HPM Final

Question 1

social insurance in Germany

Answer 1

1883 law mandating worker and employer participation in mutual sickness funds (beginning of the “welfare state”)

Question 2

social insurance in Britain

Answer 2

• 1911 British National Insurance Act
• Low income workers required to enroll in friendly societies to receive government subsidized care
• Passed by Liberal Party fearful of losing working class voters to the growing Labor Party

Question 3

social insurance in Canada

Answer 3

• provincial governments led by leftist third parties laid foundation for public insurance

[France (1910), Switzerland and Austria (1912)]

Question 4

Teddy Roosevelt’s health ideas

Answer 4

• 1912
• “Creed to provide insurance and old age pensions”
• Progressive Party (third party) platform to provide compulsory health insurance modeled on German system
• “No country can be strong whose people are sick and poor”
• WWI diverted attention from domestic social reform and flamed anti-socialism (Germany) sentiment
• Progressive movement focuses on states

Question 5

“Industrial Medicine” at the Turn of the Century

Answer 5

• growth in US industry led to more accident rates and therefore workers comp
• “company doctors” to repair industry accidents
• “Welfare capitalism,” companies provided schooling, housing, social programs and health care

Question 6

Medicine supply and demand 1910-1930

Answer 6

• Licensure and accreditation requirements restricted supply of medical professionals – put upward pressure on costs
• population increase (62m – 123m) and shift to urban areas where families had less room for the sick
• Rising incomes and public acceptance of medicine as a science increased demand

Question 7

How did the great depression affect doctors?

Answer 7

• Physician incomes declined

Question 8

How did the great depression affect patients?

Answer 8

• Use of medical services declined dramatically (especially among the poor where 68% put off seeing a doctor because of costs)

Question 9

How did the great depression affect hospitals?

Answer 9

• Hospital receipts fell from $256 to $59 per person visit
• Hospital beds empty, bills unpaid and charity care fund-raising tumbled
• Hospitals and other providers began to charge state and local government welfare agencies for services

Question 10

How did the great depression affect insurance?

Answer 10

• AMA – government payments “must be considered as a temporary expedient only, due to the unparalleled stress of the times”
• Economic reality (unpaid bills) led local medical societies to break from AMA and support some form of health insurance (MI, WA, CA, OR)
• By the mid 1930’s AMA began to shift its position and define the terms under which voluntary (private) insurance would be acceptable

Question 11

The Expansion of Private Health Plans 1930-1945

Answer 11

• Faced with losses during Depression, AHA supports “hospital insurance”
• Three forms of private insurance emerged:
  service benefit plans (Blue Cross),
  mixed service benefit and indemnity plans (Blue Shield),
  commercial indemnity plans

Question 12

1945 Truman Health Plan Proposal

Answer 12

• Expansion of hospitals
• Increased Support for Public/Child/Maternal health
• Federal aid for medical research and education
• Single health insurance for all “classes” (compulsory system where gov. to pay insurance for poor)
• “Medical services absorb only 4% of the national income, we can afford to spend more for health”
• AMA says under plan doctors would become “slaves” and offers (with AHA) extended voluntary insurance and expanded public services for indigent

Question 13

Hill Burton Act 1946

Answer 13

• AKA Hospital Survey and Construction Act
• $3m for state surveys and $75m annually for community hospital construction
• Funds to low income states but matching requirement favored middle income communities and kept smaller, unprofitable hospitals operating
• to build hospitals: requires matching contributions which led to more hospitals in communities with more money, which led to increased disparities
• Elections of 1946 brought Republican control of Congress and end to Truman’s plan until the 1948 Presidential election

Question 14

collective bargaining

Answer 14

a process of negotiation between employees and a group of employers aimed at agreements to regulate working salaries. The interests of the employees are commonly presented by representatives of a trade union to which the employees belong.

Question 15

Wagner Act (1935)

Answer 15

This act and creation of the National Labor Relations Board required management to bargain with unions over “wages and conditions of employment” – though silent on health care. Employers fought to exclude health care but Supreme Court in a case called Inland Steel affirmed that benefits (including health coverage) were part of conditions of employment

Question 16

employer-based coverage

Answer 16

• During WWII labor shortages caused employers in increase benefits – attract workers and improve loyalty
• Unions turned to collective bargaining : union negotiated plans went from 600k in 1946 to 27m in 1954 (1/4 of insur.)
• Series of strikes and Interior Dept. report on health of miners - led to higher royalty payments and union controlled medical care

Question 17

group plans

Answer 17

• Pre-paid group plan began to organize and take hold on the West coast and in NY (Kaiser Permanente and HIP)
• Group plans established hospitals and group medical practices
• Relationship with physician groups depended on plan make-up (ranged from employed physicians, partnerships to independent medical group practices)

Question 18

commercial insurance

Answer 18

• By 1953, 29 percent of Americans covered by commercial insurance, 27% Blue Cross and 7% independent plans
• Number of commercial insurers increased from 28 to 101
• Rating methods begin to distinguish Blues (“community rating”) from commercial (“experience rating” where prices set per group and could be lower for healthier workers)
• Blues initially resisted experience rating rating as “contrary to the community service ideal,” but later adopted to compete

Question 19

three main components of the Medicare bill signed Into law

Answer 19

1) Medicare Part A – compulsory health insurance under Social Security
2) Medicare Part B – government subsidized voluntary insurance to cover physician’s bills
3) Medicaid – federal assistance to states for healthcare for the poor

Question 20

certificate of need (CON) laws

Answer 20

• need approval from board before building new health care facility –> prove there’s a need
• passed in 20 states requiring approval for hospital and nursing home construction projects
• AHA favored CON as a means of limiting competition
• For-profit hospital chains, nursing home companies and physicians opposed CON
• first state to pass CON was New York

(LOOK BACK TO LECTURE 6 FOR MORE INFO ON CERTIFICATE OF NEED LAWS)

Question 21

Affordable Care Act (ACA) three legged stool

Answer 21

• community rating
• individual mandate
• subsidies

Question 22

Types of taxation

Answer 22

• Income (federal, state, local)
• Real Estate (state, local)
• Sales (state, local)
• Payroll (local)
• Financing (federal, state, local)

Question 23

Tax exemption in PA

Answer 23

“The General Assembly may by law exempt from taxation:
. . . Institutions of purely private charity, but in the case of any real property tax exemptions only that portion of the real estate which is actually and regularly used for the purposes of the institution.”

Question 24

5 features of a purely public charity (HUP test)

Answer 24

1) Advances a charitable purpose;
2) Donates or renders gratuitously a substantial portion of its services;
3) Benefits a substantial, indefinite class who are legitimate subjects of charity;
4) Relieves the government of some of its burden; AND
5) Operates entirely free from private profit motive.

Question 25

UPMC’s problem with HUP test

Answer 25

UPMC may have an easy time arguing that it meets most demands of the test . . . [b]ut meeting the fifth point of HUP – “operating entirely free from profit motive” – may pose more of a challenge.

Question 26

Obama’s 2008 pres campaign for healthcare

Answer 26

universal coverage, focus on the uninsured, reduce premiums through cost savings, National Health Insurance Exchange

Question 27

Why did employer-led health insurance begin?

Answer 27

• due to tax exemption for health insurance

- biggest tax subsidy in US

Question 28

What did tax policies (1930s) and Inland Steel decision (1940s) do?

Answer 28

• pushed towards voluntary/employer paid insurance over compulsory insurance

Question 29

Why was the policy decision made to allow unions to negotiate regarding health insurance (Inland Steel decision)?

Answer 29

During WWII there was an increase in unions. Unions are able to negotiate through collective bargaining. There was a debate about whether unions could negotiate about health insurance. The Supreme Court decided in Inland Steel case that unions have right to negotiate regarding health insurance. Decision cemented employer paid health coverage over national insurance. Major policy decision made by courts!

Question 30

Tax Policies in the 1930s

Answer 30

Social security did not include health insurance because interest groups/organized pressure against it and US population not sold on taxpayer funded compulsory insurance (want it but don’t want to pay for it). All of Trumans’ efforts just led to Hill Burton Act to build hospitals: requires matching contributions which led to more hospitals in communities with more money, which led to increased disparities.

Question 31

Reasons for Medicare/Medicaid

Answer 31

• Health insurance companies opposed government involvement in health care but didn’t want to insure poor, old people –> began to support some government intervention (Medicare/Medicaid).
• Medicare = many policies rolled up into one bill. Everyone benefited (boon for hospitals, insurance, doctors) because of ‘fee for service’ but costs for our system began to skyrocket

Question 32

Reconciliation of Balanced Budget Act

Answer 32

Special rule about how budgets are passed –> only requires 51 votes to debate and pass Budget Bills (instead of 60). ACA put in budget bill and this rule allowed it to get passed (Dems had enough votes to prevent filibuster)

Question 33

two drivers of federal spending

Answer 33

interest on debt and health care spending

Question 34

EHB requirements: what’s not covered for adults?

Answer 34

vision and dental

Question 35

Taxpayer subsidies and cost sharing reductions

Answer 35

• Taxpayer subsidies make ACA plans affordable (available up to 400% of poverty level).
• cost sharing reductions: tax payer pays to reduce out of pocket maximums

Question 36

Obama Administration strategy reflects lessons learned from failed Clinton effort

Answer 36

• Obama outlines principles/objectives, leaves details to Congress
• Principles do not put onus on employer, keeps options open on individual mandate

Question 37

President Obama’s Eight Principles for Health Reform

Answer 37

• Reduce long-term growth of health care costs for businesses and government
• Protect families from bankruptcy or debt because of health care costs
• Guarantee choice of doctors and health plans
• Invest in prevention and wellness
• Improve patient safety and quality care
• Assure affordable, quality health coverage for all Americans
• Maintain coverage when you change or lose your job.
• End barriers to coverage for people with pre-existing medical conditions

Question 38

Main drivers of health reform/federal deficit

Answer 38

• discretionary programs (security agencies, transportation, education)
• social security
• healthcare (medicare, medicaid)
• net interest

Question 39

Components of ACA to reduce number of uninsured

Answer 39

• Prohibition on rescissions - Prohibits all plans from rescinding coverage except in instances of fraud or misrepresentation
• Coverage of preventive health services
• Development and utilization of uniform explanation of coverage documents and standardized definitions
• Bringing down the cost of health care coverage
• Immediate access to insurance for people with a preexisting condition
• Fair health insurance premiums
• Reduced cost-sharing for individuals enrolling in qualified health plans
• Affordable choices of health benefit plans
• consumer choice

Question 40

Components of ACA to reduce costs

Answer 40

NO SIGNIFICANT COMPONENTS

Question 41

the number of uninsured before ACA

Answer 41

15.7% uninsured before, 9.2% after (according to CDC and Census data)

Question 42

What must a health benefits exchange do?

Answer 42

• Maintain a website to provide standardized comparative information on qualified health plans
• Certify qualified health benefits plans consistent with guidelines developed by the Secretary of HHS
• Assign a rating based upon relative quality and price to each qualified health benefits plan
• Use a standardized format for presenting coverage options under the Exchange
• Inform individuals of eligibility requirements for the state’s Medicaid program, CHIP program and screen and enroll eligible individuals in these programs
• Certify exemptions from the individual mandate
• Transfer information to the Secretary of Treasury on exemptions form the individual mandate, as well as on employees receiving subsidies through the exchange because the employer failed to provide sufficient affordable coverage

Question 43

What are components of a qualified health plan?

Answer 43

• Is certified by each Exchange through which it is offered
• Provides the essential benefits package
• Is offered by an issuer that is Licensed and in good standing in each state in which it is offered
• Agrees to offer at least one silver plan and one gold plan
• Agrees to charge the same premium whether the plan is sold through the Exchange or outside the Exchange

Question 44

What are the essential health benefits?

Answer 44

• Ambulatory services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance abuse disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative services and devices
• Laboratory services
• Pediatric services, including oral and vision care
• Preventive and wellness services and chronic disease management

NOT: vision & dental

Question 45

Levels of coverage

Answer 45

• Bronze level-Must provide coverage that provides benefits that are actuarially equivalent to 60% of the full actuarial value of benefits under the plan.
• Silver level-Must provide coverage that provides benefits that are actuarially equivalent to 70% of the full actuarial value of benefits under the plan.
• Gold level-Must provide coverage that provides benefits that are actuarially equivalent to 80% of the full actuarial value of benefits under the plan.
• Platinum level-Must provide coverage that provides benefits that are actuarially equivalent to 90% of the full actuarial value of benefits under the plan.

Question 46

ACA provides income-based tax credits

Answer 46

• Advanced Premium Tax Credits (APTCs) available to a taxpayer whose income is 100-400% of the federal poverty level (FPL) and who is not offered “affordable” employer-based coverage
• can only be used in the health insurance exchanges
• dollars from the credit will flow directly to the health plan in which the individual or family enrolls (individuals don’t wait until taxes are filed, but must file)

Question 47

ACA cost-sharing subsidies

Answer 47

• The ACA provides Cost-Sharing Reductions (CSRs) for out-of-pocket costs to eligible individuals with incomes ranging from 138% FPL to 400% FPL who purchase a qualified health plan through the Exchange.
• CSRs based on the premium cost for the second lowest cost silver plan (“benchmark”) in the Marketplace servicing the individual

Question 48

For ACA: What did the Supreme Court rule on the individual mandate?

Answer 48

• A majority of 5 justices held that the individual mandate is a constitutional exercise of Congress’ taxing power
• There was not a majority to uphold the individual mandate under the Commerce Clause or the Necessary and Proper Clause – only four justices would have done so

Question 49

For ACA: What did the Supreme Court rule on the Medicaid expansion

Answer 49

• Five justices held that the HHS Secretary may not withhold existing federal Medicaid funds for state non‐compliance with the Medicaid expansion
• The Court constrained the Secretary’s enforcement power while leaving the Medicaid expansion intact; states have financial incentive to comply, but the penalty for non‐compliance is limited to loss of Medicaid expansion funds (they can opt out)

Question 50

For ACA: What did the Supreme Court rule on the exchange subsidies?

Answer 50

• a phrase in the ACA says the subsidies are available only to people buying insurance on “an exchange established by the state”
• Finding in favor of the Obama Administration, Justice Roberts wrote in a 6-3 decision that “the context and structure of the act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase”
• Decision allows subsidies to be given to purchase of insurance on the state or federal exchanges

Question 51

Policy traps

Answer 51

• Tax breaks for employee sponsored health insurance
• Protected classes for health coverage: elderly, children, Veterans, low-income individuals, those with disabilities
• Federal investments in hospitals

Question 52

Window of opportunity

Answer 52

A crucial element to in health reform has been having a political majority in both the House and Senate. It is the political circumstance that opened the “window of opportunity” in 1965 with the passage of Medicare and Medicaid and in 2010 with the passage of the ACA