Introduction to State Health Policy: A Seminar for New State Legislators

Slide Presentation by John E. McDonough, Dr.PH., M.P.A.

On April 1, 2005, John E. McDonough made a presentation in a seminar entitled Introduction to State Health Policy.

This is the text version of Dr. McDonough's slide presentation. Select to access the PowerPoint® Slides (766 KB).

Roles of State Legislatures and State Government in Determining Health Care Policy

John E. McDonough, Dr.PH., M.P.A.
Executive Director
Health Care for All
Massachusetts House of Representatives, 1985 to 97

Slide 1

Session Outline

1. Three Pillars of Health Policy.
2. Four Eras in U.S. Health Policy.
3. Eight Key State Government Roles.
4. Federalism and Health Policy.
5. Your Role in All of This.

Slide 2

1. Three Pillars of Health Policy

• Cost.
• Access.
• Quality.
  • Everything you do affects at least one, and frequently two.
  • Health policy home run: positively influence all three
    • Childhood Immunization.
  • Most of the time, pick any two.

Slide 3

Costs: The Big Picture 1

On a line graph titled Health Spending in Dollars and as Percent of U.S. Economy, the x-axis represents given years and the y-axis represents percentages of the U.S. economy. For each of the years, the expenditure is spelled out in a dollar amount and a percent value rounded to the nearest tenth of a percent.

The graph starts with 1970, when 73 billion dollars or 7 percent was spent on health. In 1980, the figure climbs to 246 billion dollars or 8.8 percent; in 1993, 888 billion or 13.3 percent; in 1999, 1.2 trillion or 13.2 percent; in 2001, 1.4 trillion or 14.1 percent; and in 2003, 1.68 trillion or 15.3 percent.

Source: C Smith et al, Health Spending Slows in 2003, Health Affairs, January-February 2005.

Slide 4

Costs: The Big Picture 2

On a line graph titled Increases in Premiums versus Earnings and Inflation, the x-axis represents given years and the y-axis represents percent increases. Separate lines represent increases in health premiums, overall inflation, and workers' earnings. Health premium increases are spelled out rounded to the nearest tenth of a percent for most of the years.

• In 1988, health premiums increased 12.0 percent; in 1989, 18.0 percent; in 1993, 8.5 percent; in 1996, 0.8 percent; in 2001, 10.9 percent; in 2002, 12.9 percent; in 2003, 13.9 percent; and in 2004, 11.2 percent.
• Inflation and earnings do not have their precise increases written out except for 2004, when inflation increased 2.2 percent and earnings increased 2.3 percent, but one can determine that inflation increases ranged from about 2 to 5 percent for each given year, while earning increases ranged from about 2 to 4 percent.
• Earning increases were consistently lower than inflation increases until sometime between 1993 and 1996, after which inflation increases were consistently lower than earning increases.

Slide 5

Costs: The Big Picture 3

On the left side of the slide is a bar graph titled U.S. Health Spending versus Other Industrialized Nations on which the x-axis represents nations and the y-axis represents health costs in cents. Every other nation is compared to the United States in terms of how much they spend. Switzerland has the second most expensive system and they spend 68 cents for every dollar that the United States spends and it goes down from there. The United Kingdom is shown to spend 41 cents; Japan 44 cents; Australia, 51 cents; Canada 57 cents and Germany, 57 cents. U.S. health rankings are listed on the right side of the slide. They are:

• Infant Mortality: 28th.
• Life Expectancy: 24th.
• Births to Women Age 15 to 19 in Industrialized Nations: 30th.
• Measles Immunization: 14th.

Slide 6

Access: 45 Million Uninsured Americans

A map of the United States is color coded for percentages of State populations without health insurance.

• Connecticut, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Michigan, New Hampshire, Pennsylvania, Rhode Island, and Wisconsin have between 6.8 and 11.7 percent uninsured.
• Delaware, Hawaii, Kansas, Missouri, New Jersey, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, and Vermont have between 11.7 and 14 percent uninsured.
• Alabama, Colorado, Illinois, Indiana, Kentucky, Maine, Mississippi, North Carolina, Utah, Virginia, and Washington have between 14 and 15.2 percent uninsured.
• Arkansas, the District of Columbia, Georgia, Nevada, New York, Oregon, West Virginia, and Wyoming have between 15.2 and 17.6 percent uninsured.
• Alaska, Arizona, California, Florida, Idaho, Louisiana, Montana, New Mexico, Oklahoma, and Texas have between 17.6 and 27 percent uninsured.

Slide 7

Quality: The Disturbing Picture

The seal of The Commonwealth Fund appears on this slide. Chart Two-One is titled: Estimated Deaths Associated with Medical Mistakes Compared to the Leading Causes of Death in the U.S. The chart is a bar graph on which the y-axis represents causes of death and the x-axis represents the number of deaths in 1997. Heart diseases are reported to have killed 726,974 humans in 1997; cancers, 539,577; cerebrovascular diseases, 159,791; chronic obstructive pulmonary disease, 109,029; unintentional injuries, 95,644; pneumonia and influenza, 86,449; diabetes, 62,636; suicide, 30,535; and nephritis and related diseases, 25,331.

Amid these figures, Institute of Medicine (IOM) offers a high estimate of 98,000 and a low estimate of 44,000 for the number who die from medical mistakes. The caption reads: "Estimated deaths associated with medical mistakes in hospitals rank among the leading causes of death in the U.S."

Source: Kramarow et al, IOM 2000, 1999 (deaths). The reference for the chart is : Leatherman and McCarthy, Quality of Health Care in the United States : A Chartbook, 2000, The Commonweath Fund-Patient Safety.

Slide 8

Four Health Policy Eras

Era 1: Pre-emerging System Period

• Pre-1910s.
• Minimal licensure and professional standards.
• No health insurance as we know today.
• Minimal public investments.
• No standards for medical education.
• Infectious disease leading cause of death.
• Life expectancy, circa 46 years.

See: The Social Transformation of American Medicine, Paul Starr.

Slide 9

Four Health Policy Eras

Era 2: Professionalization and Growth

• 1910s to 1960s.
• Scientific breakthroughs.
• Widespread licensure, professional standards, public sector regulation.
• Development of modern health insurance and insurance regulation.
• Federal support: medical education, facilities, research.
• Emergence of chronic disease as leading cause of death.

Slide 10

Four Health Policy Eras

Era 3: Government Regulation

• 1965 to late 1980s: life expectancy, circa 70 years.
• Creation of Medicare and Medicaid in 1965.
• Market failure as defining metaphor.
• Cost control as major public priority.
• Government and business partnership.
• Key instruments to address market failure:
  • Certificate of need.
  • Health system planning.
  • HMO Act.
  • Hospital rate setting.

Slide 11

Four Health Policy Eras

Era 4: Market Dominance

• 1990s through today.
• Key idea: market failure can be corrected.
• Phase 1: The managed care revolution
  • Led to backlash and retreat.
• Growth in investor owned health entities.
• Major provider consolidations.
• Different role for government.
• Phase 2: Era of the consumer
  • Health savings accounts, "skin in the game," transparency, public data release.

Slide 12

What's Next?

"The solution is not a government-run system or a fend-for-yourself marketplace but, instead, a new approach that combines the best care options offered by the private sector backed by the resources and oversight of Federal and State governments."

Sen. John Breaux, Democrat from Louisiana, on his proposal for universal health coverage.

Still waiting...

Slide 13

Key State Government Roles in Health Care

A circle is cut into equal-sized wedges representing the different key roles that States play in health care. From the top left going clockwise, they are Public Health, Facility and Professional Regulation, Regulation of Insurance and HMOs, Health Workforce Education and Training, Provide and Finance Service, Cost Containment, Information Dissemination, and Health System Monitoring.

Slide 14

Key State Roles: 1

1. Public Health
   • Population health, disease control and prevention, sanitation, environmental protection, bioterrorism.
   • Schism with clinical medicine.
2. Regulation: Facilities and Professionals
   • Licensure: EG, hospitals, nursing homes, clinics, physicians, nurses, social workers; scope of practice; discipline.
   • Joint Commission on Accreditation of Healthcare Organizations; Certificate of Need.
   • From Quality Assurance to Quality Improvement.

Slide 15

What is Quality?

• Quality of care is the degree to which services for individuals or populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.
  • Institute of Medicine, 1990.
• Quality is doing the right thing and doing it right.

Slide 16

Key State Roles: 2

3. Regulation of insurance and HMOs
   • Solvency concerns.
   • Consumer protection.
   • ERISA, Employee Retirement Income Security Act of 1974: your 800-pound gorilla.
4. Health workforce education
   • Support for medical education, State medical schools, other professionals.
   • How to finance fairly in managed care environment and tight fiscal times?

Slide 17

Key State Roles: 3

5. Provision and financing of health care services: Make or Buy?
   • Medicaid: fee for service or gatekeeper; managed care or capitation.
   • State worker or retiree health insurance.
   • Indigent services: public hospitals, clinics, uncompensated care.
   • Health coverage expansions.
   • Other services: mental health, mental retardation, veterans, other disabilities.
   • Pharmaceutical assistance.

Slide 18

Key State Roles 4

6. Cost Containment
   • What can government do about rising costs: premiums, prescriptions?
   • Pay for Performance.
   • Evidence-Based Medicine.
7. Information Dissemination
   • Public reporting on hospitals, physicians, nursing homes, and HMOs: Who gets what?
8. Health System Monitoring
   • Anti-trust and mergers, malpractice, for profit conversions, specialty hospitals: When to intervene?

Slide 19

Federalism and Health Policy

• 1960 and 1970s: Mandates and limited discretion, for example, Medicaid, Employee Retirement Income Security Act of 1974, ERISA.
• 1980s: Transition, for example, New Federalism, block grants, Boren, Waxman.
• 1990s and 2000s: Partnership, for example, Medicaid waivers, HIPAA, SCHIP.
• Is the partnership beginning to fray?

Slide 20

Your Role in Making Health Care Work in Your State

The Job of a Legislator, Fenno, 1978

• Being one of them
  • Getting around, soliciting advice, relating to culture.
• Providing services
  • Helping constituents, organizing community initiatives.
• Acquiring resources
  • Using prerogatives to obtain resources.
• Expressing policy views and interests
  • District or Personal.

Slide 21

Your Role in Making Health Care Work in Your State, continued

• What is politics? The way we decide who gets what without resorting to violence.
• What is health care politics? The way society decides who gets what.
• The culture says: Politics is bad or corrupt.
• Bob Kuttner says: Politics is the practice of democracy in real life.
• This is your turn, your moment.

Current as of October 2005

Internet Citation:

Roles of State Legislatures and State Government in Determining Health Care Policy. Text version of a slide presentation at Introduction to State Health Policy: A Seminar for New State Legislators. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/ulp/statepolicy/mcdonoughtxt.htm

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