Health Care System Reform - Health Policy | HPAM 7600, Assignments of Management of Health Service

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Health Care System ReformHealth

Care System Reform

HPAM 7600

Why do we need reform?Why

do we need reform?

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High and growing costs

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• Health spending has increased from 5% of GDP in

1950s to 16% today

• Flat of the curve

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Rising numbers of uninsured– Who pays? We do (taxes) and hospitals do

(uncompensated care)(uncompensated care)

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Disparities in health by race and income– IMR for whites=5 7/1000; blacks=14 1/1000– IMR for whites=5.7/1000; blacks=14.1/

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Only major industrialized country that does notprovide universal access to health carep

Individual MandatesIndividual

Mandates

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Benefits:– Universal coverage– Lowers costs

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• Consumers comparison shop

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Drawbacks:– Consumers lack info to make best choices

Consumers lack info to make best choices

• Could have high costs still
  • Moral hazard

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• Administrative costs still high
  • Restricts personal freedom (but so does car

insurance mandates)

Health Savings AccountsHealth

Savings Accounts

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Benefits:

Increases catastrophic coverage

• Increases catastrophic coverage– Lowers costs
  • Consumers have incentive to comparison shop• Administrative savings b/c no small insurance claims• Administrative savings b/c no small insurance claims• Less unnecessary care b/c free/cheap with insurance

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Drawbacks:

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• Consumers will forgo preventive care to save $– Consumers lack info to make best choices– Adverse selection of healthy people into HSAs and

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unhealthy into conventional plans so benefitshealthy/wealthy more

• Critically sick patients account for most of spending &

HSAs won’t save costs with these patients

Beveridge ModelBeveridge

Model

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Countries using the Beveridge plan or variations on it include:

Great Britain

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Great Britain

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Spain

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most of ScandinaviaN

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New Zealand

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Hong Kong (the populace simply refused to give it up when the Chinesetook over that former British colony in 1997.)Cuba represents the extreme application of the Beveridge approach; it

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Cuba represents the extreme application of the Beveridge approach; itis probably the world's purest example of total government control.

Bismarck ModelBismarck

Model

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Named for the Prussian Chancellor Otto von Bismarck, whoinvented the welfare state as part of the unification of Germany inthe 19th century.

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It uses an insurance system -- the insurers are called "sicknessfunds” -- usually financed jointly by employers and employeesthrough payroll deduction.–

Unlike the U.S. insurance industry, though, Bismarck-type healthinsurance plans have to cover everybody, and they don't make a profit.

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Doctors and hospitals tend to be private in Bismarck countries; Japanhas more private hospitals than the U.S.Alth

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Although this is a multi-payer model -- Germany has about 240 differentfunds -- tight regulation gives government much of the cost-control cloutthat the single-payer Beveridge Model provides.

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The Bismarck model is found in Germany France Belgium theThe Bismarck model is found in Germany, France, Belgium, theNetherlands, Japan, Switzerland, and, to a degree, in Latin America.

National Health InsuranceNational

Health Insurance

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Benefits:– Universal coverage– Lowers costs

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• Administrative costs lower with single-payer• Regulation links expenditures to GDP growth

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Drawbacks:– No incentive for innovation– Could have high costs still

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• Government-run makes it a monopoly, inefficient• Still insurance based so moral hazard