DQ-W11,Discussion: What Can Nurses Do?

Table of Contents

What Can Nurses Do

Many people, most of them in tropical countries of the Third World, die of preventable, curable diseases. . . . Malaria, tuberculosis, acute lower-respiratory infections—in 1998, these claimed 6.1 million lives. People died because the drugs to treat those illnesses are nonexistent or are no longer effective. They died because it doesn’t pay to keep them alive.

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    –Ken Silverstein, Millions for Viagra. Pennies for Diseases of the Poor, The Nation, July 19, 1999

Unfortunately, since 1998, little has changed. For many individuals living in impoverished underdeveloped countries, even basic medical care is difficult to obtain. Although international agencies sponsor outreach programs and corporations, and although nonprofit organizations donate goods and services, the level of health care remains far below what is necessary to meet the needs of struggling populations.

What Can Nurses Do
Many people, most of them in tropical countries of the Third World, die of preventable, curable diseases

Polluted water supplies, unsanitary conditions, and poor nutrition only exacerbate the poor health prevalent in these environments. Nurses working in developed nations have many opportunities/advantages that typically are not available to those in underdeveloped countries. What can nurses do to support their international colleagues and advocate for the poor and underserved of the world?

In this Discussion, you will consider the challenges of providing health care for the world’s neediest citizens, as well as how nurses can advocate for these citizens.

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What Can Nurses Do
Consider the challenges of providing health care in underdeveloped countries

     To prepare:

  •     Consider the challenges of providing health care in underdeveloped countries.
  •     Conduct research in the Walden Library and other reliable resources to determine strategies being used to address these challenges.
  •     Using this week’s Learning Resources, note the factors that impact the ability of individuals in underdeveloped nations to obtain adequate health care.
  •     Consider strategies nurses can use to advocate for health care at the global level. What can one nurse do to make a difference?


                                        Required Readings

    Knickman, J. R., & Kovner, A. R. (Eds.). (2015). Health care delivery in the united states (11th ed.). New York, NY: Springer Publishing.

        Chapter 4, “Comparative Health Systems” (pp. 53–72)

        The chapter showcases different models of health care systems in order to help policymakers and managers critically assess and improve health care in the United States.

        Chapter 10, “The Health Workforce” (pp. 213–225)

        Review this section of Chapter 10, which details health workforce issues for nurses and nurse practitioners.

    Milstead,  J. A. (2019). Health policy and politics: A nurse’s guide (6th ed.).  Burlington, MA: Jones and Bartlett Publishers.

        Chapter 11, “The Impact of Globalization: Nurses Influencing Global Health Policy” (pp. 192-204)

        This chapter addresses how the health status of individuals and populations around the world can affect policymaking in a country.

    Bloch, G., Rozmovits, L., & Giambrone, B. (2011). Barriers to primary care responsiveness to poverty as a risk factor for health. BMC Family Practice, 12(1), 62–67.

    Retrieved from the Walden Library databases.

    This article details a qualitative study that was conducted to explore the barriers to primary care responsiveness to poverty. The authors explicate a variety of health impacts attributable to poverty.

    Harrowing, J. N. (2009). The impact of HIV education on the lives of Ugandan nurses and nurse-midwives. Advances in Nursing Science, 32(2), E94–E108.

    Retrieved from the Walden Library databases.

    This article explores the impact of an HIV/AIDS education program for Ugandan nurses and nurse-midwives. The author details the motivations behind the program and recommendations for the future.

    Koplan, J. P., Bond, C., Merson, M. H., Reddy, K. S., Rodriquez, M. H., Sewankambo, N. K., & Wasserheit, J. N. (2009). Towards a common definition of global health. The Lancet, 373(9679), 1993–1995.

    Retrieved from the Walden Library databases.

    This article provides a full description of the components that comprise global health care in detail.

    Gapminder. (2011). Retrieved from http://www.gapminder.org

    This website explains statistical graphs and tables of life expectancy and incomes around the world.

    Global Health Council. (2012). Retrieved from http://www.globalhealth.org

    This website houses the productivity and efforts of the Global Health Council as the world’s largest alliance dedicated to improving health throughout the world.

    Henry J. Kaiser Family Foundation: U.S. Global Health Policy. (2010). Retrieved from http://kff.org/globaldata/

    This website focuses on major health care issues facing the United States, as well as the U.S. role in global health policy.

    International Council of Nurses. (2011). Retrieved from http://www.icn.ch/

    This website documents the efforts of the International Council of Nurses to ensure quality nursing care for all, as well as sound health policies globally through the advancement of nursing knowledge and presence worldwide.

    United Nations Statistics Division. (2011). Retrieved from http://unstats.un.org/unsd/default.htm

    This website examines global statistical information compiled by the United Nations Statistics Division.

    University of Pittsburgh Center for Global Health. (2009). Retrieved from http://www.globalhealth.pitt.edu/

    This website analyzes health issues that affect populations around the globe through research at the University of Pittsburgh.

    The World Bank (n.d.) The costs of attaining the millennium development goals. Retrieved from http://www.nationalacademies.org/hmd/Global/News%20Announcements/Crossing-the-Quality-Chasm-The-IOM-Health-Care-Quality-Initiative.aspx.

    This article states that many countries will have to reform their policies and improve service delivery to make additional spending effective because the additional aid for education and health with not be enough.

Health Care Delivery in the United States

James R. Knickman Anthony R. Kovner Editors

Jonas & Kovner’s

11th Edition

Health Care Delivery in the United States James R. Knickman, PhD · Anthony R. Kovner, PhD Editors

Steven Jonas, MD, MPH, MS, FNYAS, Founding Editor

Knickm an


Jonas & Kovner’s 11th Edition

11th Edition

9 780826 125279

ISBN 978-0-8261-2527-9

11 W. 42nd Street New York, NY 10036-8002 www.springerpub.com

“Health care managers, practitioners, and students must both operate as effectively as they can within the daunting and con- tinually evolving system at hand and identify opportunities for reform advances… Health Care Delivery in the United States has been an indispensable companion to those preparing to manage this balance. The present edition demonstrates once again why this volume has come to be so prized. It takes the long view – charting recent developments in health policy, and putting them side-by-side with descriptions and analysis of existing programs in the United States and abroad.”

— Sherry Glied, PhD, Dean and Professor of Public Service, NYU Wagner, From the Foreword

T his fully updated and revised 11th edition of a highly esteemed survey and analysis of health care delivery in the United States keeps pace with the rapid changes that are reshaping our system. Fundamentally, this new edition presents the realities that impact our nation’s achievement of the so-called Triple Aim: better health and better care at

a lower cost. It addresses challenges and responses to the Affordable Care Act (ACA), the implementation of Obamacare, and many new models of care designed to replace outmoded systems. Leading scholars, practitioners, and educators within population health and medical care present the most up-to-date evidence-based information on health disparities, vulnerable populations, and immigrant health; nursing workforce challenges; new information technology; preventive medicine; emerging approaches to control health care costs; and much more.

Designed for graduate and advanced undergraduate students of health care management and administration and public health, the text addresses all of the complex core issues surrounding our health care system in a strikingly readable and accessible format. Contributors provide an in-depth and objective appraisal of why and how we organize health care the way we do, the enormous impact of health-related behaviors on the structure, function, and cost of the health care delivery system, and other emerging and recurrent issues in health policy, health care management, and public health.

The 11th edition features the writings of such luminaries as Michael K. Gusmanno, Carolyn M. Clancy, Joanne Spetz, Nirav R. Shah, Michael S. Sparer, and Christy Harris Lemak, among others. Chapters include key words, learning objectives and competencies, discussion questions, case studies, and new charts and tables with concrete health care data. Included for instructors is an Instructor’s Manual, PowerPoint slides, Syllabus, Test Bank, Image Bank, Supplemental e-chapter on the ACA, and a transition guide bridging the 10th and 11th editions.

Key Features: • Integration of the ACA throughout the text, including

a supplementary e-chapter devoted to this major health care policy innovation

• The implementation of Obamacare • Combines acute and chronic care into organizations

of medical care • Nursing workforce challenges • Health disparities, vulnerable populations, and

immigrant health • Strategies to achieve the Triple Aim (better health and

better care at lower cost)

• New models of care including accountable care organizations (ACOs), patient homes, health exchanges, and integrated health systems

• Emerging societal efforts toward creating healthy environments and illness prevention

• Increasing incentives for efficiency and better quality of care

• Expanded discussion of information technology • A new 5-year trend forecast

Jonas & Kovner’s

H ealth Care Delivery in the U

nited States

Jonas & Kovner’s

Health Care Delivery in the United States

Brief Contents


Chapter 1 The Challenge of Health Care Delivery and Health Policy 3

Chapter 2 A Visual Overview of Health Care Delivery in the United States 13

Chapter 3 Government and Health Insurance: The Policy Process 29

Chapter 4 Comparative Health Systems 53


Chapter 5 Population Health 79

Chapter 6 Public Health: A Transformation for the 21st Century 99

Chapter 7 Health and Behavior 119

Chapter 8 Vulnerable Populations: A Tale of Two Nations 149


Chapter 9 Organization of Care 183

Chapter 10 The Health Workforce 213

Chapter 11 Health Care Financing 231

Chapter 12 Health Care Costs and Value 253

Chapter 13 High-Quality Health Care 273

Chapter 14 Managing and Governing Health Care Organizations 297

Chapter 15 Health Information Technology 311


Chapter 16 The Future of Health Care Delivery and Health Policy 333

Appendix Major Provisions of the Patient Protection and Affordable Care Act of 2010 343

Glossary 363

Index 379

James R. Knickman, PhD, is president and chief executive offi cer of the New York State Health Foundation (NYSHealth), a private foundation dedicated to improving the health of all New Yorkers, especially the most vulnerable. Under Dr. Knickman’s leadership, NYSHealth has invested more than $90 million since 2006 in initiatives to improve health care and the public health system in New York state.

Central to the foundation’s mission is a commitment to sharing the results and lessons of its grantmaking; informing policy and practice through timely, credible analysis and commentary; and serving as a neutral convener of health care leaders and stakeholders throughout New York. Before joining NYSHealth, Dr. Knickman was vice president of research and evaluation, Robert Wood Johnson Foundation, and served on the faculty of New York University’s Robert F. Wagner Graduate School of Public Service. He serves on numerous boards, including the National Council on Aging and Philanthropy New York.

Anthony R. Kovner, PhD, is professor of management at New York University’s Robert F. Wagner Graduate School of Public Service. He has directed the executive MPA in manage- ment, the concentration for nurse leaders, the program in health policy and management, and the advanced management program for clinicians at NYU/Wagner. He was a senior program consultant to the Robert Wood Johnson Foundation’s rural hospital program and was senior health consultant to the United Autoworkers Union.

He served as a manager for 12 years in all, in a large community health center, a nursing home, an academic faculty practice, and as CEO at a community hospital. Professor Kovner is the author or editor, with others, of 11 books, 48 peer-reviewed articles, and 33 published case studies. He was the fourth recipient, in 1999, of the Filerman Prize for Educational Leadership from the Association of University Programs in Health Administration.

Jonas & Kovner’s

Health Care Delivery in the United States 11th Edition

James R. Knickman, PhD

Anthony R. Kovner, PhD


Steven Jonas, MD, MPH, MS, FNYAS

Founding Editor

Copyright © 2015 Springer Publishing Company, LLC

All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, elec- tronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Springer Publishing Company, LLC, or authorization through payment of the appropriate fees to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, info@copyright.com or on the Web at www.copyright.com.

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For Professors: Instructors’ Manual: ISBN 978-0-8261-7155-9 Transition Guide for the 11th Edition: ISBN 978-0-8261-2628-3 Test Bank: ISBN 978-0-8261-7159-7 PowerPoints: ISBN 978-0-8261-7157-3 Syllabus: ISBN 978-0-8261-7158-0 Please email textbook@springerpub.com to request these fi les.

For Students: Visit ushealthcaredelivery.com for additional materials including an update on the Aff ordable Care Act.

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Library of Congress Cataloging-in-Publication Data

Jonas and Kovner’s health care delivery in the United States / [edited by] James R. Knickman, Anthony R. Kovner.—11th edition. p. ; cm. Health care delivery in the United States Editors’ names reversed on the previous edition. Preceded by: Jonas & Kovner’s health care delivery in the United States. Includes bibliographical references and index. ISBN 978-0-8261-2527-9—ISBN 978-0-8261-2529-3 (e-book) I. Knickman, James, editor. II. Kovner, Anthony R., editor. III. Title: Health care delivery in the United States. [DNLM: 1. Delivery of Health Care—United States. 2. Health Policy—United States. 3. Health Services—United States. 4. Quality of Health Care—United States. W 84 AA1] RA395.A3 362.10973—dc23 2014045558

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FOREWORD Sherry Glied xiii






Context 3 Th e Importance of Good Health to American Life 4 Defi ning Characteristics of the U.S. Health System 5 Major Issues and Concerns 6 Key Stakeholders Infl uencing the Health System 8 Organization of Th is Book 11 Discussion Questions 12 Case Study 12 Bibliography 12


Th e U.S. Health Care System: A Period of Change 13 Th e Shared Responsibility for Health Care 14 Where the Money Comes From, and How It Is Used 16 A Comparative Perspective 16 Population Health: Beyond Health Care 17 Access to Care and Variation in Health Outcomes 19 Health and Behavior 20 Th e Health Care Workforce 21 Variations in Health Care Delivery 22 Health Care Quality 23 Health Care Cost and Value 24 Th e Future of Health Care Delivery 26 References 27


C o n t e n t svi


Context 29 Th e Government as Payer: Th e Health Insurance Safety Net 30 Government and Health Insurance: Th e Policy Process 41 Conclusion 49 Discussion Questions 49 Case Study 50 References 50

CHAPTER 4 COMPARATIVE HEALTH SYSTEMS 53 Michael K. Gusmano and Victor G. Rodwin

Overview 53 Health System Models 55 NHS and NHI Systems Compared With the United States 57 Th e Health Systems in England, Canada, France, and China 58 Lessons 70 Discussion Questions 71 Case Study 72 References 72



Context 79 Th e Population Health Model 80 Th e Medical Model 82 Comparing the Medical and Population Health Models 83 Th e Infl uence of Social Determinants on Health Behavior and Outcomes 85 Leading Determinants of Health: Weighting the Diff erent Domains 89 Health Policy and Returns on Investment 90 Conclusion 94 Discussion Questions 95 Case Study 96 References 97

CHAPTER 6 PUBLIC HEALTH: A TRANSFORMATION FOR THE 21ST CENTURY 99 Laura C. Leviton, Paul L. Kuehnert, and Kathryn E. Wehr

Who s in Charge of Public Health? 99 A Healthy Population Is in the Public Interest 102 Core Functions of Public Health 106 Governmental Authority and Services 108 Rethinking Public Health for the 21st Century 112 Discussion Questions 116 Case Study 117 References 117

C o n t e n t s vii

CHAPTER 7 HEALTH AND BEHAVIOR 119 Elaine F. Cassidy, Matthew D. Trujillo, and C. Tracy Orleans

Behavioral Risk Factors: Overview and National Goals 120 Changing Health Behavior: Closing the Gap Between Recommended and Actual Health Lifestyle Practices 126 Changing Provider Behavior: Closing the Gap Between Best Practice and Usual Care 137 Conclusion 142 Discussion Questions 143 Case Study 144 References 144

CHAPTER 8 VULNERABLE POPULATIONS: A TALE OF TWO NATIONS 149 Jacqueline Martinez Garcel, Elizabeth A. Ward, and Lourdes J. Rodríguez

Understanding Vulnerable Populations and Th eir Context 150 Th e Growing Number of Vulnerable Populations 153 Organization and Financing of Health Care and Other Services for Vulnerable Populations 158 Social Service Needs 162 Federal and State Financing of Care for Vulnerable Populations 164 Challenges for Service Delivery and Payment 165 Emerging and Tested Ideas for Better Health Delivery 167 Conclusion 174 Discussion Questions 175 Case Study 176 References 176


CHAPTER 9 ORGANIZATION OF CARE 183 Amy Yarbrough Landry and Cathleen O. Erwin

Description of the Current Care Delivery System 184 Th e Future of the Delivery System 202 Best Practices 207 Looking Forward 208 Discussion Questions 209 Case Study 209 References 210

CHAPTER 10 THE HEALTH WORKFORCE 213 Joanne Spetz and Susan A. Chapman

Who Is Part of the Health Workforce? 214 Traditional Approaches to Health Workforce Planning 215 Health Workforce Education 216 Critical Issues for the Health Workforce 218 Conclusion: Building the Future Health Care Workforce 224

C o n t e n t sviii

Discussion Questions 224 Case Study 225 References 225


General Overview of Health Care Financing 232 What the Money Buys and Where It Comes From 234 How Health Insurance Works 235 How Providers Are Paid for the Health Services Th ey Deliver 240 Specialized Payment Approaches Used by Payers 241 Issues Shaping the Future of Health Care Financing 244 Conclusion 249 Discussion Questions 250 Case Study 251 References 251

CHAPTER 12 HEALTH CARE COSTS AND VALUE 253 Thad Calabrese and Keith F. Safi an

Th e Issue of Health Care Spending Growth 254 Conclusion 269 Discussion Questions 269 Case Study 270 References 270

CHAPTER 13 HIGH-QUALITY HEALTH CARE 273 Carolyn M. Clancy and Irene Fraser

Defi ning Quality 274 How Are We Doing? 274 How Do We Improve Quality? 275 How Do We Incentivize Quality Care? 281 What Are Major Recent Developments Aff ecting Quality? 289 Core Competencies for Health Administrators 292 Conclusion 293 Discussion Questions 294 Case Study 294 References 295


Governing Boards and Owners 298 Management Work 301 Conclusion 308 Discussion Questions 308 Case Study 309 References 309

C o n t e n t s ix


HIT Defi ned 312 Th e Backing of Government 315 Transformative Powers of HIT 316 HIT at the VA 321 Th e New York Experience 322 Implementing HIT 323 Challenges and Shortcomings of HIT 324 Toward the Future 325 Discussion Questions 326 Case Study 327 References 327



Dynamics Infl uencing Change 334 Aspects of the Health System Th at Are Set to Change by 2020 335 Future Prospects for Diff erent Stakeholders in the Health Enterprise 339 Conclusion 341 Discussion Questions 341 Case Study 342 Bibliography 342

APPENDIX Major Provisions of the Patient Protection and Aff ordable Care Act of 2010 343




List of Tables and Figures

Chapter 2

Table 2.1 Th e diverse U.S. health care workforce. 22 Figure 2.1 Consumer perceptions of the U.S. health care system. 13 Figure 2.2 Th e role of government in health care. 14 Figure 2.3 Signifi cant health policy milestones, 1965–present. 15 Figure 2.4 Sources and uses of health care funding, 1970 and 2012. 17 Figure 2.5 Association between health care spending per capita and life expectancy. 18 Figure 2.6 Growth in obesity rates, 2000–2010. 18 Figure 2.7 Usual source of care by income level. 19 Figure 2.8 Adequate control of cholesterol by income level. 20 Figure 2.9 UWPHI county health rankings model of health improvement. 21 Figure 2.10 Th e Commonwealth Fund’s scorecard on local health system performance. 24 Figure 2.11 Th e factors that infl uence a patient’s choice of hospital. 25 Figure 2.12 Adjusted charges and discount prices for uncomplicated caesarean sections across

California hospitals, 2011. 26 Figure 2.13 Consumer perception of Aff ordable Care Act next steps. 27

Chapter 4

Table 4.1 Health system provision and fi nancing. 56 Table 4.2 Health care expenditure as a share of GDP: Selected countries, 2011. 66

Chapter 5

Figure 5.1 A guide to thinking about determinants of population health. 81 Figure 5.2 Association between health care spending per capita and life expectancy. 82 Figure 5.3 Gradients within gradients: Education is linked with health. 87 Figure 5.4 Health-related behaviors and education both aff ect health. 88 Figure 5.5 County health rankings model. 91

Chapter 6

Table 6.1 Ten great public health achievements: United States, 1900–1999. 103 Table 6.2 Diff erences between the roles of individual medical care and public health. 105 Figure 6.1 Th e public health system at the local level. 101 Figure 6.2 Th e circle of public health activities and 10 essential services. 106

Chapter 7

Table 7.1 Selected Healthy People 2020 objectives: Behavioral risk factors. 122 Table 7.2 Th e population-based intervention model. 133 Figure 7.1 Comprehensive approach to changing provider practice. 140

L i s t o f T a b l e s a n d F i g u r e sxii

Chapter 8

Figure 8.1 Projection of growth in chronic illness prevalence. 154

Chapter 9

Table 9.1 Registered hospitals in the United States by type and ownership status. 191 Table 9.2 Standards for patient-centered medical homes. 203 Figure 9.1 Domains in acute care. 187

Chapter 10

Table 10.1 Largest health care occupations in the United States. 215

Chapter 11

Table 11.1 National health expenditures (in $ billions), selected categories and years, 1970–2020. 234

Figure 11.1 U.S. national health expenditure as a share of GDP, 1970–2020. 234 Figure 11.2 Medicaid enrollments and expenditures for year 2010. 237

Chapter 12

Table 12.1 Average annual after-tax expenditures by consumer units/households, 2012. 256 Table 12.2 Health care spending as a percentage of GDP for OECD countries. 257 Figure 12.1 Annual change in health care spending and GDP, 1963–2012. 254

Chapter 13

Figure 13.1 Improving care through system redesign. 276 Figure 13.2 Number of state public-reporting mandates by provider category. 284



Th is, the 11th edition of Health Care Delivery in the United States, appears at an unprecedented moment in the evolution of the U.S. health care system. After decades of relentless increases in the number of uninsured residents, more Americans today hold health insurance coverage than at any time in the past. In the wake of the Aff ord- able Care Act coverage expansion, which began in January 2014, the share of the popu- lation uninsured has fallen to levels last seen more than 30 years ago. On the cost front, real per capita spending over the past 4 years has grown at the slowest rate on record. For the 8th year in a row, the Congressional Budget Offi ce has revised down- ward its projections of Medicare cost growth. Although the exceptional slowdown of overall health spending is largely due to the eff ects of the Great Recession, changes to payment policies and levels enacted in the health reform law may claim credit for some of the good Medicare news.

Th e new law, as well as changes in private insurer practices, also seems to have encouraged the proliferation of novel forms of health care delivery that seek to gen- erate the quality and cost benefi ts long associated with high-performing vertically integrated health care institutions. Some evidence suggests that these incentives have contributed to reductions in readmission rates and health care-acquired infections.

On the public health front, decades of educational eff orts, incentives, and inter- ventions, often based on academic evidence, have also led to signifi cant improve- ments. Teen and adult smoking rates are at all-time lows, and the teen birth rate has fallen almost continuously over the past 20 years. Th ese improvements are testimony to vibrant and creative eff orts in health fi nancing, delivery, and public health.

It is comforting and reassuring to imagine that the U.S. health system has settled into a more sustainable, equitable, and eff ective path. But that sanguine image belies both the condition of our health system and the history of health reform elsewhere. It is true that uninsurance rates have dropped dramatically in some states—but many others have rejected the coverage expansions. A concerted eff ort in the courts and in Congress seeks to roll back the gains that have already been made. Slower cost growth off ers the system some breathing room, but almost all analysts predict that the changes in payments and organizations will not be suffi cient to hold spending at supportable levels. Even under the most optimistic scenarios, as the baby boom generation ages, health care will consume a growing share of the gross domestic product and of the fed- eral budget. Health reform and insurer ingenuity have brought an abundance of new organizational forms, but the jury is out on whether these will actually improve quality and reduce costs. U.S. health outcomes, especially for the most vulnerable popula- tions, remain abysmally low in a comparative perspective, and the evidence suggests that inequality in health outcomes is growing.

Students of health care policy and delivery need to chart a middle course: nei- ther complacently optimistic about the promise of a new regime, nor overly discour- aged by the still-dismal U.S. context. Instead, as the experience of other countries suggests, we should recognize that health care system reform is a never-ending task. After all, Chancellor Otto von Bismarck initiated the German health insurance system in 1883—and Chancellor Angela Merkel completed the most recent German health insurance reform, building on Bismarck’s model, in 2011. Similarly, even though much

F o r e w o r dxiv

has changed, our health care system continues to resemble (quite closely) the system described in the fi rst edition of Health Care Delivery in the United States, published in 1977. No doubt a student of the future, scanning this 11th edition in 2050, will recog- nize many similarities to the health system he or she knows and will also see evidence of the decades of reform that will consume policymakers and delivery system manag- ers between now and then.

Health care managers, practitioners, and students must both operate as eff ectively as they can within the daunting and continually evolving system at hand and identify opportunities for reform advances. For nearly 40 years—27 of them at least in part under the stewardship of Tony Kovner—Health Care Delivery in the United States has been an indispensable companion to those preparing to manage this balance. Th e present edition demonstrates once again why this volume has come to be so prized. It takes the long view—charting recent developments in health policy and putting them side-by-side with descriptions and analysis of existing programs in the United States and abroad. Novelty gets its due, but so does context. Th e text recognizes that health is, after all, the ultimate object of health care delivery, and so provides a thorough assessment of population health. It explores the key elements of the health care deliv- ery system, from both the supply and the demand sides. In addition, it recognizes that the delivery system doesn’t stand alone and examines the structures and processes— technological, governmental, and organizational—that underpin the system.

Health Care Delivery in the United States profi ts from the editorship of two highly experienced observers of the health care system: James Knickman and Anthony Kovner. Jim, once a faculty member at Wagner, is now president and CEO of the New York State Health Foundation, which, under his stewardship, has been an impor- tant contributor to reform of the New York state health system. Tony is, to my delight, my colleague at the Wagner School. He has been a mentor and guide to generations of health care managers and policymakers, both at a distance, as contributor and editor to this text, and as a classroom teacher and adviser. He has transformed the lives of his students, and they, as leaders in health care institutions around the country, have transformed their institutions and the lives of their patients. Tony inculcates in his students—as he has in me—a conviction that policy and management can, should, and must be founded on the best possible evidence. Founding decisions on evidence is not just a mantra—it means asking the right questions, identifying the appropriate literature, and assessing the applicability and quality of this research. In this volume, Tony and Jim have put that system to work, and it is this foundation in rigorous evi- dence that allows the text to stand the test of time and to be responsive and useful in addressing current developments.

Sherry Glied, PhD Dean, New York University

Robert F. Wagner School of Public Service New York, New York



Th e editors would like to express deep appreciation to the team of people who made this book possible. First, we thank our 29 authors of the 16 chapters that comprise the book. Th ey are all noted experts in their fi elds, and we appreciate their willingness to translate their knowledge into chapters that introduce future leaders to the workings of the U.S. health system. Second, we wish to acknowledge the superb editorial role played by Sheri W. Sussman and the quality control of production under Joanne Jay’s direction at Springer Publishing Company. We appreciate Sheri’s insights about how to publish a textbook and have benefi ted from Joanne’s keeping the process moving in creating an eff ective and enjoyable learning experience for HCDUS readers. Christine Kovner frequently helped to strengthen the book, reading various chapters and off er- ing advice from her vantage as one of the leading nursing researchers in the country. At the New York State Health Foundation, Susan Illman, Emily Parker, and Amy Shefrin each provided valued assistance gathering current data to inform the book. Finally, we would like to acknowledge Steve Jonas, who originated this book 11 editions ago.


Organization of This Book

Th is is the 11th edition of Jonas and Kovner’s Health Care Delivery in the United States, which, although its title has evolved in the last 35 years, has stayed true to its original purpose: helping instructors and students better understand the complicated, expen- sive, and ever-changing U.S. health care delivery system and the public health system. It is a privilege to be able to work with instructors around the world to introduce the leaders of tomorrow to the health fi eld.

Our nation is embarked on an ambitious attempt to reshape how we go about taking care of the health concerns of our population. On the one hand, there is a new energy to develop initiatives that focus on keeping people healthy. On the other hand, there is a great deal of experimenting with the organization of the care system that addresses the needs of people who have medical problems associated with injuries and disease. Th e aim of this experimentation is to improve the quality of medical care and to bring costs in line with what Americans can aff ord and want to spend on the health sector.

Th is text is organized to address both the challenge of keeping people healthy (Part II) and the challenge of delivering good medical care that helps people recover from medical conditions that do occur (Part III). In addition, we have included a sec- tion that describes the current status of the U.S. health care system and explains the complicated public policy process that has so much infl uence on the way health care is delivered and fi nanced in this country (Part I). Th e text ends with a consideration of where the health system might be headed in the years to come (Part IV).

Each chapter starts with a list of key words that are central to the chapter’s focus, a list of the learning objectives addressed by the chapter, and an outline of what is to come. Each chapter ends with a list of discussion questions and a case study, encourag- ing the reader to apply the ideas of the chapter to real-life issues and challenges that face health care leaders focused on management issues and policy issues.

In addition to this text, an online Instructors’ Manual, which includes a variety of background materials that teachers will fi nd useful in guiding class discussion, is available. It also off ers additional resources and class projects that are useful to students and the learning process. In addition, PowerPoints, Syllabus, Test Bank, and Transition Guide are available to instructors via textbooks@springerpub .com

Students are encouraged to visit ushealthcaredelivery.com for additional materials including an updated supplementary chapter on the Patient Protection and Aff ordable Care Act.

We encourage instructors and students to communicate with us about this edi- tion, so that we may make the 12th edition even more useful to you. Please submit any comments or questions to us at knickman@nyshealth.org and anthony.kovner@nyu. edu, and we will get back to you. As always, we appreciate your suggestions.

Anthony R. Kovner, PhD James R. Knickman, PhDmailto:knickman@nyshealth.orgmailto:email:textbooks@springerpub.commailto:email:textbooks@springerpub.commailto:ushealthcaredelivery.commailto:anthony.kovner@nyu.edumailto:anthony.kovner@nyu.edu



Thad Calabrese, PhD, is an assistant professor of public and nonprofi t fi nancial man- agement at New York University’s Robert F. Wagner Graduate School of Public Service. Dr. Calabrese is the coauthor of two textbooks on fi nancial management with applications to government and nonprofi t organizations, including health care organizations. Financial Management for Public, Health, and Not-for-Profi t Organizations (4th edition) was writ- ten with Steven Finkler, Robert Purtell, and Daniel L. Smith. Accounting Fundamentals for Health Care Management (2nd edition) was written with Steven Finkler and David Ward. Dr. Calabrese’s research applies the principles of corporate fi nance to organizations involved in the production or coproduction of public goods and services. He teaches courses on fi nancial management for health care organizations and also for nonprofi t organizations.

Elaine F. Cassidy, PhD, is a senior consultant in research and evaluation at consulting fi rm Equal Measure, where she manages projects related to health promotion, particularly among under-privileged populations. Before joining Equal Measure, Dr. Cassidy served as a program offi cer in research and evaluation at the Robert Wood Johnson Founda- tion, where she oversaw research and evaluation activities for the Vulnerable Populations portfolio. Her work and professional interests focus primarily on child and adolescent health and risk behavior, violence prevention, and school-based interventions, primar- ily for young people living in low-income, urban environments. She is a trained school psychologist and mental health clinician who has provided therapeutic care to children and families in school, outpatient, and acute partial hospitalization settings. She holds an MSEd in psychological services from the University of Pennsylvania and a PhD in school, community, and child-clinical psychology from the University of Pennsylvania.

Susan A. Chapman, PhD, RN, FAAN, is professor in the Department of Social and Behavioral Sciences, University of California, San Francisco School of Nursing, and fac- ulty at UCSF’s Center for Health Professions and the Institute for Health Policy Studies. She is codirector of the masters and doctoral programs in health policy at the School of Nursing. Her scholarly work focuses on health workforce research, health policy analysis, and program evaluation. Susan’s workforce research focuses on transforming models of primary care to address new and expanded roles for the health care workforce and the long-term care workforce. Susan received a BS from the University of Iowa, MS from Boston College, MPH from Boston University, and PhD in Health Services and Policy Analysis from UC Berkeley.

Carolyn M. Clancy, MD, is Interim Under Secretary for Health at the Department of Veterans Aff airs, having joined the VA in 2013 as Assistant Deputy Under Secretary for Health for Quality, Safety and Value. Prior to VA, she was director of the federal Agency for Healthcare Research and Quality (AHRQ) for ten years and also was director of AHRQ’s Center for Outcomes and Eff ectiveness Research. Dr. Clancy, a general internist and health services researcher, is a graduate of Boston College and the University of Massachusetts Medical School. Aft er her clinical training in internal medicine, she was a Henry J. Kaiser Family Foundation Fellow at the University of Pennsylvania. Dr. Clancy holds an aca- demic appointment at the George Washington University School of Medicine and serves as senior associate editor for the journal Health Services Research. She serves on multiple

C o n t r i b u t o r sxx

editorial boards, is a member of the Institute of Medicine, and was elected a master of the American College of Physicians in 2004. In 2009, she was awarded the William B. Graham Prize for Health Services Research. Dr. Clancy’s major research interests include improv- ing health care quality and patient safety and reducing disparities in care associated with race, ethnicity, gender, income, and education. As director of AHRQ, she launched the fi rst annual report to Congress on health care disparities and health care quality.

Catherine K. Dangremond, MPA, is currently an administrative fellow at the Yale New Haven Health System. Her professional interests lie at the intersection of health care deliv- ery and health policy, particularly the eff ects of this intersection on health system strategy and improvement in the delivery of health care and health outcomes. Ms. Dangremond holds an MPA from New York University’s Robert F. Wagner Graduate School of Public Service. She previously worked as a process improvement consultant and business devel- opment professional, focused in the health care provider and government sectors.

Cathleen O. Erwin, PhD, MBA, is an assistant professor of health services administra- tion in the Department of Political Science at Auburn University. Before her academic career, she worked for many years in administration, development, and communica- tions for nonprofi t organizations in the arts, health care, and higher education. Dr. Erwin received her doctoral degree in administration-health services from the University of Alabama at Birmingham. Her research primarily revolves around strategic management, organizational performance, and governance in health care organizations. Dr. Erwin’s teaching portfolio includes courses in health care delivery systems, health insurance and reimbursement, health care quality management, health information technology, and fundraising for nonprofi t organizations. She is a past president of the Alabama Health- care Executives Forum, the state chapter of the American College of Healthcare Execu- tives (ACHE), and is an appointed member of the board for the Health Care Management Division of the Academy of Management.

Irene Fraser, PhD, is a political scientist who has focused her work on Medicaid, private health insurance, and health care delivery. Since 1995, she has been at the Agency for Health- care Research and Quality, where she is director of the Center for Delivery, Organization, and Markets. Dr. Fraser spent 8 years at the American Hospital Association, as senior policy manager on indigent care, Medicaid, and health care reform, and director of Ambulatory Care. Before that, Dr. Fraser was associate professor of Political Science, director of the public policy program at Barat College, and adjunct faculty to the Institute for Health Law at Loyola School of Law. Dr. Fraser’s work has appeared in Health Aff airs, Inquiry, Health Care Financing Review, Medical Care Research and Review, Journal of Healthcare Manage- ment, Journal of Ambulatory Care Management, Health Services Research, and Journal of Health Politics, Policy and Law. She has a BA in political science and Spanish from Chatham College, and a PhD in political science from the University of Illinois.

Jacqueline Martinez Garcel, MPH, is vice president at the New York State Health Foundation (NYSHealth). Ms. Martinez Garcel serves as a key adviser to the president and CEO and has a central role in developing the foundation’s program areas, iden- tifying emerging opportunities and strategic niches, building partnerships with other foundations, and evaluating the performance of programs and grantees. Before joining

C o n t r i b u t o r s xxi

NYSHealth, she served as the Executive Director for the Northern Manhattan Com- munity Voices Collaborative (Community Voices). Th e mission of Community Voices, funded by the W.K. Kellogg Foundation, is to improve access and quality of care for vulnerable populations. Ms. Martinez Garcel also worked with Dr. H. Jack Geiger at the City University of New York to complete an analysis of racial and ethnic disparities in diagnosis and treatment in the U.S. health care system. She has served as an NIH fellow for the Department of Public Health in the City of Merida in Yucatan, Mex- ico, and an adjunct professor of sociology at the Borough of Manhattan Community College. She is a board director for the Institute for Civic Leadership and for NAMI- New York City Metro. She holds a MPH from Columbia University and a BS from Cornell University.

Michael K. Gusmano, PhD, is a research scholar at Th e Hastings Center. Dr. Gusmano’s research interests include inequalities in health and theories of social jus- tice. He is one of the associate editors of Making Diffi cult Decisions with Patients and Families: A Singapore Casebook. His previous books include Health Care in World Cities (with Victor G. Rodwin and Daniel Weisz), Healthy Voices/Unhealthy Silence: Advocating for Poor People’s Health (with Colleen Grogan), and Growing Older in World Cities (coedited with Victor G. Rodwin). Dr. Gusmano holds a PhD in politi- cal science from the University of Maryland at College Park and an MPP from SUNY Albany. He was a Robert Wood Johnson Foundation scholar in health policy at Yale University and is a member of the editorial committee of Th e Hastings Center Report and the editorial boards of Health Economics, Policy and Law, and the Journal of Health Politics, Policy and Law.

Paul L. Kuehnert, DNP, RN, is the team director for the Bridging Health and Health Care Portfolio at the Robert Wood Johnson Foundation in Princeton, New Jersey. Imme- diately before coming to RWJ, Paul was the county health offi cer and executive director for health for Kane County, Illinois, a metro Chicago county of 515,000 people, for 5 years. In this role, Dr. Kuehnert provided executive leadership and oversight to four county departments: Health, Emergency Management, Community Reinvestment, and Animal Control. Before working in Kane County, Dr. Kuehnert served as deputy state health offi cer and deputy direc- tor of the state of Maine’s health department. Dr. Kuehnert is a pediatric nurse practitioner and holds a DNP in executive leadership as well as an MS in public health nursing from Uni- versity of Illinois at Chicago. He was named a Robert Wood Johnson Foundation executive nurse fellow in 2004.

Amy Yarbrough Landry, PhD, is an assistant professor in the Department of Health Services Administration at the University of Alabama at Birmingham. She teaches Introduction to Health Systems and Comparative Health Systems to masters and doc- toral students in her department. Dr. Landry’s research interests pertain to the strategic management of health care organizations in a variety of contexts, including acute care hospitals, long-term care organizations, Medicaid managed care organizations, and phy- sician organizations. Dr. Landry has also done research surrounding leadership in health care organizations. In particular, she is interested in executive selection, training, and development.

C o n t r i b u t o r sxxii

Christy Harris Lemak, PhD, FACHE, is professor and chair of the Department of Health Services Administration at the University of Alabama at Birmingham. Dr. Lemak teaches and conducts scholarship in the areas of health care management and leadership, with an emphasis on how leadership and organizational factors lead to high performance in health care. Her research includes studies of a complex pay-for-performance incentive program for physicians, and relationships among organizational culture, management practice, and surgical outcomes in a multihospital surgical collaborative. Dr. Lemak has extensively studied how Medicaid policy demonstrations aff ect hospitals, health plans, and relationships among provider organizations. She is currently examining new ways of measuring hospital and health system performance. She holds a PhD in health services organization and policy from the University of Michigan, MHA and MBA degrees from the University of Missouri-Columbia, and a BS in health planning and administration from the University of Illinois.

Laura C. Leviton, PhD, is special advisor for evaluation at Robert Wood Johnson Foundation, Princeton, New Jersey. She has been with the foundation since 1999, over- seeing more than 100 national and local evaluations. She was formerly a professor at two schools of public health, where she collaborated on the fi rst randomized experiment on HIV prevention, and later on two large place-based randomized experiments on improving medical practices. She received the 1993 award from the American Psycho- logical Association for Distinguished Contributions to Psychology in the Public Inter- est. She has served on three Institute of Medicine committees and was appointed by the secretary of DHHS to CDC’s National Advisory Committee on HIV and STD Preven- tion. Dr. Leviton was president of the American Evaluation Association in 2000 and has coauthored two books: Foundations of Program Evaluation and Confronting Public Health Risks. She received her PhD in social psychology from the University of Kansas and postdoctoral training in research methodology and evaluation at Northwestern University.

C. Tracy Orleans, PhD, is the senior scientist for the Robert Wood Johnson Foundation and has led or coled the foundation’s public policy and health care system grant-making in the areas of health behavior change, tobacco control, chronic disease management and prevention, physical activity promotion, and childhood obesity prevention during the past 18 years. During the past 6 years, she has focused mainly on discovering, evaluating, and applying eff ective policy and environmental strategies for reversing the rise in child- hood obesity and reducing the disparities in its prevalence and health tolls. She is now working to develop metrics and research that will help to create a broad culture of health nationwide. Dr. Orleans has authored or coauthored more than 250 publications, served on numerous journal editorial boards, on national scientifi c panels and advisory groups (e.g., Institute of Medicine, U.S. Preventive Services Task Force, Community Preventive Services Task Force, National Commission on Prevention Priorities, National Collabora- tive on Childhood Obesity Research), and as the associate policy editor for the American Journal of Preventive Medicine. Dr. Orleans has received many awards for her national work in the fi elds of behavioral medicine, tobacco control, and childhood obesity preven- tion. Most recently, she was deeply honored, along with Drs. Jim Sallis and Mary Story, to receive the CDC’s Weight of the Nation Pioneering Innovation Award for Applied Obesity Research in 2012.

C o n t r i b u t o r s xxiii

Lourdes J. Rodríguez, DrPh, serves as program offi cer for the New York State Health Foundation (NYSHealth) in the prevention area, disseminating evidence-based pro- grams, supporting promising prevention strategies, and leveraging additional resources for New York state. Before her current position, Dr. Rodríguez served as associate director of community partnerships for healthy neighborhoods at City Harvest, overseeing com- munity engagement activities. From 2004 to 2012 she was on the faculty at the Columbia University Mailman School of Public Health. She coedited a book examining community mobilization for health and has authored numerous publications on violence prevention, mental health, and active living. Dr. Rodríguez received a BS in industrial biotechnology from the University of Puerto Rico, an MPH from the University of Connecticut, and a DrPH from Columbia University.

Victor G. Rodwin, PhD, MPH, professor of health policy and management at the Robert F. Wagner Graduate School of Public Service, NYU, conducts research and teaches courses on community health and medical care, comparative analysis of health care sys- tems, and health system performance and reform. He has lectured widely on these topics in universities around the world, most recently at Sun Yat Sen University in Gouangzhou, Fudan University in Shanghai, Renmin University in Beijing, London School of Econom- ics, London School of Hygiene and Tropical Medicine, and the Institut d’Etudes Poli- tiques in Paris. Professor Rodwin was awarded the Fulbright-Tocqueville Distinguished Chair during the spring semester of 2010 while he was based at the University of Paris– Orsay. In 2000, he was the recipient of a 3-year Robert Wood Johnson Foundation Health Policy Investigator Award on “Megacities and Health: New York, London, Paris, and Tokyo.” His research on this theme led to the establishment of the World Cities Project (WCP)—a collaborative venture between Wagner/NYU and the International Longevity Center USA, which focuses on aging, population health, and the health care systems in New York, London, Paris, Tokyo, and Hong Kong, and among neighborhoods within these world cities.

Pamela G. Russo, MD, MPH, is a senior program offi cer at Robert Wood Johnson Foundation (RWJF) in Princeton, New Jersey. She was recruited to RWJF to lead the Population Health: Science and Policy team in 2000. Before RWJF, she was an associate professor of medicine, director of the Clinical Outcomes Section, and program codirec- tor for the master’s program and fellowship in clinical epidemiology and health services research at the Cornell University Medical Center in New York City. Dr. Russo earned her BS from Harvard College, with a major in the history and philosophy of science; her MPH in epidemiology from the University of California, Berkeley, School of Public Health; and her MD from the University of California, San Francisco. She completed a residency in general internal medicine at the hospital of the University of Pennsylva- nia and a combined clinical epidemiology and rheumatology fellowship at Cornell and the Hospital of Special Surgery. Dr. Russo is a member of the IOM Population Health Roundtable.

Keith F. Safi an, MBA, FACHE, served as the president and CEO of Phelps Memo- rial Hospital Center from 1989 through 2014. His career started as an assistant direc- tor at Kings County Hospital in Brooklyn, then assistant, associate, and senior associate

C o n t r i b u t o r sxxiv

administrator at NYU Medical Center. He served as the administrator of St. John’s Epis- copal Hospital in the Rockaways for 4  years before joining Phelps. During Mr.  Safi an’s tenure, the hospital experienced extraordinary growth: from a $40 million operating bud- get to $245 million, from an 11% operating loss in 1988 to surpluses in 23 of the last 24 years, from 189 medical staff to 503, from 800 employees to more than 1,700, and from the 50th largest employer in Westchester to the 7th. He has received awards for his work in health care from the Dominican Sisters Family Health Service, the American College of Healthcare Executives, and the Hudson Valley Branch of the Arthritis Foundation. He is a fellow of the American College of Healthcare Executives. Mr. Safi an holds an MBA from the Wharton Graduate School of the University of Pennsylvania and undergraduate degrees in industrial engineering and electrical engineering from the University at Buff alo.

Nirav R. Shah, MD, MPH, is the chief operating offi cer for clinical operations for Kaiser Permanente’s Southern California region, a $20B health system with 14 hospitals and more than 3.7 million members. He is a graduate of Harvard College and Yale School of Medicine, was an RWJ Clinical Scholar at UCLA, and is board-certifi ed in Internal Medicine. Dr. Shah has been an attending physician at Bellevue Hospital in Manhattan, associate investigator at Geisinger Health in Pennsylvania, and a faculty member of NYU Medical Center in the section of value and comparative eff ectiveness. Most recently, he served as commissioner of the New York State Department of Health. Dr. Shah is an elected member of the Institute of Medicine of the National Academy of Sciences, and is a nationally recognized thought leader in patient safety and quality, health informa- tion technology, population health, and the strategies required to transition to lower-cost, patient-centered health care.

Michael S. Sparer, PhD, JD, is professor and chair in the Department of Health Policy and Management at the Mailman School of Public Health at Columbia University. Pro- fessor Sparer studies and writes about the politics of health care, with a particular empha- sis on the health insurance and health delivery systems for low-income populations and the ways in which intergovernmental relations infl uence policy. He is a two-time winner of the Mailman School’s Student Government Association Teacher of the Year award, as well as the recipient of a 2010 Columbia University Presidential Award for Outstanding Teaching. Professor Sparer spent 7 years as a litigator for the New York City Law Depart- ment, specializing in intergovernmental social welfare litigation. Aft er leaving the practice of law, he obtained a PhD in political science from Brandeis University. Sparer is a former editor of the Journal of Health Politics, Policy and Law and is the author of Medicaid and the Limits of State Health Reform, as well as numerous articles and book chapters.

Joanne Spetz, PhD, is a professor at the Institute for Health Policy Studies and in the Department of Family and Community Medicine and the School of Nursing at the Uni- versity of California, San Francisco. She is the associate director for research strategy at the UCSF Center for the Health Professions and the director of the UCSF Health Workforce Research Center. Her fi elds of specialty are labor economics, public fi nance, and econo- metrics. She has led research on the health care workforce, organization of the hospital industry, eff ects of health information technology, eff ects of medical marijuana policy on youth substance use, and quality of patient care. Dr. Spetz’s teaching is in the areas of quantitative research methods, health care fi nancial management, and health economics.

C o n t r i b u t o r s xxv

Frank J. Thompson, PhD, is distinguished professor of public aff airs and administration at Rutgers-Newark and at the Rutgers Center for State Health Policy in New Brunswick, New Jersey. He has published extensively on issues of health policy and implementation, with particular attention to the eff ect of federalism. In 2008, Professor Th ompson received a Robert Wood Johnson Investigator Award to study the evolution of Medicaid policy during the Clinton, G.W. Bush, and Obama administrations. Th is research has led to several publications in scholarly journals and culminated in a book—Medicaid Politics: Federalism, Policy Durability, and Health Reform (2012). His book assesses the policy and political dynamics that fueled the dramatic expansion of Medicaid and established it as a key pillar of the Aff ordable Care Act. Professor Th ompson received his PhD in political science from the University of California, Berkeley. He is a fellow of the National Academy of Public Administration.

Matthew D. Trujillo, PhD, is a research associate in the Research, Evaluation, and Learning unit at the Robert Wood Johnson Foundation. Before coming to the founda- tion, Dr. Trujillo worked as an adjunct researcher at the RAND Corporation. He received his PhD in psychology and social policy from the Woodrow Wilson School of Public and International Aff airs at Princeton University. He specialized in prejudice and stereotyp- ing, and his research examines the relationship between racial and ethnic microaggres- sions, identity, and policy. Originally from Phoenix, Arizona, he received his bachelor’s degree in psychology from Arizona State University.

Elizabeth A. Ward is a program assistant at the New York State Health Foundation (NYSHealth). Ms. Ward supports grantmaking eff orts for projects under NYSHealth’s diabetes prevention and primary care priority areas. Before joining NYSHealth, she held a variety of positions in the public health and policy arena, including the consumer assistance program at the nonprofi t law fi rm Health Law Advocates and the health care advocacy organization Health Care for All, both located in her home town of Boston, Massachusetts. Ms. Ward also served as one of the inaugural volunteer members of the benefi ts and community outreach team for the Supplemental Nutrition Assistance Pro- gram (SNAP) at the Western MA Food Bank. Ms. Ward earned a BS public health, a BA in political science, and a certifi cate in public policy and administration from the Univer- sity of Massachusetts at Amherst.

Kathryn E. Wehr, MPH, program offi cer, joined the Robert Wood Johnson Founda- tion in 2010. Ms. Wehr focuses on discovering and investing in what works to promote and protect the nation’s health and to achieve the foundation’s vision where we, as a nation, strive together to build a culture of health enabling all in our diverse society to lead healthy lives, now and for generations to come. Previously, Ms. Wehr was a gradu- ate research assistant at the University of North Carolina–Chapel Hill Sheps Center for Health Services Research. She has also served as community projects coordinator for the Northeast Florida Healthy Start Coalition and as an AmeriCorps member of the North Florida Health Corps.

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Health Policy I

This fi rst section of the book presents an overview of how the U.S. health system works and how public policy infl uences its operations. Th e section also provides basic sta- tistics outlining the dimensions of the health enterprise and sets the U.S. system in the con- text of the approaches to delivering health care in other countries. At times, it is easiest to understand one health system by comparing it to what happens in other parts of the world.

Chapter 1, authored by the book’s two editors, acts as an overall introduction to the material that will be covered in the other 15 chapters of the book. Th is chapter starts by reviewing why health is so important to people and how that importance is translated into characteristics of the health care sector. Th e authors also explain the societal dynamics that have shaped the current state of the health system and explore the roles of seven diff erent types of stakeholders in shaping the system.

Chapter 2 off ers a set of charts that provide a statistical overview of the U.S. health system. Th e charts are organized around the topics that will be covered in the book, with key data displayed in a way that introduces the reader to the scale and scope of the system.

In Chapter 3, political scientists Michael Sparer and Frank Th ompson address how the public policy process works at the federal government and state government levels. Th ey review how policy is made and the forces that shape public policy in the United States. Th e chapter focuses principally on the roles government plays in funding and providing health insurance coverage for parts of the population and why government does not cover the entire population, as happens in many other developed countries around the world. Th is chapter also reviews the recent major expansion of insurance coverage mandated by the Patient Protection and Aff ordable Care Act of 2010.

Finally, Chapter 4, coauthored by Michael Gusmano and Victor Rodwin, compares the structure and traditions of the health care system in the United States to the systems in other parts of the world. In addition to reviewing how key aspects of the organization of health care vary across countries, the chapter takes a close look at health care delivery in England, Canada, France, and China as good examples of the diversity of approaches to operating health systems.

1 The Challenge of Health Care Delivery and Health Policy

James R. Knickman and Anthony R. Kovner


LEARNING OBJECTIVES o Understand the importance of health and health care to American life o Understand some defi ning characteristics of U.S. health care delivery o Identify major issues and concerns o Identify key interest groups (stakeholders) o Understand the importance of engaging a new generation of health leaders

TOP ICAL OUTLINE o Why health is so important to Americans o Factors that shape the structure of the delivery system o Seven key challenges facing the health system o Stakeholders who shape and are affected by how the health system is

organized and how it functions o The organization of the book

access to health care behavioral health health care delivery interest groups (stakeholders) Patient Protection and Affordable

Care Act

payment systems population health public health value workforce

■ Context

Our goal in editing this book is to provide a vibrant introduction to the U.S. health care system in a way that helps new students understand the wonders of health care. Th e book lays out the complexities of organizing a large sector of our economy to keep Americans healthy and to help people get better when they become ill. In addition, the book provides a framework to help professors engage students, with room for each professor to bring his or her perspective to the materials covered.

To introduce students to the many parts of the health system in the United States, we have engaged some of the leading thinkers and “doers” in the health sector to explain the parts of the system in which they are expert. Each author brings a diff erent

P a r t I . H e a l t h P o l i c y4

perspective, and it is not our aim to present one voice on this topic. Rather, we have asked each author to lay out the facts about a given topic and to off er ideas about what he or she thinks must happen to improve a specifi c aspect of the health system.

In many ways, the text lays out a serious “to-do” list facing our health system and off ers individuals beginning a health-related career a guide to the types of challenges that could engage them. Th e authors explain how the health system works, what its challenges are, and how health professionals can contribute to the process of strengthening our sys- tem to make sure it works effi ciently and eff ectively at the task of keeping all of us healthy.

In this fi rst chapter, we explain the importance of the health system, provide an overview of how the system is organized, sketch out some of the challenges facing the overall system that are addressed in the book, and discuss the roles of fi ve types of key stakeholders involved in the health enterprise. We also provide the logic behind the topics the book addresses and explain the book’s organization.

■ The Importance of Good Health to American Life

Our nation is built on the idea that society should ensure an opportunity for “life, lib- erty, and the pursuit of happiness.” Th ese words, of course, are from the second sen- tence of our Declaration of Independence. Th e aspiration of ensuring “life” is the core goal of the health system. It is obvious that nothing is possible for an individual without life, and most of us would agree that health is among the core needs to live a vibrant, viable life. Good health is essential to participate in the political and social system, to work to support ourselves and our families, and to pursue happiness and a good life.

Our nation has invested a tremendous amount to learn how to keep people healthy and how to restore health when disease, injury, or illness occurs. In the 19th century, researchers and public health experts from the United States and other countries began to understand the role of germs in communicating disease and the importance of basic public health practices, such as ensuring clean water and safe sanitation to maintain health. In the 20th century, the science and art of medicine exploded, creat- ing amazing know-how to treat people who have diseases, injuries, and illnesses.

In response to the emerging know-how for delivering medical care, a large and complex health enterprise developed throughout the 20th century and continues to evolve. Th e pipeline of new ideas for better treating illnesses is quite full and prom- ises to lead to ever-expanding methods to restore health when Americans have life- threatening medical problems.

We use the word “enterprise” deliberately because the health system is a blend of an altruistic-oriented set of providers and activities mixed with a huge industry that accounts for a sizable portion of all economic activity in our society. Th e value we put on health has led us to devote just under 20% of our economic resources to medical care and health promotion. Fully 13% of all jobs in America are in the health sector. Each of us spends a sizable share of our income on the health care we need. We spend this money through taxes, which support a good share of the health enterprise, through foregone wages used by our employers to pay for health insurance, and by siz- able out-of-pocket health care expenses for which each of us is responsible.

Th us, the “pursuit of life,” listed as a core principle in the Declaration of Indepen- dence, not only has resulted in a set of social and political norms about the importance of good health to everyone in America but also has spurred a huge industry that aff ects

C h a p t e r 1 . T h e C h a l l e n g e o f H e a l t h C a r e D e l i v e r y a n d H e a l t h P o l i c y 5

and is aff ected by society’s economic activity and economic decisions. To understand the health system, we need to understand not only the art and practice of medicine and public health but also the economic, organizational, and management issues that must be addressed to keep the health system eff ective, effi cient, and aff ordable in our over- all economic life. How we go about organizing and managing the health system and changing it over time can hurt or help both our health status and our economic status.

■ Defining Characteristics of the U.S. Health System

It is ironic that most health professionals think of themselves as working within the “health system” when in truth one of the fi rst defi ning features of what we call a sys- tem is that health-related activities are not ordered or organized as a single enterprise. Rather, eff orts to improve health and health care involve many types of actors and organizations working independently and with little coordination to make contribu- tions to improving health status. In particular, our current approach to delivering medical care has evolved and keeps evolving in a haphazard way shaped more by eco- nomic incentives and opportunities than by a central or logical design.

In recent years, we also have begun to recognize the clear diff erence between “maintaining health” and “restoring health” to a person who has a medical problem. Th e medical care system clearly takes charge of restoring health when people are ill. Often the medical care system takes charge of caring for people even if restoring health is impossible; the goal may be to limit the spread of a medical problem, to alle- viate the symptoms of a medical problem, or to help a person cope with the pain and suff ering and loss of function when major medical problems emerge. Doctors, nurses, technicians of various types, hospitals, nursing homes, rehabilitation centers, pharma- ceutical companies, and medical device companies are among the actors who engage in eff orts to care for people when they have medical problems.

Th e goal of “maintaining health” also involves many actors and activities. To some extent, medical providers help with this huge task by providing screening and preven- tion services that can keep people from becoming ill and help to identify illnesses very early when they might be easier to treat. However, good health among a population also requires a vibrant public health system that works to help people avoid illness. Public health activities include preventing epidemics; making sure food, water, and sanitation are safe; monitoring environmental toxins; and developing community- based initiatives, public awareness initiatives, and education initiatives to help people eat healthy foods, exercise, and not engage in unhealthy behaviors such as smoking, drinking alcohol in excess, and using recreational drugs or abusing prescription drugs.

Increasingly, we also recognize that the health of populations is determined by social and economic factors. Adequate family incomes, high-quality educational opportunities, and being socially connected are all key factors that predict the health

Adequate family incomes, high-quality educational opportunities, and being socially connected are all key factors that predict the health of a given person.

P a r t I . H e a l t h P o l i c y6

of a given person. Social issues such as discrimination, abuse, and social respect all are important determinants of health. To ensure attention to these issues and others like them requires involvement from many sectors of our society as well as political leader- ship to guide collective action to ensure our society encourages pro-health norms and practices. Some people term this a “health in all” approach to social policy.

We have organized this book so that it addresses both types of health issue: the challenge of keeping the population healthy and the challenge of providing eff ective medical care when needed. Th ere are other key defi ning characteristics of the U.S. health care system that guide the organization of this book:

■ Th e importance of organizations in delivering care. Th ese include hospitals, nursing homes, community health centers, physician practices, and public health departments.

■ Th e role of professionals in running our system. Th ese include physicians, nurses, managers, policy advocates, researchers, technicians, and those directing technol- ogy and pharmaceutical businesses.

■ Th e emergence of new medical technology, electronic communications, and new pharmaceuticals. New techniques in imaging, electronic communications, pharmaceuticals, surgical procedures, DNA coding, and stem-cell technology are remarkable but often expensive ways of improving health care.

■ Tension between “the free market” and “governmental control.” Th is tension shapes America’s culture but is sharply present in the health care sector. Relative to citizens of other countries, Americans have more diversity of opinion about whether health care, or certain health care services, are “goods” or “rights.” How one feels about this issue often determines whether a person thinks the delivery of health care should be done by nonprofi t or for-profi t organizations and whether health care should be fi nanced by taxes or private payments.

■ A dysfunctional payment system. Th e current payment system creates poor incen- tives for providers to be effi cient, to be customer or patient friendly, or to focus on the delivery of high-value services. Also, the payment approach is not transparent for individuals who use health care. For example, patients frequently have no idea what a service costs until after it is delivered. Th is is rarely true for other goods and services in the U.S. economy.

Th ese defi ning characteristics make health care delivery a challenging part of U.S. politics and the economy. Addressing the challenges of delivering health care is worth the best eff ort and thinking of our readers, who are tomorrow’s health care leaders.

■ Major Issues and Concerns

Reliable studies have indicated that between 44,000 and 98,000 Americans die each year because of medical errors.

Addressing the challenges of delivering health care is worth the best effort and thinking of our readers, who are tomorrow’s health care leaders.

C h a p t e r 1 . T h e C h a l l e n g e o f H e a l t h C a r e D e l i v e r y a n d H e a l t h P o l i c y 7

Th ere are many ways in which our health system can be improved. Th e chapters that follow address a long list of specifi c concerns. Many of these issues fl ow, however, from seven overarching themes regarding challenges that each of us in the health sector can address:

■ Improving quality. Reliable studies have indicated that between 44,000 and 98,000 Americans die each year because of medical errors. Other well-regarded studies show that people with mental health or substance use problems, asthma, or diabetes receive care known to be eff ective only about half the time. In addition, the health system could do much more to improve the experience of patients receiving care. Th e system is not always “customer friendly” and has not adopted many prac- tices routinely used in other service sectors to improve the consumer experience. We have a good knowledge base about how to organize care so that high-quality services happen virtually all of the time. Th e challenge is spreading this knowledge into practice across the nation.

■ Improving access and coverage. Millions of Americans still lack insurance cover- age, and millions more have inadequate coverage for acute care. Th e new federal health reform, the Patient Protection and Aff ordable Care Act (ACA), has reduced the number of people who lack insurance coverage. But gaps in coverage persist. For example, undocumented immigrants lack coverage. Th e new federal health reform has not been fully implemented in many states because of political opposition to com- ponents of the new policy that are optional for states to adopt. Most Americans lack adequate coverage for chronic (rather than acute) care. Even when Americans have insurance coverage, access to health care is not always ensured. Many rural areas have shortages of doctors and other providers. Many doctors refuse to see patients with Medicaid coverage because of low payment rates.

■ Slowing the growth of health care expenditures. Health care expenditures are simply the price of services multiplied by the volume of services. Total expenditures are growing much more rapidly than the rest of the economy because both prices and volume of services have increased relentlessly over the past 50 years. To keep health care aff ordable for middle-class and low-income residents—as well as for taxpayers and employers—we need to devise ways to moderate the ever-increasing share of our nation’s economy devoted to the health sector. Th e challenge is to determine how to restructure delivery and payment so we can focus on high-value care as we get more effi cient.

■ Encouraging healthy behavior. Healthy behavior can help people avoid disease and injury or prevent disease or injury from getting worse. For millions of Americans, leading healthy lives is not of the highest priority. Changing health-related behav- ior is a diffi cult challenge, but we need to identify eff ective prevention programs and ways to make our social and built environments more encouraging of healthy choices.

■ Improving the public health system. Th e governmental public health infrastruc- ture maintains population health and regulates aspects of the health care delivery system. State and local health departments monitor the health of residents, pro- vide a wide range of preventive services, and regulate health care providers and businesses, such as restaurants, that aff ect population health. Th e eff ectiveness and funding of state, municipal, and county health departments vary widely.

P a r t I . H e a l t h P o l i c y8

■ Improving the coordination, transparency and accountability of medical care. Problems of quality, cost, and access are caused by fragmentation and lack of coordination at the community level. Th is fragmentation exists both within and between health care organizations. It is aff ected by a lack of integrated and elec- tronic record systems and by a  lack of cooperative relationships among diff erent types of providers who treat the same patient. For example, primary care physi- cians, hospitals, and specialty physicians often fail to work as teams or in coordi- nated ways. Consumers often are not given all of the information they deserve to make adequate medical choices. Providers often refuse to reveal the prices they will charge patients, second opinions are still not encouraged as frequently as they should be, and patients often do not get clear explanations of treatment options or the pros and cons of these options.

■ Addressing inequalities in access and outcomes. In the United States, medical care and its associated outcomes depend on one’s income level, race, and geo- graphical location. We are potentially headed toward a three-tier system of medi- cal care in which the way care is delivered to the poor, the middle class, and the wealthy varies markedly. Such a system might be acceptable if the care received by the poor and middle class were eff ective and adequate to provide the oppor- tunity for “life, liberty, and the pursuit of happiness.” However, most studies show that outcomes vary across the tiers in many ways. Other studies demonstrate that access and outcomes vary by race, even for Blacks, Latinos, and Whites who have the same incomes and education levels. Marked diff erences also exist in access, quality, and outcomes across diff erent regions of our country. Best practices do not spread easily or quickly. Addressing these inequalities is a major challenge facing the health sector.

■ Key Stakeholders Influencing the Health System

A complicated enterprise like the health system includes many types of stakeholders. A stakeholder group is a set of people who have a strong interest in how something in our society is done. In addition, stakeholders generally have some power in shaping what happens. Finally, diff erent stakeholders may have very diff erent goals and views about what should be done and how.

To understand the health system, one needs a good scorecard of the interests and roles of distinct stakeholder groups. Each contributor to this book gives attention to roles of stakeholders. Th e stakeholders that keep appearing as the story of the health system unfolds include fi ve key groups: (a) consumers, (b) providers and other profes- sionals engaged in the health system, (c) employers, (d) insurers, and (e) public policy makers.

A stakeholder group is a set of people who have a strong interest in how something in our society is done.

C h a p t e r 1 . T h e C h a l l e n g e o f H e a l t h C a r e D e l i v e r y a n d H e a l t h P o l i c y 9


Consumers (or patients) should be at the center of the health system. After all, it is their needs and wants that are the reason for this giant enterprise. In some ways, however, consumers sometimes seem like bystanders in health care decisions. Often, physicians and other providers assert that they know best and fail to have a patient co-manage a medical problem or be a full partner in selecting a choice of action. Or, perhaps worse, an insurer decides what is best or “allowed” given a specifi c health condition.

Consumers are also bystanders in issues about payments. Providers sometimes think that their “customer” is an insurance company because the insurer pays much of the bill. In addition, the same provider (unknown to many customers) may charge astonishingly diff erent prices to diff erent groups and individuals. Th e usual norm in our economy, unlike in health care, is that the person receiving goods or a service is the cus- tomer and the customer has a right to know what the charge will be before purchasing the good or service.

Even so, consumers are infl uential stakeholders in many ways. For example, when there is widespread dissatisfaction among consumers, change happens. Insurers changed the rules of early managed care payment systems in the 1990s due to con- sumer complaints. Similarly, a major federal program off ering a new form of cata- strophic insurance to elders was repealed after sharp dissatisfaction among seniors.

Most experts argue that consumers need to be at the center of health care choices. Additionally, individuals need to understand the crucial role their behavioral choices play in determining their health status. Choosing to eat healthy foods, stay physically active, drink alcohol moderately, and abstain from tobacco products are among the most important choices they make to protect their health.

What do consumers want as key stakeholders? Most importantly, consumers want good access to health care for themselves and their families. Polls indicate that indi- viduals value good-quality care and aff ordable care. Th ey would also like to be treated well by providers and have a good experience when they need care.


Many professionals work to advance medical knowledge, medical practice, and the business of health care. Th e vast majority of this workforce is motivated principally by the social goal of keeping people healthy. Medical providers, caregivers, pharmaceuti- cal and medical device companies, and researchers have created an impressive set of interventions that can help people who are sick.

In recent years, however, many members of the broad health workforce have faced great fi nancial pressure to prevent the costs of health care from increasing as quickly as in the past. Payment systems keep lowering the fees paid for goods and services, consumers and payers have been demanding better quality, better outcomes, more value, and better patient experiences. In addition, the organization of services has begun to evolve quickly.

Understanding the views and needs of the health workforce and the organizations dedicated to improving health is crucial to understanding how the system works and how to improve the system.

P a r t I . H e a l t h P o l i c y10

More and more physicians and other providers are working in large practices compared with the small ones that used to be the norm. Hospitals are merging with other types of medical providers, and the approach insurers use to pay for services is changing rapidly.

Understanding the views and needs of the health workforce and the organizations dedicated to improving health is crucial to understanding how the system works and how to improve the system. Th e following chapters suggest that providers and profes- sionals engaged in the health enterprise would value simpler rules that govern how care is provided and fair opportunities to earn incomes that refl ect their expertise and their large investments in training.


Employers are stakeholders because many fi rms off er employees private health insur- ance as a key element of their compensation package. In this sense, the cost of health insurance is a cost of doing business for employers and can greatly aff ect the profi tabil- ity of a business. For example, employee health care costs add approximately $1,500 to the cost of producing every automobile manufactured in the United States.

In their role as stakeholders, employers want to see a slowdown in their health care cost responsibility as compared with the last 50 years. In addition, employers want healthy employees who are productive and do not have to take time off from work due to illness. Th ese desires lead some employers to advocate for high-quality health care and for wellness and prevention programs that help employees stay healthy.


Insurance companies act as the intermediary among payers (often employers), provid- ers (who need a system for getting paid), and consumers (who need a system to deter- mine the kinds of health care covered by the employer’s insurance plan).

In some cases, insurers take some fi nancial risk: If the payments they make to providers exceed the premiums set for employers, the insurer loses money. Increas- ingly, however, the insurer leaves the employer to bear the risk and plays the role of a pure intermediary, setting rules to determine when a health service is eligible for reim- bursement and other rules to determine what payment is made. Of course, an insurer must negotiate these rules with employers and providers.

As stakeholders, insurers always face pressure. Employers, consumers, and pro- viders often have tense relationships with insurers, who in many ways play the role of referees in health care. Payers often feel that the costs of running the insurance process are too expensive.

New approaches to payment currently exist that could compete with traditional insurance companies. Some health systems are starting their own insurance compa- nies, and it is possible that capitated payment systems (payment of a premium for a person/family for the year regardless of use of covered benefi ts) could bypass traditional insurance systems and go directly from payers to providers. Insurers want to protect their role in the health sector. Th ey also seek to expand their role by off ering analytical services that can support higher-quality and more effi cient delivery approaches.

C h a p t e r 1 . T h e C h a l l e n g e o f H e a l t h C a r e D e l i v e r y a n d H e a l t h P o l i c y 11


Th e fi nal type of stakeholder we consider is policy makers; both appointed public offi – cials and elected politicians are included in this category. However, policy makers do not act as a single stakeholder group. Instead, various components of this group set agendas, which often confl ict with one another.

Elected offi cials diff er strikingly in their views about how the health system should work and about the role government should play in health care. At times, diff erences in views refl ect diff erent ideologies. Sometimes, however, diff erent views emerge about how best to manage the extensive responsibilities that have fallen to government over the past 80 years.

Consensus does exist on some policy issues, however, within this stakeholder group. Most elected offi cials and civil servants working on health issues would like to see slower infl ation rates in the health sector. In addition, there is consensus that the U.S. health system should use state-of-the-art medical care and prevention interven- tions. Finally, there is a common sense that quality and the patient experience should be important concerns of health providers.

■ Organization of This Book

Th e editors have enjoyed the privilege of working many years as part of numerous eff orts to improve health care in the United States. We remain optimistic that pragma- tism, fl exibility, consensus building, and attention to objective, high-quality evidence can bring about positive change. We remain stimulated by the challenges and pleased that we have worked hard at the local, state, and national levels to create and sustain a viable and eff ective health care system.

Certainly, we have observed that best practices are now being used to improve health care and health across a wide range of settings in the United States and world- wide. How do we speed up the process of getting more for the money we spend, and how do we engage every type of stakeholder to bring about more eff ective services by insisting on best practices in everything we do? Th is book gives the reader the motiva- tion and skills to get engaged.

Th e book is organized into four parts: Part I: Health Policy has chapters on the current state of health care delivery,

charts depicting key statistics, a discussion of the important role of policy, and a com- parative analysis of health care delivery in other countries.

Part II: Keeping Americans Healthy has four chapters on population health, public health, behavioral health, and the health of vulnerable populations.

Part III: Medical Care: Treating Americans’ Medical Problems has seven chapters discussing organization of care, workforce, fi nancing, cost and value, quality of care, health care management and governance, and information technology.

Part IV: Futures acts as a summary of key ideas addressed in the book, with a look to the future about how change in the health system might play out.

Th e future U.S. health care delivery system will see improvements if committed and informed Americans choose to enter the fi eld and engage eff ectively. Future lead- ers who are knowledgeable about the health sector and who know how to implement

P a r t I . H e a l t h P o l i c y12

eff ective change are needed. Th e system also needs to improve quality, get more value for cost, improve patient participation in self-care, and encourage provider transpar- ency and accountability.

■ Discussion Questions

1. What is the real and perceived performance of the U.S. health care system? How do views diff er among diff erent groups of patients, providers, payers, and politicians?

2. Why do we spend so much money on health care? 3. Why isn’t the population healthier? 4. How is the Aff ordable Care Act part of the problem or part of the solution to

improving health care delivery in the United States? 5. What are your priorities to improve the value of health care Americans get for the

money we spend? What is your rationale for these priorities?


You are an aide to the governor of State X. A billionaire has said he will give the

governor $3 billion if he comes up with a satisfactory plan to improve health and

medical care for the state. Assume the state currently spends $300 billion on health

care annually. The goal is ensuring quality of health care, improving the patient

experience, improving the overall health of the state’s population, and containing the

increase in health care costs. Develop the criteria for assessing the success of the

plan. Where will the major shifts in resources occur? Give a rationale for your recom-


As you consider the case study, you might address the following questions:

1. How might the billionaire evaluate whether the governor’s plan is satisfactory?

2. After the money is given to fund the plan, what must happen to improve health

care delivery performance substantially in State X?

■ Bibliography

Bradley, E. H., & Taylor, L. A. (2013). Th e American health care paradox: Why spending more is getting us less. New York, NY: Public Aff airs.

Christensen, C. M. (2009). Th e innovator’s prescription: A disruptive solution for health care. New York, NY: McGraw-Hill.

Gawande, A. (2009). Th e checklist manifesto: How to get things right. New York, NY: Picador.

Griffi th, J. R., & White, K. R. (2011). Reaching excellence in healthcare management. Chicago, IL: Health Administration Press.

Kenney, C. (2011). Transforming health care: Virginia Mason Medical Center’s pursuit of the perfect patient experience. New York, NY: CRC Press.

2 A Visual Overview of Health Care Delivery in the United States

Catherine K. Dangremond

■ The U.S. Health Care System: A Period of Change

Th e U.S. health care system is in a period of signifi cant and ongoing change. Many key provisions of the Aff ordable Care Act either have recently gone into eff ect or will be implemented in the near future. Health insurance exchanges began accepting applications in the fall of 2013. In 2014, provisions including prohibition of coverage denial based on preexisting conditions and elimination of annual coverage limits took eff ect. Yet even though more than eight million people applied for insurance coverage through the health care marketplace as of April 2014, and widespread support exists for certain consumer protections included in the Aff ordable Care Act, consumer perceptions of the U.S. health care system are mixed (Figure 2.1). Looking forward, varying degrees of optimism exist about the extent to which the Aff ordable Care Act will be able to bring about fundamental change in the aspects of the U.S. health care system that consumers currently dislike.

F I G U R E 2 . 1


— Cost of care and insurance coverage — Poor care coordination — Administrative hassles related to billing and insurance — Poor communication between patients and providers

Consumers Like Consumers Dislike — Consumer choice of plans and coverage — Access to latest medical technologies and pharmaceuticals — Perceived high-quality clinical care — Access to doctors and medical professionals

Source: Compiled from information obtained from Th e Morning Consult, Th e Commonwealth Fund, Health Aff airs.

Note: Th e visual overview should be utilized in conjunction with Chapter 1, where key words, learning objectives, and a topic outline have been provided.

P a r t I . H e a l t h P o l i c y14

■ The Shared Responsibility for Health Care

Th e development of health care policy and provision of health care services is a complex process, with responsibilities shared across all levels of government within the United States (Figure 2.2). Th e World Health Organization (1948) defi nes health as “a state of complete physical, mental, and social well-being and not merely the absence of disease or infi rmity.” Th is makes it quite clear that, within each level of government, the work of many agencies is required in pursuit of the health of the population. For example, within the federal government, responsibilities for health spread far beyond the Depart- ment of Health and Human Services (HHS) to agencies that include the Social Security Administration, the Department of Labor, the Department of Veterans Aff airs, and the Department of Agriculture, among others.

F I G U R E 2 . 2

Own and manage public hospitals

Operate public hospitals

Develop and enforce public health codes

Fund Medicaid programs

Administer Medicaid programs

Licensing of health care providers

Care provision including operation of facilities for the

mentally ill

Development of national health policies

Health insurance for the poor, disabled,

and elderly

Tax policies favorable to employer health


Care provision including veterans


Fund physician training





Source: U.S. Department of Health and Human Services.

C h a p t e r 2 . A V i s u a l O v e r v i e w o f H e a l t h C a r e D e l i v e r y i n t h e U n i t e d   S t a t e s 15

Th e current state of health care delivery in the United States has evolved over time and has been signifi cantly shaped by several key federal policy initiatives implemented since 1965 ( Figure 2.3). Th ese initiatives have focused on improving access to care, ensuring aff ordability of care, protecting patient confi dentiality, and controlling the growing cost of health care.

F I G U R E 2 . 3



Consolidated Omnibus Budget Reconciliation Act (COBRA) enables workers to continue insurance coverage for 18

months under former employer’s plan

Health Insurance Portability & Accountability Act (HIPAA) enacted

Medicare Program expanded to include prescription drug coverage

State Childrens Health Insurance Program (SCHIP) implemented to provide coverage for children in

families of modest means

Affordable Care Act passed

Creation of Medicare and Medicaid programs







Source: U.S. Department of Health and Human Services.

P a r t I . H e a l t h P o l i c y16

■ Where the Money Comes From, and How It Is Used

Although the rate of growth in health care spending has slowed somewhat in the past few years, such spending continues to account for more than 17% of the U.S. gross domestic product.

In 2012, total health care spending in the United States reached $2.8 trillion. Although the rate of growth in health care spending has slowed somewhat in the past few years, such spending continues to account for more than 17% of the U.S. gross domestic product (GDP), and preliminary data for 2014 indicate that spending may again be trending upward.

Th e sources of funding for U.S. health care expenditures have changed substan- tially over time. Most notably, since 1970, total out-of-pocket spending for health care has decreased from 33% to 12% of funds, while spending in public and private insur- ance programs (Medicare, Medicaid, and private health insurance) has increased from 38% to 68% of funds (Figure 2.4). In recent years, however, out-of-pocket costs have again started to trend upward as cost sharing in insurance plans has increased and consumer-directed health plans have become more common.

In contrast to changes in the sources of health care funding, the use of funds has remained relatively consistent since 1970. Although there has been some transfer away from expenditures on hospital care and growth in long-term and home care, there has not been a sizable shift in how health care spending is allocated in the United States (Figure 2.4).

■ A Comparative Perspective

In 2011, the per capita health care spending in the United States was approximately $8,500. Th is may not seem particularly troubling, until it is placed in the context of com- parison to Organisation for Economic Co-operation and Development (OECD) peers, among whom health care spending averaged approximately $3,300 per capita in 2011. In fact, no other country spent close to the same amount as the United States. Norway and Switzerland ranked a distant second in spending among OECD countries, at approxi- mately $5,600 per capita.

We often perceive that the United States has the best health care system in the world. If this were the case, we could conclude that there is no reason for concern about higher spending rates, assuming such spending results in optimal care and better outcomes. Unfortunately, evidence is not available to sustain this argument and, even as the United States leads the world in spending, it lags behind its peers in health outcomes. Since 1960, for example, Japan has seen an increase of more than 15 years in life expectancy. In com- parison, life expectancy in the United States has increased by only 9 years in the same period. In fact, in 1960 life expectancy in the U.S. was 1.5 years above the OECD average. Today, it is 1.5 years below the OECD average life expectancy of 80.1 years. As illustrated in Figure 2.5, the United States is an outlier in health care spending. Unfortunately, higher levels of spending are not necessarily associated with improved health outcomes.

C h a p t e r 2 . A V i s u a l O v e r v i e w o f H e a l t h C a r e D e l i v e r y i n t h e U n i t e d   S t a t e s 17

■ Population Health: Beyond Health Care

Health is about much more than health care—the services provided within the framework of health care institutions. A true assessment of health, an individual’s ability to live a long and healthy life, depends on many social and environmental factors beyond health care services, including education, income, racial or ethnic group, genetics, physical environment, and health-related behaviors.

Th e Population Health Model brings an integrative approach to identifying the infl uence of the many factors that play a role in the health of the population and to developing strategies for change. Th is approach takes a broad view, focusing not only on the need for improvement in health care delivery, but also on the many determi- nants of health. For example, the increase in obesity rates worldwide is a signifi cant population health concern (Figure 2.6). A population health approach considers not only medical care interventions to support better prevention and management of obe- sity by clinicians, but also examines other factors, including health-related behaviors such as diet and exercise and physical environment limitations that may prevent suf- fi cient exercise.

F I G U R E 2 . 4

Private Health Insurance



Out of Pocket



Doctors & Other Health Professionals

Drugs & Other Medical Devices Nursing Homes

& Caretakers



Where the Money Comes From


21% 10%

7% 33%


36% 26%

14% 8%


32% 27%

13% 13% 15%

33% 20%

15% 12%



Where the Money Goes

Source: Centers for Medicare and Medicaid Services National Health Expenditure data set.

P a r t I . H e a l t h P o l i c y18

F I G U R E 2 . 6







United Kingdom






2000 2010


Source: Organisation for Economic Co-operation and Development (OECD).

F I G U R E 2 . 5





65 0 1000 2000 3000 4000








( Y




5000 6000

R 2 = 0.51

7000 IND






















8000 9000


Source: Organisation for Economic Co-operation and Development (OECD). (2013). Health at a glance. OECD Indicators.

C h a p t e r 2 . A V i s u a l O v e r v i e w o f H e a l t h C a r e D e l i v e r y i n t h e U n i t e d   S t a t e s 19

■ Access to Care and Variation in Health Outcomes

In 2014, millions of previously uninsured Americans obtained health insurance cov- erage through the health insurance marketplaces established in accordance with the Aff ordable Care Act. However, millions of Americans remain uninsured. Economic barriers to care  are still present in the forms of uninsurance and underinsurance, whereby an individual may have insurance coverage but copayments and deductibles are unaff ordable, thus discouraging the patient from seeking necessary care. At lower income levels, individuals are less likely to have a usual source of care (Figure 2.7).

Wide variation in health status and outcomes exists within the United States by income level, by race and ethnicity, and by education level.

F I G U R E 2 . 7

$$$$ $$$$$ $$$$$$$$ $$$$$$$$$ $$$$$$$$$$





% O
















Source: U.S. Department of Health and Human Services Health Measures.

It is also important to recognize that many factors beyond health insurance coverage and income level aff ect access to care and, ultimately, health outcomes. Well-documented, signifi cant diff erences in health care utilization and outcomes exist among racial and ethnic groups. Although less well documented, it also has been observed that cultural and language barriers aff ect health care utilization, potentially for reasons that include the language barrier, diff ering views on illness and treatment, and distrust of Western medicine. In total, this range of economic and noneconomic barriers to health care access has a signifi cant eff ect on health outcomes. Wide varia- tion in health status and outcomes exists within the United States by income level, by race and ethnicity, and by education level. Figure 2.8 depicts just one example: Cholesterol levels are more poorly controlled at lower income levels.

P a r t I . H e a l t h P o l i c y20

■ Health and Behavior

F I G U R E 2 . 8

$$$$$ $$$$$$ $$$$$$$$$$$$




350%+% O














Source: U.S. Department of Health and Human Services Health Measures.

Behavioral risk factors, including tobacco use, alcohol abuse, unhealthy diets, and sedentary lifestyles, play a fundamental role in poor health.

Many factors combine in determining an individual’s health outcomes. Beyond medi- cal care, social and economic factors, and environmental factors, the University of Wisconsin Population Health Institute (UWPHI) Model of Health Improvement indi- cates that personal health behaviors account for approximately 30% of ultimate health outcomes (Figure 2.9). Behavioral risk factors, including tobacco use, alcohol abuse, unhealthy diets, and sedentary lifestyles, play a fundamental role in poor health. According to the U.S. Preventive Services Task Force, sedentary lifestyles and lack of exercise are associated with type 2 diabetes, stroke, hypertension, osteoarthritis, colon cancer, depression, and obesity. In 2013, the Centers for Disease Control and Prevention (CDC) reported that more than one third (35.7%) of Americans are obese, a signifi cant health risk factor highly associated with behavioral choices. Yet we must recognize that behavior is often diffi cult to change. Unhealthy behavioral choices may not have a visible health eff ect for many years. Many approaches to behavioral change exist, but a change in health behavior attitudes among Americans likely will require a continued, concerted eff ort using a combination of population-based interventions, individual behavioral change approaches, and greater involvement of health care pro- viders and organizations in healthy lifestyle interventions.

C h a p t e r 2 . A V i s u a l O v e r v i e w o f H e a l t h C a r e D e l i v e r y i n t h e U n i t e d   S t a t e s 21

F I G U R E 2 . 9





















Source: Adapted from UWPHI County Health Rankings Model.

■ The Health Care Workforce

More than 13% of the total U.S. workforce is employed in a health care–related job. From clinical roles, such as nurses, physical therapists, and doctors, to employees ful- fi lling administrative and support functions, such as environmental services, billing

P a r t I . H e a l t h P o l i c y22

and fi nance, and operations management, the health care workforce is both sizable and incredibly diverse. Also, health care workers are employed by many diff erent types of organizations, including hospitals, offi ces of health care practitioners, nursing homes, and home health agencies, among others (Table 2.1).

Th e U.S. Bureau of Labor Statistics estimates that the health care workforce could expand by more than 30%, adding an additional four million jobs, by 2020. However, sig- nifi cant challenges exist. Th e Aff ordable Care Act and health care reform eff orts empha- size increased focus on primary care and coordination of care. It is unclear whether there is an adequate supply of primary care physicians, particularly in certain geographic areas of the United States, to support an increased demand in primary care services. It is clear, however, that change must occur in how health care professionals are trained and incentivized. A move toward more coordinated models of care will undoubtedly require increased focus on communication skills and teamwork. To achieve success, payment and incentive models must move away from siloed, fee-for-service structures and toward payments focused on incentivizing coordination and health outcomes.

■ Variations in Health Care Delivery

It is easy to presume that the quality of health care services and the outcomes achieved should be similar regardless of whether you live in Los Angeles, Dallas, or Boston, and regardless of which hospital or doctor’s offi ce in your city you use for services. Research has shown, however, that this is not the case. Th e Dartmouth Atlas, among others, has shown that where you live, and at which facility you receive care, infl uence both access to care and the quality of care you receive. Tremendous variations exist among geo- graphic areas, among cities within the same state, and among health care facilities within the same city. Th e 2012 Commonwealth Fund’s Local Scorecard has also documented alarming variations including the following:


I n p a t i e n t C a r e A m b u l a t o r y C a r e L o n g – Te r m C a r e

Delivery Hospitals Doctors’ offi ces



Nursing homes

Home health care

Assisted living

Focus of Services

Acute care

Preventive care

Acute care

Chronic care

Chronic care


Registered nurses (38%)

Nursing aides (14%)

Technicians (13%)

Physicians and surgeons (7%)

Licensed practical

nurses (6%)

Health care services

managers (5%)

Therapists (5%)

Physicians (17%)

Other practitioners (12%)

Technicians (12%)

Registered nurses, nurse

practitioners (11%)

Medical assistants (11%)

Therapists (5%)

Health care services managers


Nursing and personal care

aides (60%)

Registered nurses (15%)

Licensed practical

nurses (11%)

Health care services

managers (3%)

Social workers (3%)

Therapists (2%)

Technicians (1%)

Source: Adapted from Th e Partnership for Quality Care.

C h a p t e r 2 . A V i s u a l O v e r v i e w o f H e a l t h C a r e D e l i v e r y i n t h e U n i t e d   S t a t e s 23

Th e rate of potentially preventable deaths before age 75 from health care amenable causes was more than three times as high in the geographic area with the worst (highest) rate than in the area with the best (lowest) rate (169.0 vs. 51.5 deaths per 100,000 population).

Th e incidence of unsafe medication prescribing among Medicare benefi ciaries was four times higher in Alexandria, Louisiana, than in the Bronx and White Plains, New York (44% vs. 11%, respectively).

Where you live, and at which facility you opt to receive care, infl uence both access to care and the quality of care you receive.

Figure 2.10 provides additional insight regarding some of the types and extent of variation documented by Th e Commonwealth Fund’s Local Scorecard. It is evident that signifi cant variation exists in access to care, delivery of care, and health outcomes. Th e challenge for policymakers and the U.S. health care delivery system is to identify strate- gies to close these gaps.

■ Health Care Quality

Th e U.S. health care system is known for being among the most advanced in the world in terms of scientifi c discovery, equipment, facilities, and training to address complex illness and injuries. However, landmark studies, such as the Institute of Medicine’s “To Err Is Human” (1999) and “Crossing the Quality Chasm” (2001), have brought to light the fact that even the most advanced equipment and techniques cannot overcome the system design and team coordination issues that often lead to poor-quality health care outcomes. Th e Institute of Medicine’s research indicates that at least 44,000 Ameri- cans die, and hundreds of thousands more are injured, in U.S. hospitals each year due to medical errors. Th ese errors cause unnecessary costs to the U.S. health care system of between $17 billion and $29  billion annually. Th e Institute developed a road map to achieve better quality, calling for focus on care that is safe, eff ective, patient centered, timely, effi cient, and equitable.

In the years since these studies, many tools, techniques, and measures have been implemented to evaluate and improve quality in the U.S. health care system. Payment systems have also begun to integrate quality measures. Each year since 2003, the Agency for Healthcare Research and Quality (AHRQ) has reported on progress toward improved health care quality and opportunities for ongoing improvement. Although annual improvements have been recognized, the reports also indicate that health care quality and access continue to be suboptimal. Eff orts also are underway to ensure that quality health care information is more readily accessible for patients as they make health care–related decisions. Th e HHS has developed mandatory quality reporting metrics, made publicly available through www.hospitalcompare.hhs.gov. Numerous other public and private sources have begun to provide ratings and infor- mation about patient experiences and outcomes. However, many factors other than quality data currently drive decisions when patients select health care providers (Figure 2.11).http://www.hospitalcompare.hhs.gov

P a r t I . H e a l t h P o l i c y24

■ Health Care Cost and Value

Just as patients often do not consider quality data in making choices about health care providers, costs typically are not part of the decision-making process. Th is happens for a number of reasons. For insured patients, focus may be on the required copay amount, as opposed to the total cost of care. In general, the health care system is not designed to allow patients to consider costs and value obtained, as they might when making other purchasing decisions. Yet patients who do attempt to obtain cost information often fi nd that accessing this information is nearly impossible. Costs for the same procedure may vary even within a particular hospital, depending on complexity level and peripheral

F I G U R E 2 . 1 0 T H E C O M M O N W E A LT H F U N D ’ S S C O R E C A R D O N L O C A L H E A LT H S Y S T E M

P E R F O R M A N C E .


Percent of adults with insurance


Number of potentially avoidable

hospitalizations per 100,000

Medicare beneficiaries


8,773 71


59% 26%












Number of deaths per 100,000 people

that could have been prevented by timely

access to care


Percent of older adults who

received timely preventive care


Source: Th e Commonwealth Fund.

C h a p t e r 2 . A V i s u a l O v e r v i e w o f H e a l t h C a r e D e l i v e r y i n t h e U n i t e d   S t a t e s 25

F I G U R E 2 . 1 1

$ $$+ –/


Patient Choice of Hospital








Source: Compiled from multiple articles regarding patient selection of hospitals, including Jung, Feldman, and Scanlon (2011).

services. Costs also diff er depending on a patient’s insurance carrier and the rates that have been negotiated by the insurer. Recent research has shown signifi cant varia- tion in cost for the same service between hospitals, even within the same geographic area (Figure 2.12). It is also clear that a signifi cant disconnect exists between the listed charge for each hospital and the discounted price. Yet, an important question remains unanswered: What is the value of the care received at this price?

Recent research has shown signifi cant variation in cost for the same service between hospitals, even within the same geographic area.

As health care expenditures have continued to grow—and today exceed 17% of the U.S. GDP—there has been increasing pressure for greater transparency regarding health care costs, with the presumption that greater transparency will foster greater

P a r t I . H e a l t h P o l i c y26

F I G U R E 2 . 1 2 A D J U S T E D C H A R G E S A N D D I S C O U N T P R I C E S F O R U N C O M P L I C AT E D

C A E S A R E A N S E C T I O N S A C R O S S C A L I F O R N I A H O S P I TA L S , 2 0 1 1 .


Discount price (Caesarean) Adjusted charge (Caesarean)


C h

a rg

e o

r P

ri c e

(U .S

. D o

ll a

rs i n

T h

o u

s a n

d s )










Source: Hsia, Yaa, & Weber (2014).

accountability. In support of this eff ort, beginning in 2013, the Center for Medicare and Medicaid Services (CMS) began to release certain Medicare provider charge data for public viewing. Although this may be a step toward transparency, given the com- plexity of the data and the design of health care charge systems, it remains to be seen whether this information will be helpful to patients in decision making or will have any infl uence on the decisions patients make.

■ The Future of Health Care Delivery

Forecasting the future involves both learning from the past and utilizing current evidence and circumstances to develop a reasonable view of what is likely to hap- pen going forward. Past trends and current evidence make it likely that quality and costs will become an even more central part of the health care delivery dialogue. If implementation of the Aff ordable Care Act continues to move forward as intended, the focus on coordinated care makes it likely that large health care organizations will become larger and capture a growing segment of the market. An increasing number of physicians are likely to become employed by these large organizations, as opposed to being in private practice.

Health care consumers, however, remain somewhat skeptical about the future of health care delivery. Recent polls have found that Americans remain divided on appro- priate next steps for the Aff ordable Care Act (Figure 2.13). What does seem likely is

C h a p t e r 2 . A V i s u a l O v e r v i e w o f H e a l t h C a r e D e l i v e r y i n t h e U n i t e d   S t a t e s 27

F I G U R E 2 . 1 3 C O N S U M E R P E R C E P T I O N O F A F F O R D A B L E C A R E A C T N E X T S T E P S .


Ja n

Fe b

M ar

A pr

M ay Ju n

Ju l

S ep

N ov


10 10 10 10 12 14 12 12 13

910 10 1011 11 11 11 18 16 15

43 39 39 39 39

3335 38 38 38 3837 37 37 37

40 40 4241

47 47 47 43



46 4950 50 50 5051 51 5152 52

53 5354

D ec


Ja n

Fe b

M ar

M ay Ju n

Ju l

A ug

N ov

EXPAND law or KEEP law as is REPEAL law and REPLACE with Republican alternative or REPEAL law and NOT REPLACE it Don’t know/Refused


O ct

D ec

What would you like to see Congress do when it comes to health care law?


Source: Th e Kaiser Family Foundation.

that patients will become more actively involved in their health care. As dissatisfaction with the current U.S. system and the cost of care continues to increase, and quality and cost data become more readily accessible, consumers will likely become more active participants in their health care. Th is alone could prove to be a step in the right direc- tion for the health of the U.S. population.

■ References

Hsia, R. Y., Yaa, A. A., & Weber, E. (2014). Analysis of variation in charges and prices paid for vaginal and caesarean section births: A cross-sectional study. BMJ Open, 4(1), e004017. doi:10.1136/bmjopen-2013-004017

Jung, K., Feldman, R., & Scanlon, D. (2011). Where would you go for your next hospital- ization? Journal of Health Economics, 30, 832–841.

World Health Organization. (1948). Preamble to the Constitution of the World Health Organization as adopted by the International Health Conference, New York, 19-22 June, 1946; signed on 22 July 1946 by the representatives of 61 States (Offi cial Records of the World Health Organization, no. 2, p. 100) and entered into force on 7 April 1948. Retrieved from http://www.who.int/about/defi nition/en/print.htmlhttp://www.who.int/about/definition/en/print.html

3 Government and Health Insurance: The Policy Process

Michael S. Sparer and Frank J. Thompson


LEARNING OBJECTIVES o Review the evolution of govern ment’s role in the U.S. health insurance system o Describe the roles of public and private stakeholders in the health policy process o Explore key issues on the government’s health policy agenda, including the enact-

ment and implementation of the Patient Protection and Affordable Care Act of 2010

TOPICAL OUTLINE o The government as payer: The health insurance safety net o Recent efforts to help the uninsured o The ACA and the uninsured o Key characteristics of the policy process o The dynamics of program expansion: Medicaid

Children’s Health Insurance Program (CHIP)

Medicaid Medicare

Patient Protection and Affordable Care Act (ACA) of 2010

policy process

■ Context

Government is deeply entrenched in every aspect of the U.S. health care system (see Chapter 2). Th e federal government provides tax incentives to encourage employers to off er health insurance to their employees; provides health insurance to the poor, the aged, and the disabled; operates health care facilities for veterans; and supports the training of doctors and other health professionals. State governments administer and help pay for Medicaid, license health care providers, regulate private health insurers, and operate facilities for the mentally ill and developmentally disabled. Local govern- ments own and operate public hospitals and public health clinics and develop and enforce public health codes.

With the enactment of the Patient Protection and Aff ordable Care Act of 2010 (ACA), government’s role has expanded dramatically, especially when it comes to insurance coverage. Th e law expands eligibility for public insurance, uses federal sub- sidies to make private coverage more aff ordable, imposes new rules on insurers and employers to make coverage more accessible, and adds an overarching requirement

P a r t I . H e a l t h P o l i c y 30

that nearly all Americans have some form of health insurance (or pay a penalty through the tax code). Most of these provisions took eff ect in 2014; in that initial year an addi- tional 5 million Americans enrolled in state Medicaid programs, nearly 8 million others received public subsidies for private coverage purchased through newly cre- ated insurance exchanges, and private insurers were no longer able to deny coverage based on preexisting health conditions, impose annual or lifetime limits on coverage, or spend excessive amounts on administration or profi t.

Th e goal of this chapter is to provide an overview of the health policy process by looking closely at government’s role in the health care system. We do so by focus- ing on government’s role in the health insurance arena and, in particular, on politics and policymaking in the Medicaid program, the nation’s public health insurance pro- gram for low-income populations. Why focus here instead of on government’s role as a regulator or as a provider of care? After all, there is no shortage of interesting and important topics in the health policy arena: As we write this chapter, the Centers for Disease Control and Prevention (CDC) is working to limit the Ebola epidemic, Congress is reviewing claims that the Veteran’s Administration has mismanaged its hospital system, the Food and Drug Administration (FDA) is deciding how to regulate e-cigarettes (if at all), and state insurance departments are implementing a host of new and complicated regulations on the private insurance industry.

Th e short answer is that we (or you) could pick any one of these policy arenas to focus on: Our goal is to provide you with tools for analyzing the policy process that are helpful whether the focus is Medicaid, the CDC, or the FDA. Th e longer answer is that government’s role in the nation’s health insurance system provides an important and interesting lens through which to consider the health policy process. In a nation that spends nearly 18% of its gross domestic product on health care, it is important to understand why government provides health insurance to many of those who are not covered by the employer-sponsored private health insurance system and also sub- sidizes (directly or indirectly) a growing portion of the cost of private coverage. Th e Medicaid policy process is especially intriguing and unexpected: When enacted in 1965, Medicaid was expected to be a small, welfare-based program for the poorest of the poor; over time, however, Medicaid has evolved into the nation’s largest health insurance program, with more than 65 million benefi ciaries (at a cost of well over $400 billion annually) and millions more likely to enroll in the next few years. How and why did that happen, and what does that evolution suggest about U.S. health policy?

■ The Government as Payer: The Health Insurance Safety Net

For much of U.S. history, the federal government and the states were minor players in the nation’s health and welfare systems. Th e social welfare system was shaped instead by the principles that governed the English poor law system. Social welfare programs

Government’s role in the nation’s health insurance system provides an important and interesting lens through which to consider the health policy process.

C h a p t e r 3 . G o v e r n m e n t a n d H e a l t h I n s u r a n c e : T h e P o l i c y P r o c e s s 31

were a local responsibility, and assistance was provided only to those who were outside the labor force through no fault of their own (the so-called deserving poor). National welfare programs were considered unwise and perhaps even unconstitutional. Th e main exception was the Civil War pension program, which provided federal funds to Union veterans, but even this initiative was administered and implemented at the local level.

Lacking federal or state leadership (and dollars), local governments tried to pro- vide a social and medical safety net. Th e most common approach was to establish almshouses (or shelters) for indigent aged and disabled people. A medical clinic often provided health care to almshouse residents. Th ese clinics eventually evolved into public hospitals, off ering services to the poor without charge. Generally speaking, however, the clinics (and hospitals) provided poor-quality care and were avoided by people who had any alternative. Similarly, the few private hospitals then in operation were charitable facilities that served only the poor and the disabled. Th ese hospitals, like their public counterparts, represented only a small and rather disreputable por- tion of the nation’s health care system.

Most 19th-century Americans received health care in their homes, often from family members who relied on traditional healing techniques. At the same time, an assortment of health care providers—physicians, midwives, medicine salesmen, herb- alists, homeopaths, and faith healers—off ered their services, as well. Generally speak- ing, these practitioners charged low fees, which families paid out-of-pocket, much as they would for other commodities.

As the 19th century drew to a close, two developments fundamentally changed the U.S. health care marketplace. First, allopathic physicians (MDs) won the battle for primacy among medical providers. Americans increasingly recognized that medi- cine was a science and believed that medical doctors were the most scientifi c prac- titioners, best able to deliver high-quality care. Th e status and prestige accorded to MD-physicians grew, whereas the role of alternative medicine providers declined.

Th e emergence of a physician-dominated health care system was accompanied by a second pivotal factor—the dramatic growth in the size and the status of the U.S. hospital industry. Indeed, the nation’s stock of hospitals grew from fewer than 200 in 1873 to 4,000 (with 35,500 beds) in 1900, to nearly 7,000 (with 922,000 beds) by 1930 (Annas, Law, Rosenblatt, & Wing, 1990).

Th is growth was prompted by several factors. Advances in medical technol- ogy (antiseptics, anesthesia, x-rays) encouraged wealthier people to use hospitals, eliminating much of hospitals’ prior social stigma. Th e number of nurses expanded dramatically, as nurses evolved from domestics to trained professionals, and hospital- based nurses worked hard to improve hospitals’ hygiene. Th e growing urbanization and industrialization of American life produced an increasingly rootless society, less able to rely on families to care for their sick at home. Finally, the medical education system began to require internships and residencies in hospitals as part of physician training, which put a cadre of trained doctors to work full time in these facilities.

By the mid-1920s, there was growing recognition that middle-income Americans needed help in fi nancing the rising costs of hospital care and increasingly high-tech medicine.

P a r t I . H e a l t h P o l i c y 32

As the hospital industry grew, so too did the costs of care. By the mid-1920s, there was growing recognition that middle-income Americans needed help in fi nancing the rising costs of hospital care and increasingly high-tech medicine. Th e onset of the Great Depression made the situation more problematic, as hospital occupancy rates plummeted and numerous facilities went bankrupt. In response to this crisis, the hos- pital industry created Blue Cross; for-profi t insurers soon followed Blue Cross into the health business and the nation’s private health insurance industry began to emerge.

Th e health insurance industry received a major boost from the federal govern- ment, fi rst during World War II, when federal policymakers excluded most employer- sponsored health insurance from wage and price controls, and then in the early 1950s when federal offi cials ruled that premiums paid by employers would not be considered income to the employee (a tax exclusion that now costs the federal government more than $250 billion a year). By the mid-1950s, employer-sponsored private insurance was on its way to becoming the vehicle through which most Americans could aff ord the rising cost of health care (see Chapter 11 for more on the early history of private health insurance).

At the same time, the demonstrable advances in medical technology after World War II engendered confi dence that the medical system would, in time, conquer nearly all forms of disease. Th is perception prompted the federal government (through the National Institutes of Health) to funnel billions of dollars to academic medical researchers. With federal dollars so readily available, medical schools soon empha- sized research, and medical students increasingly chose research careers. Around the same time, Congress enacted the Hill-Burton Program, which provided federal funds to stimulate hospital construction and modernization. Th e policy assumption was that all Americans should have access to the increasingly sophisticated medical care rendered in state-of-the-art hospital facilities.

Even with the growing employer-sponsored health insurance system, it was soon clear that large portions of the population would not easily have access to such cover- age or to the benefi ts of the new medical advances. Left out of these new systems were the retired elderly, the disabled, the unemployed, the self-employed, the part-time worker, and most of those who worked for small businesses.

To be sure, liberal politicians had argued for many years without success in favor of government-sponsored health insurance that would replace the employer-sponsored private system and would cover all Americans. President Harry Truman had posited that health insurance was part of the Fair Deal to which all Americans were entitled. However, neither Truman nor his liberal predecessors ever came close to overcoming the strong opposition to national health insurance from doctors, businessmen, and others, who viewed it as un-American and socialistic. Doctors feared a government program would lead to greater oversight, requirements to serve indigent patients, and reduced income potential.

By 1949, mainstream Democrats had abandoned their visions of universal insur- ance and proposed instead that the Social Security (retirement) system be expanded to provide hospital insurance for the aged, reasoning that the elderly were a sympathetic and deserving group and that hospital care was the most costly sector of the health care system.

Conservatives opposed the plan, arguing that it would give free coverage to many people who were neither poor nor particularly needy. Th ey argued instead that gov- ernment’s role is to provide a safety net to the deserving poor who are unable to access

C h a p t e r 3 . G o v e r n m e n t a n d H e a l t h I n s u r a n c e : T h e P o l i c y P r o c e s s 33

employer-sponsored coverage. Th e result was an amendment to the Social Security Act in 1950 that, for the fi rst time, provided federal funds to states willing to pay health care providers to care for welfare recipients. Interestingly, this “welfare medi- cine” approach passed with bipartisan support (Sparer, 1996). For liberals, this was an acceptable, albeit inadequate, fi rst step, but at least some poor people fi nally could obtain services. Conservatives went along because a medical safety net for the poor would undermine arguments for a more comprehensive health insurance program and because responsibility for the program was delegated to state offi cials.

In 1960, newly elected President John F. Kennedy revived the eff ort to enact hos- pital insurance for the aged. Congress responded by enacting the Kerr-Mills Program. Th is program distributed federal funds to states that were willing to pay health care providers to care for the indigent aged, expanding the welfare medicine model. Congress later opened the program to covering the indigent disabled. Th ese initiatives again defl ected support from the president’s broader social insurance proposal.

Th e political dynamic had evolved considerably by 1965. President Lyndon B. Johnson and the Democrats controlling Congress were enacting various laws designed to turn the United States into a “Great Society.” Th is seemed an opportune time to renew the eff ort to enact national health insurance. Even longtime opponents of health insurance expansions expected Congress to enact a plan far more comprehen- sive than Kerr-Mills. President Johnson followed the path set by Truman and Kennedy and again proposed hospital insurance for the aged. At the same time, various Repub- lican legislators, citing the nation’s oversupply of hospitals and desiring to return to a physician-centered delivery system, recommended that Congress enact physician insurance for the aged. Th e American Medical Association (AMA), hoping once again to scuttle the social insurance model, urged Congress simply to expand Kerr-Mills.

As Congress debated these various proposals, President Johnson (working behind the scenes) convinced Congressman Wilbur Mills, powerful chair of the House Ways and Means Committee and an aspiring Presidential candidate, to demand that his colleagues enact all three expansion initiatives (Blumenthal & Morone, 2009). Th e President’s proposal for hospital insurance for the aged became Medicare Part A; the Republican proposal for physician insurance for the aged became Medicare Part B. Th e AMA’s eff ort to expand Kerr-Mills became Medicaid. Th ese government pro- grams, for the fi rst time, became a true health insurance safety net for Americans without employer-sponsored coverage (Marmor, 2000).


Medicaid is not a single national program, but a collection of 50 state-administered programs, each providing health insurance to low-income state residents but with dif- fering eligibility rules, benefi ts, and payment schedules. Each state initiative is gov- erned by various federal guidelines, and the federal government contributes between 50% and 78% of its cost (the poorer the state, the larger the federal contribution). In 2012, the various Medicaid programs covered more than 60 million Americans at an annual cost of approximately $415 billion (Kaiser Commission on Medicaid and the Uninsured, 2014).

Given Medicaid’s decentralized structure, state offi cials have considerable discre- tion. One not-surprising result is that states such as New York have more generous eligibility criteria than do poorer states such as Alabama or Mississippi. Interestingly,

P a r t I . H e a l t h P o l i c y 34

however, stark contrasts exist even among the larger states. In fi scal year 2007, New York, for example, spent $8,450 per Medicaid enrollee, whereas California spent only $3,168 ( Kaiser Family Foundation, 2010).

During the late 1980s, Congress began imposing rules designed to dramatically increase state coverage. As a result of these mandates, the number of children on Medicaid nearly doubled between 1987 and 1995, and the total number of recipi- ents increased from roughly 26 million to nearly 40 million. Medicaid expansions had become the federal government’s main strategy for reducing the ranks of the uninsured.

Concomitantly, Medicaid’s annual price tag grew from $57.5 billion in 1988 to $157.3  billion in 1995. State offi cials blamed this increase on the federal mandates. Federal regulators disputed the claim and suggested that the states themselves were largely responsible for the increase, citing accounting techniques through which states shifted state-funded programs into their Medicaid budget so they could draw down additional federal dollars. Th is argument produced signifi cant intergovernmental ten- sion (Holahan & Liska, 1997).

During the early 1990s, President Bill Clinton, a former state governor and a critic of Medicaid mandates, stopped considering Medicaid the linchpin in eff orts to reduce the number of uninsured. Recognizing that many uninsured people are in families where the husband or wife works full or part time, he proposed instead to require that employers off er health insurance to their employees. Th e Clinton administration’s proposal for national health insurance failed, but the shift away from federal Medicaid mandates persisted (until the recent enactment of the ACA). Instead, federal offi cials became more lenient in approving state requests for waivers from federal Medicaid rules, giving states additional fl exibility and autonomy.

Two trends dominated Medicaid policy during most of the 1990s. First, states used their expanded discretion to encourage or require recipients to enroll in man- aged care delivery systems. Between 1987 and 1998, the percentage of enrollees in Medicaid managed care increased from less than 5% to more than 50%, from fewer than 1 million people to more than 20 million. Second, growth in the number of Med- icaid enrollees ended, and a slow decline began. Th e most convincing explanation for the decline was federal welfare reform, enacted in 1996. Before then, people receiving Aid to Families with Dependent Children (AFDC, often referred to as welfare) were automatically enrolled in Medicaid. Th ereafter, welfare recipients needed to apply separately for Medicaid, as did those no longer entitled to welfare but still eligible for Medicaid. Millions did not know they were Medicaid eligible, the states set steep administrative hurdles that deterred others from applying, and still others were dis- suaded by the stigma attached to receiving public assistance. For all of these reasons, between 1995 and 1997, the number of adult Medicaid recipients declined 5.5%, and the number of child recipients declined 1.4%.

During the late 1990s, state and federal offi cials undertook a major eff ort to increase Medicaid enrollment. One strategy was to simplify the eligibility process (shortened application forms, mail-in applications, and more eligibility-determination sites). A second strategy was to simplify eligibility rules (eliminating assets tests and ensur- ing 12 months of continuous eligibility). A third strategy was to expand outreach and education by increasing marketing activities and encouraging community-based insti- tutions to educate and enroll their constituents. Th ese eff orts succeeded. Beginning in mid-1998, Medicaid enrollment began to increase again, a trend that has continued.

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Th e growth in enrollment, along with higher costs for prescription drugs, services for people with disabilities, and long-term care, has led to escalating Medicaid costs, and for some years, states’ Medicaid expenditures have exceeded what they spend on education. At the same time, state tax revenues declined precipitously in the late 2000s. Th e ensuing budget crises prompted Medicaid cost-containment eff orts in every state. Th e most popular option was an eff ort to control the rising cost of phar- maceuticals, either through leveraged buying (purchasing pools) or limits on access (formularies). Other Medicaid cost-containment strategies have included freezing or cutting provider reimbursement, reducing benefi ts (such as dental and home care), cutting eligibility, increasing copays, and expanding disease management initiatives.

The story of Medicaid’s growth from a relatively small welfare medicine program to the nation’s largest insurance program (with more than 20% of the population enrolled) is a remarkable political story, and one that nicely illustrates several key characteristics of the U.S. health policy process.

More recently, the ACA contained a signifi cant expansion in Medicaid eligibility, initially requiring all states to expand coverage to 133% of the federal poverty level, though the Supreme Court subsequently converted that mandate into a state option (now in place in roughly half the states). Even with this judicial limit, the story of Med- icaid’s growth from a relatively small welfare medicine program to the nation’s largest insurance program (with more than 20% of the population enrolled) is a remarkable political story, and one that nicely illustrates several key characteristics of the U.S. health policy process. Later in this chapter we review more closely these key charac- teristics and the policy dynamics of the ongoing growth of the program. First, how- ever, we continue our overview of the nation’s health insurance system, starting with Medicare and then focusing on more recent initiatives designed to help the uninsured.


Like Medicaid, Medicare was enacted in 1965 to provide health insurance to segments of the population not generally covered by the mainstream employer-sponsored health insurance system. Also like Medicaid, Medicare has become a major part of the nation’s health care system, providing insurance coverage in 2013 to 43.5 million per- sons over the age of 65 and to just under 9 million of the young disabled population, at a total annual cost of over $583 billion (Th e Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2014).

In other respects, however, Medicare diff ers signifi cantly from its sister program. Medicare is a social insurance program, providing benefi ts to the aged and the dis- abled regardless of income, whereas Medicaid is a welfare initiative, off ering coverage only to those with limited income. Medicare is administered by federal offi cials and the private insurers they hire to perform particular tasks, whereas Medicaid is admin- istered by the states following federal guidance. Medicare is funded primarily by the federal government (plus benefi ciary copayments and deductibles), whereas Medicaid is funded by the federal government and the states without any benefi ciary contribu- tion. Medicare has a relatively limited benefi t package that excludes much preventive

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care, long-term care, and, until 2006, prescription drugs outside of the hospital and the oncologist’s offi ce, whereas Medicaid off ers a far more generous array of benefi ts.

For the fi rst 30 years of its existence, Medicare had two separate parts, each with diff erent funding sources and eligibility requirements. Medicare Part A covers inpa- tient hospital care. It is fi nanced primarily by a 2.9% payroll tax: 1.45% paid by the employer and 1.45% paid by the employee, though higher income benefi ciaries (post- ACA) pay a higher tax. All benefi ciaries automatically receive Part A coverage. Medi- care Part B, in contrast, is a voluntary program, providing coverage for outpatient care for benefi ciaries who choose to pay a $110 monthly premium (though here too individuals with annual income over $85,000 now pay a higher, income-based pre- mium). Some 95% of Medicare benefi ciaries choose to enroll in Part B. General federal revenues pay the balance of the Part B bill.

Before 1994, the revenue contributed to the Part A Trust Fund exceeded the program’s expenses, and the fund built up a signifi cant surplus. Beginning in 1994, expenses began to exceed revenue; the surplus was used to pay bills, and it began to shrink. Alarmed Medicare experts predicted that the surplus would be gone by the early 2000s, that the Trust Fund would be unable to pay its bills, and that Medicare would slide into bankruptcy. In response to this crisis, Congress in 1997 enacted a broad eff ort to reduce Medicare costs, mainly by cutting provider reimbursement.

Th e rapid shift in the economics of Medicare prompted an equally rapid change in its politics (Oberlander, 2003). No longer were politicians claiming that the program was about to go bankrupt. No longer was there talk of greedy providers overcharging and generating excess profi ts. No longer was there an intense eff ort to enroll benefi cia- ries in managed care. Th ere were instead three competing views about how to respond. One camp emphasized the need to undo some of the cuts in provider reimbursement, another focused on the importance of expanding the benefi ts package, and still another argued against new spending measures, whether on behalf of providers or benefi ciaries. Th is last group—the fi scal conservatives—proposed that any surplus remain in the Trust Fund to be used in years to come.

Faced with these options, Congress chose in 1999 to undo some of the cuts in provider reimbursement. Provider organizations argued that the prior cuts were unnecessarily endangering the fi nancial health of thousands of doctors and hospitals. Even supporters of the cuts conceded that the extent of the reductions was far greater than expected. As a result, Congress reduced the impact of the cuts by $16 billion over the next 5 years and $27 billion over the next 10 years. In 2000, Congress passed another giveback initiative, this time delivering to providers $35 billion over 5 years and $85 billion over 10 years.

Following the provider giveback legislation, newly elected President George W. Bush and Congress took up the issue of prescription drug coverage and enacted Medi- care Part  D. Under this legislation, benefi ciaries can receive outpatient drug cover- age through a managed care plan or, if they wish to stay in fee-for-service Medicare, through a private prescription drug plan. In most communities, seniors can choose among dozens of plans, some of which off er limited coverage for a small monthly premium, whereas others off er more generous benefi ts for a higher premium. Th e average monthly premium nationwide is $39, in exchange for which the benefi ciary has a $310 deductible, after which the plan pays 75% of drug costs up to $2,850 and 95% of the costs beyond $4,550 (the benefi ciary pays 100% of the costs between $2,850 and $4,550—the so-called “donut hole,” which is slowly being phased out as part of the 2010 health reform legislation).

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Th e Medicare drug legislation was extraordinarily controversial and partisan. President Bush and leading Republicans maintained that the legislation, expected to cost $410 billion over its fi rst 10 years, was the largest public insurance expansion since Medicare was fi rst enacted and that it would provide signifi cant coverage to millions of seniors. Leading Democrats, while supporting the goals of the legislation, complained that the initiative gives too little to needy seniors and too much to health maintenance organizations, big business, and the pharmaceutical industry.

Th e prescription drug plan was designed, in part, to encourage benefi ciaries to enroll in a managed care plan. Th e managed care program, called Part C and created as part of the 1997 Balanced Budget Act, had only limited success during the early 2000s, largely because of declining health plan interest. Back in 2004, for example, only 4.6 million benefi ciaries were enrolled in 145 plans (Kaiser Family Foundation, 2004). Health plans claimed the main barrier to their expanded participation was inadequate reimbursement. However, several studies suggested that Medicare was actually losing money on the managed care initiative because its capitation rates often were set high, based on the health care experience of the average client in a particular community, whereas the typical managed care enrollee was healthier and less costly than average (Kaiser Family Foundation, 2004).

In an eff ort to reverse the decline in health plan participation and to advance the goals of privatization and competition, the Bush administration proposed that the new drug benefi t be delivered exclusively by managed care plans. Although the legislation as enacted does not go so far, it did dramatically increase health plan capitation rates in an eff ort to encourage plans to get back in the game. Over the next decade, average monthly capitation rates increased dramatically. As a result, plans began aggressively marketing to benefi ciaries, and there now are 16 million Medicare Advantage enroll- ees (Kaiser Family Foundation, 2014).


During the early 2000s, the number of Americans without health insurance grew from roughly 40 million to approximately 46 million—more than 15% of the nation’s popu- lation. Millions more Americans were underinsured, with high out-of-pocket medical expenses and, often, considerable medical debt. Most of the uninsured (more than 80%) were in families with a full- or part-time worker, and most of these workers were self-employed or employed by small businesses. States with a strong unionized indus- trial and manufacturing base were likely to have fewer uninsured, whereas states with large numbers of immigrants and a service-based economy were likely to have more. In Iowa, Massachusetts, and Wisconsin, for example, less than 10% of the population was uninsured; whereas in California, Louisiana, and Texas, the percentage hovered between 20% and 25%.

Rather remarkably, the dramatic increase in the nation’s uninsured population began in the mid-1990s—an era of unprecedented economic growth, low unemploy- ment, and relatively small rises in health care costs; it then accelerated during the eco- nomic downturn of the early 2000s. Much of the increase in the uninsured population also occurred during a time when the Medicaid rolls were expanding dramatically. Th e best explanation for the rise in the number of uninsured was the decline in the number of Americans with employer-sponsored private health insurance. Between 1977 and

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2004, the percentage of Americans under age 65 with employer-sponsored coverage dropped from 66% to 61% (Clemens-Cope, Garrett, & Hoff man, 2006).

Th e decline in employer-sponsored coverage was due to several factors. Many employers have increased the share of the bill that the employee must pay, prompting some employees to abandon their coverage. Other employers eliminated coverage for spouses and children or phased out retiree health coverage. Still others hired more part-time workers and outside contractors, thereby avoiding the need to off er health insurance. At the same time, much of the recent job growth has been in the service and small business sectors of the economy. Th ese jobs are notoriously low paying and rarely provide health insurance.

In response to these trends and to media and political attention to the problems of the uninsured, state and federal offi cials tried during the early 1990s to enact new coverage programs (Brown & Sparer, 2001; Sparer, 2003). Th ese proposals generally sought to require employers to provide health insurance to their employees and to use public dollars as a safety net for those outside the labor market. Th e idea was to retain and reinvigorate the employer-sponsored health insurance system. By the mid-1990s, however, the various employer mandate proposals, including the plan proposed by President Clinton, had disappeared, defeated by vehement opposition from the busi- ness community. Business opponents argued that the mandate would be too costly and would force employers to eliminate jobs.

After the collapse of the employer mandate strategy, policymakers (especially at the state level) enacted a host of eff orts designed to make health insurance more avail- able and more aff ordable in the small group and individual insurance markets. Th ese reforms focused on three structural problems in the health care system:

■ Employers in the small business community often could not aff ord to provide health insurance to their employees. Th ese employers lacked the market clout to negotiate a good deal, particularly given the high administrative costs associated with insuring a small group.

■ People who are self-employed or employees of small businesses generally earned too little to purchase health insurance in the individual market.

■ People with a high risk of catastrophic medical costs were often excluded from the individual insurance market, regardless of their ability to pay.

Many of the state initiatives required insurers to guarantee coverage to segments of the small business community. Others encouraged small businesses to join state- run or state-administered purchasing alliances. Still others allowed insurers to sell no-frills insurance policies, presumably at a lower cost than the more comprehensive packages states often require. Taken together, however, the various state mandates had only a modest eff ect on the number of uninsured (Robert Wood Johnson Founda- tion, 2007), while generating signifi cant political controversy, especially from healthy younger workers who complain about paying higher rates to subsidize the older and the sicker and from insurance companies threatening to exit reform-minded states.

By the late 1990s, state and federal policymakers had shifted their focus away from the insurance reforms that had been disappointing up to that point, and toward programs that expanded health insurance for children. Several factors explained the trend. Children are considered a deserving group; there is bipartisan agreement that youngsters should not go without health care services because their parents cannot

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aff ord to pay; and children are a relatively low-cost population to insure. In 1993, for example, the average child on Medicaid cost just under $1,000, whereas the typical elderly recipient cost more than $9,200, and disabled recipients’ costs averaged just under $8,000.

Child health initiatives also are consistent with the political agendas of both Republicans and Democrats. Republicans, along with many moderate Democrats, support insurance expansions as a counterbalance to other social welfare cutbacks. For example, many families that move from welfare to work continue to need help in obtaining health insurance for their children. At the same time, liberal Democrats, still reeling from the defeat of national health insurance proposals, saw health insurance for children as an incremental step on the path to universal health coverage.

Given this bipartisan support, Congress enacted the State Children’s Health Insur- ance Program (SCHIP; later changed to CHIP in 2009). States can use CHIP funds to liberalize their Medicaid eligibility rules, to develop a separate state program, or to create a combination of the two. Th e main advantage to using CHIP funds to expand Medicaid is administrative simplicity for both the client and the state. Th is is especially so for families in which some children are eligible for Medicaid and others for CHIP. At the same time, there are several advantages to creating a separate state program:

■ Enrollment can be suspended when the dollars are spent, unlike with Medicaid, which is an entitlement program.

■ Th e state has more discretion when developing the benefi ts package. ■ Th e state can impose copayments and premiums, which generally are not allowed

under Medicaid. ■ Benefi ciaries and providers may be more likely to participate because the new pro-

gram lacks the stigma associated with Medicaid.

By all accounts, early eff orts to enroll children in SCHIP were disappointing. By the end of 1999, roughly 1.5 million youngsters were enrolled in the program, far fewer than predicted. Th e low enrollment was due to several factors. Large numbers of eligible families did not know they were eligible. Th e complicated application pro- cesses deterred others. Still others were dissuaded by the stigma often associated with government insurance programs. Th e premiums and other cost-sharing requirements clearly discouraged others. As a result, by the end of 2000, 38 states had not spent their full allotment of federal CHIP dollars. Funds not expended in these states were real- located to the dozen other participating states.

Beginning in early 2000, however, CHIP enrollment began to rise signifi cantly. By the end of the year, roughly 3.3 million children were enrolled—nearly double the number from the prior year—and by 2005, there were more than 4 million enrollees. Policymakers attribute the turnaround to improved outreach and education initiatives and to simplifi ed processes for eligibility and enrollment.

As program enrollment grew, bipartisan support began to fade. Th e politi- cal battling was particularly intense during the eff ort to reauthorize the program in 2007. Congressional Democrats proposed signifi cantly increased funding so as to expand enrollment even further. President Bush and many congressional Republi- cans opposed the expansion, arguing that expanding enrollment to more middle-class families would undermine the nation’s private insurance system, because employers would drop private coverage for children eligible for the expanded public program.

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Th e political battling continued during the last year of the Bush Administration; the president twice vetoed reauthorization legislation. When President Obama took offi ce in late January 2009, one of his fi rst priorities was to sign legislation reauthorizing and expanding the program. He did so on February 4, 2009. As a result, CHIP enrollment continues to increase.

Despite the growth in public insurance programs such as Medicaid and CHIP, the number of uninsured kept rising, leading to an ongoing debate over whether and how government should aid this population. Th is debate returned to the national agenda during the 2008 presidential campaign, as several Democratic candidates proposed federal legislation to dramatically reduce the number of uninsured, while their Repub- lican counterparts challenged such proposals as both unwise and counterproductive. After the election of Barack Obama and a strong Democratic majority in both the Senate and the House of Representatives, the nation engaged in a fi erce and partisan debate over the merits of health reform, a debate that culminated in the enactment of the ACA of 2010.


Early in his administration, President Obama decided to push hard for comprehensive health reform legislation. Th e goals were (a) to reduce dramatically the number of uninsured, (b) to pay for such coverage without adding to the nation’s budget defi cit, (c) to slow the rising cost of health care more generally, and (d) to encourage a more effi cient and higher-value health care delivery system. Th e president understood, how- ever, that the politics of health reform would be contentious and diffi cult. Health care is a $2.6 trillion industry, and interest groups (insurers, pharmaceutical companies, employers, hospitals, doctors) would vigorously resist proposals that threatened their share of these dollars.

In addition, reform opponents often characterize comprehensive health reform initiatives as “socialistic” and contrary to our political culture, arguing instead for more incremental reforms that focus on notions of personal responsibility rather than social solidarity or equity. Finally, America’s political institutions are designed to make it dif- fi cult to enact major new legislation, as the various checks and balances at the heart of the U.S. government provide numerous veto points for those opposed to reform.

In this context, President Obama needed to develop a strategy to overcome the interest group, ideological, and institutional obstacles to reform. By mid-2009, he had developed his strategy. First, he declared health reform to be his top domes- tic priority (doable during a recession only by declaring that fi xing the economy required fi xing the health care system). Second, he urged that health reform be enacted during the fi rst year of his term, recognizing that delay was the enemy of reform. Th ird, he delegated the task of developing a health reform plan to congres- sional leaders, eschewing the White House–centered approach that ran aground in the Clinton administration, hoping instead to persuade the leadership (especially the Democratic leadership) to be fully invested in the reform initiative. Finally, he encouraged administration offi cials to negotiate with key interest groups, emphasiz- ing the need to compromise and build incrementally off the current system.

After months of partisan politicking and various unexpected political hurdles (such as the election of Scott Brown to the seat of the recently deceased Ted Ken- nedy, which meant the Democrats no longer had a 60-vote, fi libuster-proof Senate

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majority), Congress enacted the Patient Protection and Aff ordable Care Act of 2010. Th e legislation is long and complex, and covers nearly every aspect of the nation’s health care system. At its core, however, is an ambitious eff ort to provide insurance coverage to more than 32 million of the currently uninsured. Th ere are fi ve key com- ponents to this eff ort:

■ Th e law mandates that nearly all Americans have some form of health insurance or pay a penalty through the tax code. Th is provision withstood judicial challenge and is now in eff ect.

■ Th e law requires state Medicaid programs to provide coverage to all persons (and their dependents) with incomes below 133% of the federal poverty level. Th is provi- sion did not survive judicial challenge and the Medicaid expansion is now an option, not a requirement. By mid-2014, 26 states (plus the District of Columbia) had imple- mented the expansion, resulting in more than fi ve million new Medicaid enrollees.

■ Each state is encouraged to create a so-called insurance exchange, a vehicle through which the uninsured and the small-business community could presumably purchase more aff ordable private coverage. Th e federal government would then provide sub- sidies to persons with incomes up to 400% of the federal poverty level to help them aff ord the more reasonably priced coverage. As of mid-2014, however, only 16 states (plus the District of Columbia) had cre- ated a state-based exchange; 27 states were relying completely on the newly created federal exchange (healthcare.gov), whereas the remaining seven states have exchanges that operate as state-federal partnerships. During the initial open enrollment period ( October 1, 2013 to March 31, 2014), approximately 7 million individuals obtained cov- erage via these exchanges, more than 80% of whom were receiving federal subsidies.

■ Th e law requires that employers with more than 50 full-time employees either provide coverage to their employees or pay a fi nancial penalty to the federal gov- ernment. However, the Obama administration has delayed implementation of this provision until 2015 (for fi rms with more than 100 employees) and until 2016 (for fi rms with 50–99 employees).

■ Private insurance companies are required to comply with a host of federal regu- lations that seek to eliminate the practice of discriminating against persons with preexisting conditions or who are otherwise likely to incur high medical costs.

■ Government and Health Insurance: The Policy Process

Th e portraits of Medicare, Medicaid, and the ACA suggest the importance of consid- ering the dynamics of policy processes in the United States more explicitly. We open by highlighting four important characteristics of these processes before turning to the case of Medicaid to illustrate how policy dynamics can stoke program growth.


Four observations loom large in considering the policy processes that shape health care programs in the United States. First, each health program or problem domain typically has a relatively distinct policy subsystem. Th ese policy subsystems consist ofhttp://healthcare.gov

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The fact that states have considerable discretion to shape Medicaid eligibility and services means that 50 policy subsystems at that governmental level help determine who gets what from the program.

actors from the public and private sectors who are routinely and “actively concerned about a policy problem or issue” and seek to shape what government does about it. Th ese actors include congressional committees, administrative agencies, interest groups, think tanks, specialized news media, and others (Jenkins-Smith & Sabatier, 1993, p. 17). Policy subsystems tend to be fl uid and permeable. For instance, a focus- ing event may occur (e.g., a proposal to restructure Medicare gains visibility), which leads segments of the public and new stakeholders to become active in the subsystem, at least for a while.

Each policy subsystem tends to be distinctive. Advocates for pediatricians and children are key players in the Medicaid policy subsystem but not in Medicare’s. So, too, Medicare has a policy subsystem more exclusively focused on decisions by the federal government, whereas states play a larger role in Medicaid. Th e fact that states have considerable discretion to shape Medicaid eligibility and services means that 50 policy subsystems at that governmental level help determine who gets what from the program. It means that the National Governors Association and other lobbies for state offi cials devote much greater attention to federal Medicaid policy than to Medicare.

Second, the fragmented nature of America’s governing institutions makes it diffi cult to translate majority preferences into major policy decisions in the health arena. Two fundamental features of the U.S. Constitution—the separation of powers and federalism—place formidable barriers in the path of those seeking to transform policy. A new law must not only win the approval of the two houses of Congress and the president, it at times must survive a court challenge. (Th e Supreme Court came within one vote of overturning the entire ACA.) Th e American electorate’s propensity to produce divided government, with diff erent parties controlling the three elected branches, heightens the transaction costs of getting legislation approved. Other fea- tures of the policy process also make it hard to translate simple majority preferences into law. By mandating that each state has two senators, the Constitution ensures that less populous states have outsized infl uence. Moreover, the growing use of the fi libuster in the Senate enables a minority of 41 to block legislation. When Congress passes a law that relies on the states to implement it, policymakers at that level of government may decline to participate (e.g., as in the ACA’s Medicaid expansion) or otherwise drag their feet.

Given this context, major policy breakthroughs in the expansion of health insur- ance have occurred during rare and fl eeting moments of one-party dominance. When Medicare and Medicaid won approval in 1965, Lyndon Johnson was president and Democrats held a 68 to 32 majority in the Senate as well as a 295 to 140 margin in the House. Similarly, the ACA was passed during a period in which the Democrats con- trolled the White House, had a 256 to 178 majority in the House of Representatives, and with the help of Independents, had the 60 votes in the Senate needed to surmount a Republican fi libuster.

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Although America’s balkanized institutions have often impeded movement toward universal health insurance, incremental policy changes expanding public cov- erage have frequently occurred. During the last half century, Congress has repeatedly approved amendments to Medicare and Medicaid. At times, federalism has also been catalytic (Brown & Sparer, 2003). When the federal government has failed to expand insurance coverage, several states have acted. Bottom-up policy diff usion has occa- sionally occurred as policymakers in the nation’s capital learn from state initiatives and refashion federal policy. Incremental or other changes in policy depend heavily on the presence of political brokers in Congress who can forge compromises among poli- cymakers and assemble the coalitions needed to legislate. To the degree that partisan polarization occurs and elected offi cials see compromise as a form of selling out one’s principles, the prospects for congressional gridlock increase appreciably.

Th ird, implementation is a critical part of the policy process, markedly aff ecting who gets what from federal health programs. Assessments of policy processes have often focused on the dance of legislation—how a bill becomes law. In fact, however, highly discretionary decisions made by administrative agents during the implementa- tion process also shape the outputs and outcomes of federal health programs. Th ese agents include top offi cials in federal and state bureaucracies, key private contractors, health care providers, and countless others. Th e importance of implementation partly refl ects the propensity of Congress to delegate ever more authority to the executive branch (e.g., Epstein & O’Halloran, 1999). Th e ACA serves as a case in point. By late 2013, the Obama administration had published more than 70 formal rules related to the ACA under the Administrative Procedure Act and issued scores of interpretive guidelines (Rosenbaum, 2013). Th ese actions did much to fi ll in the blanks left by the original law, such as whether the federal government or the states would defi ne the exact essential health benefi ts off ered on the insurance exchanges.

Myriad interest groups and other stakeholders employ various strategies to infl u- ence administrative decisions. At times implementation becomes a partisan battle- fi eld with heavy congressional involvement. In this vein, Republicans in Congress have repeatedly attempted to defund and otherwise obstruct the implementation of the ACA. Congress, for instance, turned down the Obama administration’s request to provide additional funds to help enroll people in the federal insurance exchanges. Sec- retary of Health and Human Services Kathleen Sebelius responded by seeking grants and contributions from the private sector to support the work of a nonprofi t organiza- tion called Enroll America. House Republicans denounced her initiative as illegal and called for an investigation. Th ey insisted that navigators working to expedite ACA enrollment take time out to fi le lengthy reports about their activities. Meanwhile, Republican policymakers in some states enacted certifi cation and training require- ments for navigators that hindered their deployment (Th ompson & Gusmano, 2014).

Fourth, the establishment of health programs reconfi gures policy subsystems and broader political factors in ways that aff ect program durability. Once enacted, pro- grams vary in the degree to which they become publicly popular and generate political

Although America’s balkanized institutions have often impeded movement toward universal health insurance, incremental policy changes expanding public coverage have frequently occurred.

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support from interest groups and other stakeholders (Patashnik & Zelizer, 2013). Dura- bility connotes a political strength that allows a health program to resist retrenchment, erosion, or termination. Construed broadly, the concept also characterizes the degree to which a program evinces accretion, growth, and enhanced eff ectiveness (i.e., pro- vides more high-quality services with improved health outcomes). After enactment, some health programs have eroded or died. In 1988, for instance, Congress passed the Medicare Catastrophic Coverage Act to provide prescription drugs to seniors. Th e law increased premiums on Medicare enrollees, especially those with higher incomes, to fund the initiative. Many Medicare enrollees objected to these premium hikes, and public support for the new law plummeted. A year later Congress voted to repeal it. In contrast, over time Medicare and Medicaid have generated supportive policy feedback that has helped these programs become major pillars of the American health insur- ance system. To illuminate expansionary policy processes, we shine the spotlight on Medicaid.


Medicaid has often been seen as a down-at-the-heels second cousin to Medicare, highly vulnerable to program erosion. In part this pessimism refl ected the fact that the program served welfare recipients—a stigmatized, politically weak clientele. It also emanated from the view that states, engaged in interstate economic competi- tion to attract business and keep the lid on taxes, would severely limit spending on a redistributive program like Medicaid. In fact, however, Medicaid expenditures and enrollees have grown by leaps and bounds over the decades. Although many reformers thought the program would fade away with the coming of national health insurance, it instead became a key component of the ACA. Th e surprising story of Medicaid’s rise can be traced through four historical periods, each of which highlights certain policy dynamics.

Welfare Medicine and the Incremental Politics of Long-Term Care (1965–1980)

Working with President Johnson, Representative Wilbur Mills (D-Arkansas) bro- kered an agreement leading to Medicaid’s birth in 1965. Concerned that states might drag their feet in expanding Medicaid coverage to the uninsured, the original legisla- tion required participating states to make a “satisfactory showing” in the “direction of broadening the scope of . . . care” and “liberalizing the eligibility requirements” by 1975 (Rose, 2013, p. 48). As Mills expected, most states did not rush to estab- lish generous Medicaid programs. What Mills failed to anticipate, however, was the degree to which a few states would move apace to extend Medicaid coverage to great segments of their populations (45% in the case of New York). Now concerned about potential runaway costs, Mills and other policymakers moved in 1967 to constrain the number of Medicaid enrollees by prohibiting states from creating income eligi- bility levels that exceeded 133% of the states’ AFDC levels. Hence, Medicaid more explicitly became “welfare medicine” serving the families of unemployed mothers on cash assistance. In 1972, Congress took another step to curb growth by repealing the provision that had required states to expand Medicaid services and eligibility (Rose, 2013, p. 63).

Soon, however, other policy dynamics fueled Medicaid’s expansion. From 1968 to 1972, federal and state Medicaid outlays nearly doubled (infl ation-adjusted dollars) as

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49 states gradually signed up for the program.1 But Medicaid growth persisted beyond this start-up period, with outlays increasing by nearly 60% in constant dollars from 1972 through 1980. Th is latter growth substantially refl ected an “unchecked” policy incrementalism that greatly enlarged Medicaid’s role in providing long-term institu- tional care for the elderly and people with disabilities (Smith & Moore, 2008, p. 134). Th is incrementalism featured members of Congress approving a series of amend- ments, largely in response to lobbying by state offi cials. Each amendment appeared to be minor and attracted little public attention; minimal consideration was given to its potential cost. But in the aggregate these measures planted the seeds for rapid Medicaid growth.

Th e original Medicaid statute required participating states to provide skilled nursing home care. Medicaid’s founders had envisioned that this care would have a substantial medical component and not extend to those who principally needed “custodial services” (such as the mentally ill and those with intellectual disabilities housed in state institutions). In 1967, however, Congress gave states the option to obtain Medicaid funds to serve people in intermediate care facilities (ICFs), which were more custodial than skilled nursing homes. Subsequent amendments in the early 1970s made ICFs serving the “mentally retarded” and psychiatric hospitals housing the mentally ill eligible for Medicaid payment. Policymakers in many states welcomed these measures as a source of fi scal relief. Whereas in the past states had to spend their own monies to assist people with disabilities, they could now obtain a hefty federal subsidy to do so.

The Triumph of Congressional Entrepreneurship (1981–1992)

Th is period highlights the role of the policy entrepreneur in defending and expand- ing Medicaid. Policy entrepreneurs can be “in or out of government, in elected or appointed positions, in interest groups or research organizations. But their defi ning characteristic, much as in the case of a business entrepreneur, is their willingness to invest their resources—time, energy, reputation, and sometimes money—in the hope of a future return” (Kingdon, 1984, p. 129). Few, if any, examples of policy entrepre- neurship by a member of Congress exceed that of Representative Henry Waxman (D-California) during this period.

Ronald Reagan’s arrival in the White House and the Republican takeover of the Senate in 1981 unleashed a concerted attempt to revamp and retrench Medicaid. Rea- gan’s successor, Republican George H.W. Bush, also sought to pare the program. When the dust settled, however, Waxman not only had fended off these retrenchment initia- tives; he had also laid the foundation for substantial Medicaid growth. Th roughout the period, Democrats enjoyed substantial majorities in the House of Representatives, with Waxman chairing a subcommittee overseeing Medicaid. In this position, he skill- fully exploited his role in the budgetary process to bolster the program. Space does not permit an exhaustive listing of the many Medicaid measures Waxman helped to engineer, but two examples capture the fl avor of his eff orts. In 1981, when the Rea- gan administration was laying siege to Medicaid, Waxman played a signifi cant role in establishing Medicaid’s Disproportionate Share Hospital (DSH) program (Smith

1 Data on Medicaid expenditure growth primarily come from the Offi ce of the Actuary, Department of Health and Human Services. Calculations are based on constant 2012 dollars. See www.cms/Research-Statistics-Data-and- Systems/StatisticsTrendsReports/NationalHealthExpendData/NationalHealthAccounts.html

P a r t I . H e a l t h P o l i c y 46

& Moore, 2008, pp. 168–169). Under the DSH program, states could direct monies to hospitals that served uncommonly high numbers of the uninsured and Medicaid enrollees. Soon, certain states rushed to obtain subsidies for these hospitals, and DSH program spending grew rapidly to account for over 11% of Medicaid outlays by 1992 (Gusmano & Th ompson, 2012, pp. 156, 161). So, too, Waxman worked with southern Democratic governors to expand eligibility for Medicaid. He secured passage of legis- lation that required all states to cover children younger than age 6 years and pregnant women with incomes up to 133% of poverty, and to phase in coverage for all poor children from 6 to 18 by 2002.

In part refl ecting Waxman’s policy entrepreneurship, federal and state Medicaid spending grew substantially between 1981 and 1992: by 16% during the fi rst term of the Reagan administration, by 27% in its second term, and by a whopping 66% under President George H.W. Bush (infl ation-adjusted dollars).

The Rise of Executive Federalism (1993–2008)

Congress continued to play an important role in shaping Medicaid during the Clinton and G. W. Bush administrations. For instance, passage of welfare reform legislation in 1996 and the Children’s Health Insurance Program in 1997 further transformed Medicaid into a program for working families rather than those on cash assistance. On balance, however, the surging importance of the executive branch in policy pro- cesses stands out as the dominant theme of this period. In essence, a pattern of execu- tive federalism emerged under which presidents and their appointees, in cooperation with key governors, facilitated a transformation in Medicaid without congressional approval (Gais & Fossett, 2005; Th ompson, 2012). Th e soaring use of program waivers abetted the rise of executive federalism.

Waivers are a congressional delegation of authority to the executive branch to per- mit states to deviate from the ordinary requirements of law. Medicaid waivers assume two basic guises: demonstrations (Section 1115 of the Social Security Act) and more targeted initiatives focused on long-term care (Section 1915c). Demonstration author- ity gives the federal executive broad discretion to experiment with alternative state approaches to Medicaid. In contrast, the 1915(c) waivers seek to rebalance Medicaid long-term care away from nursing homes and other large institutions toward home and community-based services (HCBS). Before 1993, concerns about the cost neutrality of waivers and other factors undercut federal willingness to approve them. Federal admin- istrators had, for instance, approved about 50 demonstration waivers since Medicaid’s inception and seldom renewed them. Th e Reagan and fi rst Bush administrations had been more willing to sign off on HCBS waivers, but states often found negotiations with the federal bureaucracy over waivers to be arduous and protracted. By 1992, HCBS spending still accounted for only 15% of Medicaid outlays for long-term care.

A pattern of executive federalism emerged under which presidents and their appointees, in cooperation with key governors, facilitated a transformation in Medicaid without congressional approval.

C h a p t e r 3 . G o v e r n m e n t a n d H e a l t h I n s u r a n c e : T h e P o l i c y P r o c e s s 47

Th e arrival of the Clinton administration uncorked an outpouring of Medicaid waivers. Clinton unilaterally initiated administrative measures that made it much eas- ier for states to obtain waivers, and the G. W. Bush administration followed suit. More than 40 states operated some facet of their program under a demonstration waiver by 2008 (Th ompson, 2012). Many of these waivers were comprehensive and transfor- mational. For instance, a bevy of states used them to move Medicaid enrollees into managed care while expanding coverage to new adult populations. Of particular note, negotiations between Massachusetts Governor Mitt Romney (R) over a Medicaid waiver yielded a plan for near-universal coverage in that state in 2006. Th e Massachu- setts model became the template for the ACA. HCBS waivers also proliferated, with about 280 in eff ect by the time the Obama administration took offi ce. Th anks largely to these waivers, HCBS grew to account for nearly 45% of all Medicaid spending on long-term care. Waivers were among the factors leading federal and state Medicaid outlays to more than double during this period (constant dollars).

Health Reform and Contentious Federalism (2009–2015)

Th e 2008 election gave Democrats control of the presidency and Congress, with sub- stantial majorities in both legislative bodies. As in 1965, this fl eeting period of party dominance ushered in a major policy breakthrough. Th us, the story of the policy pro- cess is largely about how Congress passed the ACA and why Medicaid became a key component of the law (primarily because it was cheaper than insuring the poor on the insurance exchanges). It is also a story about the courts. Of particular importance, a Supreme Court decision in 2012 eff ectively made state participation in the Medicaid expansion voluntary rather than required.

Important as Congress and the courts were in this period, themes of executive fed- eralism and unilateral presidential action also persisted. After the 2010 election, grid- lock rooted in a three-decade trend toward partisan polarization sidelined Congress from additional legislative action directed at Medicaid. Republicans, who regained con- trol of the House of Representatives, repeatedly attempted to repeal the ACA, derail its implementation, and eviscerate funding for Medicaid. Faced with deeply entrenched Republican hostility in Congress, the Obama administration relied on executive branch action to get the ACA off the ground. In the case of the Medicaid expansion, the White House needed to persuade Republican policymakers in the states to sign up for the expansion. Th is promised to be a formidable challenge. As 2013 dawned, Republicans controlled the governorship and both houses of the legislature in 24 states. In six of 13 states with divided governments, Republicans occupied the governor’s mansion.

Th e Obama administration pursued several strategies to defuse Republican oppo- sition in the states (Th ompson & Gusmano, 2014). As in the prior historical period, waivers loomed large. Th e ACA provided the executive branch with comprehensive waiver authority starting in 2017. In the meantime, the Obama administration used existing demonstration authority to serve its ends. In this regard, it bent over backward to accommodate states that wanted to enroll new Medicaid enrollees in the insur- ance exchanges or in other market-based arrangements. Th ese alternative approaches to a traditional Medicaid expansion appealed to Republican policymakers in several states. By July 2014, four Republican-controlled states and seven with divided partisan control had expanded Medicaid. In three of them (Arkansas, Iowa, and Michigan) market-oriented waivers facilitated their participation. Meanwhile, two other Repub- lican states, Indiana and Pennsylvania, indicated they would expand Medicaid if the Obama administration approved their market-fl avored waiver requests.

P a r t I . H e a l t h P o l i c y 48


Several factors have interacted over four historical periods to fuel supportive policy feedbacks leading to Medicaid’s growth (Th ompson, 2012). Th ese include Medicaid’s open-ended funding formula, which allows federal and state governments to leverage money from each other when they enlarge the program. Elected policymakers at the state and national levels can take political credit for expanding Medicaid while pay- ing only part of the tab. So too, state offi cials, especially governors, became increas- ingly aware of their stake in the program and, with occasional lapses by Republican governors, formed an intergovernmental lobby to support the program. In addition, a panoply of service providers and other advocates (such as hospitals, nursing homes, managed care organizations, and disability rights organizations) became increasingly dependent on Medicaid and defended the program. Movement over time toward a more positive social construction of Medicaid enrollees has also contributed.2 Medicaid’s image as “welfare medicine” has faded as a shrinking share of its nondisabled enrollees receives cash assistance. Instead, Medicaid has emerged as a program for working people and as a safety net for middle-class individuals who need long-term care for themselves or loved ones due to aging or disability. So too, skilled policy entrepre- neurship by Democrats in Congress, especially during the 1980s and in the politics triggering the ACA’s passage, fueled growth. Th e rise of waivers and executive federal- ism has also played a role. Th e increased willingness of the executive branch to grant these waivers has facilitated state eligibility expansions (most dramatically so-called Romneycare in Massachusetts) and kindled the growth of HCBS. In cooperation with key gubernatorial allies, presidents employ waivers to overcome barriers to adaptation and innovation rooted in the supermajority bias of American governance, especially under divided government and intense partisan polarization.

Th e policy processes that have fueled Medicaid are not, of course, immu- table. Changes in the political stream surrounding the program could precipitate retrenchment. Th is stream includes such factors as the “public mood . . . election results, partisan or ideological distributions in Congress and changes of adminis- tration” (Kingdon, 1984, p. 152). In this regard the growth of partisan polarization, especially the movement of the Republican party to the right, could vitiate Medicaid. It could stiff en the resistance of Republican policymakers in the states to the ACA’s Medicaid expansion. It could also manifest itself if subsequent national elections leave Republicans in control of the presidency and Congress. After taking control of the House of Representatives in 2011, Republicans for two consecutive years passed budget resolutions that would not only repeal the ACA but convert Medicaid to a capped block grant with massively reduced funding. Th e Romney–Ryan ticket ran on this anti-Medicaid platform in the 2012 presidential election. After the reelection of President Obama, Republicans in the House persisted in their eff orts to retrench Medicaid. In 2014, they approved a budget resolution that would convert Medicaid to a block grant and would slash spending on the program (along with CHIP) by 26% over 10 years. Whether a Republican-dominated government would retrench Medicaid—and the degree to which it would do so—remains an open question. However, the growing federal debt and the rise of partisan polarization heighten the risk of Medicaid falling.

2 Public opinion surveys reveal substantial support for Medicaid (e.g., Rose, 2013, pp. 19–20).

C h a p t e r 3 . G o v e r n m e n t a n d H e a l t h I n s u r a n c e : T h e P o l i c y P r o c e s s 49

■ Conclusion

Th e U.S. health system is in the midst of an extraordinary period of transition and transformation. Th e era of the solo physician is disappearing, replaced by larger and larger health systems. Th ere is increasing debate over the best scope of practice for diff erent groups of providers, as more and more nonphysicians (such as nurse prac- titioners and physician assistants) take on greater care responsibility. Th ere are new entrants into the health care marketplace, including some of the nation’s largest com- panies, such as Walmart, Apple, and Google. A major eff ort is underway to change the way we pay for health care services: Th e idea is to encourage value-based purchas- ing and pay for performance, rather than the traditional models that provide a preset fee for each service provided. An increased focus on care management especially tar- gets the high-cost medical patient. Meanwhile, nearly every Fortune 1000 company is implementing its own version of an employee wellness program. Tying together all of these changes is a growing use of health information technology in an eff ort to encour- age better communication between newly connected parts of the system.

All of these changes emerge from the ongoing eff ort to strike a balance among the quality of, access to, and cost of care. Th ose balancing strategies that are conducted within particular organizations are called management. Conversely, those external strategies implemented by government (through laws, regulations, overarching rules) are called policy.

Th is chapter has examined the ways that government sets policy in the health care arena. We began by reviewing government’s growing role as a payer for health care services, primarily as an insurer for many of those not covered by the private coverage system, but also as partial fi nancer (through the tax system) of the cost of private coverage itself. We then looked more closely at the policy process itself, emphasizing four key characteristics: (a) Each health program or problem domain typically has a relatively distinct policy sub- system; (b) the fragmented, supermajoritarian nature of America’s governing institu- tions profoundly aff ects policy processes in the health care arena; (c) implementation is a critical part of the policy process markedly aff ecting who gets what from federal health programs; and (d) the establishment of health programs reconfi gures policy subsystems and broader political factors in ways that aff ect program durability.

In the case of Medicaid policy, these four characteristics have combined to fuel extraordinary and unexpected program growth. In other issue areas, however, policy outcomes look quite diff erent. Given the extraordinary changes now underway in the nation’s health system, the task of the policy analyst and the policymaker could not be more important.

■ Discussion Questions

1. Should the government play a key role in aiding the uninsured, or should market forces reign supreme?

2. How should government fi nance its eff orts to aid the uninsured? 3. How much control should government have over the private health insurance

industry? 4. What is the right division of labor between the diff erent branches of government,

the private sector, and the individual consumer?

P a r t I . H e a l t h P o l i c y 50

■ References

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Blumenthal, D., & Morone, J. (2009). Th e heart of power: Health and politics in the Oval Offi ce. Berkeley, CA: University of California Press.

Brown, L. D., & Sparer, M. S. (2001). Window shopping: State health reform politics in the 1990s. Health Aff airs, 20, 50–67.

Brown, L. D., & Sparer, M. S. (2003). Poor program’s progress: Th e unanticipated politics of Medicaid policy. Health Aff airs, 22, 31–44.

Clemens-Cope, L., Garrett, B., & Hoff man, C. (2006). Changes in employee health insur- ance coverage, 2001–2005. Washington, DC: Kaiser Commission on Medicaid and the Uninsured.

Epstein, D., & O’Halloran, S. (1999). Delegating powers: A transaction cost approach to policy making under separate powers. New York, NY: Cambridge University Press.

Gais, T., & Fossett, J. (2005). Federalism and the executive branch. In J. D. Aberbach & M. A. Peterson (Eds.), Th e executive branch (pp. 486–524). New York, NY: Oxford University Press.

Gusmano, M. K., & Th ompson, F. J. (2012). Safety-net hospitals at the crossroads: Whither Medicaid DSH? In M. A. Hall & S. Rosenbaum (Eds.), Th e health care safety net in a post reform world (pp. 153–182). New Brunswick, NJ: Rutgers University Press.

Holahan, J., & Liska, D. (1997). Th e slowdown in Medicaid growth: Will it continue? Health Aff airs, 16, 157–163.


You are a staffer for the federal secretary of Health and Human Services. The secretary

discusses with you the different ways that states have responded to the Medicaid

expansion in the Affordable Care Act: Roughly two dozen states have adopted the

expansion without much debate or negotiation; a few states, such as Arkansas, have

negotiated special terms for their expanded programs (and are using Medicaid funding

to buy private coverage for benefi ciaries); and still other states, such as Texas, have

simply refused to adopt the expansion. Your assignment is to prepare the secretary

for her upcoming visit to Texas (and her meetings with the governor, the Medicaid

director, and key interest group leaders) by writing a memorandum summarizing the

political and policy dynamics of the proposed Medicaid expansion in Texas. Be sure

your memo addresses questions such as the following:

1. Are the political reasons for not supporting Medicaid related to ideology about the

role of government in health care, or are they more about potential long-run costs

for the state budget?

2. How do the interests of hospitals, which would benefi t from the extra revenue if

Medicaid expands, affect the political and policy debates?

3. What is the role of public opinion in the choices being made by governors?

4. Will states feel differently about this issue over time and if the new insurance law

seems to become a permanent fi xture in public policy?

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Jenkins-Smith, H. C., & Sabatier, P. A. (1993). Th e study of public policy processes. In P.  A. Sabatier & H. C. Jenkins-Smith (Eds.), Policy change and learning. Boulder, CO: Westview Press.

Kaiser Commission on Medicaid and the Uninsured. (2014). Medicaid Moving Forward. Menlo Park, CA: Kaiser Commission on Medicaid and the Uninsured.

Kaiser Family Foundation. (2004). Medicare advantage fact sheet. Menlo Park, CA: Author.

Kaiser Family Foundation. (2010). Medicaid payments per enrollee, FY2007. Kaiser State Facts. Retrieved from http://www.statehealthfacts.org/comparemaptable. jsp?ind=183&cat=4

Kaiser Family Foundation. (2014). Medicare advantage. Menlo Park, CA: Author. Kingdon, J. W. (1984). Agendas, alternatives, and public policies. Boston, MA: Little,

Brown & Co. Marmor, T. (2000). Th e politics of Medicare (2nd ed.). New York, NY: Aldine de Gruyter. Oberlander, J. (2003). Th e political life of Medicare. Chicago, IL: University of Chicago

Press. Patashnik, E. M., & Zelizer, J. E. (2013). Th e struggle to remake politics: Liberal reform

and the limits of policy feedback in the contemporary American state. Perspectives on Politics, 11(4), 1071–1087.

Robert Wood Johnson Foundation. (2007). Th e state of the states. Princeton, NJ: Author. Retrieved from http://www.rwjf.org/fi les/publications/bther/Stateoft heStates2007. pdf

Rose, S. (2013). Financing Medicaid: Federalism and the growth of America’s health care safety net. Ann Arbor, MI: University of Michigan Press.

Rosenbaum, S. (2013, August 6). Federal policy implementation under the Aff ordable Care Act: Six issues whose fi nal resolution awaits, as implementation moves forward [Web log post]. Retrieved from http://healthreformgps.org/resources/federal- policy -implementation-under-the-aff ordable-care-act-six-issues-whose-fi nal-resolution -awaits-as-implementation-moves-forward/

Smith, D. G., & Moore, J. G. (2008). Medicaid politics and policy, 1965–2007. New Brunswick, NJ: Transaction Books.

Sparer, M. S. (1996). Medicaid and the limits of state health reform. Philadelphia, PA: Temple University Press.

Sparer, M. S. (2003). Leading the health policy orchestra: Th e need for an intergovern- mental partnership. Journal of Health Politics, Policy and Law, 28, 245–270.

Th e Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. (2014). 2014 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

Th ompson, F. J. (2012). Medicaid politics: Federalism, policy durability, and health reform. Washington, DC: Georgetown University Press.

Th ompson, F. J., & Gusmano, M. K. (2014). Th e administrative presidency and fractious federalism: Th e case of Obamacare. Publius, 44(3), 426–450.http://www.statehealthfacts.org/comparemaptable.jsp?ind=183&cat=4http://healthreformgps.org/resources/federal-policy-implementation-under-the-affordable-care-act-six-issues-whose-final-resolution-awaits-as-implementation-moves-forward/http://www.statehealthfacts.org/comparemaptable.jsp?ind=183&cat=4http://healthreformgps.org/resources/federal-policy-implementation-under-the-affordable-care-act-six-issues-whose-final-resolution-awaits-as-implementation-moves-forward/http://healthreformgps.org/resources/federal-policy-implementation-under-the-affordable-care-act-six-issues-whose-final-resolution-awaits-as-implementation-moves-forward/

Comparative Health Systems Michael K. Gusmano and Victor G. Rodwin


LEARNING OBJECTIVES o Understand the difference between NHI and NHS systems o Highlight key features and issues in the health systems of Britain, France, Canada,

and China o View the U.S. health system from an international perspective

TOPICAL OUTLINE o Looking abroad to promote self-examination at home o Health system models o NHS and NHI systems compared with the United States o The health systems in England, Canada, France, and China o Provider payment o Coordination of care o Workforce and information technology (IT) o Health system performance o Lessons

health system models health system performance national health insurance (NHI)

national health service (NHS) National Institute for Health and Care

Excellence (NICE)

■ Overview

Public opinion polls regularly fi nd that medical professionals and the public are dissatisfi ed with the system and believe major change is necessary.

Windows can sometimes be mirrors. A look at health systems abroad can enable us to develop a better understanding of our health system in the United States. An interna- tional perspective suggests that the United States has the most expensive health care


P a r t I . H e a l t h P o l i c y 54

system in the world, but unlike other wealthy countries, we fail to provide universal health insurance coverage and experience large inequities in access to primary and specialty care. Health care costs are often a source of fi nancial strain, even bankruptcy, for people with serious illness (Hacker, 2006), and Americans suff er from high rates of mortality that could have been avoided with timely and appropriate access to a range of eff ective health care services (Nolte & McKee, 2012). Th ere is also evidence that the U.S. health care system squanders resources and fails to address many of its population’s health care needs. Not surprisingly, public opinion polls regularly fi nd that medical professionals and the public are dissatisfi ed with the system and believe major change is necessary (Blendon, Benson, & Brulé, 2012).


International comparisons of health care system performance remind us that there are workable alternatives to our current system. Examining other systems provides “the gift of perspective” and helps us to understand our own system “by reference to what it is like or unlike” (Marmor et al., 2005). As Rudolf Klein (1997, p. 1270) explains:

Policy learning . . . is as much a process of self-examination—of refl ecting on the characteristics of one’s own country and health care system—as of looking at the experience of others . . . the experience of other countries is largely valuable insofar as it prompts a process of critical introspection by enlarging our sense of what is possible and adding to our repertoire of possible policy tools. For policy learning is not about the transfer of ideas or techniques . . . but about their adaptation to local circumstances. (emphasis in original)

Th is chapter attempts to provide a better understanding of the U.S. health care system by comparing it to health systems in wealthy countries, which share many characteristics in common, and by contrasting it to China, which is diff erent. Our focus on wealthy nations draws on the experience of those belonging to an organiza- tion based in Paris that studies economic trends and policies and collects health data from member nations—the Organisation for Economic Co-operation and Develop- ment (OECD). We pay special attention to England,1 which operates a national health service (NHS), and to Canada and France, which have national health insurance (NHI) systems. Our focus on China is an example of so-called BRIC nations (Brazil, Russia, India, and China) with large populations that have benefi ted from rapid economic growth over the past two decades and now are demanding access to state-of-the-art medical care.

Although England’s NHS is one of the most public systems in the world, it also allows opportunities for private hospitals, private practice, and private insurance for those who prefer such options. Canada is frequently compared with the United States because of its physical proximity and similar political culture; until the mid-1960s, Canada’s health care fi nancing and delivery systems were nearly identical to those in the United States (Marmor et al., 2005). France’s health system also shares many

1 We focus on England, the largest constituent country within the United Kingdom because there are important diff erences among the NHS in Scotland, Wales, and Northern Ireland.

C h a p t e r 4 . C o m p a r a t i v e H e a l t h S y s t e m s 55

features with the U.S. health system. Like the United States, France relies on a mul- tipayer system for fi nancing care and off ers a mix of public and private providers for delivering health care services. French citizens also enjoy freedom of choice among providers—to an even greater extent than Americans. Th e French experience (Rodwin & Contributors, 2006) suggests that it is possible to achieve universal coverage with- out adopting a single-payer NHI system, such as Canada’s, or an NHS, as in England. China off ers a more striking contrast to the United States. Despite its rapidly grow- ing economy, China’s national investments in public health and medical care are far smaller than those of OECD nations, and out-of-pocket payments represent roughly half of all health care expenditures. We conclude the chapter with some lessons of comparative experience for U.S. policymakers.

■ Health System Models

NHS systems, such as those in the United Kingdom, Sweden, Norway, Finland, Denmark, Portugal, Spain, Italy, and Greece, may be traced back to Lord Beveridge, who wrote the blueprint for the English NHS immediately after World War II. Although such systems are characterized by a dominant share of fi nancing derived from general revenue taxes, this does not preclude other forms of fi nancing. For example, the rela- tive size of private fi nancing and provision is much higher in Italy and Spain than in Sweden or Denmark. In England, 76% of NHS funding comes from general taxation, 18% from a payroll tax, and the remainder from private payments (Th omson, Osborn, Squires, & Reed, 2012, p. 33). Historically, NHI systems have had a more open-ended reimbursement system for health care providers, but this distinction is blurring as NHI systems are increasingly under pressure to operate within budget limits.

NHI systems may be traced back to Chancellor Otto von Bismarck, who established the fi rst NHI program for salaried industrial workers in Germany in 1883. With the exception of Canada, whose dominant share of fi nancing is from general tax revenues, these systems are characterized by payroll tax–based fi nancing. In addition to income taxes, about a quarter of Canada’s federal spending on health care comes from corpo- rations. Th e provinces also supplement income and corporate taxes with additional sources of funding, such as sales, tobacco, and alcohol taxes. As with NHS systems, NHI systems are characterized by signifi cant variation in their fi nancing and organizational arrangements. For example, the share of French health care expenditures fi nanced from general tax revenues has increased beyond 40% (Rodwin & Contributors, 2006).

Whether one’s image of a health system is private and market-based, as in the United States and Switzerland; public and government-managed, as in the United Kingdom and Scandinavian nations; or at some intermediary point along such a con- tinuum, as in France and Canada; it is possible to make some useful distinctions with respect to the public versus the private provision of health care and methods of fi nanc- ing of health services. Table 4.1 classifi es health systems along these dimensions.


Th e arrangements for providing health care in Table 4.1 distinguish whether health services are delivered by the public, private not-for-profi t, or private for-profi t sector. Within these categories, many distinctions may be added. For example, some publicly

P a r t I . H e a l t h P o l i c y 56

capitalized organizations (row A) are national (VHA), others are subnational (state mental hospitals), and many are local (municipal hospitals). Likewise, the not-for- profi t category may include a variety of quasi-public organizations, such as hospital trusts in Britain (row B). Th e for-profi t form of provision (row C), a distinctive sub- category in the United States, includes private for-profi t hospitals and managed care organizations (MCOs) that sell ownership shares to investors through stock markets. Indeed, the growth of large investor-owned MCOs distinguishes the United States from most other OECD nations.


Th e four methods of raising revenues to pay for health services correspond to columns A through D:

■ A: General revenue fi nancing through the fi scal tax system ■ B: Compulsory payroll tax fi nancing through the Social Security (payroll tax) system ■ C: Voluntary premiums assessed by private health insurance companies ■ D: Individual out-of-pocket payments

Th ere are, of course, other methods and sources of fi nancing, particularly for capi- tal expenditures, such as direct employer contributions and philanthropic funds. But these are no longer dominant sources of health care fi nancing.

Although all countries rely on these four sources of revenue to fi nance health care services, most developed countries have adopted one of two distinct models for fi nancing care. In NHS systems, the government uses its resources to operate most, if not all, of the delivery system. In NHI systems, revenue is most often raised through payroll taxes to fund a social insurance program that reimburses health care providers for services rather than paying for health care directly through the government’s budget.


P r o v i s i o n F i n a n c i n g

Government Social Security/NHI Private Insurance Out-of-Pocket


Government Owned 1 2 3 4


Private Nonprofi t/

Quasi-Government 5 6 7 8


Private For-Profi t 9 10 11 12


C h a p t e r 4 . C o m p a r a t i v e H e a l t h S y s t e m s 57

In contrast to England, Canada, and France, China and the United States rely, to varying degrees, on subnational and local governments to fi nance health care. In Canada, provinces and territories administer universal health insurance programs and the federal government provides block grants that account for approximately 20% of health care expenditures. To qualify for the federal funds, provincial and territorial health insurance systems must meet fi ve criteria specifi ed by the Canada Health Act of 1984. Th ey must be (a)  administered on a nonprofi t basis by a public authority; (b)  comprehensive in the sense that they must cover most health services provided by hospitals, medical practitioners, or dentists; (c) universal in that all legal Canadian residents are covered; (d) portable so that coverage for all residents in each province or territory is transferable to all other parts of Canada; and (e) accessible, although “reasonable access” is not defi ned in the law.

In 2009, China adopted a reform that seeks to provide health insurance for all of its population. Although China already provides some minimal health insurance to the majority of its population, coverage remains extremely limited and, as we noted earlier, more than half of all spending on health care still comes from out-of-pocket payments (Table 4.1, column D). In terms of public funding for health care, China relies—to an even greater extent than Canada—on subnational government revenues to fi nance the country’s three national health insurance funds.

Below the national government, China has provincial, regional, and local govern- ments. By the mid-1990s, these subnational government authorities fi nanced 80% to 90% of total government spending on social services, including health care (Hipgravel et al., 2012). Th e adoption of health reform has increased central government con- tributions to health care, but local government taxes and out-of-pocket payments from individual patients still represent the two largest sources of revenue. As of 2012, provincial and local government revenues fi nanced 78% of health care expenditures (Fabre, 2013). Th is approach has exacerbated the large economic disparities between the wealthier coastal provinces and the poorer rural provinces in western China. Th e national government has attempted to address the country’s rural–urban disparities, but with limited success (Jian, Chan, Reidpath, & Xu, 2010).

■ NHS and NHI Systems Compared With the United States

Table 4.1 enables one to highlight key features of NHS and NHI systems and to adopt an international perspective on the U.S. health care system. Th e most strik- ing diff erence between the United States and NHS or NHI systems is that the United States—even after passage of the Patient Protection and Aff ordable Care Act of 2010 (ACA)—includes large elements of fi nancing that are based on actuarial principles whereby private insurance premiums (column C) are set with respect to estimated risk. In contrast, in NHS and NHI systems, most health care fi nancing is based on ability to pay (columns A and B). Ability-to-pay criteria lead to wealthier, younger, and healthier individuals paying disproportionately to fi nance the care of poorer, older, and sicker individuals. Aside from this important distinction, a look at box 1 through box 12  suggests that most health care systems have elements of many boxes ranging from socialized medicine (box 1) to out-of-pocket payment for private practitioners and hospitals (box 12).

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Th e United States has neither an NHS nor an NHI system. Instead, the U.S. health care system relies on a patchwork of public and private insurance with large gaps in coverage (see Chapter 3). Its enormous pluralism exhibits components of its health system within each of the boxes in Table 4.1. It uses a social insurance system for older people and for those with permanent disabilities (Medicare: columns A and B); a social welfare system for some people with low incomes (Medicaid and CHIP, column B); and a subsidized employer-based private health insurance system for a large, but shrinking percentage of salaried employees in the private and public sectors (column C). Along with its public and private insurance programs, the United States has ele- ments of socialized medicine (publicly funded and provided programs in box 1), such as the military health care system, the Veterans Health Administration (VHA) system, and the Indian Health Service (IHS) for Native American and Alaskan Native people.

■ The Health Systems in England, Canada, France, and China

After World War II, governments have gradually extended their role in the fi nancing and provision of health services.

Beyond the diff erences we have noted between NHI and NHS systems, these systems have evolved in similar directions. After World War II, governments have gradually extended their role in the fi nancing and provision of health services. What was once largely the responsibility of the family, philanthropy, religious institutions, employers, and local governments has largely been taken over by national and subnational gov- ernments—a trend that has accompanied the rise of the welfare state (de Kervasdoué, Kimberly, & Rodwin, 1984). Th is evolution has aff ected all wealthy OECD nations and, increasingly, BRIC and less developed nations. Th e U.S. reliance on employer-based private health insurance—even after the implementation of the ACA—is an important contrast to NHI and NHS systems. Yet even in the United States recent decades have seen an expansion of public insurance and a decline in employer-based coverage.

Th e growth of government involvement in health systems has characterized OECD nations during the great boom years of health sector growth (1950s and 1960s), when governments encouraged hospital construction and modernization, workforce training, and biomedical research. It continued in the 1970s, when the goals of OECD countries shifted more in the direction of rationalization and cost containment (Rod- win, 1984). In the early 21st century, public and private health insurance has become the dominant source for funding health care, and public expenditure on health care services, along with education and Social Security, has become one of the largest cat- egories of social expenditure as a share of gross domestic product (GDP).

In contrast to these trends in OECD nations, by the end of the 1970s China moved from a health system dominated by public fi nancing to one that is now dominated by private, out-of-pocket payments. Between 1949 and the early 1980s, the Chinese health system was fi nanced largely by the central government and state-owned enter- prises ( Valentine, 2005). In 1978, Deng Xiaoping called for market reforms. Th e cen- tral government reduced its share of national health care spending from 32% to 15%

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(Blumenthal & Hsiao, 2005). It slashed subsidies to public hospitals and introduced market mechanisms in health care, resulting in rapid growth of out-of-pocket pay- ments and income-based inequities.

By the late 1990s, Chinese offi cials increased investment in public health to address growing disparities between rural and urban areas. Eff orts to improve the public health and primary care systems accelerated after the outbreak of SARS in late 2002. By the end of 2003, more than 5,000 people were infected with SARS and 349 people died (Smith, 2006), thus exposing the weaknesses of the public health system. Since 2009, China has continued to expand the role of government through the cre- ation of new public insurance schemes and the adoption of new public health regula- tions (Wang, Gusmano, & Cao, 2011).

In addition to the growth of government’s role in health care, most OECD nations must confront common challenges and exhibit distinct approaches for many issues. We illustrate how this is so by comparing the health systems of England, Canada, France, and China with respect to (a) provider payment, (b) coordination of care, (c) workforce and IT, and most importantly, (d) health system performance.


All countries rely on multiple methods for paying physicians and hospitals. NHS sys- tems traditionally have relied more on salaried and capitation forms of payment for physicians and budgets for hospitals. In the English NHS, about two thirds of general practitioners (GPs) and dentists work as independent contractors reimbursed through a blended payment system, 75% from capitation payment and most of the rest (20%) from fee-for-service (FFS) payments based on performance. Since 2012, GPs have been placed in charge of clinical commissioning groups (CCGs), which control about 70% of the NHS budget. CCGs are responsible for purchasing hospital and specialty medical care services for their patients. Th e NHS fi rst introduced a prospective pay- ment system for reimbursing public and private hospitals in 2003 and, in April 2004, phased in a new national tariff system. Since 2012, the NHS has adopted a Payment by Results (PbR) system based on the average cost of providing the procedure or the treatment across the NHS as a whole.

Historically, Canadian primary care physicians have been paid on an FFS basis. Th e Ministries of Health for all provinces and territories are responsible for negotiat- ing an annual physician fee schedule based on a relative value scale (RVS) for each reimbursable procedure or code. Th e RVS may be based on a resource-based fee schedule (RBFS), which tries to capture the inputs required to provide the service, or on historical charges. Studies have found wide variation in fee schedules across Canada (Roth & Adams, 2009). In more recent years, some provinces have experimented with blended capitation schemes in family health networks, family health teams, and family health organizations. Blended capitation relies on age- and gender-adjusted payments, coupled with fi nancial incentives to follow “evidence-based” guidelines and FFS when physicians treat nonenrolled patients (HealthForceOntario, 2014).

In France, physicians in the ambulatory sector and in private hospitals are reim- bursed on the basis of a fee schedule negotiated among physician associations, NHI funds, and the government. Approximately 15% of all physicians (and 25% of those in private offi ce–based practice) selected the option to extra-bill beyond the negoti- ated fees that represent payment in full for all other physicians. Th ese fi gures vary by

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specialty, with the highest rates of extra-billing among specialists in comparison to GPs. Physicians who have opted to extra-bill may do so as long as their charges are set with “tact and measure,” a standard that has never been legally defi ned but which has been found, empirically, to represent a 50% to 100% increase to the negotiated fees. Physicians based in public hospitals are remunerated on a part-time or full-time salaried basis, and those in private for-profi t hospitals may bill the NHI based on the negotiated fees.

Before 1984, public hospitals in France were reimbursed on the basis of a ret- rospective, cost-based, per diem fee; after that, they were placed on global budgets that were later gradually adjusted for patient case mix in the 1990s. Private for-profi t hospitals used to be reimbursed on the basis of a negotiated per diem fee; in the 1990s the per diem payments were also gradually adjusted for their case mix. Th e basis for case-based adjustment in France is an adaptation of the U.S. Diagnosis Related Group (DRG) categories known in France as GHM (groupes homogènes de malades). Th e most recent modifi cation was introduced in 2004 (Schreyögg et al., 2006), when activity-based payment (ABP) was introduced to create a level playing fi eld for reim- bursement of acute-care services among public and private hospitals. As of 2012, the reimbursement system for public and private hospitals has been completely aligned based on the national ABP tariff s, which take into account each hospital’s historical costs. Th is has resulted in expected activity growth, which in turn, results in down- ward price adjustments because annual hospital costs are constrained by national and regional hospital expenditure targets (Or, 2010).

In China, the expansion of health insurance is changing the nature of provider pay- ment, but by the end of 2013 about half of physician payments to health care providers still came from FFS payments. Subnational governments in China regulate prices in an eff ort to make health care aff ordable and, during the past decade, provincial and local governments, with encouragement from the central government, have introduced such incentives as pay-for-performance based on treatment protocols to improve quality (Yip et al., 2010). Although the central government hopes that the expansion of health insurance will limit hospital reliance on kickback payments from medical device and pharmaceutical companies, such payments continue to be an important source of revenue for Chinese health care providers (Wang et al., 2011).

In comparison to England, Canada, France, and China, the United States pays signifi cantly higher prices for medical care. Although there is a vigorous debate about the factors that drive U.S. health care spending, consensus is emerging that price is the most important factor in explaining why the United States spends so much more than any other health care system in the world (Anderson, Frogner, Johns, & Reinhardt, 2006). Two of the distinguishing characteristics of the U.S. health care system are that the United States does not operate within a budget and does not negotiate prices with providers as aggressively as other countries.

Two of the distinguishing characteristics of the U.S. health care system are that the United States does not operate within a budget and does not negotiate prices with providers as aggressively as other countries.

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All countries suff er from problems of coordination among hospitals and community- based services. Th ey diff er, nonetheless, with regard to the size and nature of their delivery systems. France, for example, has more practicing doctors per 1,000 popu- lation (3.3) than the United Kingdom (2.8), the United States (2.5), Canada (2.4), or China (1.5) (OECD, 2013). France also has more hospital beds per 1,000 population (6.2) than the United States (3.1), the United Kingdom (3.0), Canada (2.8), or China (2.7) (OECD, 2013).

Since its creation in 1948, the NHS has been one of the largest public service orga- nizations in Europe. With more than one million employees, more than 2,500 hospi- tals, and a host of intermediary health care organizations, the NHS poses an awesome managerial challenge (Klein, 2013). Perhaps because Britain has fewer health care resources than most OECD nations, the British have been more aggressive in weed- ing out ineffi ciency than other, wealthier countries. Because the NHS faces the same demands as other systems to make technology available and to care for an increasingly aged population, British policymakers recognize they must pursue innovations that improve effi ciency. But numerous obstacles have arisen: opposition by professional bodies, diffi culties in fi ring and redeploying health care personnel, and not least, the tripartite structure of the NHS, which, since its inception, has created an institutional separation among hospitals, general practitioners, and community health programs. Th is separation is reinforced further by the fact that local authorities are responsible for a great deal of prevention and health promotion, as well as social care, making it diffi cult to integrate hospital and community-based care.

In Canada less separation exists between physicians and hospitals because spe- cialists are paid FFS and work both in community-based practice and hospitals. Hos- pitals are largely private nonprofi t institutions with their own governing boards, but they are almost entirely publicly fi nanced and subject to tight budget constraints. Most community-based physicians must refer their patients requiring diagnostic pro- cedures and testing, as well as more specialized care, to local hospitals, which can lead to extended waiting times for elective procedures and problems in ensuring optimal coordination between hospital specialists and community-based providers.

France also faces problems with the coordination of care between hospitals and community-based providers. Th ere is inadequate communication between full-time, salaried physicians in public hospitals and solo physicians working in private practice. Although GPs have informal referral networks to specialists and public hospitals, no formal institutional relationships exist to ensure continuity of medical care, disease prevention and health promotion services, posthospital follow-up care, or systematic linkages and referral patterns among primary-, secondary-, and tertiary-level ser- vices. Schoen et al. (2012) document that the French health care system is character- ized by poor hospital discharge planning and a lack of coordination among medical providers.

In China, before 1978 the health care delivery system in rural areas was organized by communes, which provided housing, education, and social services, as well as basic medical care. An important feature of the communes’ Cooperative Medical System was the staff of paraprofessionals known as “barefoot doctors”’ (Rosenthal & Greiner, 1982). Most of the barefoot doctors were young peasants who received a few months of training and off ered basic primary and preventive care, including health education.

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If the needs of patients were more complex, the barefoot doctors would refer them to physicians at the commune health centers or, if necessary, to the closest hospital. In urban areas, the health care delivery system relied heavily on so-called fi rst-level hospitals, community clinics with a modest inpatient capacity, to provide ambulatory care.

With the introduction of market mechanisms in the health sector after 1978, the government ended its barefoot doctor program in rural areas, leaving the population in rural China without adequate access to health care services. It also reduced its sub- sidies to state-owned fi rst-level hospitals; forced to become more self-reliant, these hospitals withdrew public health and primary health care services. Some fi rst-level hospitals went bankrupt, and those that survived turned to profi table medical services rather than emphasize primary care and prevention.


Primary care vs. specialty care balance. In most OECD health care systems, at least half of physicians are in primary care. Th e United States stands out, in contrast, because about 70% of physicians are specialists, and only about 30% are in primary care. Th e situation in China is far more dramatic. Only 57% of cities in China had a community-based primary care organization, and more than 40% of the population reports that it does not have convenient access to a primary care center (Wang et al., 2011). In addition, most general practitioners lack additional training after receiving their undergraduate medical education.

Primary care is important because systems with a higher concentration of primary care practitioners improve coordination and continuity of care. Access to an eff ective system of primary care appears to result in higher life expectancy projection at birth, lower infant mortality, lower mortality from all causes, lower disease-specifi c mortal- ity, and higher self-reported health status (Starfi eld, Shi, & Macinko, 2005).

Workforce shortages/surpluses. Concerns about the adequacy of primary care in the United States are reinforced by discussions about the adequacy of the health and social care workforce in the face of rapid population aging (Carrier, Yee, & Stark, 2011). Increases in Alzheimer’s disease and other forms of dementia in particular have raised concerns about the extent to which the health and long-term care systems will have a suffi cient number of physicians, nurses, and other medical professionals to address the needs of an aging society (Warshaw & Bragg, 2014).

Although a shortage of clinicians, particularly in primary care, is the major con- cern in the United States, France, and China, some countries in Europe, particularly England, now wonder whether they may have too many doctors and nurses. Before the global economic crisis began in 2008, many OECD countries adopted policies designed to increase their supply of medical professionals. After the economic slow- down, many countries expressed concern about an “oversupply” of some health care workers (Ono, Lafortune, & Schoenstein, 2013).

Starting in 2000, for example, the English National Health Service adopted a workforce redesign initiative to increase the number of doctors and nurses in the sys- tem, expand the roles of existing professionals, and redistribute responsibilities to rely more on teams of health care professionals. As a result, there is now concern that the country may have too many hospital specialists, but there are persistent concerns that it still does not have a large enough supply of well-trained social care workers,

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particularly for providing home care to older patients (Bohmer & Imison, 2013). Simi- larly, a recent assessment of health care needs in Ontario, Canada, concluded that there will be an aggregate surplus of GPs and specialists in 20 years, even though some specialties and areas may experience shortages (Singh et al., 2010).

Th e push for electronic medical records and other forms of health care IT. Th rough- out the world, policymakers are searching for ways to reduce health care spending while improving the quality of care. Th e use of electronic health records and other forms of health information technology (HIT) are often touted as solutions to these problems. Harvey Fineberg (2012), the president of the Institute of Medicine, argues that over the long term HIT will improve the quality and effi ciency of the health care system. Marmor and Oberlander (2012, p. 1217) dismiss the focus on HIT as a “fad” and suggest that the desire to fi nd a “big fi x” to the problems of cost and quality has led policy makers to embrace technical and managerial solutions, including the adoption of HIT, along with various forms of managed care, health planning, and payment reforms designed to align the incentives of providers and patients with public health goals.

Th is argument supports James Morone’s (1993) thesis that the United States tends to search for a “painless prescription” to the major challenges in health care. Indeed, comparative analysis suggests that such technical solutions to the problems of cost and quality as HIT have had little eff ect on cost or quality in health care and that the United States should focus on more important structural features of other health care systems, such as global budgets, fee schedules, systemwide payment rules, and con- centrated purchasing power.

Advocates of HIT argue that newer developments in the use of so-called big data are more likely to transform medical practice because of their capacity to link infor- mation among many institutions within a health care system. Th ey also argue that the United States has never adopted HIT on a widespread basis, so the failure of previous eff orts to improve quality or lower costs is not suffi cient evidence that HIT cannot contribute to these goals in the future.

It seems plausible to suggest that HIT may be a valuable tool for addressing costs and quality in health care, but its value surely depends on the policy context in which it is used. For England, Canada, and France, HIT may further enhance the effi ciency of resource allocation by providing administrators, providers, and patients with access to better information. In the United States, however, the eff ect of HIT within the context of a fragmented, open-ended fi nancing system may be far more limited. Viewed from this perspective, it is easier to understand the arguments of those who remain skepti- cal of HIT’s importance.


Policymakers and researchers often want to compare the performance of diff erent systems and identify lessons for health policy. Although these eff orts have generated important information, they have often succumbed to the temptation of devising a composite indicator to rank health care systems against one another (Oliver, 2012). Th is practice encourages lavish attention from the media on the search for the best health care system, the new holy grail of performance assessments. Unfortunately, such an approach lacks any eff ort to understand, assess, and compare health care systems in relation to the cultural context, values, and institutions within which performance indicators are embedded.

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Th e study of health system performance by the World Health Organization (WHO) is the most prominent example of the composite indicator approach to the comparative analysis of health systems (WHO, 2000). WHO ranked the health systems of 191 member states based on weighted measures of fi ve objectives: (a)  maximizing population health (as calculated by disability-adjusted life expectancy, or DALE); (b) reducing inequalities in population health; (c) maximizing health system respon- siveness; (d) reducing inequalities in responsiveness; and (e) fi nancing health care equitably.

Although controversial because of its many methodological fl aws and missing data, the WHO report generated tremendous discussion about health system per- formance and the criteria that should be used to assess it (Musgrove, 2003). Some of the controversy generated by the report can be attributed to complaints from coun- tries unhappy with their ranking, but prominent academics also criticized the study for relying on incomplete and inadequate data, as well as on questionable methods ( Williams, 2001).

WHO’s use of DALE as a measure of health status illustrates the problem of using population health status to assess the performance of health care systems. DALE includes causes of mortality that are amenable to health care as well as a host of social determinants of health. As a result, this measure is not “related directly to the health care system” (Nolte & McKee, 2003, p. 1129). Using DALE, life expectancy at birth and infant mortality are inadequate measures of health system performance because the role of health care in improving population health is small compared with interven- tions aimed at social and environmental determinants.

As Bradley and Taylor (2013) argue, one reason the United States performs so poorly on such indicators is because it has failed to invest suffi ciently in education, housing, employment, and other social programs that help to produce and sustain good health. Between those who emphasize the decisive eff ect of social determinants of health and those who focus on access to health care, there is a middle ground: atten- tion not only to the consequences of poor social conditions, but also to barriers in access to what we have called eff ective health care services.

Th ere is a vast literature that measures inequities in access to health care (see Chapter 2). Such studies rely either on comparisons of inputs (e.g., physicians, hospi- tal beds) or on administrative or self-reported survey data to measure service utiliza- tion. An alternative approach attempts to capture the consequences of poor access to disease prevention, primary care, and specialty services—in other words, mortality amenable to health care (amenable mortality). Of course, few causes of death are entirely amenable, or not amenable to health care, and as medical therapies improve even more deaths may be classifi ed as potentially avoidable. Nevertheless, based on an OECD study, this summary provides convincing evidence that the United States is not performing well in comparison to other wealthy nations (Gay, Paris, Devaux, & de Looper, 2011).

Crossnational analysis of trends in avoidable mortality indicate that avoidable deaths have declined much faster over the last three decades than other causes of mortality (Nolte & McKee, 2012). Th is result lends further credence to the validity of avoidable mortality as an indicator for the eff ectiveness of public health interven- tions and medical care. We have used this measure to compare the health systems in megacities located within four of the countries we highlight in this chapter: London, New York, Paris, and Shanghai (Gusmano, Weisz, & Rodwin, 2009).

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Th rough accountable care organizations (ACOs) in the United States (see Chapter 11) and various forms of disease management and integrated service delivery proposals in other countries, health care professionals are being encouraged to think about population, as well as individual, health. Th e eff ort to shift health systems in this direction is a positive development, but if we hope to understand the performance of health care systems and the relationship between health care inputs and health out- puts, it is important to select such indicators as amenable mortality, which are more closely related to the performance of these systems than are broad measures of health such as life expectancy and DALEs.

Th e extensive criticism of WHO’s eff ort to evaluate health system performance has not discouraged other groups from taking similar approaches. Th e Commonwealth Fund has a project designed to identify high-performing health systems within the United States and other wealthy nations. It also draws on more dependable data than WHO’s for its assessments, in part because its scope is more limited and focuses on nations for which population, health, and health system data are more readily available. For example, the Commonwealth Fund supplements many of the same data sources used by WHO with original surveys of patients and primary care providers fi elded by Harris Interactive.

Th e Commonwealth Fund (2014) uses these survey results, along with a host of other data sources, to compare U.S. national averages on health outcomes, quality, access, effi ciency, and equity to “benchmarks,” which represent the performance on these measures “achieved by top-performing groups” (Schoen, Davis, How, & Schoen- baum, 2006). In some cases, the “top-performing groups” are other countries. In other cases, they are regions, states, or health plans within the United States. Despite the more reliable empirical analysis and its contribution to stimulating attention to health care systems abroad, this study’s use of a single national scorecard to evaluate the per- formance of the U.S. health system shares many of the same problems highlighted by WHO’s eff ort to rank health systems on the basis of criteria about which policymakers rarely agree.

Access to services across income groups. An important dimension of health system performance is the extent to which a system provides access to health care services by income group. In contrast to the United States, countries with universal or near- universal coverage enjoy a relatively equitable distribution of primary care visits (Van Doorslaer, Masseria, & the OECD Health Equity Research Group Members, 2004). Lower-income residents of Australia, Canada, New Zealand, and the United King- dom, for example, are  less likely to report barriers to health care than people with below-median incomes in the United States (Blendon et al., 2002). Comparative stud- ies that examine hospitalizations for ambulatory care sensitive conditions (ACSC), a measure of access to timely and eff ective primary care, fi nd that rates are much lower in Canada, England, France, and Germany than in the United States and inequalities in rates of ACSC are smaller in these countries (Billings, Anderson, & Newman, 1996; Gusmano, Rodwin, & Weisz, 2014; Roos, Walld, Uhanova, & Bond, 2005).

A concern often voiced by conservative analysts in the United States is that so- called government-run health care systems, by which they mean both NHS and NHI systems, “ration” care (Goodman, Musgrave, & Herrick, 2004). Because such sys- tems operate within a budget, these analysts claim, they must limit access to spe- cialty and  surgical health care services in ways that are unacceptable. Th is claim is supported by studies that compare access to certain expensive health care services in England and the United States (Aaron, Schwartz, & Cox, 2005). Although there is

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evidence that some expensive technologies, including revascularization and kidney dialysis, are used less frequently in England than in the United States (Gusmano & Allin, 2011), this is not the case with respect to France or Germany. For example, after controlling for need, the use of revascularization (coronary artery bypass and angio- plasty) is comparable in France, Germany, and the United States (Gusmano et  al., 2014).

Even among countries that provide universal coverage there are diff erences in access to specialty services by socioeconomic status. Residents of higher-income neighborhoods in Winnipeg, Canada, a country that strives to eliminate fi nancial bar- riers to care, receive “substantially more” specialty and surgical care than lower-income residents of the city (Roos & Mustard, 1997). In France, Germany, and England, access to some specialty health care services is signifi cantly worse among residents of lower- income neighborhoods ( Gusmano, Weisz, & Rodwin, 2009). Inequalities in access to health care are even greater in BRIC countries and developing nations. Despite remarkable economic growth in recent decades, for example, there are fl agrant dis- parities in access to health care within China.

Cost. As was evident during the debates over the ACA, there is a widely shared belief among American policymakers that a national program providing for univer- sal entitlement to health care in the United States would result in runaway costs. In response to this presumption, nations that entitle all of their residents to a high level of medical care, while spending less on administration and on health care than the United States, are often held up as models. Th e Canadian health system is the most celebrated example. French NHI is another case in point. England’s NHS, although typically considered a “painful prescription” for the United States (Aaron, Schwartz, & Cox, 2005), nevertheless ensures fi rst- dollar coverage for basic health services to its entire population and, as we have seen, spends less than half as much on health care, as a percent of GDP, and approximately one half as much per capita as in the United States (Table 4.2). Huang (2011) expects that China’s total health care expenditures will increase rapidly over the coming decade, but its current spending, as a percent of GDP, is far below the OECD average.

Stories in the media often suggest that pressures from population aging will render existing welfare state commitments, including the Medicare and Medicaid programs in the United States, unsustainable. Despite these concerns, most studies


H e a l t h E x p e n d i t u r e a s a S h a r e o f G D P, 2 0 1 1

United States 17.7%

France 11.6%

Canada 11.2%

United Kingdom 9.4%

OECD Average 9.3%

China 5.2%

Source: Organization for Economic Co-operation and Development (2013).

C h a p t e r 4 . C o m p a r a t i v e H e a l t h S y s t e m s 67

conclude there is no correlation between the percentage of the older population (65  years and over) and health  care expenditures as a percent of GDP. Th e United States, which spends more on health care than any country in the world, is among the OECD countries with the youngest age cohorts. In contrast, Britain, Italy, Sweden, Germany, and France, with older populations than the United States, spend a far lower percentage of GDP on health care. Even if one excludes the United States and examines only the European Union, there is no correlation between population aging and health care spending.

Crossnational analysis of health care expenditure data indicates that, after con- trolling for income, age has little eff ect on national health care expenditures. Prox- imity to death, not age, leads to an increase in health spending (Moon, 1996). An analysis of health spending on older people in Switzerland found that expenditures are concentrated in the last few months of life (Zweifel, Felder, & Meiers, 1999). Although the OECD projects that “age-related spending for the average country will rise by around 6 to 7 percentage points of GDP between 2000 and 2050,” they acknowledge that “part of this pressure is a result of cost pressures from advances in medical technologies, rather than ageing per se” ( Australian Department of the Treasury, 2007).

Price, volume, and technology diff usion are the most important factors that drive health care costs; as noted earlier, however, high U.S. prices explain why the U.S. health care system is so expensive relative to other nations (Anderson et al., 2006). Although Americans spend more than any other nation, health service use in the United States is actually below the median for the OECD on most measures. A study for the McKinsey Global Institute (Angrisano, Farrell, Kocher, Laboissiere, & Parker, 2007), based on four diseases, provides further support for the role of prices in driv- ing up U.S. health care costs. Th e study found that in 1990, Americans spent about 66% more per capita on health care than Germans but received 15% fewer real health care resources.

In addition to understanding the factors that drive health care spending, it is important to confront the question: How much spending on health care is too much? Most health economists argue that there is no right amount of money to spend on health care. Cutler (2007) argues that we should focus less on the level of health care expenditure and pay greater attention to whether the expenditures gen- erate more benefi ts than costs. However, eff orts to adopt explicit economic evalu- ation of health technology provoked controversy in the United States. Th e ACA forbids federal government agencies from using cost as a criterion for making cov- erage decisions. Among the countries compared in this chapter, France, Canada, and England, to varying degrees, all use economic evaluations of health technology to make coverage decisions. In France, economic evaluations of new drugs are rec- ommended but not required (Sorenson, 2009). In Canada, these eff orts are more decentralized than in England, and “only a handful” of technologies are subject to cost-eff ectiveness analysis (Menon & Stafi nski, 2009). In England, NICE focuses on new technologies only and is reputed to be the leading health technology assess- ment agency worldwide.

NICE, established in 1999 in response to growing concerns about variations in the use of new technology, is supposed to meet three primary objectives: (a) to reduce unwarranted variation in prescribing patterns across England and Wales, princi- pally through setting practice guidelines; (b) to encourage the diff usion and uptake

P a r t I . H e a l t h P o l i c y 68

of eff ective health technologies; and (c) to ensure value for money for NHS invest- ment by assessing the cost eff ectiveness of selected interventions. Record increases in NHS expenditures throughout the decade following 2000 were linked to meeting these objectives, particularly in terms of directing spending to facilitate widespread and uniform access to the most cost-eff ective treatments.

NICE prides itself on its transparency, methodological rigor, stakeholder inclu- siveness, consistency, independence from government, and timeliness, all of which appear necessary to secure the legitimacy and eff ectiveness of its recommendations. Since 2003, it has been mandatory for local NHS purchasers and providers to act on all positive recommendations on technology appraisals (i.e., recommendations that specifi c health care interventions be made available in the NHS) within 3 months of their publication.

NICE arrives at conclusions about whether interventions are therapeutically benefi cial and cost-eff ective compared with other relevant alternatives by review- ing a range of available evidence, assembled and synthesized by a publicly funded network of academic institutions. Th e role of social values in the appraisal process is increasingly apparent as NICE reviews complex cases, for instance, on whether select end-of-life cancer drugs be made available to NHS patients despite their off er- ing insuffi cient value for money with respect to conventionally accepted thresholds of cost-eff ectiveness.

Th ere is some evidence that widespread adoption of NICE recommendations for specifi c technologies, particularly cancer drugs and the use of varenicline for smoking cessation, has reduced geographic variations in access to the technologies (Chalkidou, 2009). Also, there is evidence that NICE guidance has increased costs to the NHS, which is not surprising because most cost-eff ective interventions are more expensive than the alternatives. Th is does not bode well for those in the United States who hope that economic evaluation of health technology will contain the growth of health care costs, particularly if assessment eff orts are disproportionately focused on new, expen- sive technologies. Chalkidou (2009) estimates that since its creation, NICE’s decisions have cost more than £1.5  billion a year. In this context, it should be noted that cost containment was never one of NICE’s explicit objectives.

Quality. Th e focus on quality is a relatively recent phenomenon. For many years, the primary concern of most policymakers, particularly in developed countries, was on overcoming fi nancial barriers to the health care system. In 2002, the OECD created the Health Care Quality Indicators (HCQI) project to develop and implement a set of international indicators. Th e project includes representatives from 23 of the 30 OECD nations, as well as a number of international partners, including the Commonwealth Fund, the Nordic Council of Ministers Quality Project, and the International Society for Quality in Health Care (ISQua). Th e project team identifi ed fi ve priority areas for monitoring quality: (a) cardiac care, (b) diabetes mellitus, (c) mental health, (d) patient safety, and (e) primary care and prevention/health promotion. Th e OECD secretariat asked participating countries to identify expert panelists to review potential indicators (Mattke, Epstein, & Leatherman, 2006). Th e panels were charged with reviewing exist- ing indicators rather than developing entirely new measures. Th ey used a consensus process and selected 86 indicators on the basis of relevance—including the extent to which the health system can infl uence the indicator—scientifi c soundness, and fea- sibility. Not surprisingly, the project has identifi ed signifi cant variation in quality as measured by these indicators (OECD, 2010).

C h a p t e r 4 . C o m p a r a t i v e H e a l t h S y s t e m s 69

Some quality indicators, such as leaving a foreign body inside patients during sur- gery, follow directly from the literature on medical errors that can be infl uenced by a health system. Th e relationships between health system quality and other indicators, however, are controversial. For example, higher rates of 5-year survival among patients diagnosed with breast or cervical cancer may refl ect better access to high-quality cancer care. It is possible, however, that these outcomes may refl ect more aggressive eff orts to diagnose patients with cancer and have little to do with the quality of care patients receive. Beyond these conceptual issues, countries continue to struggle with a lack of relevant data for quality monitoring. Even in countries with relatively well-developed health data systems, it is often diffi cult to link data with unique patient identifi ers in ways that allow researchers and policymakers to understand quality of care across dif- ferent episodes of care and diff erent providers (OECD, 2010).

In 2010, the United Kingdom’s coalition government published a white paper entitled Equity and Excellence: Liberating the NHS, which called for the measure- ment of health outcomes based on a number of specifi c indicators. To achieve this goal, England has developed the NHS Outcomes Framework (Secretary of State for Health, 2014) with indicators that will be used to evaluate local health care arrange- ments across fi ve diff erent domains: (a)  preventing people from dying prematurely; (b) enhancing the quality of life for people with long-term conditions; (c) helping peo- ple to recover from episodes of ill health or after injury; (d) ensuring that people have a positive experience of care; and (e) treating and caring for people in a safe environ- ment and protecting them from avoidable harm.

In France the Haute Autorité de Santé (HAS), or National Authority for Health, was established in 2004 as an independent public organization to promote quality of health services through accreditation, certifi cation, and development of practice guidelines. Today, HAS leads the European Network for Patient Safety (EUNetPaS), which has developed a common agenda to promote patient safety. After a contami- nated blood scandal in the early 1990s, the French government established new insti- tutions to conduct disease surveillance and protect the population from unsafe foods, unsafe drugs, and unsafe blood. In addition, France’s Ministry of Health recently initi- ated a small number of aggressive safety campaigns with strong patient involvement, such as one supported by TV spots to improve the use of antibiotics in preventing the appearance of resistant bacteria. Based on a risk-scoring system for surgical wound infections, national prevalence rates of methicillin-resistant Staphylococcus aureus (MRSA) in France declined from 2001 (33%) to 2006 (27%). Th ese results are impres- sive in comparison with other European countries and the United States, where MRSA infections have increased (Degos & Rodwin, 2011).

In 1994, the Canadian government established the Canadian Institute for Health Information (CIHI) to improve its capacity to assess the health care system and to iden- tify standards for health system performance. CIHI maintains 27 databases and clinical

Even in countries with relatively well-developed health data systems, it is often diffi cult to link data with unique patient identifi ers in ways that allow researchers and policymakers to understand quality of care across different episodes of care and different providers.

P a r t I . H e a l t h P o l i c y 70

registries. Th e agency receives funding from the federal (80%) and provincial (20%) gov- ernments ( Marchildon, 2013). In 2004, the federal government adopted a 10-year plan to strengthen health care. Th e plan increased federal health transfers to the provinces by 6%, and the provinces were supposed to place greater emphasis on reducing wait times and improving quality (Allin, 2012). Some of these funds have been used to track and reduce wait times. Th e federal government has also encouraged the use of health technology assessment, clinical guidelines, and best practices to enhance patient safety. Critics argue that despite the increase in attention to quality in individual provinces, Canada lacks a “guiding framework that supports” quality improvement in primary care (Sibbald, McPherson, & Kothari, 2013, p. 2).

In China, the issue of quality is also central to recent policy debates, but their start- ing point is radically diff erent. When the Chinese government reduced its subsidies for health care in the late 1970s, health care organizations and providers often turned to pharmaceutical companies to make up for these lost revenues. Rather than focus on providing primary and preventive care, for example, many fi rst-level hospitals focused on selling drugs to patients (Wang et al., 2011). As a result, these institutions devel- oped a reputation for poor quality, and patients now crowd into larger hospitals and academic medical centers, creating overcrowding problems. Part of the motivation for expanding health insurance in China is to improve the quality of care across the entire health care system (Wang et al., 2011).

Criteria used to evaluate the performance of health care systems—such as access to, cost of, and quality of health care—are often called the “three-legged stool” of health policy. Until recently, however, quality did not receive a great deal of atten- tion. Since the 1970s, researchers, policymakers, and patients have been demanding better information about quality. In the late 1990s, the U.S. Institute of Medicine led the world in calling attention to the importance of this issue, based on a report that uncovered disturbing evidence of problems with safety and quality in the United States (IOM, 1999). In contrast, the SARS epidemic embarrassed the Chinese government and sparked eff orts to improve access to and the quality of care. Finding solutions to such problems has been a challenge because stakeholders cling to existing practices and technologies, data limitations make it diffi cult to measure the quality of care, and fundamental disagreements remain about the meaning of quality and how to measure value for money in health care.

■ Lessons

Based on the experience of NHI and NHS systems in the countries we have examined, we would highlight four lessons for policymakers in the United States:

■ Achieving the goal of universal health coverage requires legislation to make such coverage compulsory.

■ Financing broader insurance coverage in the United States—beyond Medicare and Medicaid—requires increasing government subsidies based on ability-to-pay criteria.

■ Health care systems with universal coverage rely increasingly on economic evalua- tion of health technology as a criterion for making coverage decisions.

■ Containing health care costs has not been achieved without greater reliance than in the United States on price regulation and systemwide budget targets.

C h a p t e r 4 . C o m p a r a t i v e H e a l t h S y s t e m s 71

Th e ACA represents the most signifi cant health care reforms since Medicare and Medicaid in 1965, because it is likely to increase signifi cantly the share of the popula- tion with health insurance coverage and redistribute the burden of health care fi nanc- ing from those who are wealthier, younger, and healthier toward those who are poorer, older, and sicker (see Chapter 3). We would argue that this legislation draws heavily on the fi rst two lessons of comparative experience (the mandate and the move toward ability-to-pay criteria for fi nancing health care), less so on the third (economic evalua- tion of health technology), and ignores the fourth (greater price regulation and budget targets). Th is will bring the United States closer to other wealthy nations in terms of population coverage. Yet the U.S. health care system continues to present some strik- ing contrasts to most other wealthy nations. It remains a patchwork system character- ized by a complex combination of institutions that include an enclave of socialized medicine such as the VHA, a social insurance program (Medicare), and social welfare programs (Medicaid and CHIP); tax-subsidized employer-based private insurance for about one half of the population; and heavy reliance on out-of-pocket payment for the population that remains uninsured, similar to the situation in China, India, and most developing nations.

Th e United States has the highest per capita expenditures; the highest salaries for physicians and other professionals making up the health care workforce; and the high- est aggregate prices for hospitals, physicians’ services, and pharmaceuticals. Despite our drive to innovate and invest in the latest medical technologies, access to high- technology services, as well as to basic primary care services, is highly inequitable compared with other OECD nations—but not with China, which faces not only the usual inequities among populations of diff erent income and educational levels, but also massive inequities among its urban and rural residents, and, within cities, among its registered and migrant populations.

Another way in which the U.S. health care system diff ers from that of wealthy OECD nations concerns the vast range of health insurance products we off er to our population, including the option (following the ACA) of not purchasing health insur- ance, albeit with a fi nancial penalty. Despite the emphasis on choice of insurer many people fi nd themselves confi ned to obtaining health care within restricted provider networks outside of which payment for services often becomes unaff ordable. Th ere is no parallel to this problem in wealthy OECD nations such as England, Canada, and France. In China, choice of too many insurance products is not the problem. Th e situ- ation there is far worse than in the United States because a large part of the urban migrant population is typically excluded from health insurance coverage. Th e prob- lem of internal migrants in China is substantial, but not surprising, for a system that spends only 3.2% of its GDP on health care and has only recently set itself the goal of providing universal coverage.

■ Discussion Questions

1. What are some reasons for studying health care systems abroad? 2. How do NHI and NHS systems compare with the health care system in the United

States? 3. How do most countries with similar levels of per capita income diff er from and

resemble the United States with respect to cost, quality, and access to health care?

P a r t I . H e a l t h P o l i c y 72

4. What can the United States learn from other OECD countries about how to extend health coverage while containing health care expenditures?

5. How can health system performance be measured? Compare the approaches adopted by WHO and the Commonwealth Fund.

6. How are the problems and opportunities diff erent for China than for the United States and other OECD countries?


You are an employee of a think tank in Washington, DC. The director has been asked

to testify before a congressional committee on the following question: In reforming the

ACA, what lessons should the United States learn from relevant experience abroad?

Your job is to write a memorandum that will help the director answer this question. In

writing this memo, you should address the following questions:

1. How can learning from abroad help policymakers engage in a process of self-

examination of health policy at home?

2. What is the difference between NHS and NHI systems?

3. What should members of Congress know about China’s problems and aspirations

in health policy?

4. What lessons from abroad would be most relevant in reforming the ACA?

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Keeping Americans Healthy II

An important theme of this book is that the U.S. health system must accom- plish two key tasks: It must keep people healthy from birth to death as much as is possible, and it must restore health when people are injured or become ill. Part II focuses on this fi rst challenge: promoting and maintaining good health among the entire population.

In Chapter 5, Pamela Russo introduces readers to the emerging fi eld of population health. It  is often said that this fi eld began with a simple question: Why are some people healthy and others are not? Th e chapter explains how health status is mostly determined by how we live our lives and by how the environment (both social and physical) in which we live supports the ability to lead healthy lives. Russo introduces the concept of the social determinants of health, explaining how income, education, housing, and a range of other such factors contribute to our well-being. Th e chapter also considers how public policy infl uences these social determinants of health.

Chapter 6 addresses how the governmental public health system contributes to the health of populations. Although the government plays a key role in fi nancing medical care in the United States, it also is engaged in a wide range of activities focused on preventing illness and promoting healthy living. State governments in particular have important responsibilities for ensuring public health, and in most states there also are public health departments within county or local governments. Laura Leviton, Paul Kuehnert, and Kathryn Wehr explain how public health departments promote health and describe how the public health fi eld is chang- ing, taking on a more active role in ensuring that our communities promote good health among their populations.

Individual choices we make every day have a lot to do with whether or not we maintain our health. Decisions about what and how much we eat, how much we exercise and stay active, how safely we drive, and whether we drink too much alcohol or inappropriately use drugs all shape our health status. Chapter 7, authored by Elaine Cassidy, Matthew Tru- jillo, and C. Tracy Orleans, explains the range of behavioral choices that aff ect health and reviews how medical providers, other health professionals, and public initiatives can help people change unhealthy behaviors. Th e chapter makes clear that the social conditions we face (the focus of Chapters 5 and 6) and the individual choices we make both determine our health status. Also, these two sets of factors interact in that social conditions often aff ect our behavioral choices.

Chapter 8 focuses on the important issue of addressing the health challenges facing the most vulnerable Americans. Th is group includes low-income people, who often do not live in places that make it easy to live healthy lifestyles or to have good access to social and health services. What we term the vulnerable population also includes immigrants and people with signifi cant chronic illnesses. Jacqueline Martinez Garcel, Elizabeth Ward, and

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y78

Lourdes Rodriguez review emerging ideas for improving how our health system serves the most vulnerable in our society.

Th ree of the authors in this section are on the senior staff of the Robert Wood Johnson Foundation, the nation’s largest foundation focused on the health of Americans. Th e Foundation has recently refocused its funding and operational priori- ties to emphasize initiatives that will improve population health across our country. Th e Foundation’s website (www.rwjf.org) is a good source of current information and ideas on this important topic.http://www.rwjf.org

LEARNING OBJECTIVES o Understand the differences between the medical and population health models

of producing health, including the difference between the concepts of health and health care

o Explain how the two models lead to different strategies for interventions to prevent disease and improve health

o Learn about the differential importance of various health determinants o Review the evidence regarding social and physical environmental infl uences on

behavior and on health outcomes o Review the variation in health and life expectancy between counties and between

countries o Describe innovative synergistic approaches that integrate the clinical and popula-

tion models

TOPICAL OUTLINE o The population health model o The medical model o Comparing the medical and population health models o The infl uence of social determinants on health behavior and outcomes o Leading determinants of health: weighting the different domains o Health policy and returns on investment

5 Population Health Pamela G. Russo

KEY WORDS determinants of health gradient integrative models medical model

population health model population medicine reverse causality

■ Context

Th e majority of this book concerns what happens within the walls of health care institutions—hospitals, clinics, physician offi ces, and long-term care facilities. Th e focus in those chapters is on how health care is delivered, fi nanced, managed, and measured for quality and eff ect, and how access to appropriate and safe diagnostic

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y80

and treatment modalities varies across populations. In several chapters, disparities in health care and outcomes are shown to exist among insured, underinsured, and uninsured groups, among diff erent races and ethnic groups, between rural and urban populations, among immigrant groups, and even between men and women.

However, having access to high-quality medical care is not the only factor that leads to disparities in health between diff erent groups, nor are health care and medical services even the most important factors that determine the overall health of a popu- lation. Th is chapter documents the profound infl uences on health that occur outside of the health care system, where the vast majority of people—or patients—spend the overwhelming majority of the time.

Whether people live long and healthy lives is largely determined by powerful social factors such as education, income, racial or ethnic group, and the quality of environ- ments where they live, learn, work, and play. In fact, the eff ects of the systematic diff er- ences in health care are far smaller than the eff ects of the nonrandom diff erences in other determinants of health on a population’s overall health outcomes. Th ese infl uences that are outside the health care system greatly infl uence which groups of people are more likely to become ill in the fi rst place, to be injured, or to die early. Th ese infl uences also help determine people’s health care outcomes once they become sick, injured, or disabled.

■ The Population Health Model

Th e population health model seeks to explain and intervene in the causes of the sys- tematic diff erences in health between diff erent groups (Kindig & Stoddart, 2003). To do so, it analyzes the patterns or distribution of health between diff erent groups of people in order to identify and understand the factors leading to poorer outcomes. Th ese fac- tors are often described as “upstream” causes, in the sense that they infl uence health through a series of pathways that may not be immediately visible (see also Chapter 7).

In addition, population health employs an integrative model, meaning that diff erent factors are highly likely to intersect and combine to produce good or poor health and should be assessed in tandem. Population health scientists use the term “determinants of health” rather than factor or cause, and they use the term “the multiple determinants of health” to describe the determinants that arise from fi ve important domains:

■ Th e social and economic environment—factors such as income, education, employ- ment, social support, and culture (often referred to as the social determinants of health, or SDOH)

■ Th e physical environment, including urban design, housing, availability of healthy foods, air and water safety, exposure to environmental toxins

■ Genetics (and, more recently, epigenetics—the study of gene–environment interactions) ■ Medical care, including prevention, treatment, and disease management ■ Health-related behaviors, such as smoking, exercise, and diet, which in turn are

shaped by all of the preceding determinants

Health is therefore conceptualized as the result of exposure to diff erent patterns of these multiple determinants. Although the determinant categories are listed inde- pendently, they have substantial and complex interactions over the life course of an individual or group.

C h a p t e r 5 . P o p u l a t i o n H e a l t h 81

Some health care outcomes can, in turn, aff ect the determinants; that is, they can have a “reverse causality” eff ect on determinants. For example, whereas social deter- minants such as income have an eff ect on outcomes, the outcome of being unhealthy also can have a negative eff ect on income (Kindig & Chin, 2009).

The population health model is that of a web of causation, in which multiple different infl uences interact to produce good or poor health.

F I G U R E 5 . 1 A G U I D E T O T H I N K I N G A B O U T D E T E R M I N A N T S O F P O P U L AT I O N H E A LT H .








Innate Individual Traits: Age, sex, race, and biological

factors –––

The biology of disease

Living and working conditions may include: • Psychosocial factors • Employment status and occupational factors • Socioeconomic status (income, education, occupation) • The natural and built environments • Public health services • Health care services

Individual Behavior

Social, Family, and Community Networks

Living and Working Conditions

Broad social, economic, cultural, health, and environmental conditions and policies at the global, national, state, and local levels


Source: Institute of Medicine (2003, p. 52). Reproduced with permission from National Academies Press, Copyright 2002, National Academy of Sciences.

Th e population health model is that of a web of causation, in which multiple dif- ferent infl uences interact to produce good or poor health (see Figure 5.1). Over the past 40 years, a signifi cant body of knowledge has developed that demonstrates the profound eff ects of multiple determinants from diff erent domains, as well as the inter- actions among them, their eff ects at diff erent stages in the life course from gestation to old age, and their cumulative eff ects.

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y82

■ The Medical Model

In contrast to the population health model, the medical model hones in on individuals, focusing on the factors that are most immediately linked to the pathophysiology under- lying a person’s disease. It is a reductionist model in the sense that it searches for the mechanisms at the cellular level that explain how specifi c factors produce illness or act as markers of incipient disease. In turn, the therapeutic goal is to fi nd the “silver bullet” that will stop or reverse those mechanisms and thus cure the current medical problem.

Th e medical model frames risk factors as working through disease-specifi c path- ways, and typically analyzes risk factors as if they were independent in statistical modeling. Th e medical model does consider how diff erent biological systems within the individual interact—for example, the endocrine system and the cardiovascular system—but the lens remains focused on the body.

Health care is generally reactive, meaning that it responds to abnormality, disease, or injury, and as a result has been characterized as a “sickness care system” (Evans, Barer, & Marmor, 1994). Health care has traditionally been delivered (and reimbursed) in acute episodes, although the rise of chronic illnesses that require continued care management has led to a more long-term perspective. Historically, the health care system has placed less value on and provided less reimbursement for eff orts to promote health or to prevent illness and injury. Although health care has achieved great strides in diagnosing, treating, and in some cases curing illness and injury, and although new knowledge and technol- ogy are constantly increasing the capacity to preserve life, relieve suff ering, and maintain or restore function, the inexorable increases in U.S. health care spending clearly are not improving Americans’ chances for living long and healthy lives, as shown in Figure 5.2.

F I G U R E 5 . 2





65 0 1000 2000 3000 4000








( Y




5000 6000

R 2 = 0.51

7000 IND






















8000 9000


Source: Organisation for Economic Co-operation and Development (OECD). (2013). Health at a glance. OECD Indicators.

C h a p t e r 5 . P o p u l a t i o n H e a l t h 83

Th e United States is the outlier point on the far right—the highest health care spending—yet Americans’ probability of survival to age 80 is lower than that of other developed countries. Th is marked discrepancy between the highest spending on health care and poorer survival rates is referred to as “the U.S. health disadvantage.” Th e diff erences between the medical and population health models can help explain the reasons for the disparity between the United States and other developed countries, as well as the severe disparities within the United States among diff erent populations.

■ Comparing the Medical and Population Health Models

Consider two examples, obesity and tobacco use, that illustrate the diff erent explana- tory and intervention approaches of the medical model versus the population health model. In the medical model, when an obese adolescent visits a health care provider, the provider will likely take a family history and a diet and physical activity history. Th ese may be followed by laboratory tests to rule out hormonal or other physiological causes for obesity and to check for diabetes and other consequences of extreme over- weight. Interventions are likely to include referrals to nutritionists and recommenda- tions for decreasing calories and increasing physical activity, with regular monitoring. In very serious cases (morbid obesity) or with failure to achieve weight loss through these means, the patient may be referred for bariatric surgery.

The medical model does not ask why an epidemic of obesity has occurred over the past 20 years.

Th e medical model does not ask why an epidemic of obesity has occurred over the past 20 years, or investigate why there are higher rates of obesity in low-income and minority populations, or grapple with the circumstances that make it diffi cult for many patients to comply with medical recommendations for eating less and exercising more.

In contrast, the population health model has identifi ed a wide variety of causes that have worked synergistically—an unintended conspiracy of causes over time—to produce the epidemic and the diff ering patterns of obesity observed among popula- tion groups. Th ese causes could include the following:

■ Higher density in low-income neighborhoods of fast-food restaurants, which off er high-calorie, high-fat, low-nutrient, supersized meals at very low prices

■ Th e presence of vending machines, which sell high-calorie soft drinks as a source of needed revenue, in schools

■ Subsidized school lunches with high caloric and fat content—a result of agricultural policies

■ Th e decrease in physical education classes and near-elimination of recess periods, due to shrinking school budgets and a narrow focus on meeting academic test score requirements

■ Fewer children and adults walking or bicycling to school or other destinations, due in part to the lack of sidewalks, safe pedestrian crossings, and bicycle lanes

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y84

■ Few places to play or walk in urban, low-income neighborhoods, due to unsafe play- grounds, crime, and violence

■ A lack of grocery stores with healthy food options such as fresh fruit and vegetables in many neighborhoods, due to the higher cost and lower profi t margins of these foods

Th ese determinants are all in the social and physical environmental domains, and they strongly limit people’s behavioral choices. It is extremely diffi cult to achieve lasting lifestyle behavioral changes in people who do have the economic resources to join gyms, have child care while they exercise, and aff ord healthier food choices. It is almost impossible to achieve such changes among people for whom healthy choices are out of their fi nancial reach.

In a population health framework, the relevant interventions could include zoning law changes; menu labeling; working with fast-food industries to provide healthier, but low-cost menu options; educational policies that encourage healthy food choices and increased physical activity in schools and after school; and so on. Such interventions are not traditionally considered part of the health arena by adherents of the medical model. Making the healthy choice the easier choice is not always suffi cient; programs to change behavior boost the chances that people will make those healthy choices their default choices. Such programs might include workplace or community programs to encourage physical activity in the form of walking, bicycling, or other exercise, or cooking classes using nutritious, aff ordable, noncalorie-dense foods.

Tobacco use off ers a second example. In the medical model, the focus is on indi- vidual patients who smoke or chew tobacco. Th e solution is framed in individual terms and is geared toward behavioral change through cessation counseling and nicotine replacement options. Success requires having access to providers who support and encourage cessation (see Chapter 7).

In the population health model, the understanding of the problem includes the infl uences of tobacco production, advertising, distribution, and patterns of use in diff erent groups, and the interventions include smoke-free laws, tobacco taxes, and regulation of advertising and marketing. Without doubt, these populationwide policy changes have changed U.S. social norms regarding the acceptability of tobacco use and prompted a dramatic decrease in the rate of smoking.

As with programs to increase physical activity and healthy eating, policy changes to reduce smoking are usually coupled with increases in access to cessation programs at the community level, such as free quitlines and free nicotine patches, which assist smokers to quit. Th e population health model also enables targeting policies toward groups with the highest rates of tobacco use, and it responds to tobacco industry actions to redirect their advertising from the more affl uent smokers who are able to access cessation programs to new, more susceptible markets, including youth, minori- ties, and people in developing countries (Kreuter & Lezin, 2001).

Making the healthy choice the easier choice is not always suffi cient; programs to change behavior boost the chances that people will make those healthy choices their default choices.

C h a p t e r 5 . P o p u l a t i o n H e a l t h 85

■ The Influence of Social Determinants on Health Behavior and Outcomes

Th e medical model is well accepted and respected by health care providers, labora- tory researchers, clinical researchers, and health services researchers. Many people tend to regard medical knowledge as based on the so-called hard sciences, and thus as having greater likelihood of refl ecting the “true” nature of human pathophysiol- ogy. Th e population health model, conversely, requires multiple disciplines to col- laborate and integrate diff erent social science concepts, methods, and data sources with those of the biological sciences. Although few people may doubt that poverty and lack of education are associated with worse health—as the Australian-born population health researcher John Lynch says, population health is the “science of the bleedin’ obvious”—they are not aware of the magnitude of the scientifi c basis underlying these eff ects, the gradients in eff ect, the importance of the interactions, and the biological pathways. Th ey are even less aware of the most eff ective public health interventions.

Th ose who follow the medical model are often surprised that the social science disciplines are just as rigorous as the biological sciences—if not more so—in their analysis of data, their reliance on large longitudinal data sets collected under strict criteria, and their coupling of these with work in tightly controlled experimental set- tings. In fact, signifi cant progress has been made in defi ning the pathways between the social determinants and health—in other words, how these factors “get under the skin”—using a wide variety of research methods, including animal research, neuroim- aging, experimental psychology studies, and a variety of stress-related physiological phenomena involving the cardiovascular, endocrine, neural, and other systems, as well as epigenetics. For a recent, comprehensive review of the research on the interaction between social determinants and human biology, see Adler and Stewart (2010).

Initially, work on health determinants was based on epidemiological fi ndings link- ing morbidity and mortality to socioeconomic status, defi ned by education, income, or occupational status or grade. One of the earliest studies to demonstrate the impor- tance of such factors was Michael Marmot’s Whitehall study, a longitudinal study con- ducted over two decades with results reported throughout the 1970s and 1980s (Evans et al., 1994). Th e British data were especially enlightening because they included a measure of social class, based on occupation, not available in U.S.-based data.

Th e Whitehall study collected extensive information on more than 10,000 British civil servants, from the lowest rung of the income and rank hierarchy to the highest. Marmot found that the likelihood of death was about three and a half times higher for those in the lowest status rank (clerical and manual workers) than for those in the high- est administrative jobs. Mortality rates increased steadily with every reduction in rank.

Such a steady increase is known as a “gradient” in the population health model and a “dose-response eff ect” in the medical model, where it is taken as evidence of a robust relationship between causal factor and outcome. None of the workers in this population were actually poor, and none had high exposure to work-related toxins or other risks in the physical environment. All had access to the British National Health System. Th e gradient in heart disease mortality continued to be present after adjust- ing the data for diff erent rates of smoking, high blood pressure, and high cholesterol. In other words, after controlling for the traditional medical model risk factors, the

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y86

3:1 diff erence in death rate by social class could not be explained away. Marmot and others went on to investigate the role of stress associated with occupational rank.

Over the past 20 years, studies on the stress response have rigorously demon- strated its eff ects on multiple bodily systems in addition to the endocrine system, including the immunological, neural, and cardiovascular systems. Th ese eff ects have been shown in both laboratory and community situations. A wide variety of stressful stimuli have been studied, including social subordination, lack of job control, discrimi- nation, social isolation, economic insecurity, job loss, bankruptcy, and other situations that provoke anxiety. Th e proposed pathway is that such situations result in greater stress, which leads to biological dysregulation, adverse physiological responses, and a common pathway of pathology, including the onset and progression of diseases.

Scientists increasingly recognize that the mechanisms by which social determi- nants act depend on the context in which people encounter stressful events. One area of research focuses on “neighborhood eff ects,” which include the interaction of social and physical environmental determinants; for example, the negative interaction between the physical environment (poor housing, areas of crime and violence, lack of stores with healthy foods, and so on) and social determinants related to poverty.

Recent U.S. data on the links between social factors and health and the wide varia- tions in health among groups come from two reports from the Robert Wood Johnson Foundation Commission to Build a Healthier America (2009), a national, independent, nonpartisan group of leaders who investigated how factors outside the health care system shape and aff ect opportunities to live healthy lives. Th e Commission’s team of researchers compared average life expectancy by county and found signifi cant varia- tions. For example, the average life expectancy in Bennett County, South Dakota, is 66.6  years, compared with 81.3 years in nearby Sioux County, Iowa—a diff erence of almost 15 years. Th e challenge is to understand and address the underlying factors that explain this marked diff erence in mortality rates.

Two of the most predictive factors of life expectancy are income and degree of education. Examination of the relationship between measures of education and income on U.S. life expectancy showed that:

■ College graduates can expect to live at least 5 years longer than those who did not complete high school.

■ Upper middle-income Americans can expect to live more than 6 years longer than poor Americans, signifi cant for national life expectancy because 25% of adults nationwide live in poor or near-poor households. (In 2015, the federal poverty level [FPL] was $20,090 for a family of three.)

■ Middle-income Americans can expect to live shorter lives than those with higher incomes, whether or not they have health insurance.

Th e Commission also examined the relationships between health status, educa- tional attainment, and racial or ethnic group. Th e measure of health status was a self- reported assessment of one’s own health as excellent, very good, good, fair, or poor. Self-reported health status corresponds closely with assessments made by health pro- fessionals. Indeed, among adults studied by the Commission’s research team, those who reported being in less than very good health had rates of diabetes and cardiovas- cular disease more than fi ve times as high as the rates for adults who reported being in very good or excellent health. Highlights of the Commission’s results include:

C h a p t e r 5 . P o p u l a t i o n H e a l t h 87

■ Overall, 45% of adults ages 25 to 74 reported being in less than very good health, with rates varying among states from 35% to 53%.

■ Adults with less than high school degrees were more than two to three times as likely to be in less than very good health than college graduates. Th ere was also a clear gradient in health by educational level.

■ Health status varied across racial or ethnic groups; non-Hispanic Whites were more likely to be in very good or excellent health than were other groups nationally and in almost every state. In some states, non-Hispanic Black and Hispanic adults were more than twice as likely as White adults to be in less than very good health.

■ Analyzing both social factors simultaneously, non-Hispanic Whites had better health status than adults in any other racial or ethnic group at every level of educa- tion. Th e gradient in health by educational level within each racial or ethnic group is shown in Figure 5.3.

Educational attainment may infl uence healthy choices and better health via multi- ple pathways. For example, people with more schooling may have a better understand- ing of the importance of healthy behavior, or higher educational attainment may lead to higher-paying jobs with greater economic security, healthier working conditions, better benefi ts, and increased ability to purchase more nutritious foods and live in a

F I G U R E 5 . 3 G R A D I E N T S W I T H I N G R A D I E N T S .














60.9 57.5










U.S. Overall

National Benchmark



Black, Non-Hispanic

Hispanic Asian American Indian or Alaska Native

Less than high-school graduate High-school graduate

Some college College graduate

P e rc

e n

t o

f A

d u

lt s A

g e s 2

5 – 7 4 Y

e a rs

, in

L e s s T

h a n

V e ry

G o

o d

H e a lt


Other White, Non-Hispanic


Source: Robert Wood Johnson Foundation Commission to Build a Healthier America (2009). Available at www.commissiononhealth.org.http://www.commissiononhealth.org

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y88

safe neighborhood with good schools and recreational facilities. Figure 5.4 demon- strates that behavior and education both aff ect health: At every level of educational attainment, adults who smoke and do not participate in leisure-time exercise are less likely to be in very good health than adults who do not smoke and do get exercise.

Similar to educational attainment, racial discrimination can aff ect health via mul- tiple pathways. A substantial base of evidence exists regarding the eff ect of diff erent policies on both discrimination and health. A variety of policies have combined to maintain or worsen Black–White segregation by neighborhood, despite the civil rights legislation of the 1960s. Segregation determines access to educational and employ- ment opportunities and increases the likelihood of unsafe housing, few places to play or exercise, food “ deserts” with no access to fresh healthy foods, and exposure to vio- lence. Th ere is strong evidence that elimination of residential segregation would com- pletely eliminate Black–White diff erences in income, education, and unemployment, in turn reducing racial disparities in health (Williams & Collins, 2001). Exposure to discrimination in and of itself provokes a physiological stress response in the lab, and chronic discrimination results in toxic chronic stress.

As noted earlier, the population health model calls for integration of the multiple determinants of health, with consideration of both negative and positive interactions among diff erent factors. Th e relationships between socioeconomic status and health are complicated, but the most persistent disparities in health between groups clearly involve the intersection of multiple types of social disadvantages (Adler & Stewart, 2010).

F I G U R E 5 . 4









Less Than High-School


High-School Graduate

Adults without healthy behaviors Adults with healthy behaviors

P e rc

e n

t o

f A

d u

lt s A

g e s 2

5 – 7 4 Y

e a rs

, in

L e s s T

h a n

V e ry

G o

o d

H e a lt


Some College College Graduate


U.S. Overall

National Benchmark





Source: Robert Wood Johnson Foundation Commission to Build a Healthier America (2009). Available at www.commissiononhealth.org.http://www.commissiononhealth.org

C h a p t e r 5 . P o p u l a t i o n H e a l t h 89

Th e fi ve diff erent domains or categories of health determinants, described earlier in this chapter, do not make equal contributions to the health outcomes of popula- tions. Th is is not “new news.” In the 1970s, Th omas McKeown (1976) concluded that improved health and longevity in England over the previous 200 years resulted from changes in food supplies, sanitary conditions, and smaller family sizes, rather than medical interventions. In the United States, John Bunker and colleagues (1995) esti- mated that during the 20th century, medical care explained only 5 of the 30-years of increase in life expectancy, and between 1950 and 1990, when many new therapies were developed for infectious diseases and heart disease, medical care accounted for only 3 of the 7 years of life expectancy increase.

Medical care also can be responsible for increasing mortality rates. A 2000 Insti- tute of Medicine (IOM) report publicized the startling fi nding that medical errors accounted for approximately 2% to 4% of U.S. deaths annually (Kohn, Corrigan, & Donaldson, 2000), which would make medical error the fi fth leading cause of death (Bleich, 2005).

Th ere was a period of time in the 1990s during which medical scientists expected that genetics could explain much of the variation in health between groups and indi- viduals; however, experience to date has not borne out this belief. Current estimates suggest that, although many diseases have genetic contributors, only about 2% of U.S. deaths can be explained by genetic factors alone. On a population level, multiple stud- ies of immigrants show that the patterns of disease and death change from those of the original country to those of the new country over a fairly short time period—again suggesting that genetics plays a relatively minor role in preventable deaths (Evans et al., 1994).

Health behavior (smoking, physical activity, substance abuse, sexual activity, diet, and so on) is considered a major determinant of health in both the medical and population health models. Analysis of data from 22 European countries showed that variations in health disparities could be attributed to variations in smoking, alcohol consumption, and access to care, but that the patterns of determinants of inequality were diff erent for men and women, by country, and by which outcome was measured (Mackenbach et al., 2008).

Th e best weighting scheme to determine the combined eff ects of determinants from diff erent domains depends on the health outcome of interest. Some outcomes will be more dependent on certain determinants than on others. Researchers have therefore estimated the relative contributions of the multiple determinants of health through what are called summary measures of mortality and morbidity; that is, mea- sures that summarize the length and quality of life. Signifi cant progress has been made in accumulating the empirical data that can yield the best approximations of the rela- tive weights of each domain on summary health outcomes.

■ Leading Determinants of Health: Weighting the Different Domains

During the 20th century, medical care explained only 5 of the 30-years’ increase in life expectancy.

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y90

McGinnis and Foege (1993) reviewed the relevant literature from 1977 to 1993 to analyze the leading causes of U.S. deaths. Th ey concluded that approximately half of all deaths in 1990 were due to key nonmedical care factors, led by tobacco use and followed by diet and physical activity. Th ey estimated that about 40% of deaths were caused by behavioral factors, 30% by genetics, 15% by social determinants, 10% by medical care, and 5% by physical environmental exposures. Ten years later, an IOM (2003) analysis revised the 1990 estimate of 50% of all deaths upward to 70% of all deaths being due to key nonmedical care factors. Th e CDC updated the McGinnis and Foege analysis and concluded that smoking remained the leading cause of preventable deaths, followed by poor diet and lack of physical activity (Mokdad, Marks, Stroup, & Gerberding, 2004).

Th e America’s Health Rankings report ranks states in order of overall health status and uses an expert panel to assign weights and attribute causes to four categories of deter- minants: (a) behavior at 36% percent, (b) community environment at 25%, (c) public and health policies at 18%, and (d) clinical care at 21% (United Health Foundation, 2007). Since 2010, there also has been an annual national County Health Rankings report. Th is report ranks the overall health of every county within each of the 50 states and reports the contribution of the multiple determinants of health on each county’s overall health using a population health framework. Health outcomes are viewed as the result of a combined set of factors, and these factors are also aff ected by conditions, policies, and programs in their communities. Th e report is based on a model that compares overall rankings on health outcomes with rankings on diff erent health factors (Figure 5.5).

Th e County Health Rankings report estimates the infl uence on health and lon- gevity of (a) health behaviors at 30%, (b) clinical care at 20%, (c) social and economic factors at 40%, and (d) physical environmental factors at 10%. Th ese rankings dem- onstrate the dramatic amount of variation between one county and another in health outcomes and in health determinants. Th is variation is even greater than the variation in health care expenditures and health care outcomes that has been demonstrated over many years by health service researchers. For example, the premature death rate in the least healthy counties was two and one half times greater than in the healthiest counties.

Th e bottom-line message of the County Health Rankings project is that some places are healthy and others are not, so where people live matters to their health. Th e population health framework enables communities to see which factors are contribut- ing the most to their poor or good health outcomes, and thus choose to act to improve the factors aff ecting health, vitality, and productivity of all community residents.

■ Health Policy and Returns on Investment

In a logical world, the more that is known about the causes of a problem, the more resources would be allocated toward reducing the most important of those causes. In the United  States, two thirds of what we spend on health care is attributable to diseases that are preventable. Yet we invest less than 5% of our more than $2 tril- lion annual health spending on eff orts to prevent illness, whereas 95% goes to direct medical care. Th e population health model shows that only perhaps 10% to 15% of preventable mortality could be avoided by increasing the availability or quality of medical care.

C h a p t e r 5 . P o p u l a t i o n H e a l t h 91

F I G U R E 5 . 5
























Source: University of Wisconsin Population Health Institute (2010). See also http://www.countyhealthrank- ings.org.http://www.countyhealthrankings.orghttp://www.countyhealthrankings.org

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Th e population health model suggests that investments and policy decisions in areas that are not traditionally considered the province of health care are more likely to have a signifi cant eff ect on improving a population’s health than will increased spend- ing on medical services. An excellent review of the challenges and eff ect on health of policies in the areas of education, income transfer, civil rights, macroeconomics and employment, welfare, housing, and neighborhoods is provided in a recent compre- hensive text (Schoeni, House, Kaplan, & Pollack, 2008).

Unfortunately, researchers are only beginning to be able to provide the evi- dence to guide policymakers regarding the comparative eff ectiveness and costs of specifi c investment choices across the fi ve categories of health determinants. Th is lack of cross- sectoral economic evidence stems from complicated issues of interac- tions among determinants, the latency over time of their eff ects, and the absence of robust longitudinal data sets.

Nevertheless, this evidence base is growing rapidly, as shown by research such as that which estimates that correcting disparities in education-associated mortality rates would have averted eight times more deaths than improvements attributable to medical advances between 1996 and 2002 (Woolf, Johnson, Phillips, & Philipsen, 2007). Another example comes from a study by the Urban Institute, which calculated the return on investment for prevention and concluded that an investment of $10 per person per year in proven community-based programs to increase physical activity, improve nutrition, and prevent smoking and other tobacco use could save the coun- try more than $16 billion annually within 5 years. Th is is a return of $5.60 for every $1[invested] (Trust for America’s Health, 2008).

In 2009, the Commission to Build a Healthier America delivered a series of evi- dence-based recommendations to improve health, including the following:

■ Provide high-quality early developmental services and support for all children ■ Fund and design the Special Supplemental Nutrition Program for Women, Infants,

and Children (WIC) and the Supplemental Nutrition Assistance Program (SNAP, also known as food stamps) programs to meet the need of hungry families for nutri- tious food

■ Eliminate so-called food deserts through public-private partnerships ■ Require healthy foods and physical activity in all schools (K–12) ■ Ensure that decision makers in all sectors have the evidence they need to build

health into public and private policies and practices

Th e last strategy underscores the need to consider the health eff ects of policies, programs, and projects in sectors that are not traditionally thought of as aff ecting health. Th is can be achieved through the use of health impact assessments (HIAs) (www.healthimpactproject.org), which have a long history of use in the same countries

The population health model suggests that investments and policy decisions in areas that are not traditionally considered the province of health care are more likely to have a signifi cant effect on improving a population’s health than will increased spending on medical services.http://www.healthimpactproject.org

C h a p t e r 5 . P o p u l a t i o n H e a l t h 93

that have led the way in developing and acting upon the population health model. HIAs have been used in a wide variety of decisions regarding transportation, housing, zoning, and other aspects of the built environment, and more recently have been used to address social policies related to education, labor, criminal justice, segregation, and other areas. HIAs are one of the tools that can be used to bring a health lens to policy, program, and project decisions made in nonhealth sectors, a practice known as health in all policies (HIAP).

Th e recommendations for improving health that come from a population health model are very diff erent from the technological breakthroughs and “silver bullets” hoped for in the medical model. With their broad reach across an entire population or community and their focus on the fundamental causes of illness, population health interventions have the potential to create much greater improvements in the health of Americans than further spending increases for medical services. Th e challenge is to fi nd ways to fi nance population health interventions. Over the past 5 years, a num- ber of innovative methods have been implemented to direct funding to community prevention addressing social, physical, and economic environments. One model is a wellness trust: a fund set aside specifi cally to support populationwide interventions or policies. Funds for a wellness trust can come from a number of sources, such as a tax on insurers or hospitals, as was done in Massachusetts in 2013. Another innova- tion is a variation on social impact bonds as health impact bonds. Capital is raised from private investors to implement community or state prevention interventions, and the resulting health care cost savings are returned to the investors as break-even or profi t. Th ere are a number of health impact bonds in progress, including commu- nity prevention to reduce the incidence and severity of asthma in Fresno, California; improving birth outcomes through the Nurse-Family Partnership in South Carolina; and reducing recidivism among juveniles in the justice system in New York City.

Another funding mechanism receiving wide attention is community benefi ts from nonprofi t hospitals. Since the 1950s, to keep their tax exempt status nonprofi t hospi- tals have owed certain duties to the community. In large part these duties included providing charity care to the medically indigent, but federal regulations were fairly vague. In 2002, the Congressional Budget Offi ce estimated that the tax savings to nonprofi t hospitals were approximately $12 billion, and this brought community ben- efi t under scrutiny. With passage of the Patient Protection and Aff ordable Care Act (ACA), amendments were made to the Internal Revenue Service code that increased the transparency of hospital reporting, required hospitals to perform a community health needs assessment every 3 years with collaboration from public health experts and the community, and obliged hospitals to conduct community health improve- ment activities. Th e last can include community health improvement investments in research, training, and education; certain community- building activities that can be shown to improve health; and community-based health services that are furnished outside of the hospital and are not billable by the hospital. Th ese changes have stimu- lated increased collaboration by many hospitals with public health and community partners, although the degree to which hospitals are committing funds varies widely. A variety of models are being promoted that show the potential for community benefi t to have an eff ect on population-wide health improvement.

Other innovations include the concept of a health dividend, which refers to the opportunity cost of waste in health care spending, estimated at $750 billion per year. If this waste could be eliminated and the funding recaptured, the money could be

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y94

used on population health–enhancing improvements in education, job training, or improvement to the built environment.

Other potential population health fi nancing innovations result from the imple- mentation of the ACA. Th e most signifi cant was the Prevention and Public Health Fund, which is intended to provide stable and increased activities in community health. Th e fund was designed to build from $500 million in fi scal year 2010 to $2 billion per year by fi scal year 2015. As a result, a number of positive programs to improve population health using place-based strategies have occurred, such as Community Transformation Grants. However, the fund also has been used to fi ll gaps in the implementation of health care changes under the ACA, and has been a continual target of those opposed to the health reform act.

Other opportunities have resulted from the ACA, including accountable care organizations (ACOs) and Medicaid waivers and innovation grants. ACOs are essen- tially a network of providers and hospitals that share responsibility for the health care of a set of patients. ACOs provide savings incentives by off ering bonuses when provid- ers keep costs down and meet specifi c quality benchmarks, focusing on prevention and carefully managing patients with chronic diseases. In other words, providers get paid more for keeping their patients healthy and out of the hospital. To do this requires providers and hospitals to work in the community beyond the walls of their institu- tions to ensure better care coordination—and better social and physical conditions for promoting health. Th e Texas Medicaid waiver was constructed such that 5% of the billions of dollars in the waiver was earmarked to support public health interventions that would prevent illness or injury and thus save Medicaid money. Th ese innova- tions, like the ones mentioned previously, must be monitored for their ability to lead to population health improvement interventions and results in order to document their potential as sustainable sources of funding for population health improvement.

■ Conclusion

Th e population health model has been accepted and used as a basis for health policy decisions in Europe, Canada, Australia, and New Zealand for nearly 20 years, and the World Health Organization Commission on Social Determinants made recommenda- tions for implementation in 2008.

Th e United States is fi nally catching up. Recognition of the importance and value of population health science in the United States is demonstrated by numerous types of evidence:

■ Th e very large bibliography of relevant peer-reviewed articles appearing in top U.S. medical and health care journals, as well as books in multiple disciplines

■ National Institutes of Health and CDC funding of multidisciplinary population health research and intervention programs

■ Numerous IOM review committees and reports on the multiple determinants of health

■ Th e IOM roundtable on population health improvement ■ Interdisciplinary population health centers and training programs at premier

universities across the country

C h a p t e r 5 . P o p u l a t i o n H e a l t h 95

■ Th e MacArthur Research Network on Socioeconomic Status and Health, a research working group funded by the MacArthur Foundation, which operated from 1998 to 2010

■ National commissions on population health and prevention, including the Robert Wood Johnson Foundation’s two reports from the Commission to Build a Healthier America

■ Th e annual national County Health Rankings report based on a multiple determi- nants of health framework

Th e population health model is increasingly accepted as a framework for under- standing the multiple determinants of health, with an emphasis on prevention and a strong basis in scientifi c evidence. However, the same term—“population health”— entered the clinical lexicon in 2007 as part of the Institute for Healthcare Improve- ment’s (IHI) Triple Aim initiative. Th is initiative’s three-part goal is (a) to improve the health of the population, (b) to enhance the experience and outcomes of the patient, and (c) to reduce per capita cost of care for the benefi t of communities. Th e Triple Aim initiative’s use of the phrase “population health” has led to some confusion in termi- nology. Noting this confusion, the IHI stated in 2014 that “population health” refers to the broader determinants of health, whereas the Triple Aim refers to “population medicine” as the management of a discrete population in a health care system, health plan, or accountable care organization to improve outcomes.

Th ere is also a great potential for population health strategies to aid medical care providers in improving the outcomes for their patients. As noted earlier in this chapter, population health is not only about primary prevention; the social, behav- ioral, and environmental determinants of health also strongly aff ect patients’ ability and likelihood to carry out medical care providers’ recommendations about chang- ing lifestyle behaviors to reduce potential complications, or to prevent social cri- ses (such as losing a job or becoming homeless) that in turn trigger serious health crises.

As envisaged in the 2003 IOM report on the future of the public’s health, col- laboration among those using the medical, governmental public health, and popu- lation health models would provide a more coherent national approach to health improvement. Such an approach would include a common, integrated set of metrics for determinants and outcomes, would provide sustainable realigned funding, and would result in more strategic and synergistic planning for the actions best suited for improving the conditions needed for all Americans to have the opportunity to lead healthy lives.

■ Discussion Questions

1. Th e general public equates the word “health” with “health care.” Polls asking people about their health typically result in responses about their health care experiences. How do you defi ne health? How would you assess a population’s health if you could ask the people in that population only one question on a survey?

2. Why do some people refer to the health care system as “the sickness care system”? Do you agree or disagree with this term?

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y96

3. Cross-sectional research shows that, on average, people with disabilities second- ary to illness or injury have lower socioeconomic status than people without dis- abilities. How could longitudinal research help to explain whether this is because people of lower socioeconomic status are at higher risk of developing disabilities, or because disability leads to loss of income and thus lower socioeconomic status? In a population health model, how might lower socioeconomic status increase the risk of disability secondary to illness or injury?

4. Th e Commission to Build a Healthier America found that non-Hispanic Whites were more likely to be in very good or excellent health than were other groups nationally and in almost every state. In addition, non-Hispanic Whites had better health status than adults in any other racial or ethnic group at every level of edu- cation, but all groups showed a gradient in health by educational level. What are some of the determinants that are likely contributing to this disparity in health between non-Hispanic Whites and other groups after controlling for diff erent edu- cational levels?

5. It is possible that a community’s County Health Rankings would suggest that the biggest driver of poor health in that community is unemployment. How would you present the case to your nonprofi t hospital board that the biggest commu- nity benefi t contribution the hospital could make would be to join and support an initiative to increase job openings in the community, rather than holding health fairs or off ering educational lecture series?


Recent data show that Americans consume, on average, more than three times the

recommended level of sodium per day in their food and beverages. High salt intake

contributes to high blood pressure and its complications—stroke, heart attack,

congestive heart failure, and kidney failure. In fact, thousands of lives could be saved if

sodium consumption were lowered in people with high blood pressure. Write a memo

for the U.S. Secretary of Health and Human Services about what might be done to

address concerns about the effect of high sodium intake on health. In preparing your

memo, consider the following questions:

1. How might we address this problem in the patient population using the medical

model that a health care provider might use versus a population health model that

a public health offi cial might use?

2. How far can and should governments go in attempting to create a more healthful

environment? Intrinsic to many population health policies is the specter of the

so-called nanny state. In this case, is it necessary for everyone to be exposed to

lower sodium in their bread, in other common foods, and in restaurants, so as to

protect people who have salt-sensitive illnesses?

3. Should manufacturers bear the costs of manufacturing different versions of foods

in order to protect the public’s health? Should they be required to manufacture

healthier foods even if customers prefer the less-healthy versions? Or should they

be liable if they don’t manufacture healthier foods?

C h a p t e r 5 . P o p u l a t i o n H e a l t h 97

■ References

Adler, N. E., & Stewart, J. (Eds.). (2010). Th e biology of disadvantage: Socioeconomic status and health. Annals of the New York Academy of Sciences (Vol. 1186). San Francisco, CA: MacArthur Network for Socioeconomic Health.

Bleich, S. (2005, July). Medical errors: Five years aft er the IOM report. Issue Brief (Th e Commonwealth Fund), 830, 1–15.

Bunker, J. P., Frazier, H. S., & Mosteller, F. (1995). Th e role of medical care in determining health: Creating an inventory of benefi ts. In B. C. Amick III, S. Levine, A. R.  Tarlov, & D. C. Walsh (Eds.), Society and health (pp. 304–341). New York, NY: Oxford University Press.

Evans, R. G., Barer, M. L., & Marmor, T. R. (Eds.). (1994). Why are some people healthy and others not? Th e determinants of health of populations. New York, NY: Walter de Gruyter, Inc.

Institute of Medicine. (2003). Th e future of the public’s health in the 21st century. Washington, DC: National Academies Press.

Institute of Medicine. (2013). Shorter lives, poorer health. Washington, DC: National Academies Press.

Kindig, D., & Chin, S. (2009, June 18). Achieving “a culture of health”: What would it mean for costs and our health status?” Innovation, health, and equity: Taking a systems approach to health and economic vitality. Presentation sponsored by Altarum Institute, Ann Arbor, MI.

Kindig, D., & Stoddart, G. (2003). What is population health? American Journal of Public Health, 93, 380–383.

Kohn, L. T., Corrigan, J. M., & Donaldson, M. S. (Eds.). (2000). To err is human: Building a safer health system. Washington, DC: National Academies Press.

Kreuter, M., & Lezin, N. (2001). Improving everyone’s quality of life: A primer on popula- tion health. Seattle, WA: Group Health Community Foundatio n.

Mackenbach, J. P., Stirbu, I., Roskam, A. R., Schaap, M. M., Menvielle, G., Leinsalu, M., & Kunst, A. E. (2008). Socioeconomic inequalities in health in 22 European coun- tries [Special article]. New England Journal of Medicine, 358, 2468–2481. doi:10.1056/ NEJMsa0707519

McGinnis, J. M., & Foege, W. H. (1993). Actual causes of death in the United States. Journal of the American Medical Association, 270, 2207–2212.

McKeown, T. (1976). Th e role of medicine: Dream, mirage, or nemesis? London: Nuffi eld Provincial Hospitals Trust.

Mokdad, A. H., Marks, J. S., Stroup, D. F., & Gerberding, J. L. (2004). Actual causes of death in the United States, 2000. Journal of the American Medical Association, 291, 1238–1245. (Correction published 2005, Journal of the American Medical Association, 293, pp. 293–294.)

Robert Wood Johnson Foundation Commission to Build a Healthier America. (2009). Beyond health care: New directions to a healthier America. Princeton, NJ: Robert Wood Johnson Foundation.

Robert Wood Johnson Foundation to Build a Healthier America. (2014). Time to act: Investing in the health of our children and communities. Princeton, NJ: Robert Wood Johnson Foundation.

Schoeni, R. F., House, J. S., Kaplan, G. A., & Pollack, H. (Eds.). (2008). Making Americans healthier: Social and economic policy as health policy. New York, NY: Russell Sage Foundation.

Trust for America’s Health. (2008). Prevention for a healthier America: Investments in disease prevention yield signifi cant savings, stronger communities. Washington, DC: Trust for America’s Health. Retrieved from http://healthyamericans.org/reports/prevention08/http://healthyamericans.org/reports/prevention08

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United Health Foundation. (2007). America’s Health Rankings: A call to action for people and their communities. Minnetonka, MN: United Health Foundation.

University of Wisconsin Population Health Institute. (2010). County Health Rankings model. Madison, WI: University of Wisconsin Population Health Institute.

Williams, D., & Collins, C. (2001). Racial residential segregation: A fundamental cause of racial disparities in health. Public Health Reports, 116, 404–416.

Woolf, S. H., Johnson, R. E., Phillips, R. L., & Philipsen, M. (2007). Giving everyone the health of the educated: An examination of whether social change would save more lives than medical advances. American Journal of Public Health, 97, 679–683.

6 Public Health: A Transformation for the 21st Century

Laura C. Leviton, Paul L. Kuehnert, and Kathryn E. Wehr


LEARNING OBJECTIVES o Contrast defi ning characteristics of prevention-oriented public health and

treatment-oriented health care o Describe state, federal, and local authority for public health law, regulation, and

services o Identify how challenges and opportunities are transforming public health

TOPICAL OUTLINE o Who’s in charge of public health? o A healthy population is in the public’s interest o Core functions of public health o Governmental authority and services o A transformation of public health

Association of State and Territorial Health Offi cers (ASTHO)

core functions (assessment, assurance, policy development)

disease prevention (primary, secondary, tertiary)

essential services health impact assessments health promotion

National Association of County and City Health Offi cials (NACCHO)

nongovernmental organizations population health Public Health Accreditation Board

(PHAB) World Health Organization (WHO)

defi nition of health

■ Who’s in Charge of Public Health?

Th is chapter introduces the policies, programs, and practices that constitute public health in the United States. Public health is “what society does collectively to assure the condi- tions for people to be healthy” (Institute of Medicine [IOM], 2002). It is the science, prac- tice, and art of protecting and improving the health of populations. Historically, public health emphasized regulating and improving community sanitation and monitoring envi- ronmental hazards. Over time it greatly expanded its role in documenting and control- ling communicable diseases and encouraging healthful behavior. In the late 20th century,

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many local health departments were the provider of last resort for indigent health care, a situation that is changing with passage of the Patient Protection and Aff ordable Care Act (ACA) in 2010. As the ACA reorganizes activity and channels resources to preven- tion, public health champions are working far beyond the health sector to advocate for a broader set of policies and systems changes to improve and protect health.

We fi rst describe the goals and characteristics of public health that diff erentiate it from medical care treatment, and we outline the core functions of public health. We then describe the complex network of laws, regulations, authorities, and services involved. State, federal, tribal, and local government agencies, often called the infra- structure, have legal authority for the core functions. But champions of public health span many public, private, and nonprofi t organizations. In the concluding section, we describe forces at work to transform public health in the 21st century.


Public health activities aff ect the lives of Americans profoundly, but more often than not these activities are invisible. A thought experiment shows how this works. Imagine waking up and going through your morning routine. You slept 8 hours for a change, because health experts claim that lack of sleep causes stress and other health problems. You wander into the bathroom and brush your teeth—teeth that are still in your mouth and pain-free thanks to regular brushing and fl ossing, adequate nutrition, the fl uoride in your local water supply, and routine dental visits. You rinse your mouth with water that is safe to drink. Before it ever reached your faucet, it was checked for sickness- causing bacteria, heavy metals such as lead (which causes lower intelligence in chil- dren), and chemicals such as polychlorinated biphenyls (which cause cancer). When you fl ushed the toilet, the waste did not get into the water supply where it could kill you.

You get your children ready for school; so far, they have all survived, never hav- ing had measles, diphtheria, polio, or other diseases that killed and maimed so many children in bygone days. Th e kids’ breakfast includes cereal and pure pasteurized milk. You looked at the nutritional label on their cereal and saw that the ingredients included whole grains and not too much sugar. You open the newspaper to see that a new infl uenza strain is spreading, and the authorities have renewed their advisory for hand-washing and travel precautions.

Your sister calls to announce she is going to have a baby! She is not aware that the toast she is eating is fortifi ed with folic acid, the B vitamin that prevents birth defects. Th e couple can have a baby in part because young people in their town had access to comprehensive sex education and family planning—they never had gonorrhea or chlamydia, which can cause infertility.

Th e two of you also discuss your father. He’s over 70 and not in the best health, so he needs to get his fl u and pneumonia shots right away! Th e last time he had fl u, it turned into pneumonia; he went to the hospital and could have died. Both of you are worried about him, because he is overweight, still smokes, and never exercises.

Public health activities affect the lives of Americans profoundly, but more often than not these activities are invisible.

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Is a heart attack, diabetes, or stroke in his future? Th e odds are not in Dad’s favor. Quit-smoking programs are available in the community without charge, so you agree that Dad’s doctor should try suggesting them again. Too bad there are no sidewalks in Dad’s neighborhood; he loves to walk, but there is too much traffi c. Does the senior center have an exercise program that might appeal to him?

You buckle the kids into their safety belts. When you get to your job, you see signs that read: “607 days without an accident at this worksite” and “proud to be tobacco free since 2008.”


Th e responsibility for the public’s health and the infrastructure to make it work are divided among many agencies across all levels of government, and many nongovern- mental organizations, professional associations, and businesses (see Figure 6.1). In

F I G U R E 6 . 1











Elected Officials



Mental Health

Home Health

Community Centers

Nursing Homes

Nonprofit Orgs.

Neighborhood Orgs.

Drug Treatment

Law Enforcement

Tribal Health

Faith Instit.


Public Health Agency

Civic Groups





Community Health




Elected Officials



Mental Health

Home Health

Community Centers

Nursing Homes

Nonprofit Orgs.

Neighborhood Orgs.

Drug Treatment

Law Enforcement

Tribal Health

Faith Institution


Public Health Agency

Civic Groups

Source: Redrawn from the Centers for Disease Control and Prevention, 2013, Th e Public Health System and the 10 Essential Public Health Services http://www.cdc.gov/nphpsp/essentialservices.htmlhttp://www.cdc.gov/nphpsp/essentialservices.html

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our thought experiment, for example, municipal authorities handle waste water, but the federal government regulates chemicals in the water supply. Th e federal govern- ment recommends physical activity for older adults, but senior centers, YMCA, pri- vate gyms, and city departments of transportation, parks and recreation, and public safety all make it possible to be physically active. Th e federal government requires seat belts and air bags in cars, but state laws mandate seat belt use and the penalties for violation, and local police generally enforce the laws.

At least four factors account for the complexity and diff use responsibility for public health in the United States. Th e fi rst factor is that our government is not cen- tralized; states have authority for public health except where specifi ed by federal and tribal law. How much authority the states in turn share with local government varies a great deal and rests with diverse agencies, boards of health, and municipal and tribal codes (Hodge, 2012; IOM, 2011).

Second is the distinctive American tendency, fi rst recognized by Alexis de Toc- queville in the 1830s, to design laws, policies, and organizations that are problem specifi c, rather than general. For example, individual diseases receive special legal recognition, and new federal programs, policies, and categorical funding streams are created to deal with them. Diverse federal departments (see Chapter 2) deal with such health problems as assuring pure food and drugs (Food and Drug Administration [FDA] and U.S. Depart- ment of Agriculture [USDA]), monitoring and controlling infectious diseases (Centers for Disease Control and Prevention [CDC]), providing guidance to prevent chronic diseases (CDC, National Institutes of Health [NIH]), improving traffi c safety (U.S. Department of Transportation, National Highway Traffi c Safety Administration [NHTSA]), maternal and child health (Centers for Medicare & Medicaid Services [CMS], Health Resources and Services Administration [HRSA]), and ensuring a healthy place to work (Occupa- tional Safety and Health Administration [OSHA], Mine Safety and Health Administra- tion [MSHA], National Institute for Occupational Safety and Health [NIOSH]).

A third distinctively American approach is the heavy reliance on nongovernmen- tal organizations to achieve public health goals. Yet these organizations also tend to be issue specifi c: national organizations and their local affi liates such as the American Red Cross, American Heart Association, the Planned Parenthood Federation of America, United Way Worldwide, the Y, various environmental organizations, and many community-based organizations specifi c to a city neighborhood. With shrinking governments, these organizations take on additional importance.

Th e fourth cause of diff used responsibility lies in the broad defi nition of health goals and ongoing debates over what should be done to achieve them. Th e World Health Organization (WHO) asserts that health is more than the absence of disease, but rather “a state of complete mental, physical, and social well-being” (Green & Kreuter, 1999). Well-being is achieved, for example, when children perform well in school and do not fear neighborhood violence, when physical and mental function- ing is maintained well into old age, and when people have a better quality of life. But where, then, do we draw the line between health goals and other societal goals? Should we draw such a line? Who has responsibility, and for which goals?

■ A Healthy Population Is in the Public Interest

Two key assumptions distinguish public health from the health care delivery systems discussed elsewhere in this text: (a) A healthy population is in the public interest, and

C h a p t e r 6 . P u b l i c H e a l t h : A T r a n s f o r m a t i o n f o r t h e 2 1 s t C e n t u r y 103

(b) working at a societal or community level (outside of what a clinician can do in a medical care setting) we can improve an entire population’s health.


Th e goal of public health is to improve the health status of entire populations, not just individuals. It is concerned with the incidence, prevalence, and distribution of health problems (see Chapter 5). In using these indicators, public health aims to identify health problems and improve them through action at a community or collective level. Th is aim is well justifi ed by past successes. Between 1900 and 2000, average life expec- tancy increased from 47.3 to 76.8 years (CDC, 2011). Medical care treatment did not accomplish this change. Rather, society made pervasive improvements in 10 public health arenas (see Table 6.1). In the present day, health is still most strongly deter- mined by behavioral, community, environmental, and societal forces, not by medical care (see Chapters 5 and 7).


Since ancient times, people have taken collective action to protect themselves from plague and environmental disaster. In the 19th century, public health was justifi ed on utilitarian grounds: the greatest good for the greatest number. Healthy people are a more productive workforce and better able to defend the nation. Th e utilitarian argu- ment is still compelling: For example, a high childhood obesity rate impairs America’s economic competitiveness and the combat readiness of youth (IOM, 2012). However, public health today is also justifi ed as a human right and is seen as a means to achieve social justice by addressing social and economic disparities in health (Beauchamp & Steinbock, 1999).

Not everyone agrees with this rationale. Conservatives often reject social justice as a reason for collective action. In truth, most public health services serve both utilitar- ian and social justice aims. For example, many publicly funded prevention eff orts are targeted to poor children, but these eff orts also help produce a healthier workforce.


■ Vaccination

■ Motor-vehicle safety

■ Safer workplaces

■ Control of infectious diseases

■ Decline in deaths from coronary heart disease and stroke

■ Safer and healthier foods

■ Healthier mothers and babies

■ Family planning

■ Fluoridation of drinking water

■ Recognition of tobacco use as a health hazard

Note: Based on the eff ect on death, illness and disability in the United States and not ranked by order of importance. Source: U.S. Centers for Disease Control and Prevention (1999). Ten great public health achievements— United States, 1900 to 1999. Retrieved April 6, 2014 from http://www.cdc.gov/mmwr/preview/mmwrhtml /00056796.htmhttp://www.cdc.gov/mmwr/preview/mmwrhtml/00056796.htmhttp://www.cdc.gov/mmwr/preview/mmwrhtml/00056796.htm

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Also, libertarians believe public health limits individual liberty (Leviton, Needleman, & Shapiro, 1997). Indeed, public health policy and practice usually balance individual freedoms and collective benefi ts. For example, health departments have police pow- ers to control infectious disease as a “clear and present danger,” but they need to do so without appearing to abuse this power. Finally, some Americans may question whether government should be involved in public health: Can’t private or nonprofi t organiza- tions play the role that government plays now? In fact, private and nonprofi t organiza- tions do play important roles, but without government there is no way to address what economists term “market failures” of health care. For example, private physicians lack the health department’s legal authority to monitor, track, intervene, and disrupt the spread of sexually transmitted diseases, food-borne disease outbreaks, rat infestations, lead poisoning among children, and other many other problems.


Public health works on prevention at a collective level through health promotion, changes in policy or law, and consensus of professional societies about prevention eff orts. Health promotion addresses behavior and lifestyle: “the combination of edu- cational and environmental supports for actions and conditions of living conducive to health” (Green & Kreuter, 1999; see Chapter 7). Health promotion often works through businesses, schools, recreational facilities and community associations, as well as in the health care setting.

Th e U.S. Preventive Services Task Force (2010) uses three long-accepted catego- ries to describe the full array of potential preventive interventions:

■ Primary prevention: helping people avoid the onset of a health condition, including injuries

■ Secondary prevention: identifying and treating people who have risk factors or preclinical disease

■ Tertiary prevention: treating people with an established disease, in order to restore their highest functioning, minimize negative eff ects, and prevent complications

Th ese categories, especially tertiary prevention, obviously spill over into the medical treatment of individuals; at a systems level, however, they are public health issues. Providers need guidance and support to carry them out. In Table 6.2 we can see the diff erences between individual and collective prevention for heart disease and stroke. Notice that successful prevention for an individual (in this case, a person who might have a heart attack or stroke) depends on the widespread availability of prevention services at a population level. To understand more about how medical care and pub- lic health can support each other, especially since the passage of the ACA, see the Surgeon General’s National Prevention Strategy (www.surgeongeneral.gov/initiatives/ prevention/strategy/).

Disease prevention and health promotion are rarely completely effective, because there are no “magic bullets” that can prevent 100% of people from becoming sick.http://www.surgeongeneral.gov/initiatives/prevention/strategyhttp://www.surgeongeneral.gov/initiatives/prevention/strategy

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An important eff ort of the U.S. Department of Health and Human Services (DHHS, 2013), Healthy People 2020, provides a comprehensive review of priority health risks, eff ective strategies, and public health focus areas for the nation, each with many specifi c objectives. Th ese areas are updated every 10 years. Progress in meeting the Healthy People objectives has been very uneven, because many of the objectives are quite ambitious ( Sondik, Huang, Klein, & Satcher, 2010). Disease prevention and health promotion are rarely completely eff ective, because there are no “magic bul- lets” that can prevent 100% of people from becoming sick. For example, prevention has greatly reduced the rate of heart attacks, but some heart attacks still occur. Youth smoking has declined, but some youth still take up smoking in spite of all eff orts to discourage them. People die in car crashes in spite of lower fatalities and many safety improvements.

Universal prevention means that everyone receives an intervention equally, whereas targeted prevention involves identifying and serving people at higher risk. When they are possible, universal approaches are often more eff ective in improving the health of populations. Th e case of traffi c safety illustrates these approaches. People who drive while intoxicated are clearly at high risk of injury to themselves and others, and target- ing drunk drivers improves road safety for everyone. However, universal protections, such as seat belts, air bags, and safer vehicles, contribute much more to reducing traf- fi c fatalities and injuries because they help everyone, even those who never encounter a drunk driver (National Highway Traffi c Safety Administration, 2014).

Targeted prevention is an important focus for public health when the risk is preva- lent and when there are eff ective means to identify and treat it. For example, a national campaign in the 1970s led to improved identifi cation and treatment of people with


I n d i v i d u a l M e d i c a l C a r e P u b l i c H e a l t h



Encourages patients to maintain

healthy weight, be physically active,

and not smoke

Works to establish bike and walking paths

and to eliminate transfats from foods, offers

smoking quitlines, advocates for smoke-free

public spaces and higher cigarette taxes,

provides prevention guidelines to medical

care providers



Encourages regular checkups for

detecting and treating high blood

pressure, elevated cholesterol, and

other risk factors

Mounts public service campaigns about the

importance of controlling blood pressure

and “knowing your number” for cholesterol,

provides guidelines to medical care

providers on diagnosis of blood pressure and




Treats heart attack to save the heart

muscle, treats stroke to minimize

nervous system damage, treats

atherosclerosis, restores function and

prevents recurrence through cardiac

rehabilitation and medication

Provides guidelines on treatment to

medical care providers, creates widespread

awareness of the symptoms of heart attack

and stroke and the need to seek help quickly

to save the heart muscle, teaches CPR,

locates automated external defi brillators in

public places and worksites, establishes

effective emergency systems, sponsors

patient support groups

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y106

high blood pressure. Th is, in turn, greatly reduced premature death and disability from cardiovascular disease (CDC, 2011). However, an initial goal was to make sure that providers screened all their patients for high blood pressure, a universal strategy with a population focus. Combining universal and targeted strategies can have a cumula- tive benefi t, and a balance of targeted and universal approaches is important to avoid stigma or victim-blaming of people at risk.

■ Core Functions of Public Health


Public health serves three core functions—assessment, policy development, and assurance—as seen in Figure 6.2, to solve health problems at a population level (IOM, 2002). Assessment of public health problems involves understanding their prevalence, severity, and causes, using various well-tested statistical tools. Although private and nonprofi t organizations often do such assessments, public health agencies have the

F I G U R E 6 . 2 T H E C I R C L E O F P U B L I C H E A LT H A C T I V I T I E S A N D 1 0 E S S E N T I A L S E R V I C E S .

Monitor Health

Diagnose & Investigate

Inform, Educate, Empower


Mobilize Community

Partnerships Develop Policies

The 10 Essential Public Health Services describe the public health activities that all communities should undertake and serve as the framework for the National Public Health Performance Standards (NPHPS) instruments. Public health systems should:


Monitor health status to identify and solve community health problems.












Diagnose and investigate health problems and health hazards in the community.

Inform, educate, and empower people about health issues. Mobilize community partnerships and action to identify and solve health problems.

Develop policies and plans that support individual and community health efforts.

Enforce laws and regulations that protect health and ensure safety. Link people to needed personal health services and ensure the provision of health care when otherwise unavailable.

8 Ensure competent public and personal health care workforce.

9 Evaluate effectiveness, accessibility, and quality of personal and population-based health services. Research for new insights and innovative solutions to health problems.

Enforce Laws

Link to/ Provide


Ensure Competent Workforce














S ys

te m M

anagem en



Source: Redrawn from the Centers for Disease Control and Prevention, 2013, Th e Public Health System and the 10 Essential Public Health Services http://www.cdc.gov/nphpsp/essentialservices.htmlhttp://www.cdc.gov/nphpsp/essentialservices.html

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primary responsibility for surveillance of population health status, monitoring of dis- ease trends, and analysis of the causes of those trends and points for intervention. Th e assessment function is undergoing dramatic transformations, both in terms of resources and technology, as seen in the fi nal section.

Th e second core function, policy development, is to create and advocate for solu- tions to achieve public health goals. Formal policy development includes devising laws and regulations to protect the public, as in the case of environmental protec- tion; funding and reimbursement for specifi c services such as child immunizations; and setting guidelines or standards for services or practices, such as laboratory test- ing for infectious diseases. However, policy development can also involve voluntary changes and agreements in communities, business, health care, or nonprofi t organi- zations—for example, locating a supermarket in an underserved area so that people have access to fresh fruits and vegetables.

Th e third core function, assurance, involves enforcement of policy, as with inspec- tion of restaurant sanitation or nursing home safety; monitoring legal compliance, as with smoke-free indoor air laws; ensuring proper implementation of necessary ser- vices such as supervision of home visits to new mothers in disadvantaged communi- ties; and adequate crisis response, as when public health plays a role in coping with natural disasters.

In order to fulfi ll all three core functions, public health departments are highly dependent on other organizations and individuals. For assessment, public health relies on medical care providers, fi rst responders, and others to provide the necessary data on births, deaths, reportable diseases, and environmental hazards. For policy develop- ment it relies on advocates, policymakers, and community collaborators who share a common interest in public health goals. For assurance it relies on complementary health care services and voluntary compliance with standards and regulations. Public health agencies do not have the legal authority, fi nancial capability, or personnel to address all health problems by themselves. Th ey need to collaborate with other orga- nizations that have the power, infl uence, and resources to achieve better public health outcomes—for example, in promoting worker safety, ensuring safe food, or building bicycle- and pedestrian-friendly streets for physical activity.


Th e following example, concerning the birth defect spina bifi da, illustrates the cycli- cal problem-solving approach used in public health (see Figure 6.2 and www.cdc.gov/ ncbddd/spinabifi da/data.html). Diff erent types of assessment, policy development, and assurance issues emerge during this cycle.

1. Monitor the problem: Spina bifi da is a neural tube defect that develops in the fi rst 3 to 4 weeks of pregnancy, when the neural tube that will form the spine does not close properly. In its most severe form, spina bifi da leads to leg paralysis, bowel and bladder control problems, and, without treatment, mental retardation. Spina bifi da aff ects 3.05 out of every 10,000 live births (assessment).

2. Diagnose and investigate: Th e CDC projects that 50% to 70% of spina bifi da cases can be prevented if women take enough folic acid (a B vitamin) before and during pregnancy. Folic acid is most eff ective in promoting healthy neural tubehttp://www.cdc.gov/ncbddd/spinabifida/data.htmlhttp://www.cdc.gov/ncbddd/spinabifida/data.html

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y108

development when taken before pregnancy and during the critical fi rst weeks. For this reason, the CDC recommends that, even before they become pregnant, women take a multivitamin with 400 mg of folic acid every day and eat foods rich in folic acid (Centers for Disease Control and Prevention, 2010). (policy development).

3. Develop policies: Unfortunately, women may not know they are pregnant until the defect has developed, as roughly half of all pregnancies are unplanned. Also, foods that naturally contain folic acid may not be readily available to the poor or to individuals eating certain diets (assessment). One alternative is to fortify common foods with folic acid (policy development).

4. Enforce laws and regulations: Since 1998, the government has required that enriched cereal, pasta, fl our, and bread products include folic acid (assurance, policy development).

5. Evaluate eff ectiveness: Since the fortifi cation requirement began, the rate of spina bifi da in the United States has declined by 31% (assurance, assessment).

6. Diagnose and investigate: Many scientists believe that we could prevent more cases of spina bifi da if new regulations increased the amount of folic acid in grain products (policy development, assessment).

■ Governmental Authority and Services


State Law

Th e 10th Amendment to the U.S. Constitution gives states the primary responsibil- ity for public health. (In contrast, the Constitution recognizes tribes as sovereign nations for decision making and designates federal responsibility for their health [Hodge, 2012]). Th e 50 states vary greatly on how they defi ne and delegate public health authority and responsibility. States enacted public health statutes over time to respond to specifi c diseases or health threats.

Th ese laws are fragmented and badly out of date, so public health law is emerging as a powerful force to improve eff ectiveness (IOM, 2011). For example, some state laws have separate sections for specifi c communicable diseases, instead of standard approaches to address infectious disease in general. Th is fragmentation leaves them with no standards for addressing new infectious diseases, advances in public health practice, and constitutional law. State laws require updating to permit new multi- sectoral health promotion eff orts—for example, collaborations among public health, transportation, and parks and recreation to encourage more physical activity. State laws may also neglect important safeguards for privacy, due process, and protection from discrimination. Th e Model State Public Health Act takes a systematic approach to establishing authority, implementing public health responsibilities, and modern- izing public health core functions. However, as of 2011 the Model Act did not have much uptake (IOM, 2011).

Although the Model Act addresses inconsistencies within a state, other improve- ments are needed for problems that cross state lines. Chief among these are problems arising from human-made and naturally occurring events such as the anthrax attacks in the fall of 2001, hurricanes Katrina and Rita in 2005, the 2009 H1N1 infl uenza pan- demic, and Superstorm Sandy in 2012. Th ese events have underscored the need for

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legal reforms to enhance public health emergency preparedness by addressing a variety of issues including: (a) declaring public health emergencies separate from other types of disasters; (b) expediting public health powers, such as those needed to collect health data, screen, vaccinate or treat exposed people or seize property to abate hazards, iso- late or quarantine residents; (c)  recruiting and deploying trained health professional volunteers; and (d) providing liability protections to health professionals and entities, among others (Hodge, 2012). Since 2002, 26 states and the District of Columbia have amended their statutes to incorporate the term “public health emergencies” or similar terms (Network for Public Health Law, 2011).

State Health Departments

A state’s chief health offi cial directs the department of public health and may report directly to the governor or to an offi cer in the governor’s cabinet. Th e state health department’s position in the chain of command and the governor’s priorities aff ect the authority and power of its director. Medicaid and public assistance programs, being among the costliest state programs, tend to garner most of a governor’s atten- tion. At times, this can aff ect the quality of public health services. Th e website of the Association of State and Territorial Health Offi cers (ASTHO, www.astho.org) pro- vides a wealth of detail on the characteristics and fi nancing of state health depart- ments. Twenty-seven state health departments are free standing as separate agencies, whereas 23 states combine public health into umbrella agencies with related programs, such as Medicaid, human services and welfare, mental health and substance abuse, or environmental management. Th e ways various health-related functions and pro- grams are organized aff ect how well public health activities can be coordinated. For example, environmental protection is often located outside the health department, in which case conservation, wilderness preservation, or litigation around toxic spills may head that other agency’s agenda. Th is situation often leaves less opportunity for eff ec- tive interaction with the health department, even though the health department must monitor potential health consequences of environmental exposures.


Federal–State Relations

Although the states have constitutional authority to implement public health, a wide variety of federal programs and laws aff ect their work. Federal law relating to pub- lic health preempts state laws, just as state law preempts local laws. (However, tribal governments are sovereign nations, so tribal law supersedes other laws, if they are in place.) Preemption aff ects public health, because the federal government can require “fl oor preemptions”—minimum protections below which states cannot go. For exam- ple, the Clean Water Act requires a minimum standard for water in all states, although states are allowed to have more stringent standards. But “ceiling preemption” can pose an obstacle to prevention when states and localities are more aggressive than the fed- eral government. For example, the tobacco industry challenged state and local regula- tion of tobacco in the courts, and more recently, Mississippi passed a law to preempt local eff orts to limit the size of sugar-sweetened beverages.

Th e federal agencies working in public health are described in Chapter 2. States must constantly interact with these federal agencies. For example, the DHHS supportshttp://www.astho.org

P a r t I I . K e e p i n g A m e r i c a n s H e a l t h y110

state health departments with block grants for maternal and child health and preven- tive services; it also supports state agencies for child welfare services, substance abuse treatment and prevention, and mental health. Th e DHHS also funds the states to train the public health workforce. Th e CDC provides grants and cooperative agreements to states, cities, and community-based organizations for HIV prevention, chronic disease control, and from 2010 to 2013, for improving state and local infrastructure (see the following). Th e USDA provides health departments with direct support for food assistance and nutrition education. Th e Environmental Protection Agency (EPA) provides direct resources to the states for environmental management. Most of these funding streams are categorical—that is, the funding is intended for specifi c categories of people or special purposes. Congress authorizes categorical funding to address a specifi c health problem, such as preventing AIDS or addressing bioterrorism. How- ever, categorical funding limits states’ fl exibility to deliver a range of relevant services with available resources.

Delegation of State Authority to Local Health Departments

States vary in terms of the authority they give to local governments and local public health departments. As of 2011, 14 states had centralized public health departments, meaning that employees of the state lead the local health units, and the state retains authority over many decisions relating to the budget, public health orders, and the selection of local health offi cials. Health departments were decentralized in 27 states: Local governments make many decisions and staff the local health units. Four states shared authority, decision making, and employment with local governments. Th e remaining fi ve states were mixed, meaning that some features were centralized, whereas others were shared or decentralized.

Th e National Association of County and City Health Offi cials (NACCHO) web- site (www.naccho.org) off ers further detail on the wide variety of organizational arrangements, responsibilities, fi nancing, staffi ng, and authority of local health departments. One reason for this variety is simply historical. Th e fi rst public health agencies were formed in the early 1800s and were primarily city based. Later in the 19th century, state health agencies began to form. Th roughout the 20th century, county health departments developed. One can see the eff ects by comparing older states with states that were admitted to the union more recently: Massachusetts has 329 local boards of health, whereas Oregon has 34 county health departments. State and local health departments are exploring ways to share services, functions, and staff across jurisdictional boundaries. From “handshake agreements” to more formal memoranda of understanding to consolidations and mergers, these sharing arrangements often seek to balance eff ectiveness and effi ciency concerns (Libbey & Miayhara, 2011).

Local, state, tribal, and federal agencies all have strengths and resources for public health. States and localities usually better understand local problems and how local conditions aff ect services. Meanwhile, the federal government has greater resources and scientifi c expertise for tackling large and complex health threats. Th e CDC, for example, leads the investigation of serious disease outbreaks, such as H1N1, and makes recommendations for both clinical and community prevention. Th e federal govern- ment also steps in when health threats cross state borders or when states cannot com- ply with federal regulations, off ering technical assistance and fi nancial support.http://www.naccho.org

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State Responsibilities

Th ese generally include disease and injury prevention, sanitation, controlling water and air pollution, vaccination, isolation and quarantine, inspection of commercial and residential premises, food and drinking water standards, extermination of vermin, fl uoridation of municipal water supplies, and licensure of physicians and other health care professionals. However, the specifi c activities and services provided vary widely across states and localities. For example, state and local health departments work to prevent chronic disease but focus to varying degrees on education, social marketing, or policy and environmental changes (see Chapter 7).

Ten Essential Services

In the face of this variation, most public health professionals agree that all health departments should provide the 10 essential services listed in Figure 6.2. Most local health departments are challenged to provide these services on their own, given their serious resource and staffi ng limitations. Most departments are small and rural: 61% serve fewer than 50,000 people and usually have 15 or fewer full-time staff . Staff skills in many health departments are weak, and higher education is not doing enough to provide the appropriate training. Many experienced professionals are on the verge of retirement, and replacements are in short supply given the low salaries and rural location of many local health departments. Many health departments are thinking creatively about how to meet these challenges, the topic of the fi nal section.

Public Health Emergencies

Since the 2001 anthrax attacks, public health agencies have faced the added respon- sibility of protecting the public against bioterrorism threats and other communica- ble disease emergencies. Experts agree that we can soon expect another severe fl u epidemic, perhaps as serious as the 1918 pandemic that killed an estimated 675,000 Americans. Diseases spread much more quickly than they did in the past because of international travel, urban overcrowding and poverty, climate change, and overuse of antibiotics, which produce multiple drug resistant infections (such as the so-called superbug multidrug-resistant Staphylococcus aureus [MRSA]). Interventions include global surveillance networks, stockpiles of vaccines, and better communications to deal with outbreaks. Although preparedness is much better now than in 2001, a 2013 study found that two thirds of the states had inadequate policies and capabilities to protect against threats from communicable diseases (Trust for America’s Health, 2013b).

New Training, Competencies, and Accreditation

As of 2011, public health agencies have national voluntary performance standards, with review by an external accrediting body, the Public Health Accreditation Board (PHAB). Th ese standards are a means, not an end, to improve the quality of public health services, including their eff ectiveness and effi ciency. Th ey establish accountability for providing good services, strengthen the credibility of public health agencies, and help to iden- tify areas for improvement (Centers for Disease Control and Prevention, 2004). At the end of 2013, more than 170 state, local, and tribal health departments serving 60% of the U.S. population were accredited or in the accreditation process. Th e PHAB website

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gives updates on progress and details of the accreditation standards (www.phaboard. org). PHAB also developed a consensus set of core competencies for public health prac- tice at the entry, supervisory, and executive levels (being revised in 2014). Movement to upgrade the competence of individual public health workers is seen in new management academies, continuing education, and certifi cate programs (IOM, 2009).

■ Rethinking Public Health for the 21st Century

Champions of the public’s health now have a major opportunity to rethink the infrastructure by working in new ways, communicating more effectively with the public, advocating for a wider variety of policies that affect health, and engaging new partners that are vital to achieving public health goals.

Government agencies are important, but they are only part of the public health story, and government is shrinking in the early 21st century. Champions of the public’s health now have a major opportunity to rethink the infrastructure by working in new ways, commu- nicating more eff ectively with the public, advocating for a wider variety of policies that aff ect health, and engaging new partners that are vital to achieving public health goals.


Shrinking Government

According to ASTHO and NACCHO, state and local health departments were hard hit by the recession of 2008 to 2010, with job losses totaling about 20% of the total pub- lic health workforce. During the recession nearly every health department reported making cuts to programs and services. Th ese staffi ng and program cuts have contin- ued into the recovery period. How can health departments serve their constituents with high quality and meet new national performance standards? National develop- ments and creative partnerships at the state and local level off er part of the answer.

Federal Action Transforms Prevention

Th e ACA authorized $15 billion over 10 years for a Prevention and Public Health Fund, and recent stimulus funding, the American Recovery and Reinvestment Act of 2009, provided $650 million. Th ese resources go to state and local governments but also to nongovernmental organizations and community coalitions. Many of the com- munity eff orts aim to change policies and environments to prevent chronic disease and promote physical activity, nutrition, and tobacco control (see Chapter 7). However, it has been challenging for the existing systems to absorb these funds quickly and to implement activities at scale (Trust for America’s Health, 2013a). Also, the Prevention and Public Health Fund depends on appropriations from Congress; it faced the 2013 federal budget sequester as well as ongoing reductions to pay for other ACA activities such as enrollment in health insurance exchanges. Th e American Public Health Asso- ciation (APHA) website (www.apha.org) gives updates on the fund.http://www.phaboard.orghttp://www.phaboard.orghttp://www.apha.org

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Government at all levels aims to encourage more coordinated action across orga- nizations. Th e ACA and executive orders mandate better planning and coordination of prevention. For example, the White House ordered coordination of childhood obe- sity prevention eff orts across the USDA, CDC, NIH, and Department of Education (IOM, 2012). At the state and local levels, there is a growing realization that public health must rely on the range of partners with power and resources to bring about needed changes.

A New Role for the Health Care Sector

For more than 40 years, many local health departments have provided direct health care to the poor, leaving fewer resources to improve the health of populations. Th e ACA will free up these resources by insuring poor individuals, who may choose pro- viders other than the health department. Some health departments are exploring ways to divest their primary care services while still fulfi lling their duties to ensure health care in their jurisdictions, especially for vulnerable populations (Kuehnert & McConnaughay, 2012). Where they continue to provide health care services, health departments are identifying ways to collect third-party reimbursements— collections they have not had to do or been able to do historically. Th e ACA also alleviates pres- sure on health departments by giving incentives for providers to work in underserved areas and by reimbursing private plans for essential prevention services, such as vac- cinations and screening, if the plans meet federal standards.

New Resources for Assessment

Nonprofi t hospitals can satisfy their community benefi t obligations under the ACA with community health assessments once every 3 years. Th ese assessments aim to engage multisectoral community stakeholders to identify priority needs (www.cdc .gov/policy/chna/). Also, PHAB accreditation sets health department standards for more consistent, high-quality assessment. New data sources, including electronic health records, shared and linked databases, and techniques such as geographic information systems (GIS), allow rapid response to potential public health emergen- cies. Equally important, however, they help policymakers and community stakehold- ers to understand health diff erently, including opportunities to promote health and reduce health disparities. For example, GIS make it possible to design communities proactively to prevent obesity (IOM, 2012) or to reduce triggers for asthma (http:// propellerhealth.com).

Public Health Institutes

Th e growing number of these institutes is a very positive development for public health. Th e National Network of Public Health Institutes website (www.nnphi.org) provides details on the 25 institutes, 11 institutes under development, and 7 affi liate organizations. As nongovernmental organizations, these institutes can accept private funds, leverage funding from multiple sources, and serve as fi scal intermediaries for health departments to speed the delivery of services and processes, such as hiring staff and buying supplies or equipment. Institute staff can advocate vigorously for public health programs and funding, whereas government employees have restrictions. Institutes can off er a cred- ible, neutral, third-party voice on issues and can convene all interested parties to address a broad health problem and implement a multisector strategy. In general, health depart- ments support these institutes and recognize their value and complementary roles.http://www.cdc.gov/policy/chnahttp://www.cdc.gov/policy/chnahttp://propellerhealth.comhttp://propellerhealth.comhttp://www.nnphi.org

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Putting the Public Back in Public Health

The public—and policymakers—react to specifi c problems and crises. They do not see the disease cases, injuries, disabilities, and deaths that have been prevented.

Th e champions of the public’s health need to build a constituency that understands its value, in order to create coalitions, gain allies to solve public health problems, and advocate eff ectively. Th e general public does not understand what public health is, often supposing it refers solely to programs for the poor. Th e public—and policymakers— react to specifi c problems and crises. Th ey do not see the disease cases, injuries, disabil- ities, and deaths that have been prevented. And they do not understand why problems are not solved quickly when an eroded infrastructure hinders crisis response—such as when the 2001 anthrax episode overwhelmed many public health laboratories or after Hurricane Katrina, when even such a basic function as handling the dead broke down. In reality, public health is invisible because it is generally so eff ective. With this in mind, how can public health develop an eff ective public constituency?

Building and Maintaining Trust

Public health practitioners sometimes can be seen as authoritarian or paternalistic, especially when they stress science and technology (“this is good for you because sci- ence says so”) while ignoring collaboration, democratic processes, and individuals’ preferences. Th is tendency weakens their connections to grassroots groups and local leadership and limits input from (and active listening to) their constituents. Th e last years of the 20th century heightened public awareness of the need for a new form of leadership in public health—one that engages people on their own terms in order to engender trust and cooperation. For example, the EPA learned to work with commu- nities aff ected by toxic contaminants. In its early days, however, the agency did not lis- ten to the public about their concerns, did not provide the information they needed, or gave them incomprehensible techno-babble that enraged community leaders ( Leviton et al., 1997). Th e old bureaucratic ways of doing business were simply not eff ective when people had legitimate concerns.

Th e most diffi cult lesson for public health came from the Tuskegee syphilis exper- iment (Jones, 1993). In 1932, 600 poor African American men in Macon County, Alabama, unknowingly became syphilis research subjects when the Public Health Service and the Tuskegee Institute began a study of the natural course of syphilis and off ered the men “free medical care.” Of 600 subjects, 339 had syphilis but were left untreated for up to 40 years, even though a penicillin cure became available in 1947. As many as 100 of the men died of syphilis and many more suff ered long-term dis- abilities before a public outcry and a federal advisory panel’s recommendations halted the study in 1972. Along with the Nuremberg Code on medical experiments, this epi- sode led Congress to require new protections for human research subjects. In 1997, President Bill Clinton off ered an offi cial public apology to the Tuskegee study’s eight survivors and participants’ families. However, public health—and the health care system more generally—never fully regained African Americans’ trust.

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If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
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Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
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Professional Writing Engl-3311
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Customer 452919, March 2nd, 2023
I want to thank the entire team. Please know that I am truly grateful for your service.
Customer 452919, November 11th, 2021
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Customer 452919, April 5th, 2022
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Customer 452717, April 20th, 2021
Computer science
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Customer 453099, August 28th, 2022
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Customer 452919, April 26th, 2022
Very well written thank you
Customer 452667, April 8th, 2021
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Customer 452919, December 1st, 2021
Thank you. You all have been timely, and amazing.
Customer 452919, May 3rd, 2022
Thank you for your teamwork. I have only used Solutions to assist me with my assignments.
Customer 452919, March 1st, 2023
Advanced Technical Writing
Excellent service as always, Thank you!
Customer 452995, January 20th, 2022
Best service hands down.
Customer 452995, January 24th, 2022
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