Reimbursement Of Healthcare, The History And Politics

Elizabethan Poor Law of 1601: England, guaranteed medical care for poor, blind, and ‘lame’ individuals.  This minimal care was supported by the local government and administered by the parish offices; it sought as much to regulate the poor as to provide care during illnesses.

Chadwick Report of 1832:  Led to the Poor Law Amendment Act in 1834.  This provided for paid government officials to design regulations for administration of the law.  This was to ensure centralization, uniformity, and efficiency.    

Shattuck Report 1850: Most famous of the early public health reports, conducted in Massachusetts by Lemuel Shattuck. The report recommended a state board of health be established.

Workmen’s Compensation 1917: United States Supreme Court upheld the constitutionality of compensation legislation. Accidents and occupational diseases were now to be covered by the employer. 

Social Security Act of 1935: Attempted to overcome the national setbacks of the Depression.  This act provided funding for health protection and promotion through education and employment of public health nurses. It also provided money to assist states and counties in the establishment and maintenance of adequate health services, as well as monies for research and investigation of disease.

Public Health Service Act of 1944: Act established a mechanism for oversight of construction and surveyance of Healthcare facilities. It also led to the development of the Center for Disease Control and Prevention and the FDA.

Medicare – 1965: Congress amended the Social Security Act to include health insurance benefits for the elderly (Medicare) and the poor (Medicaid).

OSHA 1970: Made healthcare of the worker a public concern. 

ADA 1990: Guaranteed equal access and opportunity to the disabled.

FMLA 1993: Guarantees 12 weeks employment leave in a 12 month period for the birth of a baby, adoption, or illness of a family member. It also protects the employee’s benefits while on leave.

The following table provides a brief outline of the correlation between the concerns of civilization and the ‘policy’ of healthcare over the course of European and American history. This outline is based on a historical perspective on public health developed by George Rosen (1993), who felt strongly that public health includes broad environmental measures and should not be restricted to the prevention of specific diseases. His text emphasizes the moral, political, and social perspectives necessary as a knowledge base for consideration on effecting legislation.

Simply speaking, well meaning legislators act according to what they believe is in the ‘public interest’. On the flip side however, the legislators’ motive is ‘self-interest,’ job security and their own political support. These motives will clash (Feldstein, 1996).

The supporters who can most help the legislator keep his/her job will get the most support. For the better part of the 20th century, the ‘squeaky wheels’ have been the aged and the healthcare providers (specifically physicians and hospitals). Demographics and their significance will be discussed a bit later.

The legislature is huge, so committees are formed, and then sub-committees.  Legislators self-elect to the committees of their choice (essentially those of most interest to their constituency) and voter-trading can occur.

Federal legislation becomes law in Congress.

* The United States Census is conducted every 10 years.  Congressional districts are adjusted accordingly. The districts in the West and the South have been on the increase and the Northeast’s number of representatives has been on the decline.

Ideas for laws are usually generated in response to an event or a constituent suggestion that something needs to to change. Bills are introduced into either the house or senate, sometimes to both. A Bill is given a number with the prefix of HR or S, and sent to the appropriate committee. This would be the committee with most relevance to the given subject or matter.

In the Congressional Committee, bills are introduced, hearings are held, and initial voting occurs. This basically simple process can take months, and sometimes years, from introduction of the Bill to initial vote.

Bills can be sent from committee to subcommittee as determined by committee chair. Subcommittees take on lives of their own, chairs are selected and permanent staff is assembled. The subcommittee will hold hearings, taking testimony from supporters and opponents. A report is issued that will be favorable or unfavorable, or may amend/change or rewrite the bill. The committee usually accepts the recommendation of the subcommittee. The ‘dance of legislation’ is influenced by: partisan politics, lobbying of interest groups, and public opinion.

The votes are influenced by: party loyalty, interest groups, a call from the President, constituents, fellow legislators, etc. The bill is then sent to the President for ‘final’ action, his/her signature. The President may also veto the bill; this then can be overridden by a 2/3 vote of both the house and senate. 

• President (The first 5 positions are usually filled with friends and people owed favors…)
• The White House Office
• National Security Council
• Council of Economic Advisors
• Office of Management and Budget
  • Cabinet – head of each department is called ‘secretary’, more likely appointed due to expertise and reputation…advises the President.

The cabinet department is a very large administrative unit in the ‘federal bureaucracy’. The Department of Health and Human Services is the cabinet department most significant to healthcare policy implementation. Regulations written here are published in the Federal Register.

Public supporters with the most influence on the legislators are generally defined by the demographic trends at the time. National trending for consideration as we enter the 21^st century:

• Increasing ‘school-aged’ population
• Increasing number of people in their late-30’s to late-50’s (baby boom of 1945-64 continues to concentrate the population growth within the age group they reach…they are 30% of the overall population)
• Elderly – especially ‘older-elder’ over age 85
  • The first members of the baby boom will turn 65 in 2011; the elderly population will continue to grow through the 2030’s and by 2030, the nation’s elderly population will be greater than 20% of the total, it is now 13%. Of the current elderly – 8% of those between 65 and 69 need assistance with activities of daily living (ADLs), and 45% of those over 85 need ADL assistance.

• The % of ‘households’ is decreasing – from 81% in 1970 to 71% by the late 90s.
• The population is shifting to the West and the South. The 6 fastest growing states are Nevada, Arizona, Utah, Colorado, Idaho, and Georgia. The Northeast is the slowest growing area of the U.S. and only New Hampshire had any measurable growth in the 1990’s.
• Most people have some health insurance – 84.6%
  • Young adults are the highest uninsured group, with 1/3 of those between the ages of 18 and 24 being uninsured.

The average citizen can effect legislation by attending hearings (sometimes brought to the local arena) or calling/writing the appropriate senator or congress person.

There are 2 forms of government health insurance: Medicare, which is federally run, and Workers’ Compensation, which is delegated to the states for administration.

The first significant form was developed in 1965 with the passage of Medicare under the Social Security Act. Medicare is a contributory program, paid into during the ‘work’ years. Private insurance companies contract with the government to provide healthcare services. Medicare expenditures are approximately 60% of the federal spending on healthcare.

Medicaid, which is a state-administered federal program, was created by the same act that created Medicare. It provides noncontributory health assistance for people unable to meet their health expenses and who fall within specific economic guidelines. Federal and state funds pay for Medicaid. States receive an average of 57% of their Medicaid costs from the federal government. Federal law does not mandate that a state operate a Medicaid program, but all 50 states do. Medicaid generally provides extensive coverage: inpatient, outpatient, home care, and long-term care.

There are some other health service programs funded by the U.S. government: these are provided to Veterans, Military personnel, Federal employees, and American Indians on reservations.

Reimbursement Models

Blue Cross-Blue Shield was essentially the first private health insurance program, it was established in 1939. In 1940, less than 10% of the civilian population was covered. By 1992, 74% were covered. Americans are generally insured as part of their employee work benefits. Blue Cross-Blue Shield is still one of the most common insurers; there are also commercial insurance companies, self-insurance, Health Maintenance Organizations (HMO), and Preferred Provider organizations (PPO).

These are voluntary, and generally of a non-profit nature. Some include the American Cancer Association, American Diabetes Association, American Heart Association, Lion’s Club, Knights of Columbus, etc.

The majority of American hospitals operate on a voluntary, nonprofit basis. There are also some privately funded health services programs, often part of benefits packages in the work setting, such as employee health clinics.