CourseHealth Policy Law - Law 610B
Instructor Larry Aldrich   View Faculty Page
Emaillaldrich@aldrichcapital.com
Units 3 - Graded
Prerequisites:

None

 
Recommended Courses:

None

 
Overview

     Health care spending in the United States in 2011 was projected by the economists at Medicare to be about $2.7 trillion or about 17% of GDP an average of $8,600 for every man, woman and child in America; such spending will increase about 8% over 2010, a rate that appears to be accelerating as the country ages and Baby Boomers hit their mid-60s. These same economists project that health care spending will increase to $4.6 trillion by 2020, about 20% of GDP, a per capita cost of $13,700.

     The economic conditions over the past several years have (1) reduced the number of employees on private insurance and (2) increased the number of citizens seeking government paid for and/or provided health care; there has also been a reduction in the number of tax-paying Americans versus the number in individuals who need government health care subsidies.

     In Arizona, for example, the number of individuals who receive care through AHCCCS/Medicaid has increased to almost 1.4 million from about 500,000 in 2000 (AHCCCS Population Highlights, accessed at www.azahcccs.gov), although recent policy decisions have reduced the number to about 1.1 million. Of course, that is just a policy decision; such folks are not now suddenly healthier and richer. Moreover, every day more than 10,000 Americans turn 65 and qualify for Medicare. The Medicare trust fund is now projected by 2024 to run out of money to pay full benefits to Medicare recipients.

     During the past decade, average annual employer-sponsored insurance premiums (including worker contributions) have increased to $13,770 from $6,438, an increase of 114%. Employer Health Benefits  2010 Summary of Findings, The Kaiser Family Foundation. There has been increased interest over this decade to shift more of health care spending to employees in the hope that their having more skin in the game will moderate spending. Thus, while the costs of private insurance (as measured by premium increases) have more than doubled over the most recent decade, the costs borne by employees have increased faster, by 147%.

     One thing for sure: Costs have not moderated despite cost shifts to employees. We are focused on the wrong drivers of care  competition at the plans, hospitals and doctors levels rather than how we can get and stay as healthy as we can be, and how necessary care can be as effective as possible. We do have some of the best health care delivery systems in the world. Yet overall statistics suggest some problems: Per the OECD (Organization for Economic Cooperation and Development), in 2011 the United States spent 2.5 times the OECD average on health expenditures per capita; yet in many ways the health of the US population does not reflect that spending. For example, the United States often does not manage chronic disease well (compared to other developed countries), with significantly higher rates of hospital admissions for asthma than the OECD average.

     And, as indicated, we do not take care of ourselves to limit the need to access health care. Our diets could be much better, we could exercise more, we could no longer smoke, we can manage diabetes more carefully, etc. An obesity epidemic is underway  the US has the second highest rate of childhood obesity among OECD countries (behind only Greece; 2011 OECD Report). The trends are alarming.

     In 2004, Michael Porter and Elizabeth Olmstead Teisberg wrote in the Harvard Business Review about Redefining Competition in Health Care. They noted that we have zero sum competition in health care in America, which is a consequence of a series of poor strategic choices made over the prior decades. Thus, we currently see in the United States:

  • The wrong level of competition (at the provider level rather than at the care level) 
  • The wrong objective (focus on cost reductions rather than value of care received) 
  • The wrong forms of competition (again focused on cost rather than care) 
  • The wrong geography (care delivered locally rather than regionally or nationally)
  • The wrong strategies (full service offerings rather than focused care delivery)
  • The wrong information (costs, coverage, benefits rather than care outcomes) 
  • The wrong incentives for payers (defensive medicine, cost-shifting and exclusion rather than successful care) 
  • The wrong incentives for providers (e.g., defensive medicine not treatment)

     Coupled with the increasing cost of health care is the clear understanding by business (public and private) leaders that even though they're paying more for health care benefits than ever, their employees become less healthy each year; moreover, daily productivity in the workplace (due to illness and sick leave) is reduced. The design of todays typical benefit package focuses on sick care with little measurable focus on being healthy  we continue to talk about (and try to incent) fitness rather than overall healthy behaviors.

     Porter and Teisberg note, In buying health care services, [employers] have forgotten some basic lessons of how competition works and how to buy intelligently. Ignoring differences in quality, [employers] have bought health plans based on price rather than on value&.Rather than approve hospitals or tell them how to run their operations, employers need to insist that choice and information be made truly available at the level of specific diseases and treatments so that patients and referring physicians can choose providers that use efficient, state-of-the-art methods of care.

     As we enter the post-Supreme Court Patient Protection and Affordable Care Act (PPACA) decision period, the inexorable choices ahead will be opaque. In this course, successful students will learn how to analyze laws and regulations to ensure that successful policy choices can be implemented  in local communities, around States and across the Nation.

 
Materials

Law and the American Health Care System, Second Edition, by Sara Rosenbaum, David M. Frankford, Sylvia A. Law, Rand E. Rosenblatt (Foundation Press, 2012). Supplemental materials distributed in class or as noticed, in particular the US Supreme Court decision on PPACA, the PPACA bills themselves (to the extent some legislation remains valid) and various State approaches to delivering health care to its citizens.

 
Course Format

The class will be in the nature of debates and discussions that should occur in various State and Federal legislatures that discuss the relevant issues, balance the trade-offs, and seek to achieve consensus and the agreement on key issues and how to successfully address them. Class participation by all students is a must and will have a major impact on the final grade!

 
Written Assignments

Three essays  based on course discussion, presentation and argument, and additional extra-curricular reading  will be required. The first two essays will be 4-5 pages; the final essay will be up to 10 pages long.

 
Type of Exam

Final essay.

 
Basis for grading

Class participation (10%), two short (4-5 page) essays (50% total) and one final essay (40%).

 
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