center (FQHC) A community health center that either receives funding under section 440 of the Public Health Service Act or has been certified as meeting the same criteria. fee-for-service A method of paying for medical services under which doctors are paid for each service provided. Bills are paid by the patient, who then submits them to the insurance company for reimbursement. fraud and abuse A range of wasteful healthcare activi- ties, including billing for services not performed, billing for more expensive services than performed (“up-coding”), and performing inappropriate or unnecessary care. gainsharing A system in which the government passes on savings from providing more-efficient care to insurers and providers. guaranteed issue and renewal A rule that bars health insurers from denying or dropping an individual’s coverage for any reason other than fraud or nonpayment of health insurance premiums. This rule is especially important to prevent insurance companies from denying coverage based on individuals’ health status. health disparity A situation in which one population group experiences a higher burden of disability or illness relative to another group. health equity A situation in which everyone has the opportunity to attain his or her full health potential and no one is disadvantaged because of social conditions. health information privacy and security Standards or procedures to ensure that personal health information is not compromised or disclosed in processing healthcare transactions. health information technology (HIT) Technology that allows the comprehensive management of health informa- tion and enables its exchange among health professionals, healthcare providers, healthcare payers, and public health agencies. health insurance exchanges Regulated marketplaces for the sale and purchase of health insurance established under federal law and operated in accordance with federal requirements. health insurance exchange subsidies Federal subsidies made available on an income-related basis to exchange- eligible individuals for the purchase of health insurance coverage through health insurance exchanges. health insurance issuers Entities that sell health insur- ance in the individual and employer-sponsored group mar- kets. Health Insurance Portability and Accountability Act (HIPAA) A federal law that regulates health insurers and health benefit plans in the group market and provides pri- vacy protections for health information. health maintenance organization (HMO) A type of health insurance plan that provides a coordinated array of preventive and treatment services for a fixed payment per month. Enrollees receive medically necessary  services regardless of whether the cost of those services exceeds the premium paid on the enrollees’ behalf. health status All aspects of physical and mental health and their manifestations in daily living, including impair- ment, disability, and handicap. health threat In the context of national or global security, an environmental, biologic, chemical, radiologic, or physi- cal risk to public or community health. healthcare/public health workforce A term used to define a range of health professionals in private and public practice who provide medical care and public health ser- vices such as primary care, disease diagnosis, and public education. healthcare disparity A difference in access to healthcare services or to health insurance, or in the quality of care actually received. high-risk insurance pool An insurance option for patients with existing medical conditions that make them expensive to insure. homeland defense The protection of U.S. territory, populations, and infrastructure against external threats or aggression. incidence The number of new cases of illness or disease during a specific period of time in a specific population. Indian Health Care Improvement Act A federal law creating programs to strengthen healthcare options in Native American communities. Indian Health Service A federal health program to provide health care to Native Americans and Alaska natives. individual market The insurance market for individuals who are purchasing insurance for themselves and their fam- ilies and are not part of a group plan, such as one offered by an employer. Also referred to as the nongroup market. Glossary 333 individual responsibility The requirement that all indi- viduals must carry health insurance or pay a penalty. Also referred to as an “individual mandate.” insurance pool A group of individuals whose premiums are used to pay all covered medical costs of its members. Insurance companies may charge higher premiums to a pool whose members are older or less healthy than other pools in order to cover the risk that its members may sub- mit more medical claims. interest group An organization that uses various forms of advocacy to influence public opinion and/or policy. Groups vary considerably in size, influence, and purpose. Also referred to as special interest groups, advocacy groups, or lobby groups. International Health Regulations A 2005 interna- tional treaty obligating all Member States of the World Health Organization to detect, report, and respond to potential public health emergencies of international con- cern. These regulations are aimed at improving global health security through international collaboration and communication. large group market The market for health insurance or health benefit plans among employers whose employee numbers exceed a specified threshold size (e.g., 100 full- time workers). lifetime aggregate limits Provisions included in health insurance contracts designed to limit the total amount the policy will pay out in claims and benefits over the lifetime of the policy. long-term care A set of healthcare, personal care, and social services provided to persons who have lost, or never acquired, some degree of functional capacity (e.g., the chronically ill, aged, or disabled) in an institution or at home, on a long-term basis. managed care Health insurance arrangements that inte- grate the financing and delivery of services to covered indi- viduals. market failure A concept within economic theory in which the allocation of goods and services by a free market is not efficient. Medicaid A program established in 1965 to provide health insurance to low-income families and individuals with cer- tain disabilities. It is administered by the states and funded jointly with the federal government. medical home A clinic focused on primary care and pre- ventive services that offers a range of coordinated treatment services. medical-legal partnership An approach to health that integrates the expertise of healthcare, public health, and legal professionals and staff to address and prevent health-harming social and civil legal needs for patients and populations. medical underwriting The insurance industry practice of assessing the medical condition of individuals at the time that insurance enrollment is sought in order to iden- tify existing physical or mental health conditions that may affect an individual’s or group’s eligibility for enrollment, the application of preexisting condition exclusions or wait- ing periods, or the price to be charged for coverage. Medicare A federal program enacted in 1965 that provides government-sponsored health insurance to individuals ages 65 years and older and certain individuals younger than 65 years with disabilities that meet federal requirements. Medicare Advantage Optional private insurance plans in which Medicare beneficiaries may enroll to receive their federal benefits. Medigap coverage Supplemental health insurance designed to cover all or most of the charges that are not cov- ered by Medicare, including the 20% co-payment required for many outpatient services. National Health Service Corps A commissioned corps of public health professionals employed by the federal Depart- ment of Health and Human Services. Members are assigned to settings that include clinics in underserved areas, state and local health departments, and federal agencies such as the Centers for Disease Control and Prevention. National Institutes of Health A federal agency within the Department of Health and Human Services that is pri- marily responsible for conducting and supporting medical research. notifiable disease A disease that, once diagnosed, must be reported under the law to a public health authority. Office of the Inspector General (OIG) Located within the federal Department of Health and Human Services, this office is charged with protecting the integrity of programs administered by the Department, protecting the health and welfare of program beneficiaries, and reporting problems to the Department Secretary and to Congress. pandemic An infectious disease that spreads through human populations across a large region, over multiple continents. parity A term generally used to require that large group insurers or plans pay equivalent benefits for different kinds of services. For example, federal law requires “mental health parity,” which means that for health plans that include men- tal health benefits as well as medical ones, the services must be covered with the same financial requirements and treat- ment limitations. Patient Protection and Affordable Care Act Also known as the Affordable Care Act or ACA, a major federal health reform law enacted in March 2010. patient protections Laws establishing protections for patients, such as the right to health information, to choice of 334 Glossary providers, to access to care, to file a grievance, or to appeal a denied health benefit claim. pay-for-performance (P4P) A healthcare payment sys- tem in which providers receive incentives for meeting qual- ity and cost benchmarks (or, in some cases, penalties for not meeting established benchmarks). performance measurement A set of recommendations, requirements, or data used to determine whether plans, providers, or programs meet or exceed a standard of care. policy analysis An analysis that provides informed advice to a client that relates to a public policy decision, includes a recommended course of action/inaction, and is framed by the client’s powers and values. population health Health outcomes of a group of indi- viduals, including the distribution of such outcomes within the group. preexisting conditions Health conditions that exist prior to or at the time of enrollment into a health insurance or health benefit plan. preferred provider organization (PPO) A health insur- ance plan in which providers agree to provide care to cov- ered individuals at a negotiated price. Covered individu- als receive all medically necessary services regardless of whether the cost of the services exceeds the premium paid, although members do have cost-sharing obligations. premium The amount a business or individual pays regu- larly to maintain health insurance coverage. premium rating An insurance industry practice deter- mining health insurance premiums based on factors includ- ing age, health status, gender, industry, geography, or other factors. prevalence The total number of cases of a disease or ill- ness in the population at a given time. preventive services Measures taken to prevent the devel- opment of disease or to treat illnesses early so that they do not become more acute and expensive to treat. Examples include vaccination, weight-loss programs, and mammograms. primary care provider (PCP) A healthcare provider, such as a physician engaged in the practice of internal medicine, pediatric care, or geriatric care, or a nurse practitioner, who provides general medical care and coordinates treatment. public health emergency An acute event capable of causing large-scale morbidity and mortality, either immediately or over time. These events have the ability to overwhelm normal public health and medical care capabilities. public health insurance A health insurance plan that is administered by the government either directly or through the use of private contractors. Medicare, Medicaid, and CHIP all are considered forms of public health insurance. public health preparedness The actions and policies associated with preventing, protecting against, responding to, and recovering from a major public health event. quarantine The separation and restriction of movement of people or animals that may have been exposed to an infectious agent. reinsurance A form of insurance that health insurers may purchase to protect themselves against losses that may occur should they underestimate how much they will pay out for medical claims in a year. rescission A process by which an insurance company seeks to recover the amount paid out for covered services after discovering that information on a beneficiary’s initial enrollment form was incomplete or incorrect. retiree health benefits Health benefits provided by an employer to its retirees. risk adjustment A tool for evaluating the relative risk of enrollees within insurance plans and providing for a finan- cial transfer from plans with low-risk enrollees to plans with higher-risk enrollees. safety net The collection of healthcare providers who serve patients regardless of patients’ ability to pay for care. Provid- ers include community health centers, public hospitals, local health departments, school- and church-based health clinics, and private physicians and nonprofit hospitals committed to serving uninsured and low-income, vulnerable patients. skimming The insurance plan practice of enrolling pre- dominantly healthy individuals in order to reduce the costs to the plan. small group market The health insurance market for employers whose size is smaller than a specified threshold (e.g., 100 full-time workers). social determinant of health (SDH) A factor outside of one’s genetic predisposition that can cause or prevent poor health, as well as affect how disease can progress (or not) throughout one’s lifetime. Examples include socioeconomic status, geographic birthplace, and housing quality. stare decisis A Latin term that refers to the legal principle that prior case law decisions should be accorded great def- erence and should not be frequently overturned. surge capacity The ability of clinical care facilities and laboratories to accommodate a sharp increase in patients and samples during a public health emergency. telehealth The use of electronic information and telecom- munications technologies to support long-distance clinical health care, patient and professional health-related educa- tion, public health, and health administration. Technolo- gies may include videoconferencing, the Internet, store- and-forward imaging, streaming media, and terrestrial and wireless communications. uncompensated care Services provided by physicians and hospitals for which no payment is received from the patient or from third-party payers. Glossary 335 underinsured Individuals with insurance policies that do not cover all necessary healthcare services, resulting in out- of-pocket expenses that exceed the ability to pay. uninsured Individuals who lack public or private health insurance. universal coverage The provision of at least basic or med- ically necessary health insurance for an entire population. utilization review The examination, usually by an insurer or third-party administrator, of the necessity and/or appro- priateness of healthcare services provided to a patient. weapon of mass destruction (WMD) A weapon that causes large-scale destruction, generally through nuclear, radiologic, chemical, or biologic means. wellness programs Special services and benefits offered by employers to employees in addition to health benefit plans, including nutrition classes, smoking-cessation pro- grams, or gym memberships. World Health Organization (WHO) The directing and coordinating authority for health within the United Nations system. The following source was used, in part, in the compilation of this Glossary: The Health Policy Institute of Ohio. (n.d.). Glossary. Retrieved from http://www.healthpolicyohio.org/tools/glossary/ 336 Glossary http://www.healthpolicyohio.org/tools/glossary/ © Mary Terriberry/Shutterstock Page numbers followed by f, t, b and n indicate figures, tables, boxes and notes. A AALL. See American Association for Labor Legislation (AALL) abortion, 117 costs, 238 coverage, 63 criminal penalties for, 124 restrictive policies, 210 right to privacy and, 122–123 state regulation for, 123 Abortion Control Act, 122 ABP. See Alternative Benefit Plan (ABP) ACA. See Affordable Care Act (ACA) Academy of Medicine, 126 access to care. See healthcare access access to justice movement, 145 accountable care organizations (ACOs), 138, 287 accreditation, 272–273 ACOs. See accountable care organizations (ACOs) ACS. See American College of Surgeons (ACS) actual agency, 278 actuarial value, 210 “actuarially sound basis,” 246 acute radiation syndrome (ARS), 297 ADA. See Americans With Disabilities Act (ADA) Adams, John, 44 ADAP. See AIDS Drug Assistance Program (ADAP) adjudication, 42 adjudicatory power, 38 administrative agencies, 25t agency powers, 24–25 constituents of agencies, 25 administrative court, 38 administrative law judges (ALJs), 38 Administrative Procedure Act of 1946 (APA), 25, 37 administrative regulations, 37–38 advanced biological agents, 298b adverse selection, 158, 204 advocacy groups, 29, 92–93 Aetna Health, Inc. v. Davila case, 284 AFDC. See Aid for Families With Dependent Children program (AFDC) Affordable Care Act (ACA), 7, 24, 40, 49, 51–52, 67–68, 106, 114, 119, 138, 154, 189, 231, 273 changes to private insurance market, 214–215 employer mandate, 213–214 essential health benefit requirement, 207–210 financing features, 215–216 individual mandate, 203–206 litigation, 224–225 Medicaid benefits for expansion population under, 240–241 Medicaid eligibility expansion under, 237 passage commitment and leadership, 197–199 lessons from failed efforts, 199–201 political pragmatism, 201 premium and cost-sharing subsidies, 210–213 public health/workforce/prevention/ quality, 216–217 state health insurance exchanges/ marketplaces, 206–213 African American healthcare disparities among, 70 social determinants of health, 141 age discrimination, 128 agencies, administrative, 24–25, 25t agency law, 278 agroterrorism, 297 AHCA. See American Health Care Act of 2017 (AHCA) AHPs. See Association Health Plans (AHPs) Aid for Families With Dependent Children program (AFDC), 132 AIDS Drug Assistance Program (ADAP), 53 Alexander v. Sandoval case, 126 ALJs. See administrative law judges (ALJs) allocative efficiency, 175 Alternative Benefit Plan (ABP), 240, 241b alternative payment model (APM), 263, 287 AMA. See American Medical Association (AMA) ambulatory payment classification (APC) groups, 264 Ambulatory Quality Alliance (AQA), 286 Amendments to Food, Drug and Cosmetic Acts (1962), 103 American Association for Labor Legislation (AALL), 194 American Cancer Association, 92 American College of Surgeons (ACS), 101 American Federation of Labor, 194 American Health Care Act of 2017 (AHCA), 220, 221t American Heart Association, 92 American Hospital Association, 199 American law, sources of, 35–39, 39t American Lung Association, 92 American Medical Association (AMA), 98, 155, 194, 273 American Recovery and Reinvestment Act of 2009 (ARRA), 106, 197, 285 American Red Cross, 92, 302 American Taxpayer Relief Act of 2012 (ATRA), 285 Americans With Disabilities Act (ADA), 105, 127 America’s Essential Hospitals, 29, 64 Amerithrax, 298 “amount, duration, and scope” and “reasonableness” requirements, in Medicaid, 241–242, 242t amyotrophic lateral sclerosis (ALS), enrolled in Medicare, 253, 254 analytic side-by-side table, 328, 329t Animal and Plant Health Inspection Service (APHIS), 304 antiseptic surgery, 99 APA. See Administrative Procedure Act of 1946 (APA) APC groups. See ambulatory payment classification (APC) groups APHIS. See Animal and Plant Health Inspection Service (APHIS) Index 337 APM. See alternative payment model (APM) apparent agency, 278, 279 appellate courts, 42 appellate jurisdiction, 44 appropriation authority, 15 AQA. See Ambulatory Quality Alliance (AQA) ARRA. See American Recovery and Reinvestment Act of 2009 (ARRA) ARS. See acute radiation syndrome (ARS) assessment, as function of public health, 83, 83t Assistant Secretary for Preparedness and Response, 28 Association Health Plans (AHPs), 207 assurance, 83, 84–85t asymmetric information, 158 Atlantic hurricane season (2017), 301b ATRA. See American Taxpayer Relief Act of 2012 (ATRA) authoritative decisions and guidelines, 11–12 authorization jurisdiction, 15 authorizing legislation, for Medicaid, 20 average cost, 180 B background section, in policy analysis, 319, 322–323, 329b Balanced Budget Act (1997), 105 balanced budget requirement, 192 balances, in separation of powers framework, 40 BARDA. See Biomedical Advanced Research and Development Authority (BARDA) Baucus, Max, 200 Bauman, Michelina, 272b BCRA. See Better Care Reconciliation Act of 2017 (BCRA) benchmark plans, 208–209 beneficiary/insured, 156 Better Care Reconciliation Act of 2017 (BCRA), 220, 221t Beveridge, William, 73 Bill and Melinda Gates Foundation, 12 Bill of Rights, 36 bioethics, 6 biologic agents accidental exposure to, 299b major threat, 298b in nature, 297b biologic threats, 297–299 biologic warfare, 297 biologic weapon, 293 Biologics Control Act (1902), 100 Biomedical Advanced Research and Development Authority (BARDA), 304 biosafety incidents, 299b bioterrorism, 4, 28, 297 Bioterrorism Act, 305–306 black market, 186 Blackmun, Harry, 121 Black’s Law Dictionary, 35 blister agents, 296b block grant program, 231, 232 blood agents, 296b Blue Cross, 101, 102, 154, 251 Blue Shield, 102, 154, 155, 251 bonuses, 163 Boyd v. Albert Einstein Medical Center case, 280 Bragdon v. Abbott case, 127 “branch office” model, 87 broad problem identification, 321 Brown, Scott, 198 Brown v. Board of Education case, 43, 46, 103, 125 Budget Act. See Congressional Budget and Impoundment Control Act of 1974 budget and appropriations process, 19–20 budget resolution, 19 Burk, Charlotte, 114b Burwell v. Hobby Lobby Sores, Inc., case, 107, 224 Burwell v. King case, 107 Bush, George W., 22, 197, 200, 248 Byrd, Michael, 126 Byrnes, John, 155 C Calad, Ruby, 284 California Department of Social Services, 37 Cambridge Board of Health (1902), 129 Canada’s healthcare system, 71–73 Canadian Health Act of 1984, 71 cancer chemotherapy, 274 Canterbury, Jerry, 120 Canterbury v. Spence case, 104, 120 capitated payments, 163 CARE, 93 Carhart, Leroy, 123 Carter, Jimmy, 196 case law. See common law case management, 165, 165t catastrophic coverage, 210 catastrophic threshold, 262 CBO projects. See Congressional Budget Office (CBO) projects CBRN agent. See chemical, biologic, radiologic, or nuclear (CBRN) agent CCGs. See Clinical Commissioning Groups (CCGs) CDC. See Centers for Disease Control and Prevention (CDC); Communicable Disease Center (CDC) CEHRT. See certified electronic health record technology (CEHRT) Center on Budget and Policy Priorities, 29 Centers for Disease Control and Prevention (CDC), 65, 81–82, 104, 139, 295, 304 Strategic Planning Workgroup, 298 Centers for Medicare and Medicaid Services (CMS), 233, 286 certified electronic health record technology (CEHRT), 290 Chadwick, Edwin, 98 Chamberlain-Kahn Act (1918), 101 CHAMPUS. See Civilian Health and Medical Program for the Uniformed Services (CHAMPUS) checks and balances, 39, 40 chemical, biologic, radiologic, or nuclear (CBRN) agent, 294 chemical agents impacting public health, 296b types of, 296b chemical and radiologic preparedness, 311 chemical threats, 295–297 Chief Executive Officer, 21 child oral health, 95, 95–96b childbirth care, 8–9 Children Supplemental Nutrition Program, 231 Children’s Bureau of Health (1912), 101 Children’s Health Insurance Program (CHIP), 29, 206, 232, 248–253 benefits and beneficiary safeguards, 251–252 eligibility, 250–251 future of, 252–253 and Medicaid, 250t and private insurance coverage, 252 structure and financing, 249–250 waivers, 252 Children’s Health Insurance Program Reauthorization Act (CHIPRA), 106, 237, 248–249 CHIP. See Children’s Health Insurance Program (CHIP) CHIPRA. See Children’s Health Insurance Program Reauthorization Act (CHIPRA) choking agents, 296b cholera outbreak (2010), 108 338 Index Cigna v. Calad case, 284 circuit courts, 42 civil legal aid/services, 145–146, 149 Civil Rights Act of 1964, 103, 117, 125, 126, 143 Civilian Health and Medical Program for the Uniformed Services (CHAMPUS), 103 Clayton, Linda A., 126 Clayton Antitrust Act (1914), 101 client-oriented advice, 317–318 client’s power and values, 318–319 Clinical Commissioning Groups (CCGs), 73 Clinton, Bill, 140, 193, 196, 199 individual mandate, 203 CMS. See Centers for Medicare and Medicaid Services (CMS) co-insurance, 61–62, 155–156, 179 co-payments, 62, 155–156, 179 COBRA. See Consolidated Omnibus Budget Reconciliation Act (COBRA) Code of Federal Regulations, 38 Collins, Susan, 220 Commander in Chief of the Armed Forces, 21 Commerce Clause, 205–206, 217 commissions and staff agencies, 17 commitment and leadership, in health reform, 197–199 committees, 14–17 common law, 38–39 Communicable Disease Center (CDC), 88, 102 history of, 89b communicable diseases, 87 community-based resources, 140 Community Needs and Services Study, 146 community-oriented primary care (COPC), 94b, 94–95, 94t community-oriented public health (COPH), 95, 95–96b community planning, 310 community rating method, 160 complements, 177 comprehensive disease surveillance, 310 concurrent budget resolution, 19 conference committee, 18f, 19 conflict preemption, 282 Congressional activity, 220–222 Congressional Budget and Impoundment Control Act of 1974, 19 Congressional Budget Office (CBO) projects, 17, 52, 204, 206, 212 Congressional commissions and staff agencies, 17 Congressional leadership positions, 14 Congressional Research Service, 17 Consolidated Omnibus Budget Reconciliation Act (COBRA), 104 constituents of agencies, 25 of executive branch, 23–24 of legislative branch, 20–21 constitutional right to personal privacy, 120–125 constitutions, 34, 35–36 consumer income, 177 physical profile of, 178 continuing resolution, 20 contraceptive coverage, 63, 209 Cooper v. Harris case, 107 Cooperative Threat Reduction programs, 305 COPC. See community-oriented primary care (COPC) COPH. See community-oriented public health (COPH) Corcoran v. United HealthCare, Inc. case, 283 “core functions” concept, 82–85, 87, 96n “core” safety net providers, 63 Cornyn, John, 222 coronary heart disease, 128 corporate hospital liability, 279 correct or ameliorate standard, 240 cost containment strategy, 163–164, 163t, 169b cost-effectiveness, 165 cost-related access barriers, 75, 77f cost-sharing subsidies (CSRs), 210–213, 211t costs of medical care, 59–60 sharing, 61–62 supply, 180 countermeasures, 310 Court of Appeals for the District of Columbia Circuit (1972), 120 courts, role of, 41–46 enforcing legal rights, 43 maintaining stability in law, 45–46 reviewing actions of political branches, 43–45 coverage. See healthcare coverage criminal legal representation, 145 criminal penalties, for abortion, 124 Crossing the Quality Chasm: A New Health System for the 21st Century, 68, 271 “crowd-out” politics of health reform, 194 Cruzan v. Director, Missouri. Dep’t of Health case, 105 CSRs. See cost-sharing subsidies (CSRs) cultural differences, 69 cultures, 140, 191 D Darling v. Charleston Community Memorial Hospital case, 279 Dartmouth Atlas Project, 69 data tracking, for pregnancy, 8 Davila, Juan, 284 de Tocqueville, Alexis, 40 death penalty, 36 death spiral, 204 decision making scarce resources, 175–176 utility analysis, 174–175 decisional law. See common law deductibles, 156 Deficit Reduction Act of 2005 (DRA), 106, 240, 285 benchmark benefit options, 240b demand changers, 176–178 elasticity, 178–179 health insurance and, 179–180 income elasticity, 179 price elasticity, 178–179 demonstration projects. See “section 1115” waiver Department of Agriculture, 91, 144, 304 Department of Defense (DoD), 25, 28, 305 Department of Energy, 17t, 91–92, 144 Department of Health and Human Services (HHS), 15–17t, 25, 26–28, 26f, 27t, 37, 71, 87, 88t, 104, 138, 198, 286–289, 303–304 Department of Health, Education, and Welfare (HEW), 103 Department of Homeland Security (DHS), 28, 91, 144, 303 Department of Housing and Urban Development, 91, 144 Department of Justice, 304 Department of Labor, 37 Department of the Treasury, 15t Department of Veterans Affairs (VA), 25, 28 Dependents Medical Care Act (1956), 103 descriptive side-by-side table, 328, 328t DeShaney v. Winnebago County Department of Social Services case, 130–131 DHS. See Department of Homeland Security (DHS) diagnostic-related groups (DRGs), 264 Index 339 dilation and evacuation (D&E), 123 dilation and extraction (D&X), 124 diminishing marginal utility, 175 direct democracy, 192 direct services programs, in private healthcare delivery system, 53–54 Dirigo Health Reform Act, 115 dirty bomb, 297 discounted fee schedules, 163 discretionary spending, 19 discrimination, 125–128, 140 age, 128 gender, 128 physical and mental disability, 127 race/ethnicity, 126–127 socioeconomic status, 127–128 disproportionate share hospital (DSH) payments, 59, 215, 245 district courts, 42 District of Columbia, 214 “do-nothing” approach, 326 DoD. See Department of Defense (DoD) Doe v. Mutual of Omaha Insurance Company case, 127 Don’t Ask Don’t Tell Repeal Act of 2010, 107 doughnut hole, 262 Down syndrome, 127 DRA. See Deficit Reduction Act of 2005 (DRA) DRGs. See diagnostic-related groups (DRGs) Drug Enforcement Agency, U.S., 108 DSH payments. See disproportionate share hospital (DSH) payments dual eligibles, 234, 254, 257 dual enrollees, 234 Due Process Clause, of federal Constitution, 131, 132 due process, right to, 43 Dukes v. U.S. Healthcare, Inc. case, 283 E early and periodic screening, diagnosis, and treatment (EPSDT), for beneficiaries, 240 Ebola outbreak (2014), 108, 309–310b economic bill of rights, 195 economic theory, 173–174 Eddingfield, George, 114b educational institutions, in health care, 50 efficacy, in healthcare system, 68–69 efficiency, 175–176 in healthcare system, 69–70, 69b EHBs. See essential health benefits (EHBs) elasticity, 178–179 Election Day, 193 emergencies, 294–295 Emergency Economic Stabilization Act, 197 emergency medical condition, 118 Emergency Medical Treatment and Active Labor Act (EMTALA), 104, 118, 143 emerging biological agents, 298b employee benefit plan, 282 Employee Retirement Income Security Act (ERISA), 104, 192, 272 federal preemption of state liability laws under, 281–284 and managed care professional medical liability, 283–284 overview of, 281–282 preemption, 282–283 employer mandate, 213–214 employer-sponsored insurance, 52, 155, 192, 206 EMTALA. See Emergency Medical Treatment and Active Labor Act (EMTALA) “enabling statute,” 37 end-stage renal disease (ESRD), enrolled in Medicare, 253, 254 End-Stage Renal Disease Quality Incentive Program (QIP), 287 enforcement power, 38 enhanced biological agents, 298b entitlement programs, 231–232 entrepreneurialism, 191 Environmental Protection Agency, 91, 144 Equal Protection Clause, 128 equilibrium/disequilibrium, in market, 181 equity, in healthcare system, 70–71, 183 ERISA. See Employee Retirement Income Security Act (ERISA) errors, medical. See medical errors essential health benefits (EHBs), 207–210, 208b “established by the State” phrase, 212 ethnicity/race discrimination, 126–127 Examination and Treatment for Emergency Medical Conditions and Women in Labor Act, 115, 117 executive agency policymaking, 23f executive department agencies, 25 executive orders, 22–23 Executive Order 13527, December 2009, 308 experience rating method, 160 externalities, 183, 184–185 F Family Health Insurance Program, 196 family planning coverage and services, 54, 63 FBI. See Federal Bureau of Investigation (FBI) FDA. See Food and Drug Administration (FDA) Feder, Judith, 194 federal assistance programs, 126 federal budget process timeline, 20t Federal Bureau of Investigation (FBI), 298, 304 federal Constitution Due Process Clause, 131 Equal Protection Clause, 128 Federal Coordinated Health Care Office, 255 federal courts, 41, 42 Federal Emergency Management Agency (FEMA), 28 Federal Emergency Relief Administration, 102 Federal Employers Liability Act (1908), 100 federal executive branch administrative agencies, 24–25 presidency, 21–24 federal government, 13, 25–28 agencies, in health care, 50 allocation of authority, 40–41 implementing health reform plans, 192 role in public health, 87–90 federal legislative branch committees, 14–17 congressional budget and appropriations process, 19–20 congressional commissions and staff agencies, 17 constituents of legislative branch, 20–21 leadership positions, 14 passing laws, 18–19 Federal Medical Assistance Percentage (FMAP), 243 enhanced-FMAP, 249 federal policy, 5 federal poverty level (FPL), 54, 235b Federal Register, 38 federal response agencies and offices Department of Agriculture (USDA), 304 Department of Defense (DoD), 305 Department of Health and Human Services (HHS), 303–304 Federal Bureau of Investigation (FBI), 304 federalism, 34, 40–41 federally facilitated marketplace (FFM), 207 federally qualified health centers (FQHCs), 53, 67 fee-for-service (FFS) reimbursement, 155–156, 196 340 Index Medicaid, 245 Medicare, 285, 287 FEMA. See Federal Emergency Management Agency (FEMA) FFM. See federally facilitated marketplace (FFM) FFS reimbursement. See fee-for-service (FFS) reimbursement “fiduciary” responsibilities, 281 field preemption, 282 FMAP. See Federal Medical Assistance Percentage (FMAP) Food, Drug and Cosmetic Act (1938), 102 Food and Agriculture Organization, 309 Food and Drug Act (1906), 100 Food and Drug Administration (FDA), 27, 99, 304 Food and Drug Administration Modernization Act (1997), 105 food deserts, 140 for-profit insurance companies, 171n foundation funding, 93 FPL. See federal poverty level (FPL) FQHCs. See federally qualified health centers (FQHCs) free market, 7 free riders, 184, 205 freedom of choice and freedom from government interference right to make informed healthcare decisions, 119–120 right to personal privacy, 120–125 FTE providers. See full-time-equivalent (FTE) providers Fukushima nuclear disaster, 303b full-time-equivalent (FTE) providers, 65 fully insured health plan, 282 Future of the Public’s Health in the 21st Century, The (IOM), 82, 87 G Gardasil vaccine, 106 gatekeepers, 164, 165t Gates Foundation, 93 Geiger, Jack, 147 gender discrimination, 128 generosity test, 209 Germany’s healthcare system, 74–75 GHSA. See Global Health Security Agenda (GHSA) Gibbons v. Ogden case, 41 Gibson, Count, 147 Gideon v. Wainwright case, 145 Global Food Security Act of 2016, 107 global health organizations and agencies, roles of, 90–91 global health security, 293 Global Health Security Agenda (GHSA), 309 Global Public Health Organizations, 90 Gonzales v. Carhart Decision, 124–125 goods and services, production of, 176, 186 Gorsuch, Neil, 107 Government Accountability Office, 17 government health insurance programs CHIP. See Children’s Health Insurance Program (CHIP) Medicaid. See Medicaid Medicare. See Medicare government intervention, 185–186 governmental public health agencies, goals and roles of, 81–83 grandfathered plans, 215 Grassley, Charles, 200 grassroots campaign, 30 grasstops strategy, 30 Great Britain’s healthcare system, 73–74 Great Depression, 86b, 102, 195 Griffiths, Martha, 196 Griswold v. Connecticut case, 103, 121 gross domestic product (GDP) and healthcare spending, 50–51, 50f H habilitative services, 209 HACs. See hospital-acquired conditions (HACs) Hall v. Hilbun case, 277 Harlan II, John Marshall, 46 harm avoidance, 130 “Harry and Louise” television ads, 193 HCFA. See Health Care Financing Administration (HCFA) HDHP. See high-deductible health plan (HDHP) health alliances, 196 Health and Medicine Division (HMD), 63, 82 Health and Social Care Act of 2012, 73, 74 health bureaucracy federal government, 25–28 interest groups, 29–30 state and local governments, 28–29 health care as commodity, 116 in economists view, 176 framing legal care as, 147, 148f individual rights and, 116–117 needs, 94b Health Care Financing Administration (HCFA), 104 Health Care Payment Learning and Action Network, 289 Health Care Quality Improvement Act (1986), 104 health committees and subcommittees, 15–17t health disparity, 138 health economics, 173–187 decision making, 174–176 defined, 174–176 demand changers, 176–178 elasticity, 178–179 health insurance and, 179–180 income elasticity, 179 price elasticity, 178–179 markets failure, 183–187 health insurance and, 182 structure, 182–183 positive and normative economics, 176 scarce resources, 175–176 supply changers, 180 costs, 180 health insurance and, 181–182 profit maximization, 180–181 utility analysis, 174–175 health equity, 138 health-harming social conditions, through MLPs, 146–149 health in all policies (HIAP) strategy, 92, 144 health industry fees, 215 health information technology, role of, 288, 289–290 Health Information Technology for Economic and Clinical Health Act (HITECH), 285, 289 health insurance, 51–53 in Canada, 71–73 coverage, 58–59 and demand, 179–180 design, 75 essential health benefit requirement, 207–210 exchanges, 206–213 in Germany, 74–75 in Great Britain, 73–74 history of, 154–156 laws, 119 managed care, 162–170 common structures, 166–169 cost containment and utilization tools, 163–164 future of, 169–170 health maintenance organizations, 166–167 point-of-service plans, 169 preferred provider organizations, 167–169 provider payment tools, 163–164 Index 341 utilization control tools, 164–165 and markets, 182 operation basic terminology, 156–157 medical underwriting, 161–162 risk, 158–160 setting premiums, 160–161 uncertainty, 157 plans, 215 premium and cost-sharing subsidies, 210–213 and supply, 181–182 understanding, 153–170 Health Insurance Association of America, 193, 199 Health Insurance Flexibility and Accountability (HIFA) waivers, 248 Health Insurance Portability and Accountability Act of 1996 (HIPAA), 105, 161 Health Maintenance Organization Act of 1973, 104, 155 health maintenance organizations (HMOs), 155, 166–167, 167–168t, 196, 280 health policy and law, 6. See also health economics; healthcare quality policy and law; policy analysis conceptualizing, 5–8, 5b free market perspective, 7 key stakeholders, 7–8 professional autonomy perspective, 6 role in public health, 3–5 social contract perspective, 6–7 social, political, and economic historical context, 6–7 timeline, 97–108 topical domains, 5–6 bioethics, 6 healthcare policy and law, 6 public health policy and law, 6 health reform congressional activity, 220–222 culture, 191 insurance plan premium rates, 222–224 interest groups, 193 introduction, 189–190 National Federation of Independent Business v. Sebelius case, 217–218 overview of ACA, 201–217 changes to private insurance market, 214–215 employer mandate, 213–214 essential health benefit requirement, 207–210 financing features, 215–216 individual mandate, 203–206 litigation, 224–225 premium and cost-sharing subsidies, 210–213 public health/workforce/ prevention/quality, 216–217 state health insurance exchanges/ marketplaces, 206–213 passage of ACA commitment and leadership, 197–199 lessons from failed efforts, 199–201 political pragmatism, 201 path dependency, 193–194 states and, 218–219 unsuccessful attempts to passing national health insurance plan, 194–197 U.S. political system, 191–193 health reimbursement arrangements (HRAs), 158 Health Resources and Services Administration, 87 health savings accounts (HSAs), 158 Health Security Act, 105, 193, 196–197, 203 healthcare access costs of medical care, 59–60 health insurance, 58–59 insurance coverage limitations cost sharing, 61–62 reimbursement and visit caps, 62–63 service exclusions, 63 safety net providers, 63–65 underinsured, 60–61 uninsured, characteristics of, 54–58 workforce issues, 65–68 healthcare capital inputs, 175 healthcare costs, 104 healthcare coverage, 52f healthcare discrimination, 125–128 healthcare finance, 50–54 direct services programs, 53–54 health insurance, 51–53 healthcare quality areas of improvement efficacy, 68–69 efficiency, 69–70 equity, 70–71 patient-centeredness, 69 safety, 68 timeliness, 69 assessment of efforts to improving quality, 71 healthcare quality policy and law corporate liability, 279 Employee Retirement Income Security Act (ERISA), 272, 281–284 federal preemption of state liability laws under ERISA, 281–284 health information technology, role, 289–290 hospital liability, 278–279 insurer liability, 279–280 introduction, 271–272 managed care liability, 280–281 measuring and incentivizing healthcare quality, 284–290 medical errors, 273–275 National Quality Strategy, 288 private payer efforts, 289 promoting through standard of care, 275–278 public reporting, 286–287 quality control through licensure and accreditation, 272–273 quality measure development, 286 quality measurement, 286 value-based purchasing, 287 vicarious liability, 278–279 healthcare safety net, 87 healthcare systems. See also individual rights and healthcare system in Canada, 71–73 in Germany, 74–75 in Great Britain, 73–74 HEALTHY KIDS Act of 2018, 249 Healthy People 2020, 49 Helling v. Carey case, 276 herd immunity, 184, 187n Heritage Foundation, 29 HEW. See Department of Health, Education, and Welfare (HEW) HHS. See Department of Health and Human Services (HHS) HI. See Hospital Insurance (HI) HI Trust Fund, 258, 259 HIAP strategy. See health in all policies (HIAP) strategy HIFA waivers. See Health Insurance Flexibility and Accountability (HIFA) waivers high-deductible health plan (HDHP), 158–160 Hill-Burton Act (1946), 102, 125 HIPAA. See Health Insurance Portability and Accountability Act of 1996 (HIPAA) HITECH. See Health Information Technology for Economic and Clinical Health Act (HITECH) HIV/AIDS advocacy groups, 93 HIV/AIDS Bureau (HAB), 26 HIV/AIDS services, 53 HMD. See Health and Medicine Division (HMD) HMOs. See health maintenance organizations (HMOs) Holmes, Oliver Wendell, 33 “home rule” model, 86, 96n Homeland Security Act of 2002, 106, 303 342 Index Homeland Security Presidential Directive (HSPD) HSPD 10, 307–308 HSPD 21, 308 hospital-acquired conditions (HACs), 287 Hospital Compare (website), 286 Hospital Insurance (HI), 255 hospital liability corporate liability, 279 vicarious liability, 278–279 Hospital Quality Alliance (HQA), 286 hospital reimbursement, 264 Hospital Survey and Construction Act of 1946, 125 hot spot analyses, 300 House and Senate Appropriations committees, 15 House and Senate Budget committees, 15 house and senate majority and minority whips, 14 house and senate minority leaders, 14 house majority leader, 14 House Rules committee, 15 House Ways and Means and Senate Finance committees, 15 HQA. See Hospital Quality Alliance (HQA) HRAs. See health reimbursement arrangements (HRAs) HSAs. See health savings accounts (HSAs) HSPD. See Homeland Security Presidential Directive (HSPD) Hurley v. Eddingfield case, 114, 272 Hurricane Katrina, 301b Hurricane Matthew, 108 I “I-HELP” mnemonic, 147 IHS. See Indian Health Service (IHS) immigrants eligibility for Medicaid, 237 immunizations, 87 IMPACT Act. See Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) Implementing Recommendations of the 9/11 Commission Act of 2007, 307 Import Drug Act, 98 Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act), 285 income elasticity of demand, 179 income, redistribution of, 186–187 income tax code provisions, 215 indemnity, 279 independent agencies, 25 Indian Health Service (IHS), 87, 143 indicative ruling, 211 individual legal rights, 43 individual mandate, 202, 203–206, 217–218 individual property rights, 34–35 individual providers, in health care, 50 individual rights and healthcare system, 116–128 in public health context Jacobson v. Massachusetts decision, 129–130, 130b negative constitution, 129–132, 132b overview of police powers, 128–129 right to be free from wrongful discrimination, 125–128 age discrimination, 128 gender discrimination, 128 physical and mental disability discrimination, 127 race/ethnicity discrimination, 126–127 socioeconomic status discrimination, 127–128 right to make informed decisions, 119–120 right to personal privacy, 120–125 rights under health insurance laws (ACA), 119 rights under healthcare financing laws (Medicaid), 118–119 rights under healthcare laws (EMTALA), 118 individualism, 191 inertia, power of, 193 inferior goods, 179 informational privacy, 121 informed advice, 318 Institute of Medicine (IOM) Crossing the Quality Chasm: A New Health System for the 21st Century, 68, 271 To Err Is Human, 68, 271, 274 focuses on healthcare quality, 68–71 Future of the Public’s Health in the 21st Century, The, 82, 87 Health and Medicine Division, 63 healthcare discrimination, 126 public health, 82, 83 institutional providers, in health care, 50 institutions and systems, public health, 81–96 insurance company–consumer–provider interaction, 52, 53f insurance coverage. See also health insurance to health status, 58–59 limitations cost sharing, 61–62 reimbursement and visit caps, 62–63 service exclusions, 63 insurance plan, premium rates, 222–224 “insurance savings” clause, 282 insurer liability, 279–280 insurers, 182 intelligible principle, 38 Interdepartmental Committee to Coordinate Health and Welfare Activities, 195 interest groups, 29–30 power of, 193 intermediate review, 45 Internal Revenue Service (IRS), 103, 155, 212 international agreements, 308–310 International Association for Atomic Energy, 309 IOM. See Institute of Medicine (IOM) IRS. See Internal Revenue Service (IRS) Italy, 116 J Jackson, Robert, 36 Jacobson v. Massachusetts decision, 129–130, 130b Javitz, Jacob, 155 JCAH. See Joint Commission on Accreditation of Hospitals (JCAH) JCAHO. See Joint Commission on Accreditation of Healthcare Organizations (JCAHO) Jefferson, Thomas, 44 Jesner v. Arab Bank case, 107 Jim Crow laws, 125, 142 substitutes, 125 “job lock,” 162 Johnson, Lyndon, 147, 193, 199, 200 The Joint Commission, 273 Joint Commission on Accreditation of Healthcare Organizations (JCAHO), 104 Joint Commission on Accreditation of Hospitals (JCAH), 103 Jones v. Chicago HMO Ltd. of Illinois case, 280 Jost, Timothy, 116 judge-made law. See common law “judicial bypass” option, 122 judicial review doctrine, 43–45 Judiciary Act of 1801, 44 K Kaiser Permanente health plan, 102 Kaiser Tracking poll, 191 Kavanaugh, Brett, 107 Kellogg Foundation, 93 Kennedy, Anthony, 107 Kennedy, Edward, 196 Index 343 Kennedy, Ted, 198 Kentucky’s waiver, 247 Kerr-Mills program, 103 Kerry, John, 197 Khan al-Assal chemical attack, Syria, 296b King v. Burwell case, 212 Kingdon, John, 318 L landscape section, in policy analysis, 319, 324–325b, 329b language/literacy, 140 laws defining, 35 and legal system, 33–46 maintaining stability in, 45–46 passing, 18–19, 18f role of, 34–35 as social determinant of health, 142–146 civil legal assistance, 145–146 criminal legal representation, 145 sources of, 35–39, 39t leadership positions, in Congress, 14 leading problem identification, 322 legal duty of care, 118 legal precedent, 45–46 legal rights, 34–35 enforcing, 43 Legal Services Corporation (LSC), 146 legal system federalism, 40–41 key features of, 39–46 role of courts, 41–46 separation of powers, 39–40 LHDs. See local health departments (LHDs) licensure, 272–273 Lister, Joseph, 99 living constitution, 36 lobbying firms, 29 local autonomy model, 86 local government role in public health, 85–87 local health departments (LHDs), 29 locality rule, 275–276, 277–278 Long, Russell, 196 Lou Gehrig disease. See amyotrophic lateral sclerosis (ALS) LSC. See Legal Services Corporation (LSC) M MA plans. See Medicare Advantage (MA) plans MACPAC. See Medicaid and CHIP Payment and Access Commission (MACPAC) MACRA. See Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) macroeconomics, 174 maintenance-of-effort (MOE) rule, 244 man-made environmental disasters, 294, 303 manageable problem identification, 322 managed care organizations (MCOs), 162, 245, 272b common structures health maintenance organizations, 166–167 point-of-service plans, 169 preferred provider organizations, 167–169 cost containment and utilization tools, 163–164 financial incentives in, 181 future of, 169–170 liability, 280–281 provider payment tools, 163–164 reimbursement, 245–246 utilization control tools, 164–165 mandatory populations and benefits, in Medicaid program, 233 mandatory spending, 19 Manham Act (1941), 102 Marbury, William, 44 Marbury v. Madison case, 44 March of Dimes, 92 marginal cost, 180 Marine Hospital Service, 97, 99 market failure, 183–187 externalities, 184–185 government intervention, 185–186 public goods, 184 redistribution of income, 186–187 marketplaces, in federal documents, 206–213 markets health insurance and, 182 structure, 182–183, 183t “markups” budget plans, 19 Maryland’s constitution, 36 Massachusetts, primary care physician shortage in, 65–66 Massachusetts Supreme Court, 36 Masterpiece Cakeshop v. Colorado Civil Rights Commission case, 107 McCain, John, 197, 220 McCulloch v. Maryland case, 41 MCOs. See managed care organizations (MCOs) Medicaid, 7, 20, 29, 43, 50, 103, 118–119, 126, 143, 155, 202, 232 administrative law, 37 “amount, duration, and scope” and “reasonableness” requirements, 241–242, 242t assistance to variety of vulnerable populations, 234f beneficiaries by race/ethnicity, 234f benefits, 238–241 and CHIP, 250t eligibility, 234–238 expansion under ACA, 237–238 immigrants, 237 medically needy, 235–237 traditional requirements, 235 expansion, 218–220, 235 FFS reimbursement, 245 financing, 243–244 future of, 248 managed care reimbursement, 245–246 mandatory and optional eligibility groups and income requirements, 236t prescription drugs, 215 program administration, 233 provider reimbursement, 244–246 services, 233 spending, 242–243 two-tier program, 231 waivers, 247–248 Medicaid and CHIP Payment and Access Commission (MACPAC), 235 Medicaid–Medicare Coordination Office, 255 Medical Care Act of 1966, 71 medical care services, access to, 139 medical emergency, 122 medical errors, as public health concern, 273–274, 275b medical-legal partnerships (MLPs) approach to social determinants of health, 148f benefits of, 148–149 combating health-harming social conditions through, 146–149 evolution of “upstream” innovation, 147–148 medical loss ratio (MLR), 214 Medical Practice Acts, 99 medical transaction, 182 medical underwriting, 161–162 medically needy programs, 235–237 Medicare, 15, 35, 50, 71–73, 103, 104, 155, 191, 196, 232, 285 advantage payments, 215 benefits, 255–258, 256f, 256t characteristics of, 254f eligibility, 253–255 employer subsidy, 215 enrollment, 255–256, 257f financing, 258–262, 262t future of, 265 hospital insurance, 215 hospital reimbursement, 264 MA reimbursement, 264–265 344 Index physician reimbursement, 262–264 premiums, 215 prescription drug benefit, 257, 259b, 261–262 provider reimbursement, 215, 262–265 spending, 258 Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), 107, 249, 263, 285 Quality Payment Program, 287, 290 Medicare Advantage (MA) plans, 255–258, 260, 262, 264–265 Medicare Advantage and Prescription Drug plans, 285 Medicare Catastrophic Coverage Act of 1988, 104 Medicare-for-all, 191 Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), 285 Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), 285 Medicare Modernization Act (2003), 106 Medicare Payment Advisory Commission, 17 Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA), 256, 285 Medicine–Public Health Initiative, 95 Mental Health Parity Act, 105, 106 Mental Health Parity and Addiction Equity Act, 241 Merit-Based Incentive Payment System (MIPS) program, 263, 286 MERS-CoV emergence, 108 microeconomics, 174 Miller, George, 200 Mills, Wilbur, 196 MIPPA. See Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) MIPS program. See Merit-Based Incentive Payment System (MIPS) program MLPs. See medical-legal partnerships (MLPs) MLR. See medical loss ratio (MLR) MMA. See Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) MMSEA. See Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) MMWR. See Morbidity and Mortality Weekly Report (MMWR) “modestly egalitarian social contract,” 6 “modified” community rating, 160 MOE rule. See maintenance-of-effort (MOE) rule monetary cost, 175 monopolistic markets, 182 moral constitution, 36 moral hazard, 179 Morbidity and Mortality Weekly Report (MMWR), 88 Mothers Against Drunk Driving, 93 muckraking, 86b Mueller, Robert, 107 multistakeholder approach, 286, 289 Murkowski, Lisa, 220 N NACHC. See National Association of Community Health Centers (NACHC) narrow problem identification, 321 National Academy of Medicine. See Institute of Medicine (IOM) National Academy of Sciences, 63 National Association of Community Health Centers (NACHC), 64 National Association of Public Hospitals and Health Systems. See America’s Essential Hospitals National Center for Medical-Legal Partnership (NCMLP), 147 National Committee for Quality Assurance (NCQA), 286 National Defense Authorization Act of Fiscal Year 2017, 307 National Federation of Independent Business v. Sebelius case, 107, 217–218, 224, 238 National Health Conference, 195 national health insurance plan, unsuccessful attempts to passing, 194–197 National Health Insurance Standards Act, 196 national health insurance system, in Canada, 71–73 National Health Service Corps (NHSC), 143 National Health Services Act of 1946, 73 National Health System (NHS) in Great Britain, 73–74 National Healthcare Quality and Disparities Report, 288 National Hygienic Laboratory, 99 National Institutes of Health (NIH), 87, 102, 304 National Preparedness Presidential Policy Directive 8, March 2011, 308 National Quality Forum (NQF), 286 National Quality Strategy, 288 National Quarantine Act (1878), 99 National Rural Health Association (NRHA), 67 National Security Council and Domestic Policy Council, 21 national standard of care, 277 National Strategy for Countering Biological Threats, November 2009, 308 National Strategy for Quality Improvement, 216 National Vaccine Plan, 93–94b National War Labor Board (1942), 102 natural disasters, 293, 294, 300–302, 302b natural epidemics, 294 naturally occurring disease threats, 299–300 NCMLP. See National Center for Medical-Legal Partnership (NCMLP) NCQA. See National Committee for Quality Assurance (NCQA) Nebraska criminal law, 123 negative constitution, 129–132, 132b negative externality, 185 “neighborhood health centers,” 147 nerve agents, 296b neutral problem identification, 320–321 NGOs. See nongovernmental organizations (NGOs) NHS. See National Health System (NHS) NHSC. See National Health Service Corps (NHSC) NIH. See National Institutes of Health (NIH) 9/11 incident, 22, 86, 106, 303 Nixon, Richard M., 196 NMHC. See nurse-managed health center (NMHC) “no-duty-to treat” principle, 114, 272 nondelegable duty, 279 nonexclusive public goods, 184 nonexplosive radiologic device, 297 nongovernmental organizations (NGOs), 92–93 nonprofit health maintenance organizations, 164 nonrival public goods, 184 normal good, 179 normative economics, 176 not-for-profit insurance companies, 171n NPs. See nurse practitioners (NPs) NQF. See National Quality Forum (NQF) NRHA. See National Rural Health Association (NRHA) nuclear fission, 297 nuclear threats, 297 Nuremberg Code, 119–120 nurse-managed health center (NMHC), 65 nurse practitioners (NPs), 65, 67f Index 345 O OASH. See Office of the Assistant Secretary of Health (OASH) Obama, Barack, 51, 193, 197–199, 220 administration, 190, 209 political pragmatism, 201 Obergefell v. Hodges case, 107 Occupational Health and Safety Act of 1970, 38, 91, 144 OECD. See Organization for Economic Cooperation and Development (OECD) Office of Disease Prevention and Health Promotion, 49 Office of Health Reform, 106 Office of Management and Budget (OMB), 21b Office of the Assistant Secretary for Preparedness and Response (ASPR), 304 Office of the Assistant Secretary of Health (OASH), 27 Office of the National Coordinator for Health Information Technology, 289 OMB. See Office of Management and Budget (OMB) opportunity costs, 175 optional populations and benefits, in Medicaid program, 233 options section, in policy analysis, 319, 329b assessing options, 327 identifying options, 326–327 side-by-side tables, 328–329 structuring, 327–328 Oregon Health Plan, 105 Organization for Economic Cooperation and Development (OECD), 49, 138 Organization for the Prohibition of Chemical Weapons, 309 original jurisdiction, 44 originalism, 36 ostensible agency. See apparent agency out-of-pocket spending, 211, 212, 212t oversight authority, 15 Oxfam International, 93 P PAHPA. See Pandemic and All-Hazards Preparedness Act of 2006 (PAHPA) PAHPRA. See Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (PAHPRA) Pandemic and All-Hazards Preparedness Act of 2006 (PAHPA), 306–307 Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (PAHPRA), 307 pandemic flu, 101 pandemics, 294 Pareto, Vilfredo, 175 Pareto-efficient, 175 Parmet, Wendy, 130 partial birth abortion, 123 Partial Birth Abortion Ban Act of 2003 (PBABA), 124 PAs. See physician assistants (PAs) Pasteur, Louis, 99 path dependency, concept of, 193–194 patient attitudes, 140 patient-centered medical home (PCMH), 65 Patient-Centered Outcomes Research Institute (PCORI), 216 patient-centeredness, in healthcare system, 69 patient dumping, 118 Patient Protection and Affordable Care Act of 2010 (ACA). See Affordable Care Act (ACA) patient rights. See rights Patient Safety and Quality Improvement Act (PSQIA), 274 PBABA. See Partial Birth Abortion Ban Act of 2003 (PBABA) PCMH. See patient-centered medical home (PCMH) PCORI. See Patient-Centered Outcomes Research Institute (PCORI) PDPs. See private drug insurance plans (PDPs) peer review processes, 274 Pegram v. Herdrich case, 283–284 Pelosi, Nancy, 198, 222 Pennsylvania Abortion Control Act, 122 perfectly competitive market, 182 performance-based salary bonuses, 163 personal privacy, right to, 120–125 Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), 105, 237 Pharmaceutical Research and Manufacturers of America, 29, 199 Pharmacy Quality Alliance (PQA), 286 PHI. See private health insurance (PHI) PHMHS. See Public Health and Marine Hospital Service (PHMHS) PHS. See Public Health Service (PHS) physical and mental disability discrimination, 127 physician assistants (PAs), 65, 66f Physician Quality Reporting System (PQRS), 285, 286 physician reimbursement, 262–264 physician–patient relationship, 272 physicians, shortages of, 65, 66f Physicians for Social Responsibility and Doctors Without Borders, 93 Pilot Life Insur. Co. v. Dedeaux case, 282 The Planned Parenthood of Southeastern Pennsylvania v. Casey case, 122–123 Plessy v. Ferguson case, 46 “pocket veto,” 19 point-of-service (POS) plans, 169, 255 police powers, 4–5, 41, 128–129 policy analysis art of structuring and writing, 317–330 defined, 317 overview client-oriented advice, 317–318 client’s power and values, 318–319 informed advice, 318 multiple purposes, 319 providing options and recommendation, 318 public policy decision, 318 structuring, 319–330 background section, 322–323 landscape section, 323–326 options section, 326–329 problem identification, 320–322 recommendation section, 330 policy and policymaking process defining policy identifying public problems, 11–12 structuring policy options, 12–13 federal executive branch administrative agencies, 24–25 presidency, 21–24 federal legislative branch committees, 14–17 congressional budget and appropriations process, 19–20 congressional commissions and staff agencies, 17 constituents of legislative branch, 20–21 leadership positions, 14 passing laws, 18–19 health bureaucracy federal government, 25–28 interest groups, 29–30 state and local governments, 28–29 public policymaking structure and process, 13–25 state-level policymaking, 13–14 policy development, 83, 83–84t policy options, structuring, 12–13 policymakers, 176 political capital, 22 346 Index political model, of policy analysis, 318 population-level equity, 70 POS plans. See point-of-service (POS) plans positive economics, 176 positive externality, 184 PPOs. See preferred provider organizations (PPOs) PPS. See prospective payment system (PPS) PQA. See Pharmacy Quality Alliance (PQA) PQRS. See Physician Quality Reporting System (PQRS) preferred provider organizations (PPOs), 62, 167–169, 255 pregnancy care, 8–9 premiums, 155 setting, 160–161 subsidies, 210–213 tax credits, 210–211, 211t PREP. See Public Readiness and Emergency Preparedness (PREP) Act of 2005 prepared community, 295 prescription drug benefits, through Medicare, 257, 259b, 261–262 presidency, 21–24 agenda setting, 22 constituents of executive branch, 23–24 presidential powers, 22–23 presidential directives Executive Order 13527, 308 HSPD 10, 307–308 HSPD 21, 308 National Preparedness Presidential Policy Directive 8, 308 National Strategy for Countering Biological Threats, 308 presidential powers, 22 Prevention and Public Health Fund, 216 preventive services, 214 price elasticity of demand, 178–179 primary care payment, 245 primary sources of law, 35 private accreditation agencies, 50 private drug insurance plans (PDPs), 257 private employer–sponsored benefit plan, 281 private health insurance (PHI), 50, 74 private insurance coverage, and CHIP, 252 private insurance market, changes to, 214–215 private insurance systems, 4 private partnerships, 311 private payer efforts, 289 private suppliers of goods and services, in health care, 50 private trade associations, 50 procedural due process, 43 production efficiency, 175 productivity costs, 60 professional autonomy, 6 professional custom rule, 276–277 professional standard of care, 272 profit maximization, 180–181 Project BioShield Act (2004), 106, 306, 309 property rights, 34–35 proportionality, 130 prospective payment system (PPS), 285 provider networks, 208b provider payment tools, 163–164 PRWORA. See Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) PSQIA. See Patient Safety and Quality Improvement Act (PSQIA) psychotomimetic agents, 296b public and private partnerships, 310 public education, financing, 115 Public Education Campaign, 328 public goods, 183, 184 public health crisis, 295 individual rights in, 128–132 insurance programs, 50 necessity, 130 policy and law, 6 powers, 129, 130 promotion of, 217 regulation, 130 threats to biologic threats, 297–299 chemical threats, 295–297 man-made environmental disasters, 303 natural disasters, 300–302 naturally occurring disease threats, 299–300 nuclear threats, 297 radiologic threats, 297 workforce, 67 Public Health Accreditation Board, 87 public health agencies coordination and collaboration, 91 essential services of, 83–85 federal government roles, 87–90 global health organizations and agencies roles, 90–91 goals and roles of government, 81–83 in health issues, 91–92 history, in U.S., 86, 86b local and state roles, 85–87 mobilization of community partnerships, 95–96 NGOs roles, 92–93 partnership with other health care, 93–95 Public Health and Marine Hospital Service (PHMHS), 100, 101 Public Health and Prevention Fund, 217 Public Health Improvement Act of 2000, 305 public health preparedness, defining, 294–295 public health preparedness policy federal response agencies and offices, 303–305 international agreements, 308–310 presidential directives, 307–308 statutes/regulations/guidance, 305–307 threats to public health, 295–303 Public Health Security and Bioterrorism Preparedness and Response Act of 2002, 305–306 Public Health Service (PHS), 27–28, 81–82, 86b, 102 Public Health Service Act, 54, 97 public hospitals, 64 public insurance programs, 4 public policy decisions, 318 public policymaking structure and process federal executive branch administrative agencies, 24–25 presidency, 21–24 federal legislative branch committees, 14–17 congressional budget and appropriations process, 19–20 congressional commissions and staff agencies, 17 constituents of legislative branch, 20–21 leadership positions, 14 passing laws, 18–19 state-level policymaking, 13–14 summary of entities, 25t Public Readiness and Emergency Preparedness (PREP) Act of 2005, 306, 309 public reporting, 286–287 public safety, 140 public welfare and national security, 128 pulmonary toxicants, 296b “pure” community rating, 160 Q QPP. See Quality Payment Program (QPP) quality. See also under healthcare quality of care, 216–217 improvement, 289 measures, 286 of product, 177 Index 347 quality measurement programs, 286 Quality Payment Program (QPP), 286 R race/ethnicity discrimination, 126–127 racism, 140 radiologic threats, 297 Rand Compare microsimulation model, 204 Rangel, Charles, 200 rational basis/rational relations review, 45 rational model, of policy analysis, 318 Reagan, Ronald, 41 “reasonable means,” 130 “reasonableness” and “amount, duration, and scope” requirements, in Medicaid, 241–242, 242t “reasonably competent physician” standard, 277 reconciliation instructions and process, 20, 192–193 recreational activities, 140 Rehnquist, William, 44 Reid, Harry, 198 reimbursement and visit caps, for specific services, 62–63 reinsurance, 223 Religious Freedom Restoration Act (RFRA), 224 Republican Party, 41 research organizations, in health care, 50 residential segregation, 140 resilience and community planning, 310 restraining orders, 131–132 retirement income, 281 RFRA. See Religious Freedom Restoration Act (RFRA) rights. See also individual rights and healthcare system economic bill of, 195 legal, 34–35, 43 property, 34–35 right to counsel, 145 right to due process, 43 right to make informed healthcare decisions, 119–120 right to privacy, 36, 121 riot control agents, 296b risk adjustment program, 223 in insurance, 158–160 management programs, 274 Robert Wood Johnson Foundation, 93, 289 Rockefeller Foundation, 93 The Roe v. Wade Decision, 104, 121–122 Roosevelt, Franklin, 195 Roosevelt, Theodore, 194 RU-486, 238–239 Ryan White Care Act, 26, 105, 231 Ryan White HIV/AIDS Program, 53 S safety, in healthcare system, 68 safety net providers, 54, 63–65, 65b salaries, 163 Salisbury novichok poisonings (2018), 296b San Antonio Independent School District v. Rodriguez case, 115 SARS epidemic, 92b, 106 Scalia, Antonin, 107 scarce resources, 175–176 “scope of practice,” 273 screening examination, 118 SDH. See social determinants of health (SDH) secondary sources of law, 35 “section 1115” waiver, 247 self-funded plans, 215, 283 self-insured health plan, 283 sellers, 180 senate majority leader, 14 “separate but equal” constitutional doctrine, 142 separation of powers doctrine, 39–40 September 11 (2001) terrorist attacks, 22, 86, 106, 303 service exclusions, in health insurance, 63 SGR. See Sustainable Growth Rate (SGR) Shattuck, Lemuel, 98 Shepherd-Towner Act (1922), 101 Sherman Antitrust Act (1890), 100 SHIS. See Social Health Insurance System (SHIS) SHOP exchange. See Small Business Health Options Program (SHOP) exchange sickness funds, 74 sickness insurance, 101 side-by-side tables, 328–329 analytic table, 329t descriptive table, 328t “silver loading” strategy, 212 Simpkins v. Moses H. Cone Memorial Hospital case, 103 single-payer system, 191 “skinny repeal” option, 220 Small Business Health Options Program (SHOP) exchange, 206 Smallpox Emergency Personnel Protection Act of 2003, 306 SMI. See Supplemental Medical Insurance (SMI) social behavior, 33 social compact theory, 130 social contract, 6–7 social determinants of health (SDH) definition of, 139 evolution of “upstream” innovation, 147–148 and health outcomes, 141–142 law as, 142–146 medical-legal partnerships (MLPs) benefits, 148–149 right to criminal legal representation vs. civil legal assistance, 144–146 types of, 139–141 Social Health Insurance System (SHIS), 74–75 social media, access to, 139–140 social norms and attitudes, 140 Social Security, 15, 155, 195, 254 Social Security Act (SSA), 16t, 86b, 102, 103, 233 Socialist Party, 194 socialized medicine, 195 society, and law, 34 socioeconomic conditions, on health, 141 socioeconomic status discrimination, 127–128 South Africa, 117 special needs plans, 256 “spend down” process, 236 “spillover” effect, of uninsurance for insured individuals, 60 SSA. See Social Security Act (SSA) staff-model MCOs, 163 stakeholders, 7–8, 323 standard of care, 291n evolution of, 276–278 locality rule, 277–278 origins of, 275–276 professional custom rule, 276–277 promoting healthcare quality through, 275–278 standing committees, 15 stare decisis, doctrine of, 38, 45 state and local roles, in public health agencies, 28–29, 85–87 state courts, 41 State Flexibility in Benefits Packages (section 1937), 241 state government, allocation of authority, 40–41 state legislatures, 13, 192 state-level policymaking, 13–14 State Medicaid Manual, 233 State Poor Laws, 97 states and health reform, 218–219 statutes, 36–37 statutory construction, 37 Stenberg v. Carhart Decision, 123–124 Stewart v. Azar case, 247 stimulus bill, 197 Stone, Deborah, 319 348 Index strict constructionism, 36 strict scrutiny, 45 subcommittees, 15–17t subsidies insurance, 212 for low-income individuals, 196 Substance Abuse and Mental Health Services Administration, 87 substantive due process, 43 substitutes, 177 suitcase bomb, 297 Supplemental Medical Insurance (SMI), 255, 259 supplier-induced demand, 181–182 supply changers, 180 costs, 180 elasticity, 179 health insurance and, 181–182 profit maximization, 180–181 Supreme Court death penalty, 36 decision in National Federation of Independent Business v. Sebelius case, 107, 217–218, 224, 238 Marbury v. Madison case, 44 McCulloch v. Maryland case, 41 right to privacy, 36 Sustainable Growth Rate (SGR), 263 Sweet Act (1921), 101 T T. J. Hooper v. Northern Barge Corp. case, 276–277 TANF. See Temporary Assistance for Needy Families (TANF) TARP. See Troubled Asset Relief Program (TARP) Tax Cut and Jobs Act of 2017, 107, 158, 202 Tax Relief and Health Care Act of 2006 (TRHCA), 285 tear gas, 297 Technical Committee on Medical Care, 195 technical efficiency, 175 Temporary Assistance for Needy Families (TANF), 132, 241 terrorism, 22, 28, 34, 86b Texas Health Care Liability Act, 284 think tanks, 29 third-party payer. See insurers threats, to public health, 295–303 Ticket to Work and Work Incentives Improvement Act of 1999, 105 timeliness, in healthcare system, 69 To Err Is Human: Building a Safer Health System (IOM), 68, 271, 274 toll goods, 184 torts, 275 Town of Castle Rock, Colorado v. Gonzales case, 130–131 toxins, 296b trade associations, 29 traditional biological agents, 298b transportation options, 141 TRHCA. See Tax Relief and Health Care Act of 2006 (TRHCA) Tri-Committee bill, 200 trial court, 42 TRICARE program, 28, 50 “trimester framework,” in abortion, 121 Troubled Asset Relief Program (TARP), 197 Truman, Harry S., 195 Trump administration, 203, 207, 209 restricting access to abortion services, 210 Trump v. Hawaii case, 107 Tuskegee syphilis study, 102, 140 21st Century Cures Act, 107 two-tier Medicaid program, 231 U UNAIDS. See United Nations Programme on HIV/AIDS (UNAIDS) uncertainty, in insurance, 157 uncompensated care costs, 59 underinsured, 60–61 UNICEF. See United Nations International Children’s Emergency Fund (UNICEF) uninsured rate characteristics age, 56 education level, 57 employment status, 55–56 geography, 57–58 income level, 54 race/ethnicity/immigrant status, 55 costs of medical care, 59–60 health insurance, 58–59 among nonelderly population, 55f, 57f, 58f reasons for being, 55f United Nations International Children’s Emergency Fund (UNICEF), 90, 90t United Nations Programme on HIV/ AIDS (UNAIDS), 90, 90t United Nations Security Council Resolution 1540, 308–309 United States Agency for International Development (USAID), 90, 91t Agricultural Department, 15t Constitution, 12, 14, 40 Department of Health and Human Services (HHS), 15–17t, 25, 26–28, 26f, 27t, 37, 71, 87, 88t, 104, 138, 198, 286–289, 303–304 Department of Labor, 37 Drug Enforcement Agency, 108 health insurance history, 154–156 health reform in. See health reform healthcare coverage in, 52f healthcare system. See under healthcare informed consent law, 120 political system, 191–193 Public Health Service (PHS), 27–28, 81–82, 86b Public Health Service Act, 54, 97 Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, 305 Universal Declaration of Human Rights, Article 25 of, 116 universal health coverage, 191 universal rights, 117 unmanageably vague problem identification, 321 unpriced by-products, 184, 185 USA PATRIOT Act of 2001, 305 utility analysis, 174–175 utilization control tools, 163, 164–165 utilization review (UR), 164, 165t V VA. See Department of Veterans Affairs (VA) VA Mission Act of 2018, 28 vaccinations, 129 value-based purchasing programs, 287 vesicants, 296b Veterans Health Administration (VHA), 28, 191 VHA. See Veterans Health Administration (VHA) vicarious hospital liability, 278–279 visit caps, 62–63 voluntary quality improvement programs, 287 von Bismarck, Otto, 74 W Wagner, Robert, 195 waivers CHIP, 252 Medicaid, 247–248 Index 349 War Labor Board, 155 Waxman, Henry, 200 weapons of mass destructions (WMDs), 293, 299 welfare rights, 115 White House Office on Health Reform, 198 WHO. See World Health Organization (WHO) Wilmut, Ian, 105 Wilson, Woodrow, 194 Wisconsin Department of Commerce, 37 WMDs. See weapons of mass destructions (WMDs) Woman’s Health v. Hellerstedt case, 107 workforce development, 288 diversity, 217 public health, 310 “workhorses” of Congress. See committees Works Project Administration, 102 World Health Assembly, 309 World Health Organization (WHO) healthcare rights, 116 public health emergency, 294 roles/limitations, 90, 90t social determinants of health, 139 World War I, 195 World War II, 155, 195 writ of mandamus, 44 Y Yersinia pestis, 298 Z zero accounting, 175 Zika virus epidemic, 108 ZMapp, 310 350 Index Cover Essentials of Health Policy and Law Copyright Contents Prologue About the Editor Preface Acknowledgments About the Authors Contributors PART I Setting the Stage: An Overview of Health Policy and Law Chapter 1 Understanding the Role of and Conceptualizing Health Policy and Law Introduction Role of Policy and Law in Health Care and Public Health Conceptualizing Health Policy and Law The Three Broad Topical Domains of Health Policy and Law Social, Political, and Economic Historical Context Key Stakeholders Conclusion References Endnotes Chapter 2 Policy and the Policymaking Process Introduction Defining Policy Identifying Public Problems Structuring Policy Options Public Policymaking Structure and Process State-Level Policymaking The Federal Legislative Branch The Federal Executive Branch The Health Bureaucracy The Federal Government State and Local Governments Interest Groups Conclusion References Endnotes Chapter 3 Law and the Legal System Introduction The Role of Law The Definition and Sources of Law Defining “Law” Sources of Law Key Features of the Legal System Separation of Powers Federalism: Allocation of Federal and State Legal Authority The Role of Courts Conclusion References Endnotes Chapter 4 Overview of the United States Healthcare System Introduction Healthcare Finance Health Insurance Direct Services Programs Healthcare Access The Uninsured The Underinsured Insurance Coverage Limitations Safety Net Providers Workforce Issues Healthcare Quality Key Areas of Quality Improvement Assessment of Efforts to Improve Quality Comparative Health Systems A National Health Insurance System: Canada A National Health System: Great Britain A Socialized Insurance System: Germany The Importance of Health Insurance Design Conclusion References Chapter 5 Public Health Institutions and Systems Introduction What Are the Goals and Roles of Governmental Public Health Agencies? What Are the 10 Essential Public Health Services? What Are the Roles of Local and State Public Health Agencies? What Are the Roles of Federal Public Health Agencies? What Are the Roles of Global Health Organizations and Agencies? How Can Public Health Agencies Work Together? What Other Government Agencies Are Involved in Health Issues? What Roles Do NGOs Play in Public Health? Nongovernmental Organizations How Can Public Health Agencies Partner With Health Care to Improve the Response to Health Problems? How Can Public Health Take the Lead in Mobilizing Community Partnerships to Identify and Solve Health Problems? Conclusion References Endnotes Further Reading References Other Sources Consulted Source for Political Affiliation of Senate Source for Political Affiliation of the House of Representatives PART II Essential Issues in Health Policy and Law Chapter 6 Individual Rights in Health Care and Public Health Introduction Background Individual Rights and Health Care: A Global Perspective Individual Rights and the Healthcare System Rights Under Healthcare and Health Financing Laws Rights Related to Freedom of Choice and Freedom From Government Interference The Right to Be Free From Wrongful Discrimination Individual Rights in a Public Health Context Overview of Police Powers The Jacobson v Massachusetts Decision The “Negative Constitution” Conclusion References Endnotes Chapter 7 Social Determinants of Health and the Role of Law in Optimizing Health Introduction Social Determinants of Health Defining Social Determinants of Health Types of SDH The Link Between Social Determinants and Health Outcomes Law as a Social Determinant of Health Right to Criminal Legal Representation vs Civil Legal Assistance Combating Health-Harming Social Conditions Through Medical-Legal Partnership The Evolution of an “Upstream” Innovation The Benefits of MLPs Conclusion References Endnotes Chapter 8 Understanding Health Insurance Introduction A Brief History of the Rise of Health Insurance in the United States How Health Insurance Operates Basic Terminology Uncertainty Risk Setting Premiums Medical Underwriting Managed Care Cost Containment and Utilization Tools Utilization Control Tools Common Managed Care Structures The Future of Managed Care Conclusion References Endnotes Chapter 9 Health Economics in a Health Policy Context Introduction Health Economics Defined How Economists View Decision Making How Economists View Health Care Economic Basics: Demand Demand Changers Elasticity Health Insurance and Demand Economic Basics: Supply Costs Supply Changers Profit Maximization Health Insurance and Supply Economic Basics: Markets Health Insurance and Markets Market Structure Market Failure Conclusion References Endnotes Chapter 10 Health Reform in the United States Introduction Difficulty Achieving Health Reform in the United States Culture U.S Political System Interest Groups Path Dependency Unsuccessful Attempts to Pass National Health Insurance Reform The Stars Align (Barely): How the ACA Became Law Commitment and Leadership Lessons From Failed Health Reform Efforts Political Pragmatism Overview of the ACA Individual Mandate State Health Insurance Exchanges/Marketplaces Employer Mandate Changes to the Private Insurance Market Financing Health Reform Public Health, Workforce, Prevention, and Quality The U.S Supreme Court’s Decision in the Case of National Federation of Independent Business v Sebelius States and Health Reform Key Issues Going Forward Congressional Activity Insurance Plan Premium Rates ACA Litigation Conclusion References Chapter 11 Government Health Insurance Programs: Medicaid, CHIP, and Medicare Introduction Medicaid Program Administration Eligibility Benefits Amount, Duration, and Scope, and Reasonableness Requirements Medicaid Spending Medicaid Financing Medicaid Provider Reimbursement Medicaid Waivers The Future of Medicaid Children’s Health Insurance Program CHIP Structure and Financing CHIP Eligibility CHIP Benefits and Beneficiary Safeguards CHIP and Private Insurance Coverage CHIP Waivers The Future of CHIP Medicare Medicare Eligibility Medicare Benefits Medicare Spending Medicare Financing Medicare Provider Reimbursement The Future of Medicare Conclusion References Endnotes Chapter 12 Healthcare Quality Policy and Law Introduction Quality Control Through Licensure and Accreditation Medical Errors as a Public Health Concern Promoting Healthcare Quality Through the Standard of Care The Origins of the Standard of Care The Evolution of the Standard of Care Tort Liability of Hospitals, Insurers, and MCOs Hospital Liability Insurer Liability Managed Care Liability Federal Preemption of State Liability Laws Under ERISA Overview of ERISA ERISA Preemption The Intersection of ERISA Preemption and Managed Care Professional Medical Liability Measuring and Incentivizing Healthcare Quality Quality Measure Development Quality Measurement Public Reporting Value-Based Purchasing National Quality Strategy Private Payer Efforts Role of Health Information Technology Conclusion References Endnotes Chapter 13 Public Health Preparedness Policy Introduction Defining Public Health Preparedness Threats to Public Health CBRN Threats Naturally Occurring Disease Threats Natural Disasters Man-Made Environmental Disasters Public Health Preparedness Policy Federal Response Agencies and Offices Preparedness Statutes, Regulations, and Policy Guidance Presidential Directives International Agreements Conclusion References PART III Basic Skills in Health Policy Analysis CHAPTER 14 The Art of Structuring and Writing a Health Policy Analysis Introduction Policy Analysis Overview Client-Oriented Advice Informed Advice Public Policy Decision Providing Options and a Recommendation Your Client’s Power and Values Multiple Purposes Structuring a Policy Analysis Problem Identification The Background Section The Landscape Section The Options Section The Recommendation Section Conclusion References Glossary Index