Health Policy
Chapter 13
Learning Objectives
Understand the definition, scope, and role of health
policy in the United States.
Recognize the principal features of U.S. health policy
Comprehend the process of legislative health policy
Be familiar with some of the critical health policy
issues in the United States
Health Policy
Public Policies
are authoritative decisions made in the legislative, executive, or
judicial branches of government

intended to direct or influence the actions, behaviors, or decisions of others
Health Policy
the aggregate principles, stated or unstated

that characterize the distribution of resources, services, and political
influences
• that impact on the health of the population
Different Forms of Health Policy
Health policies
a by-product of public social policies enacted by
pertains to health care at all levels,

including policies affecting the production, provision, and
financing of health care services.
Health policies can be made through the private
sector or the public policymaking process
Different Forms of Health Policy
Public Health policies include:
1.
Reforms in medical education
2.
1965 enactment of Medicare and Medicaid
3.
Federal funding for family planning clinics
4.
A merger of two hospitals violates antitrust laws
5.
Procedures for licensing physicians
6.
Monitoring sanitation standards in restaurants
7.
Banning smoking in public places
Regulatory Tools
Health policies may be used as regulatory tools
they call on government to prescribe and control the behavior of a
particular target group by

monitoring the group and imposing sanctions if it fails to comply
Allocative Tools
Health policies may be used as allocative tools
they involve the direct provision of income, services, or goods to

certain groups of individuals or institutions
Distributive policies include:
funding of medical research through the National Institute of Health
the development of medical personnel
the construction of facilities
initiation of new institutions
Redistributive policies
creates visible beneficiaries and payers
takes money or power from one group and gives it to another
The Principal Features of U.S.
Health Policy
Features that characterize U.S. health policy:
Fragmented
Incremental
Piecemeal reform
Pluralistic (interest group)
The decentralized role of the states
The impact of presidential leadership
Policy intervention begins with identifying what
markets fail or do not function well
The Principal Features of U.S.
Health Policy
Government spending on health care fills the private
sector gaps
Intervention includes:
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Environmental protection
Preventative services
Communicable disease control
Care of special groups
Institutional care of mentally and chronically ill
Medical care to the indigent
Support for research and training
Government as Subsidiary
to the Private Sector
Most cited problems associated with government involvement in
health care:
Bureaucratic inflexibility
Excessive regulation
Red tape
Irrational paperwork
Arbitrary and sometimes conflicting public directives
Inconsistent enforcement of rules and regulations
Escalating costs
Fraud and abuse
Inadequate reimbursement schedules
Arbitrary denial of claims
Insensitivity to local needs
Consumer and provider dissatisfaction
Government programs tend to promote welfare dependence rather than a desire
to seek employment
Fragmented, Incremental, and
Piecemeal Reform
The subsidiary role of government with both private and public
approaches to healthcare result in a complex and fragmented
financing structure, therefore:
The employed are predominantly covered by voluntary insurance
that they and their employers make
The aged are insured through a combination of coverage financed
out of Medicare Part A and Medicare Part B
The poor are covered through Medicaid via federal, state, and local
revenues
Special population groups have coverage that the federal
government provides directly
Pluralistic and Interest Group Politics
U.S. health policy outcomes result from compromises
to satisfy demands
The policy community has included:
Legislative committees
Executive branch
Private interest groups
The first two communities supply policies demanded
by the third.
Pluralistic and Interest Group Politics
Well-organized interest groups are the most effective
“demanders” of policies
Examples include:

American Medical Association
American Association of Retired Persons
American Hospital Association
American Health Care Association
Pharmaceutical Research and Manufacturers of America
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Businesses are a newcomer to interest groups
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• Look at Exhibit 13-1, page 542
To overcome pluralistic interests and maximize policy outcomes:

Diverse interest groups form alliances with legislators
Decentralized Role of the States
The role of the individual states has taken several forms:
1.) financial support for the care and treatment of the poor and chronically
disabled
2.) quality assurance and oversight of health care practitioners and facilities
3.) regulation of health care costs and insurance carriers
4.) health personnel training
5.) authorization of local government health services
•
24 state governments created an:
•
“Insurance risk pool”
•
a program that helps people acquire private insurance
• Look at Exhibit 12-2, page 543
Impact of Presidential Leadership
Lyndon B. Johnson passed
Medicare and Medicaid
Harry Truman passed the
Hill-Burton Hospital Construction Act
Richard Nixon passed:
1.) federal support of health maintenance organizations in 1973.
2.) the enactment of the National Health Planning and Resources
Development Act of 1974 (CON legislation)
The Development of Legislative
Health Policy
The making of U.S. health policy is a complex process that involves
private and public sectors, and reflects:
1.) the relationship of the government to the private sector
2.) the distribution of authority and responsibility within a federal
system of government
3.) the relationship between policy formulation and implementation
4.) a pluralistic ideology as the basis of politics
5.) incrementalism as the strategy for reform
The Policy Cycle
The formation and implementation of health policy occurs in a
policy cycle comprising five components:
1.) issue raising
2.) policy design
3.) public support building
4.) legislative decision making and policy support building
5) legislative decision making and policy implementation
Legislative Committees and
Subcommittees
Congress has three important powers that make it
extremely influential in the health policy process:
1.) the power to “make all laws
which shall be necessary and proper for carrying into
execution”
2.) the power to tax
3.) the power to spend
House Committees
Ways and Means Committee
has sole jurisdiction over

Medicare Part A, Social Security, unemployment compensation, public
welfare, and health care reform.
Energy and Commerce
has jurisdiction over

Medicaid, Medicare Part B, matters of public health, mental health, health
personnel, HMO’s, foods and drugs, air pollution, consumer products safety,
health planning, biomedical research, and heath protection.
Committee on Appropriations
responsible for funding substantive legislature provisions.
Senate Committees
Committee on Labor and Human Resources
has jurisdiction over most health bills
Committee on Finance
has jurisdiction over

taxes and revenues, matters related to Social Security,
Medicare, Medicaid, and Maternal and Child Health
Access to Care
Two arguments for all American citizens have a right to
be guaranteed access to health care
1.) All citizens have a right to the same level of care
2.) All citizens have a right to the some minimum
level of care
Public Financing
Policies have been enacted to:
provide access to health care for specific groups
otherwise unable to pay for and receive care.
These groups :
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elderly (Medicare),
poor children (Medicaid and SCHIP),
poor adults (Medicaid and local or state general assistance),
the disabled,
veterans (Department of Veterans Affairs),
Native Americans (Indian Health Service),
and patients with end-stage renal disease (Social Security)
• benefits for kidney dialysis and transplants
Access and the Elderly
Two main concerns dominate the debate about
Medicare policy:
1.) spending should be restrained to keep the
program viable
2.) The program needs to be truly comprehensive

by adding services not currently covered.
Access and Minorities
In some instances, the combination of low income
and minority status creates difficulties;
in others, the interaction of special cultural habits and
minority status causes problems.
With the exception of Native Americans
no other minority population has programs specifically
designed to serve its needs.
Access in Rural Areas
In the Omnibus Budget Reconciliation Act of 1986,
Congress provided rural hospitals three important
provisions:
1.) Separated urban and rural pools of funds
• used to pay for outliers,
– cases in which excessive expenditures above the prospective
payment system allotment are incurred
2.) Provided early payments to those with less than 100 beds
3.) Changed criteria for rural referral centers to allow more
hospitals to qualify for funds.
Access in Rural Areas
The OBRA of 1987 included provisions that :
1.
Provided greater increase in reimbursement to rural hospitals than to urban
hospitals
2.
Allowed rural hospitals located adjacent to metropolitan statistical areas to be
defined as urban hospitals
3.
Authorized a rural health care transition program to provide assistance to
hospitals and others wishing to adopt new service delivery strategies
4.
Required a report in the appropriateness of separate urban and rural rates
5.
Authorized small rural hospitals to serve as residency training cites for
physicians
Cost of Care
The National Health Planning and Resources
Development Act of 1974:
became law in 1975.
the transition from improvement of access to cost
containment

the principal theme in federal health policy.
Quality of Care
OBRA of 1989,
Congress created a new agency, now known as the Agency for
Healthcare Research and Quality (AHRQ)
Mandated to conduct and support research concerning:

outcomes, effectiveness, and appropriateness of health care services and
procedures.
The AHRQ
established funding for patient outcomes research teams (PORTs)
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focuses on particular medical conditions
It’s the medical treatment effectiveness program
• Consists of four elements:
– medical treatment effectiveness research,
– development of databases for such research,
– development of clinical guidelines and
– the dissemination of research findings and clinical guidelines
Quality of Care
In March 2001, the Institute of Medicine (IOM) issued:
Crossing the Quality Chasm
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identified six areas of quality improvement:
1.
2.
3.
4.
5.
6.
Safety
Effectiveness
Patient-Centeredness
Timelines
Efficiency
Equity
Research and Policy Development
The research community influences policymaking
through:
Documentation
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Gathering, cataloging, correlating
Analysis
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Feasibility, efficacy, practicality of an intervention
Prescription
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Research that shows a course of action
Health Insurance Reform
One common criticism of the U.S. health care system:
the U.S. is the only industrialized nation that fails to
assure universal access to basic health care.
States as Leaders
During the 1980’s, President Reagan ushered a:
return of greater control and discretion

over the financing, delivery, and regulation of health care
• to the states.
Block grants
consolidates funds from different categorical programs
into one lump sum
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distributed to the states on a formula basis,
became a key vehicle to achieve all three goals.
States as Leaders
One of the oldest and most fundamental state role:
Protecting the public’s health
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Includes:
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Protecting the environment, workplace, housing, food and water
Preventing injuries and promoting health behaviors
Responding to disasters and assisting in recovery
Ensuring quality, accessibility and accountability of medical care
Providing basic health services when otherwise unavailable
Monitoring the population’s health status
Developing policies and plans that support health improvement
States as Leaders
The Institute of Medicine (1988),
condensed these activities into three basic functions:
1.
Assessment of health status and systems
2.
Policy development
3.
Assurance of personal, educational, and environmental health
services
Medical Malpractice
According to DHHS,
the malpractice litigation “crisis”
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threatens access to health care
Malpractice insurance premiums increasing by double
digits
A possible $250,000 cap for damages?
Mental Health Benefits
30 million Americans suffer from
Schizophrenia, depression…
Employers offer lower treatment benefits
Possible federal law requiring equal treatment
Steps to a Healthy U.S.
The DHHS launched
The Steps to a Healthy U.S. initiative:
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The initiative unites all relevant programs of the Health and
Human Services agencies such as:
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Centers for Disease Control
Centers of Medicare and Medicaid Services
Food and Drug Administration
National Institute of Health