Abstract
Survival in the health care world requires an informed person. Healthcare providers, administrators and patients are affected by decisions and health policies made on health care programs. Healthcare policies are closely tied with politics of United States where decisions are made to affect the entire population.
Health policies are as a result of decisions made by many people in hospitals, the government, insurance industry, and some business corporations. Health care policies affect the effectiveness of service delivery in current health care programs.
This paper seeks to highlight the influence of health policy on the development, operation, design, and effectiveness as it relates to the effectiveness of health care delivery systems of health care program.
Introduction
Health care programs offer the primary means of getting access to health care in the United States today. Designing of health care programs like Medicare and Medicaid involves extensive interactions among health insurers, health care providers, individuals, public and private sectors, and the government. Proposals in health coverage in general focus on their policy impact.
Majority of proposals give only sketchy information about management. In addition, administrative costs stand for only a diminutive part of the total costs of a proposal (Darr & Longest, 2008).
Nevertheless, when matters of implementation are not addressed, expensive policies or programs fail to achieve their objectives. Health care policies affect the management and administrative issues, and this affects the effectiveness of health care programs (Morone, Litman, & Robins, 2008).
An important goal of health care programs is expanding access to inexpensive, high-quality health care (NAPA-NASI, 2009). This goal is met when health care policies provide a supportive environment. Health care policies affect planning, coordinating and implementation of healthcare programs.
It also affects the process of regulating health insurance, streamlining health care program markets, and the process of designing managerial organizations for health reform (Morone, Litman, & Robins, 2008).
Health care system in United States
The three major issues facing the health care system of United States are access, cost, and quality. Improved access may quickly become expensive without slowing the increase of costs and without increasing the quality of health care (NAPA-NASI, 2009). Improvements quality and cost are consecutively likely to necessitate changes in the process of delivering health care.
Financial access in health care is an important issue in United States; different financing models may have different implications on control of costs and performance improvement of the health care delivery system like Medicare and Medicaid (Angeles, 2009). The relationship between service delivery in health coverage and containing health costs is of utmost importance.
Committed public administrators can make any health program to work on the ground. However policy makers can make the administrators’ task to be easy by considering administrative issues when creating proposals and legislations (NAPA-NASI, 2009). This is an important factor in creation of a successful health program. Administrative issues can either be specific to certain plans, or apply to a wide range of programs.
The establishment of Medicare program in 1965 and the implementation of latest health care reforms experiences, gives some common lessons in planning for service delivery of health programs (Merlis, 2003).
A case study of Medicare
Medicare was signed into law in1965 by President Lyndon Johnson, and began offering benefits less than a year later in 1966. The program offered health care coverage to approximately nineteen million elderly people in US. Of the nineteen million, only half had previously had some form of health insurance.
Medicaid, a joint federal-state program of medical assistance for poor people was also created. Medicaid created some significant alterations to disability benefits and social security retirement (NAPA-NASI, 2009).
The beginning of Medicare offers good instance of impact of health policy on healthcare programs. Implementation of Medicare had started earlier before the legislation was passed. Congressional leaders and administration had discussed the part of Medicare dealing with hospital insurance during the early 1960s. The provisions of health insurance had been refined to assist administration.
The program was supposed to begin in midsummer when hospital occupancy was low. Nursing homes coverage was supposed to start six months after hospital benefits to separate the two. A proposal to give beneficiaries a choice of benefit packages was rejected following its administrative complication (NAPA-NASI, 2009).
Some aspects of legislation and health policies simplified the implementation of Medicare. An important policy aspect of Medicare was that it was a fully federal program that did not depend on the different interests and administrative capabilities of the states. It is important to note that there was a political agreement was not meant to reform delivery of, or payment for, health care.
There was an agreement from the beginning of discussions that Medicare was to be administered by the Social Security Administration.
This policy allowed the program to experience a tremendous success at the beginning. Social Security Administration had put in place a network of field offices for taking care of Medicare beneficiaries. The administration was supportive of the new program and was willing to take some chances to ensure its success (NAPA-NASI, 2009).
The government of the day contributed a lot in designing of health policies. The federal government understood that Medicare was a main concern for the presidency of Johnson. The General Services Administration and the Civil Service Commission cooperated with Social Security to ensure the success of the program. The Social Security agency received additional funding, new staff and its training and new field offices.
Social Security Administration devoted a small team to run Medicaid as compared to Medicare. In addition, its design and implementation was largely left to the states. The agency was left to implement and run the program without interference from the office of the president (Baucus, 2008).
The only notable major instance where the office of the president got involved was a few weeks before the launching of the program. The president was concerned about the likelihood of certain hospitals to be overwhelmed by a flood of newly insured elderly people. A system that was to track hospital occupancy rates was created to take care of this issue.
The veterans and military hospitals were placed on standby, and plans were established to transport people. Eventually, capacity of hospitals proved more than enough to accommodate more people than it was anticipated (Darr & Longest, 2008).
The Social Security Administration developed consensus over policies via various informal task forces and working groups instead of depending on the formal federal rulemaking process. Proposed policies were presented to “the Health Insurance Benefits Advisory Council” after far-reaching staff work and discussions with all stakeholders. The agency took the council’s advice, although it was not a requirement.
Rather than in final regulations, policies were integrated in the conditions of participation for health care providers. In this regard, hospitals were required desegregate. Hospitals were required to comply with the Civil Rights Act by the federal officials (Ebeler, Van de Water, & Dem, 2006).
Policies were also designed to provide a tight time frame for the magnitude of the task. This facilitated implementation of Medicare in timely fashion due to the sense of urgency. The administration of Social Security was motivated to boost its morale.
Offices were opened on evenings and weekends to allow more applicants into the program. The program also gained considerable support from advocacy groups and aging organizations. After enactment of the program, a lot of cooperation was obtained from all stakeholders (Etheredge, 2009).
Regulation of health care programs and health insurance
Health care programs have similar regulatory issues as other forms of insurance. The person covered under the healthcare program requires the program to provide a contract that meets realistic expectations about coverage. The individual also requires the health insurer to explain the nature of the cover being offered.
As agreed in the health insurance policy, the individual requires his/her claims to be paid promptly and fairly. Before enrolling people into health care programs, the risks are assessed before the cover is granted. In ordinary health insurance programs, the insurer assesses the risks and may decide to decline the cover depending on risks (Hacker, 2007).
Health insurance covers have had cases of fraud in marketing and claiming process. The government through state authorities has regulated the issuance of health insurance covers to protect the consumers.
The federal government has also become more involved in financing and insurance of health care. Since the launch of healthcare programs, the authority of the states to control and regulate health insurance has been well established (Jost, 2009).
The Supreme Court decided to put the health insurers under the federal control in 1945. The McCarran-Ferguson Act which enables the states to control insurance business was passed by the Congress. In each state, the insurance industry is regulated by a division of insurance or similar agency.
The National Association of Insurance Commissioners (NAIC) controls and coordinates the regulation of multistate health insurance agencies. The model laws and regulations of NAIC usually act as the foundation for state policies. It also brings some degree of consistency to regulation of health insurance. Some premium taxes are imposed by the states on health insurers as a source of income (Hacker, 2009).
The original emphasis of health insurance regulation was making sure that the financial accountability of insurers to pay claims was met. The federal bankruptcy code excludes insurers from its coverage and leaves the issue of assuring the solvency of the insurer to the states.
States have designed the process of managing insolvent health insurers and take care of their financial responsibilities. Traditional concerns of regulations are getting rid of deceptive advertising and marketing, follow-ups of consumer feedbacks, and review of health insurance policies (Monheit & Cantor, 2004).
Health insurers are faced with challenges when covering small groups since they pose threats of adverse selection. Small groups and individuals are sometimes denied the cover, have their covers cancelled or not renewed. High risk groups are sometimes given long waiting periods.
Administrative activities, marketing and other expenses increase the cost associated with small groups and individual health insurance policies as compared to large groups (Van de Water & Nathan, 2011).
The state started to enact reforms of health insurance market associated wit small groups in 1990. Major changes included guaranteed issue and renewal of policies regardless of health status of individuals.
Restrictions on exclusions of existing health conditions were done to limit the difference in premiums. State regulators have to review premium schedules and insurance policies to ensure that they are in compliance and to limit on rates (Monheit & Cantor, 2004).
A few years ago, the states took deregulatory measures to assist the spread of high deductible health insurance plans. In 2003, the Medicare Modernization Act approved tax subsidies for health savings accounts (HSAs) amid highly deductible health plans.
The law did not obstruct any state insurance guideline. However, the states provided that the tax subsidies for HSAs would be accessible only in states that allowed high deductible plans (NAPA-NASI, 2009).
Regulation of insurance has been a responsibility of the states for a long time. However, the roles of the federal government have grown in recent past. Federal regulation is primarily carried out through the income tax system, the Medicare and the Medicaid programs.
The initial administrative rulings that employee contributions to health insurance plans sponsored by the employer are not taxable to both were confirmed by the Internal Revenue Code of 1954. The tax subsidy has been conditioned on different legislation requirements although IRS gives little omission and has by and large been slow to create implementing policy or impose tax punishments for infringements.
For instance, nondiscrimination provisions of the tax code forbid employers who are self insured from giving better tax favored health coverage to employees who are highly paid (NAPA-NASI, 2009).
Presently, Medicare and Medicaid cover approximately a quarter of US citizens, and a third of health care expenses. The rules that regulate the coverage and payments for these programs constitute an important form of federal regulatory activity (Angeles, 2009). The result of failure to comply with the policies of the program is denial of program eligibility or payment.
In addition submitting inaccurate claims can results to civil or criminal penalties. Medicare is the largest purchaser and regulator of health care in the United States. This enables the program to exert a significant influence on the rest of the health care system (Ebeler, Van de Water, & Dem, 2006).
Public programs and private insurers have widely adopted the coverage policies and the payment system of Medicare. Majority of private health insurers follow Medicare’s lead in approval and adoption of new medical technologies.
New payment mechanisms used by Medicare have been widely adopted by the private sector. For instance, the private sector has adopted the prospective payment system for hospitals and fee schedule for medical practitioners (Baucus, 2008).
Medicare influences the way health care is provided through its participation conditions for hospitals and health plans. In addition, Medicare influences administrative procedures including reporting requirements and review practices of claims. State regulations that conflict with requirements of Medicare are generally preempted by the federal government.
In this category are state regulations of private health plans that contribute in Medicare. States have the power to license and control the insurance agents and brokers dealing with private plans for healthcare. However, the states cannot control the organizations that provide the plans. On the contrary, federal requirements for Medicaid managed care organizations cannot prevent more strict state standards (Angeles, 2009).
The responsibility of private health plans in Medicare was expanded by the Modernization Act of 2003. The act also broadened the federal preemption of state control of these plans. The Medicare Improvements for Patients and Providers Act of 2008 prohibits certain sales and marketing processes under Medicare Advantage plans and Prescription Drug Plans.
According to state regulators, the present federal control structure for Medicare private does not sufficiently protect consumers. The state regulators have called for authority to impose state laws on marketing methods of insurers that sponsor them (NAPA-NASI, 2009).
Medigap plans are the private plans offered to those already covered by Medicare to cover expenses that are not covered by Medicare. This plan is regulated by both state and federal government. A regulation model has been established as required by the federal law to include a standardized benefit strategy and marketing standards for all Medigap plans.
The model has been incorporated in federal guidelines by the centers for Medicaid and Medicare services. States that are using the Medigap standards imposed by the federal law enforce them against the plans. In some cases, more strict standards are imposed by the states (NAPA-NASI, 2009).
Payment responsibilities of medical services covered by both Medicare and other health insurance are governed by the federal law. Laws making payment by Medicare secondary to payment by health insurance plans sponsored by employers have been passed by the Congress. An excise duty is imposed for operating a health plan that goes against the regulations (Gluck & Reno, 2001).
The Employer Retirement Income Security Act of 1974 (ERISA) has the most important limitations of the federal government on regulation of health insurance by the state. The act takes over from the most state regulations applicable to health plans based on employment and subject to the federal law. However, the act does not apply to church or governmental sponsored plans.
The implication is that the act’s preemption of state rules allows multistate employers to provide health benefits on a national basis. This is done without having to adapt their plans to specific state in which they function.
Employers can steer clear of any state rule or taxation of its health plan if it assumes the plan’s financial risk and does not buy a cover for the funding of benefits. Particularly, it gets rid of state authorized benefits (NAPA-NASI, 2009).
Initially When ERISA was enacted it covered mostly the pension plans and enforced no regulations on health insurance based on employment. The Congress then modified the act by adding comparatively few requirements.
ERISA prevents the state regulation, but does not enforce much in the way of substantive regulation. This structure implies that self-funded employers have operated in a regulatory vacuum that is unreal.
In order to provide continuance in some cases of employer-sponsored coverage that would otherwise be stopped, ERISA was amended by the Consolidated Omnibus Budget Reconciliation Act (COBRA) in 1985.
The amendment required that employer with over twenty employees and who offer employers’ sponsored insurance covers to continue providing health insurance temporarily to employees who have lost coverage or stopped employment. In most cases, compliance with COBRA is impelled by the efforts of the Department of Labor and the risk of lawsuits posed by participants under ERISA (Darr & Longest, 2008).
To prohibit discrimination by employment-based group health plans in enrollment, the Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996. HIPAA curbs discrimination on the basis of health status. The act also limits the elimination of coverage for pre-existing health conditions and requires special enrollment in case of occurrence of such events.
Without limiting the charges, HIPAA requires health insurers to avail and renew health coverage for small employers. Except under limited circumstances, health insurers operating in the individual market are also required by the act to guarantee restitution of coverage (Ebeler, Van de Water, & Dem, 2006).
Administrative responsibility is isolated in that the requirements of HIPAA are enforced under ERISA for employer-sponsored group health plans. As far as COBRA is concerned, the Department of the Treasury has the power to impose an excise duty to enforce observance.
Generally, states are accountable for implementing the necessities imposed on health insurance issuers in the individual markets. In addition, states may enforce more stringent regulations on health insurance issuers in some specific situations (Fowler & Jost, 2008).
Conclusion
It is not possible to achieve a reformed health care system and healthcare programs without health insurance policies. Any proposal seeking to subsidize or direct health insurance must describe the insurance coverage to be subsidized, and set up measures for assuring that plans conform to the requirements.
The financial responsibilities of the insurer and protection of consumers against errant insurers, fraudulent marketing practices, and denial of claims are very important in any healthcare program (Fowler & Jost, 2008).
It is important to note that the enforcement of a particular regulatory principle is a significant administrative issue. However, the appropriate content of regulation of health insurance is mainly a policy issue.
The federal government does not have a significant administrative framework for regulating health insurance. On the contrary, states have substantial regulatory understanding and proficiency (NAPA-NASI, 2009).
A number of regulatory approaches are possible if health insurance reform is to take place at the federal level. The federal government could adopt its own health insurance regulations and form an administrative framework to impose them.
Although the federal government cannot constitutionally mandate states to enforce federal laws, it could provide financial incentives to the states to take regulatory and enforcement procedures (Gluck & Reno, 2001).
The federal government should exploit the states’ regulatory skills, experiences and administrative mechanisms for consumer protection. This can be approached by developing a uniform national standard for health insurance to be fundamentally imposed on states level.
States should be given the mandate to impose the national standards against all health plans existing in the state. As the case foe Medigap plans, states should be allowed to create standards that are more protective of their populace.
The responsibility of states in protection of consumers of health insurance is likely to become more sophisticated. Policy makers at federal level are required to identify the difference in the resources and potential from state to state. Policy makers should also ensure that the states have the needed resources to impose new regulations on health insurers.
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