1. Discuss the US Health Care System, tracing its development during the 20th century
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First half of 20th century- majority of health care costs were paid out of pocket- where payment by the
patient could be money, chickens, or services. Large public hospitals served the poor, and private
physicians and hospitals also took care of the poor. Free care was made up by charging more to those
who could afford to pay. Safety net for the poor continued with health care insurance companies
taking on the costs.
Private insurance in early 1900s w/Met Life & Prudential covering expenses for: life insurance,
funerals, final illness. In1929-Baylor hospital plan: 21 days inpatient care to 1500 Dallas
schoolteachers @ $6/person/yr. In Late 1930s- American Hospital Association started Blue Cross: for
hospitalization coverage, and Blue Shield for physician costs. Common goal was reimbursing providers
regardless of cost- premiums rose to cover increased costs. No incentive to reduce cost, everyone got
paid. Private insurance companies realized they could make more profit with healthy people, so they
charged higher premiums for potentially expensive clients (ie elderly). Prohibitively high premiums
prevented coverage for many. In Late 1950s-only 15% elderly had coverage, the poor had none except
for county/city public facilities.
In 1965-Medicare started by federal government: insurance for elderly, later Medicaid for poor. The
American Medical Association opposed these programs because of fear of government intervention/
and potential control of medicine, ie socialized medicine. Other insurance companies and
pharmaceutical companies also were against Medicare. Note that in the 1980’s when the federal
government was considering eliminating these programs due to costs, the AMA led the fight to retain
them, and protect their income. Two Lobbies: AMA &AARP, The Poor has no lobby.
Health care costs spiraled out of control: little incentive to control costs, deep pockets of insurance,
government covering the bills. Employers paid majority of insurance premium costs and were
spending more than they could afford. Large gov’t deficits rapidly developed…..All of this lead to the
development of Health Maintenance Organizations. HMOs emphasized prevention and cost-conscious
management of health resources in order to control costs (inc premiums) and focus on keeping pts
healthy.
2. Describe the Medicare and Medicaid programs, including a summary of their benefits
All States have Medicare: Fed covers 50% and the State covers 50%. Medicaid is also 50/50 but each state
must buy in. (see handouts in syllabus summarizing Medicare & Medicaid)
3. Discuss the development of HMOs, including their advantages & disadvantages, and
reasons for each
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HMOs were originally a capitated system: $3-4/mo per patient for a given number of patients.
Cost Cutting in HMOs in theory: prevention, holding costs down by negotiations, and screening for
medically necessary procedures. Also, specific outpatient facilities, hospitals.
Costs have come down with HMOs due to negotiating down fees for services, procedures and
hospitalizations. Utilization reviews: decisions are made (often by clerical personnel) about medical
necessity if care. “Unnecessary care” is denied, leading to lack of medical care even if it was indicated
medically. End result- preventative medicine doesn’t happen.
Prevention emphasis has not been realized due to competition among HMOs leading employers and
patients to change providers to the lowest bidders- no continuity of care- and loss of interest by
insurers in preventative medicine.
Negotiations between HMOs for physicians and hospitals has led to decreased costs, but physicians
and hospitals have lost income in the process. Dr Moher showed lots of data on CEO salaries for
HMOs, showing that as hospitals bankrupt, employees get fired, etc these guys are making fat bank.
Rest of the moolah went to stockholders. Also profitability increased by insuring healthy people.
4. Describe the current health care system in Arizona
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Our beloved state ranks 3rs in the number of uninsured (24%) behind Texas and Arkansas.
Az was the last state to join Medicare in 1983, and it only covered those below the 34 th percentile of
poverty rate income.
Az ranks 8th in the country for the rate of children living in poverty (24%)
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AZ was the 40th state to join the “Kids Care” program, which is a federally funded program (The
Children’s Health Insurance Program) that provides health care coverage for children up to age 18 who
live in families whose income is up to 200% of the Federal Poverty Level (FPL currently ~$19000/yr
or $10/hr for a family of 4). The federal government covers 75%, and the state covers 25% of Kids
Care.
AHCCCS: On 10.1.2001 thousands of Arizonans became eligible under new laws which increased the
income limits from 34% to 100% of the FPL. Premium Sharing Plan under AHCCCS for those whose
income exceeds the FPL cutoff whereby families enroll and pay a monthly premium based on income
& family size. Also pay co-pays ($20/Dr visit, $25/ED visit, $5/generic drugs). Sample monthly
premiums: $53/mo 1 p, $200/mo for family of 6
5. Describe the “notch group”
The working poor- those that make too much to qualify for Medicaid, but not enough to pay for insurance.
Many of these people work 1 or more part-time jobs (no bene’s with PT). Despite the misconception that
those who lack insurance are lazy, unemployed, etc, more that 75% of the uninsured are in families w/at
least one full-time equivalent worker.
6. Discuss the role of physicians in the development of health care policy
Physicians need to speak out on behalf of their patients & not their own income needs to affect necessary
changes in income policy. If we don’t become leaders on this issue, we will let our fates be decided by
corporate executives & politicians. Physician leadership will ensure provision of high quality health care
for all in the future.
7.
Discuss whether health care is a right or a privilege in the US today and defend your
answer- this exercise is left to the student.
8. Discuss the current “system” of meeting the health care needs of the poor in this
country; and be able to trace its historical roots- how did we get here?
See #1 for History, #4 for notch group. Safety cushion has all but disappeared for poor as physicians and
hospitals face decreased reimbursements.
Other interesting info:
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In 1999, 42.6 million people, 1/6th of the population, were uninsured in the US. All other industrialized
countries (except S Africa) have national systems which provide health care to all people, regardless of
ability to pay.
General Motors supposedly spends more on health insurance than it does on steel. They spend
$1500/cost of car for insurance. Delphi (car electronics company) went bankrupt recently due to
employee health insurance: $27/hr was the average wage, and the cost was $65/hr with benefits.
Kaiser-Permanente was California’s 1st big HMO (for a steel company). They take surveys and have
the highest % of all around satisfaction. It is a not-for-profit with its own hospital, doctors, drugs,
pharmacies, etc
Suggested Readings
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Woolhandler, S, Campbell, T, Himmelstein, D. Costs of Health Care Administration in the United
States and Canada. New England Journal of Medicine, Aug 21, 2003, Vol. 349: 768-775.
-not much difference between uninsured- 46 million people- and underinsured
 Aaron, Henry J. The Costs of Health Care Administration in the United States and Canada –
Questionable Answers to a Questionable Question. New England Journal of Medicine, Aug 21,
2003, Vol. 349: 801-803.
 Proposal of the Physicians’ Working Group for Single-Payer National Health Insurance. JAMA,
Aug 13, 2003, Vol. 290, No. 6, pp. 798-805.
 Bindman, AB, Haggstrom, DA. Small Steps or a Giant Leap for the Uninsured? JAMA, Aug 13,
2003,Vo. 290, No. 6, pp. 816-818.