Basics of Health Care Financing Policy in the U.S.:

“What is the role of professional nursing in advocating for patients and families?”

Presented and written by Anne Jones MA, BSN, RN

It was my privilege to give a talk to our AORN of Twin Cities chapter on October 9th, 2017, on an issue that matters to all of us as nurses, patient advocates, individuals, and family members. I spoke on the “Basics of Health Care Financing Policy in the U.S.: What is the role of professional nursing in advocating for patients and families?”

My purpose was to take a look at health policy and the high cost of health care in the U.S., explain where we are and how we got here, describe the impact on individuals, families, and society, remind ourselves of the many attempts over the years to address these costs, review some of the barriers to change, and describe the principles of a health care financing system that would provide a comprehensive, affordable, high quality health care system that covers everyone. I ended by listing several areas for advocacy for us as nurses to let elected officials know how concerned we are about ongoing problems with cost and coverage.

Health care in the U.S. costs too much, does too little, and leaves too many people out. Nurses have an opportunity to build on the high level of public trust enjoyed by the profession to use our role as advocates to champion and fight for real reform in how we pay for health care in this country. The health care industry currently consumes over 17.8% of GDP – one-sixth of an almost $18 trillion dollar economy – yet even with the premium subsidies and the Medicaid expansion associated with the Patient Protection and Affordable Care Act (PP & ACA), passed in March of 2010, some 27 million people are still uninsured. Many more are underinsured or find themselves spending so much money on premiums, co-pays, and deductibles that they cannot afford to use the insurance that they supposedly have other than for a catastrophic illness.

Total health spending in the U.S. is $3.2 trillion, one-third of which goes to the administrative overhead associated with our multi-payer system. These costs are incurred as a result of the numerous, complex processes related to billing, coding, pre-authorizations, denials, appeals, documentation, marketing, executive pay, shareholder return, etc., required on both the payer and the provider sides of the system. Health spending has now reached $10,035 per capita, two to three times the per capita spending of other developed countries – all of which, unlike our country assure universal coverage – and on many measures achieve health outcomes superior to that of the U.S. Please see a report from The Commonwealth Fund, “Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care” for details.

We are the only developed country in the world that does not guarantee health care to all of its people. Our employment-based model, largely an accident of World War II wage and price controls, means that when you lose your job, you lose your health insurance, if your health insurance is linked to your employment. Furthermore, two-thirds of total health spending is publicly funded, yet many Americans have extremely high out-of-pocket costs or go without. The cost to employers of providing health insurance coverage holds down wages and reduces the ability of American businesses to compete around the world.

Other consequences of how we pay for health care are that two thirds of personal bankruptcies are medical bankruptcies – 70% of those persons had health insurance, and half of the U.S. population report forgoing needed care, including not filling prescriptions, due to cost. The harm to individuals and families related to health care costs include reduced ability to save for education or retirement, make investments, meet basic needs for housing and food, or improve their standard of living. The harm to society as a whole is lack of funds for infrastructure investment, schools, social programs, and public services. Physicians report a high level of burnout and loss of job satisfaction due to the administrative burden associated with our multi-payer system.

Complicating the efforts to contain costs is a medical-industrial complex that consumes one-sixth of the economy, creates huge profits for certain sectors, and fails to meet the test of any sort of a functioning marketplace. The phenomenon of “health care as a business” which seems to have taken hold since around the 1980s, has created a monster that consumes an ever-increasing share of personal and public resources. According to Elizabeth Rosenthal in An American Sickness: How Healthcare Became a Business and How You Can Take It Back, a noticeable shift in focus from science and healing has taken hold, encouraged by the influence of consultants from the business sector, that is failing society as a whole. We seem to accept the high cost of health care in this country with relatively little critical analysis or scrutiny.

It isn’t as though we haven’t tried. Attempts over the last 40 years to rein in costs have included literally dozens of strategies designed and implemented with good intentions, often at the cost of significant additional administrative burden.These efforts include such initiatives as diagnosis related groups, health maintenance organizations, utilization review, accountable care organizations, preferred provider organizations, cost-sharing and consumer-directed care insurance plans, and on and on. None of these have resulted in significant or sustained reductions in health spending.

Efforts to reform how we pay for health care and to assure universal coverage in this country actually go back over a hundred years. Even when people agree that cost is a serious issue, real reform has faced significant ideological and political barriers to change, along with opposition from the well-funded for-profit side of the health care industry and physician groups, resulting in the current unsustainable economic trajectory.

The major political parties differ sharply on solutions to health spending and access to coverage for health care. What has been lacking is the political will for change fueled by demand from an organized, informed public.

The PP & ACA accomplished two important things – regulation of the private insurance market to prohibit the most harmful measures used to control their costs including lifetime caps, denials based on pre-existing health conditions, dropping coverage, gender and age-based charges, etc. – and an increase in the number of insured through the expansion of Medicaid eligibility and public subsidies for purchase of private insurance coverage. The PP & ACA did not address the underlying problem of the administrative burden associated with our multi-payer system nor the out-of-control prices for drugs, devices, diagnostics, hospitalization, and fees, due to the political reality facing proponents of the ACA in 2010 in getting the law passed.

According to recent surveys, threats to the health care law have served to increase the percent of people who agree that there is a role for government in assuring access to health care. Numerous professional associations and patient advocacy groups including the American Nurses’ Association and the American Medical Association oppose the changes proposed by the majority party. Efforts to “repeal” or “repeal and replace” failed in 2017 but various changes are already underway to reduce funding needed to support provisions in the law. So, now that we’ve tried everything else, I believe it’s time to agree that health care is a basic human need rather than a commodity. We have already demonstrated that we can provide high quality health care under an other-than-private insurance model with Medicare and Medicaid, and Minnesota Care in our state.

I offered as a solution a system that is publicly financed and administered, privately delivered-guided by the principles of a system that is affordable, accountable, comprehensive, efficient, equitable, effective, safe, accessible, that controls costs by negotiating fair prices and fees. This solution would also emphasize primary care, prevention, chronic disease management, preservation of the provider-patient relationship, workforce utilization, and public health, and is portable – not linked to employment. Either we continue to defend the status quo or we embrace a future free from the fear of financial ruin due to health care costs.

Organizations working for change, in addition to numerous advocacy groups, are the Minnesota Nurses’ Association, Health Care for All Minnesota, and Physicians for a National Health Program Watch this newsletter and chapter meetings for opportunities for advocacy.