What is Health Policy?What is Health Policy?

HSA 6152HSA 6152

Spring 2007Spring 2007

Robert G. FrankRobert G. Frank

What is Policy Analysis?What is Policy Analysis?

• Multi-element process of assess and analyzing components of a plan of action– Not an exact science, more of an art

• Reviews the component parts of an issue or problems– Considers new options.

What is Policy Analysis?What is Policy Analysis?

• Multi-element process of assess and analyzing components of a plan of action– Not an exact science, more of an art

• Reviews the component parts of an issue or problems– Considers new options.

Policy AnalysisPolicy Analysis

• New discipline– Dates to early 1960s

• Policy analysis should – Improve decision making– Consideration of broad sets of alternatives

• Use of more systematic tools

Policy AnalysisPolicy Analysis

• Neutral analysts– Consider all options

• Advocates for best options serving “national interest”

1970s 1970s Amendments to the Amendments to the

Legislative Reorganization ActLegislative Reorganization Act

• “Congressional declaration of analytic independence from the administrative branch”– Created CBO, CRS, and OTA

Evolution of Policy AnalysisEvolution of Policy Analysis

• Clients not only decision makers– Individuals stewarding institutional

governance• Planning• Budgeting• Regulation

Office of Assistant Secretary Office of Assistant Secretary for Planning and Evaluation for Planning and Evaluation

(ASPE)(ASPE)• ASPE

– Principal policy advisor to the secretary– Policy coordination, legislation development,

strategic planning, policy research and evaluation and economic analysis

Office of Assistant Secretary Office of Assistant Secretary for Planning and Evaluation for Planning and Evaluation

(ASPE)(ASPE)• Use of office has varied with

Administrations– Staff vary, initially Ph.D. economists…

many from DoD• Over time staff has varied

– Staff now serves entire department– Also, other units have policy analysts, so

ASPE is only one voice to Secretary

Office of Assistant Secretary Office of Assistant Secretary for Planning and Evaluation for Planning and Evaluation

(ASPE)(ASPE)

Early methodology and analytic techniques relied on economic models

Evolution to reliance upon policy expertise of office vs. policy analysis

Needed skills for ASPENeeded skills for ASPE

• Program knowledge

• Statistics

• Microeconomics

• Cost-benefit analysis

Congressional Research Congressional Research ServiceService

CRSCRS• Part of the Library of Congress

• Most recent incarnation dates to 1970 Legislative Reorganization Act– Act allowed CRS to triple staff– Now @ 700 individuals– New staff teamed with experienced

individuals

CRSCRS

• What is the legislative hook?

• High volume, quick turnaround– “a reference factory”

• Emphasis on legislative consultation, interdisciplinary work, & anticipatory work

CRSCRS

• Provision of background papers to the committee

• Assistance in design of congressional hearings• Suggestions of witnesses for hearings• Possible questions for Members to ask

witnesses• Attend hearings to supplement questions

CRSCRS

• Consultation at mark-ups

• Hearing testimony

• Consultation on the floor as requested

• Prepare conference agendas

• Consultation at conferences

CRSCRS

• Most important role may be participation in creation of new legislation

• Work not available to the public– Unless released by a Member

CRSCRS

• Varied products– Electronic briefing books– Background reports on topics

• CRS staff also interacts with Members and staff

CRSCRS

• In-house capacity – Modeling– Create microsimulation models– Fiscal analyses– Culture emphasizes qualitative approaches

and oral tradition

Think TanksThink Tanks

• Originally, U.S. – Now world-wide

• Have blended policy outside of political environment

• Established by interest groups– Interest groups can adapt models developed

by official sources

Heritage FoundationHeritage Foundation

• Founded in 1973 – Formulate and promote conservative policies based

on principles of free enterprise, limited government, individual freedom, traditional Americans values and strong national defense

• Seeks to differentiate itself from other conservative think tanks by focusing on influencing decisions very early in the process

Heritage FoundationHeritage Foundation

• Established in 1973 with 9 staff– 1997 staff of 180

• Added research staff in 1980

• Funding from individual sponsors

Heritage FoundationHeritage Foundation

• Has pushed boundary of tax exempt organizations

• Replaced the Kennedy School orienting new conservative congressman

• Focus on Congress --- members and staff

Health PolicyHealth Policy

• Peters (1999)– Pubic policy

• “sum of government activities, whether acting directly or through agents as it has influence on the life of citizens”

• Birkland (2001)– “ a statement by government of what it intends to

do or not do, such as laws regulation, ruling, decision, or order as a combination of these”

Health PolicyHealth Policy

• Cochran and Malone (1995)– “policitical decisions for implementing

programs to achieve societal goals

• Longest 2002– “authoritative decisions made in the

legislative, executive, or judicial branches of government that are intended to direct or influence the actions, behaviors, or decisions of others.

Health PolicyHealth Policy

• Authoritative– refers to decisions made in any part of

government• all three branches

Policy and HealthPolicy and Health

• When public policies or authoritative decisions refer to health it is health policy

• Includes federal, state, and local government

• Health policy affects classes of citizens– physicians, providers, consumers, the

poor, the elderly

Health PolicyHealth Policy

• Laws

• Rules

• Regulations

• Judicial Decisions

Health PolicyHealth Policy

• In the US: Consists of many decisions, rather than one large decision

• Other countries have integrated, coordinated health systems (Great Britain, Canada)

Health PolicyHealth Policy• PL 89-97 1965 law establishing Medicare• Executive order establishing federally funded

health centers• Court ruling that an integrated delivery

system’s acquisition of another hospital violates federal anti-trust

• County health department’s procedure for inspecting restaurants

• City government’s ordinance banning smoking in public places

LawsLaws

• Laws enacted at any level of government create policies

• Laws passed at federal and state levels– federal laws: 1983 Amendments to the Social

Security Act (P.L. 98-21)– state laws govern professional practice

Health Policy and MarketsHealth Policy and Markets

• Capitalist countries such as the USA assume – markets are critical to production– consumption of health services

Health Policy InterventionsHealth Policy Interventions

– intervention needed when markets fail

– party models have differing tolerance for market imperfection

Conditions for the MarketConditions for the Market

• True markets require:– buyers and sellers have adequate information

to make informed decisions– large numbers of buyers and sellers– easy entry to the market– competitive products that can replace each

other– adequate quantity of products

Health Policy CategoriesHealth Policy Categories

• Allocative Policies– provide net benefits to some at the

expense of others• subsidies for medical education• rural hospital support• Medicare and Medicaid

Health Policy CategoriesHealth Policy Categories

• Regulatory Policies– policies designed to influence actions,

behaviors, and decisions of others• market-entry restrictions• rate or price setting controls• quality controls• market preserving controls• social controls

Health Policy CategoriesHealth Policy Categories

• Regulatory Policies– market entry, rate controls, quality controls,

market preserving controls are all economic regulation

– social controls seek socially desired outcomes: smoke free workplace, nondiscriminatory hiring practices

Market-Entry RestrictionsMarket-Entry Restrictions

• State licensing laws

• Planning programs

• CON

Price SettingPrice Setting

• Out of vogue

• Electric and gas utility control

• PPS

QualityQuality

• Food safety and quality standards

• Medical Devices Amendments (P.L. 94-295) to the Food, Drug and Cosmetic Act (P.L. 75-717)– placed medical devices under FDA

Market PreservingMarket Preserving

• Health markets are not true markets; this class of regulatory action addresses market imperfections

• Sherman Anti-trust laws

State Health PolicyState Health Policy

• Dynamic balance between state and federal policy

• Recent ascendance of state policy

– failed national reform in 1994-1995

– Medicaid growth

State Health Policy RolesState Health Policy Roles

• Lipson (1997)– financing or paying for several categories of

people– public health – regulating health professions licensing and

practice.

State Health Policy RolesState Health Policy Roles

• Financing– Medicaid

• about 15% of most state budgets

– State employee health benefits (large group when you consider teachers, employees, etc)

– uninsured

State Health Policy RolesState Health Policy Roles

• Public Health – oldest most fundamental state health

responsibility– States granted constitutional authority to

establish laws to protect public’s health and welfare

• engages states in environmental protection• Federal government delegates to states

responsibility for monitoring the environment– monitoring workplace and food safety

State Health Policy Roles State Health Policy Roles

• Professional Regulation

–license various professionals

–write practice acts

–license and monitor compliance

State Health Policy RolesState Health Policy Roles

• States regulate the content, pricing and marketing of insurance plans

• Under the McCarran-Ferguson Act (P.L. 79-15)

ERISA 1974ERISA 1974

• ERISA preempts state’s regulation of pensions and self-insured plans

– COBRA 1985 – allows employees to purchase health coverage for 18 months post employment

– 1996 HIPPA (P.L. 104-191)• allows employees guaranteed access to health coverage

– company must provide benefits– premiums can be renewed assuming payment

ERISAERISA

• Enacted to remedy fraud mismanagement in private-sector employer pension plans– Includes broad preemptive language

providing for federal law to supercede all state law

• “relate to employee benefit plans sponsored by private-sector employers or unions

ERISAERISA

– ERISA has exemptions to preemptions• Self-insured plans cannot be regulated• Insured plans can be regulated by states

– ERISA has led to 25 years of court interpretations

• Courts have noted ERISA is “conspicuous in its breadth”

ERISAERISA

• 1995 Travelers Insurance decision – Court limited ERISA’s peremption provisions

• Limited types of state law impacts that “relate to” private sector employment

• Allowed NY hospital rate setting law to impose surcharges upon hospital bills paid by insurers and ERISA plans

– ERISA still prohibits mandating employers offer benefits

State Laboratories State Laboratories

• State viewed as “health coverage laboratories”– ability to implement local solutions to

coverage• little evidence the laboratories actually

design experiments with national implications

– 50 individual markets• all politics are too local

State roles increasingState roles increasing

• States may be too idiosyncratic

• States still face large problems and increasing problems

Health Policy Policy vs Policy Health Policy Policy vs Policy ObjectivesObjectives

• Policies developed to achieve someone’s policy directives

• The objectives shape health policy

Current US Health Policy Current US Health Policy ObjectivesObjectives

• Adding years and quality to life

• Eliminating disparities in health and access to health services

• Improving quality of health services

• Reducing cost of health services

Current US Health Policy Current US Health Policy ObjectivesObjectives

• Eliminating environmental threats to health• Improving housing and living conditions• Improving economic conditions • Improving nutrition• Moderating consumption of food, drink and

chemicals• Modifying unsafe sexual practices

Domain of Health PolicyDomain of Health Policy

• Remarkably broad

– physical Environment

– biology

– social

– tax issues

Domain of Health PolicyDomain of Health Policy

• Personal Responsibility and Work Opportunity Reconciliation Act (P.L. 104-193)– AKA Welfare Reform Act

• modified welfare eligibility• also modified Medicaid eligibility for key welfare

benefit– AFDC

Personal Responsibility and Personal Responsibility and Work Opportunity Work Opportunity

Reconciliation Act (P.L. 104-Reconciliation Act (P.L. 104-193)193)

• Replaced AFCD with Temporary Assistance to Needy Families (TANF)

• TANF provided in state block grants– states provided broad flexibility to design

support and work programs• states must impose time limits on support

Personal Responsibility and Personal Responsibility and Work Opportunity Work Opportunity

Reconciliation Act (P.L. 104-Reconciliation Act (P.L. 104-193)193)

• Allows AFDIC eligible families to enroll in Medicaid, but new identification methods are needed

Political NegotiationPolitical Negotiation

• Involves two or more parties bargaining – win/win – competitive -- win/lose

Political NegotiationPolitical Negotiation

• Cooperative Negotiating Strategies Work best when:– goal of both negotiators is to attain fair,

specific outcome– sufficient resources are available– both negotiators believe they can achieve fair

outcome

Political NegotiationPolitical Negotiation

• Competitive Negotiation works best when:– each negotiator want to achieve the most possible.– resources are not sufficient for both negotiators to

achieve their goals.– both negotiators think it is impossible for both to

succeed.– the intangible goal of both negotiators is to beat the

other.

Economic Markets vs. Economic Markets vs. Political MarketsPolitical Markets

• Health policies– all policy– is made within political markets– operate much like traditional markets

• Differ from traditional markets– no money exchanged– less direct relationship than traditional

markets

Sellers Economic Exchanges in Market Transactions Buyers

(Suppliers) (Demanders)

Economic Markets vs. Economic Markets vs. Political MarketsPolitical Markets

• Demand for health policy markets– knowledgeable individuals– organizations– organized interest groups

• AMA• AARP• AAHP• PhRMA

Benefits of Interest Groups Benefits of Interest Groups AmbiguousAmbiguous

• James Madison “The Federalist Papers” in 1788– described groups he labeled “factions”– Madison felt factions were inherently bad– “mischiefs of the factions” must be contained

by setting it against other groups ambitions

Pluralist PerspectivePluralist Perspective

• Everyone’s interests represented in one or more interest groups

• View interests groups as positive• Interest groups provide linkages among

people and government• Interest groups compete for outcomes;

creates counterbalanced vectors• No group will become too dominant

Pluralist PerspectivePluralist Perspective

• Groups must rely on political power bases

• Groups representing concentrated economic interests must have money

• Groups representing consumer groups must have members

Interest GroupsInterest Groups

• More than 22,000 in US

– concern with pluralist perspective

• all 22,000 groups given legitimacy

Interest Groups Have PowerInterest Groups Have Power

• Lowi labeled “interest group liberalism”– to address excessive deference to interest

groups

• Edwards, Wattenberg & Lineberry, 2001 – Hyperplualism

Interest Groups have PowerInterest Groups have Power

• Critics:– Interest groups too influential

• responding to interest groups creates conflicting policy

• Government tries to satisfy conflicting groups with policy satisfying all groups

ElitistElitist

• Models argues those who control key institutions have power– act as gatekeepers for public policy process– take powerful roles in nation’s economic and

social systems thereby overly controlling policy

Elitist ModelElitist Model

• Real power lies within only a few groups• Members of the power elite share a consensus

or near consensus on basic values– private property rights– preeminence of markets– best way to organize– limited government– role of individual liberty

ElitistElitist

• Protect power base

What Must Health Care What Must Health Care Reform Accomplish?Reform Accomplish?

• Restrain cost

• Create access and equity

• Improve quality

• Promote health