Healthcare policy in the United States

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Healthcare policy in the United States

Overview

Total population: 313,395,400

Percent uninsured: 13%

Total healthcare spending: $2,505,800,000,000

Percent of gross domestic product: 17.4%

Total Medicaid spending: $415,154,234,831

Total Medicare spending: $471,260,000,000

Median annual income: $52,047

Average family premium: $16,029

Average employee contribution: $4,421

Percent of income: 8.5%

State healthcare policy

Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming

Healthcare policy in the U.S. • Medicare • Medicaid • Obamacare overview

Years of data (most recent available as of August 2015): •2013: State population, percent uninsured, median annual income, average family premium, average employee contribution, and percent of income. •2012: Total Medicaid spending. •2009: Total healthcare spending, percent of gross state product, and total Medicare spending.

In 2010, President Barack Obama signed the Affordable Care Act into law. The aim of the law was to expand health insurance coverage to all Americans and to curb healthcare spending and costs. The reforms primarily affect the insurance industry and have been implemented incrementally beginning in the year of the law's passage, 2010. Proponents of the reforms have said they will lower costs and improve access to healthcare, while opponents have said the legislation will increase costs and lower the quality of healthcare delivery. The law has faced a number of legal challenges, and a July 2015 poll by the Kaiser Family Foundation showed 78 percent of Americans believe the law will continue to be challenged in the future. Due to the complexity and size of the healthcare industry, which accounts for one-sixth of all spending in the nation, and the political disputes surrounding the law, the effects of its reforms are uncertain and will be watched closely over the next several years. This page is about healthcare policy in general; to learn more about the effects of the Affordable Care Act, click here.^[1][2][3][4]

Healthcare policy involves the creation and implementation of laws, rules, and regulations for managing nation's healthcare system. The healthcare system consists of services provided by medical professionals to diagnose, treat, and prevent mental and physical illness and injury. The system also encompasses a wide range of related sectors, such as insurance, pharmaceuticals and health information technology.

Background[edit]

See also: History of healthcare policy in the United States

How is healthcare provided in the United States?[edit]

The United States primarily has a third-party payer system of healthcare, which means that a health insurance plan (the third party) reimburses doctors for the bulk of the cost of healthcare services provided to patients. The nation used a mixed system of public and private insurance. The two major public programs are Medicaid, for low-income people and individuals with disabilities, and Medicare, for people 65 or older or younger people with certain disabilities or kidney disease. Most Americans, 48 percent, are enrolled in private health insurance through their employer. The remainder of insured people either purchase private insurance through the individual market or receive insurance through a different publicly-funded program, like the military's TRICARE.

How can healthcare be changed?[edit]

A number of routes could be taken that could impact federal healthcare policy. Primarily, healthcare laws can be changed by the legislative process, through which Congress passes a law and the president signs it. In this way, the federal government could, for example, alter some of the provisions of the Affordable Care Act or repeal it entirely. Another way healthcare policy could be changed is through the regulatory process, whereby federal agencies write rules for how laws are implemented. Healthcare could also be impacted by administrative action. For example, Republican administration may be more likely to approve state proposals to expand Medicaid using an alternative method that the Obama administration had rejected. Finally, healthcare could be impacted through the court system via lawsuits. For instance, the federal government could withdraw its appeal in House v. Burwell, which would end reimbursements to insurers for reducing costs for low-income consumers.

Major legislation[edit]

Beginning in the mid-20th century the federal government took an increasing role in regulating the healthcare industry. In that time, the National Institutes of Health and the Centers for Disease Control, the Food and Drug Administration, and the Department of Health and Human Services were established. Toward the ends of expanding insurance coverage and controlling costs, the federal government also enacted a number of pieces of legislation during the second half of the century:^[5]

Lyndon Johnson signing the Medicare bill, July 30, 1965

• Social Security Amendments of 1965, which established Medicare and Medicaid
• Health Maintenance Organization Act of 1973, which promoted prepaid group practice service plans known as health maintenance organizations (HMOs) as an alternative to fee-for-service plans
• Consolidated Omnibus Budget Reconciliation Act of 1985, which allowed employees to continue healthcare coverage if they would otherwise lose it (due to job loss, medical leave, etc.)
• Health Insurance Portability and Accountability Act of 1996, which limited the extent to which insurance companies could exclude people with preexisting conditions
• Patient Protection and Affordable Care Act of 2010, known as Obamacare, which established health insurance exchanges and required all citizens to obtain health insurance

Though there have been steady calls for a national health insurance program since the early 1900s, no such measure has been adopted in the United States.^[5]

General information[edit]

The tables below provide demographic and economic statistics for the United States, since both factors significantly impact healthcare and healthcare policy. Also provided is general information on the insurance coverage of individuals. For added context, these figures are compared with those in Massachusetts and Utah, the states with the highest and lowest levels of healthcare spending per capita, respectively.

Demographics[edit]

See also: State population demographics by age and gender

A major concern for the healthcare industry is the shifting demographic makeup of the nation and its states. Different groups of people tend to use different health services, like men and women for example. In particular, persons aged 65 and older comprise an increasing share of the total population, with that share expected to reach 20.2 percent by 2050. This trend has had a part in the increase in demand for healthcare services and the related increase in costs. It will also influence the federal budget, as more and more seniors join Medicare.^[6]

In 2013, there were 313.4 million residents living in the United States. About a quarter of the population was age 18 and under, 61 percent was between the ages of 19 and 64, and 14 percent was age 65 and over. Just over half of the population was female, at 51 percent.^[7][8][9]

Economic indicators[edit]

See also: Economic indicators by state

The United States' GDP increased by 2.2 percent in 2014. Click the image to view a larger version.

Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross domestic product or gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees, while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes in turn may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.^[10][11][12]

Between 2011 and 2013, the national median annual household income was $52,047, with most residents earning incomes at least 400 percent above the federal poverty level. In September 2014, the nation's unemployment rate was 5.9 percent, and in 2013 gross domestic product totaled about $16.7 trillion.^{[13][14][15][16]}

Note: Gross state product (GSP) or gross domestic product (GDP) on its own is not necessarily an indicator of economic health; GSP and GDP may also be influenced by population size. Many factors must be looked at together to assess a state's or nation's economic health.

Insurance coverage[edit]

See also: Health insurance coverage by source

In general, employers have been the dominant source of health insurance for individuals since the late 1940s and 1950s. This can be at least partially attributed to the income tax exemption granted to employers for payments made toward health insurance for employees. The second major sources of health insurance are the state and federal governments, which jointly provide Medicaid for low-income individuals while the federal government sponsors Medicare for the elderly and disabled.^[17]

In 2013, about 48 percent of Americans were insured through their employers. Medicaid covered about 16 percent of residents, while about 15 percent were enrolled in Medicare. The percentage of residents without health insurance was 13 percent.^[18]

The 1980s saw a peak in the percentage of people who were receiving health coverage through their employers, with a continuous decline in the rate thereafter. A study by researchers at the University of Minnesota’s State Health Access Data Assistance Center, which was funded by the Robert Wood Johnson Foundation, found that despite the tax exemption, fewer employers are choosing to offer health coverage to their employees, and when it is offered, fewer employees are enrolling.^[17][19]

Between 2000 and 2012, the rate of individuals covered by employer-sponsored insurance fell by 10 percentage points. Medicaid enrollment increased by 5.8 percentage points, while Medicare enrollment increased by 2.2 percentage points. The uninsured rate increased by 2.3 percentage points. Click 'show' on the table below to view more comparisons.^[20]

Spending and costs[edit]

See also: Total healthcare spending by state

Healthcare spending per capita, 2009. Source: The Henry J. Kaiser Family Foundation

Healthcare spending and costs have become a top priority for both state and federal legislators amid growing concern from consumers and employers. Healthcare spending as a percentage of the national gross domestic product (GDP) increased from 5 percent in 1960 to reach 17.4 percent in 2009, or over one-sixth of the nation's economy, where it remained steady through 2013. Total healthcare spending in both the public and private sectors amounted to $2.9 trillion in 2013. Federal, state and local governments were responsible for about 43 percent of that spending. Projections have shown that if healthcare spending continues to increase at its current rate, it will reach 19.3 percent of GDP in 2023.^{[21][22][23][24]}

The rise in spending has been attributed partially to increased demand, but in large part to the increased price of delivering and receiving care.

Such costs mean less disposable income for consumers, greater expenses to hire new employees for employers, and difficulty writing budgets for lawmakers.^[26][27]

In 2009, the most recent year for which state-level data are available, total healthcare spending nationwide was $2.5 trillion. Total spending came out to about $8,175 per person. About 36 percent of the country's total healthcare spending went toward hospital care, while 27 percent went toward physician and professional services. About 14 percent was spent on prescription drugs and other medical nondurables, with the rest going to various specialized services. Total healthcare spending figures can be found in the table below. For added context, these figures are compared with those in Massachusetts and Utah, the states with the highest and lowest levels of healthcare spending per capita, respectively.^{[28][29][30][31]}

Government programs[edit]

See also: United States state budget and finances

Medicaid and Medicare[edit]

Medicaid[edit]

During fiscal year 2012, combined federal and state spending for Medicaid, a government health insurance program primarily for low-income and disabled persons, totaled about $415.2 billion. Total spending came out to $5,790 per enrollee. Between 2000 and 2012, Medicaid spending nationwide grew by 63 percent, or about 4.1 percent per year. On average, the federal government accounted for about 57 percent of Medicaid spending, while states contributed the remaining 43 percent. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^{[32][33][34][35][36]}

Acute care services are those that are typically provided within a short time frame, such as inpatient hospital stays, lab tests and prescription drugs. Long-term care services, on the other hand, are those provided over a long period of time, such as home care and mental health treatment. Disproportionate Share Hospital (DSH) payments are funds given to hospitals that tend to serve more low-income and uninsured patients than other hospitals. In 2013, most Medicaid spending was, on average, toward acute care services. The portion of spending for DSH payments was 4.1 percent, and the remaining 29.5 percent was on long-term care services. For added context, these figures are compared below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^[37]

In 2010, there were 66,390,642 United States residents enrolled in Medicaid. The majority of spending, 64 percent, was on the elderly and disabled, who made up 24 percent of Medicaid enrollees. This is typical of most states, since this group of enrollees is "more likely to have complex health care needs that require costly acute and long-term care services," according to the Pew Charitable Trusts. The portion of Medicaid enrollees who are elderly and disabled is a factor taken under significant consideration when state lawmakers make appropriations for the program each year. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^[38]

Medicare[edit]

Medicare is a federal health insurance program for elderly persons over age 65 and younger individuals with certain disabilities. Medicare accounted for 14 percent of the federal budget in 2013. In 2009, the most recent year state-level spending data is available, total federal Medicare spending for enrollees in the United States amounted to $471.3 billion, or $10,362 per enrollee. Between 1991 and 2009, Medicare spending grew by an average of 8 percent per year. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^{[39][40][41][42]}

In 2012, there were 49,435,610 individuals in the United States enrolled in Medicare, or 16 percent of the nation's population. Aged beneficiaries made up 81.4 percent of the total number, while 18.6 percent were disabled. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^[43][44][45]

Dual eligibility[edit]

Some individuals, such as low-income seniors, are eligible for both Medicare and Medicaid; these individuals are known as dual-eligible beneficiaries. For those enrolled in Medicare who are eligible, enrolling in Medicaid may provide some benefits not covered by Medicare, such as "nursing facility care beyond ... [Medicare's] 100-day limit ..., prescription drugs, eyeglasses, and hearing aids." Medicaid may also be used to help pay for Medicare premiums. Total Medicaid spending for dual eligibles in the United States amounted to $146.9 billion. Most payments were made toward long-term care. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^[46][47]

State employees[edit]

See also: State employee health plans

State employee health insurance accounts for the second-largest portion of state healthcare spending, behind only Medicaid. The total cost of insurance for state workers was $30.7 billion nationwide in 2013, with $25.1 billion paid for by the states. Premium costs varied widely, with higher premiums found in states such as New Hampshire and Vermont compared to those in states like Arkansas and Mississippi. Part of this variation is due to demographic factors and provider prices, and part may be attributed to differences in health plan "richness," or the cost sharing between the insurer and health plan enrollees, such as deductibles and copayments.^[48]

Several states are experimenting with various cost-containment methods. "Pooled public employee health benefit programs" are one such strategy, which are mergers between state employee health plans and those of other, smaller public employers, such as city governments and school districts. The idea is to save on administrative costs for insurers and leverage the larger pool to negotiate lower premium rates. Evidence of cost savings is mixed, with the smaller public employers reaping most of the benefits. Programs for pooling public employee health plans have been implemented in 31 states as of December 2014.^[49]

As of 2010, there were 46 states that "self-fund at least one of their employee health care plans," meaning that rather than purchasing insurance, the state pays health insurance claims with state and employee out-of-pocket insurance contributions while an insurer administers the benefits. There were 24 states offering plans with a $0 deductible.^[48][49]

Net state employee health plan expenditures in the United States totaled $25.1 billion in 2013. This represented a 1 percent decline from 2011 expenditures. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^[48]

Note: Due to such variations as demographics, plan richness and provider rates, "higher spending is not necessarily an indication of waste, and lower spending is not necessarily a sign of efficiency."^[48]

Average state employee premiums were $570 per year for single coverage and $1,233 per year for family coverage. On average, employers contributed about 84 percent of state employee health plan premiums in 2013. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^[48]

Prison healthcare[edit]

See also: Prison healthcare

Another component of state healthcare budgets is healthcare for prisoners. In 1976, the United States Supreme Court ruled that adequate healthcare for prisoners is a constitutional right and that the refusal to provide them with such violates the Eighth Amendment prohibiting cruel and unusual punishment. As such, state budget allocations for correctional facilities, like other healthcare expenditures, have continued to grow, especially as the prison population ages. Correctional healthcare spending nationwide totaled $7.7 billion in 2011, or $6,047 per inmate, which The Pew Charitable Trusts estimated to be about one-fifth of total prison spending. This was up from 2007, but down from a peak in 2009 as the average daily prison population decreased. States have experienced fiscal pressure to manage prison healthcare costs without compromising prisoners' right to quality care.^[50]

Total spending on prison healthcare in the United States rose by about 13 percent from 2007 to 2011. Per inmate spending rose by 13 percent as well during that same time period. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^[50]

Private insurance[edit]

See also: Private health insurance

Premiums[edit]

For private insurance, consumers typically either receive coverage through their employer or buy it on their own through the individual market. As healthcare costs have increased, so have insurance premiums. Between 2000 and 2014, insurance premiums for employer-sponsored plans, including state and local government plans, increased 144 percent for single coverage and 161 percent for family coverage. However, the rate of increase has slowed in more recent years. Between 2000 and 2007, premiums grew by 81 percent for single coverage and 88 percent for family coverage. Between 2007 and 2014, the rates of increase were 34.5 percent and 39 percent, respectively.^[51]

Employers have reacted to these costs in a number of ways, one of which has been to shift more responsibility for premium contributions to their employees. The portion of premiums paid by employees for single coverage has increased by four percentage points, from 16 percent to 18 percent, since 2000, and by three percentage points, from 26 percent to 29 percent, for family coverage. Average deductibles for employees have also risen, doubling from $584 to $1,135 between 2006 and 2013.^[51][52]

In the United States' private employer-based insurance markets, average premiums for employer-sponsored coverage amounted to about $464 per month for single coverage, or $5,571 per year. Average employer-sponsored premiums amounted to about $1,336 per month for family coverage, or $16,029 per year. Employees contributed about $97.50 per month for single coverage and $368 per month for family coverage. Average premiums in the country's individual market were about $235 per month, or $2,820 per year. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively. However, the bar chart displays figures for the United States only.^[53][54][55]

In 2013, private sector employers in the United States contributed on average 79 percent to single coverage premiums and 72.4 percent to family coverage premiums. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively. Click 'show' to see the data.^[56][57]

Competitiveness[edit]

The Henry J. Kaiser Family Foundation measured the competitiveness of the private health insurance market in 2013, using the Herfindahl-Hirschman Index (HHI) as an indicator. The HHI takes into account how much of a market is controlled by each of the companies competing within it (market share) and is expressed in a value between zero and 10,000. The lower the number, the more competitive the market. The analysis was divided into individual, small group and large group insurance markets. The data also includes information on the market share of the largest insurer in each state and the number of insurers with a market share of greater than 5 percent.^{[58][59][60][61]}

On average, health insurance markets were highly concentrated, or uncompetitive. The nation's largest individual market insurers held an average of about 55 percent of the market. The largest insurers in the small and large group markets each held an average of 57 percent of their respective markets. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^[58][59][60]

Other sectors[edit]

Pharmaceuticals[edit]

See also: Prescription drug sales by state

In the United States, there are more than 10,000 FDA-approved medicines available for doctors to prescribe or individuals to purchase over-the-counter. A major target of state healthcare cost-containment efforts is the price of these medicines. Prescription drugs generated a total of $259 billion in sales at retail pharmacies nationwide in 2014. Since generic drugs tend to be significantly less expensive than their brand name equivalents, all states allow pharmacists to dispense generics in place of brand name drugs for prescriptions. This practice is required in 13 states, except when a brand name drug is specifically ordered by a physician.^[62]

Additionally, state Medicaid programs typically take a number of steps to control spending on pharmaceuticals. Most common are establishing preferred drug lists, which are prescription drugs that are automatically covered by the program, and negotiating rebates with manufacturers for both brand name and generic drugs. Some states also join "pools," or associations with guidelines designed to further manage costs.^[63]

In 2014, retail sales of prescription drugs at pharmacies in the United States amounted to $259.1 billion, with about 4 billion drugs sold. On average, women and individuals over age 65 bought more prescription drugs than men and those under age 65. These totals do not include medications sold over-the-counter. For added context, these figures are compared in the table below with those in Massachusetts and Utah, the states with the highest and lowest levels of total healthcare spending per capita, respectively.^{[64][65][66][67]}

Monitoring programs[edit]

States are also focusing on curbing prescription drug abuse and fraud as a method to contain costs.^[68]

Between 2004 and 2009, there was a documented increase of 98.4 percent in emergency room visits caused by the abuse and misuse of prescription drugs. As an effort to combat the rise in prescription drug abuse and fraud, most states states have authorized the development of prescription drug databases that can monitor the dispensing of certain controlled substances. These programs have been bolstered by federal grants encouraging their implementation.^[68]

Laws establishing monitoring programs typically require pharmacies and practitioners to report daily, weekly or monthly on the dispensing of Schedule II, Schedule III, Schedule VI and Schedule V drugs. These requirements sometimes include veterinarians, but often exclude hospitals that dispense drugs to inpatients. Some states require that patients be notified of the monitoring program, while others do not. As of July 2015, Missouri was the only state that had not enacted legislation authorizing the development of such a database.^{[68][69][70][71]}

Right to try[edit]

Under the current model, access to experimental drugs by terminally ill patients is controlled by the Food and Drug Administration (FDA), which must give its approval after it receives a form from a patient's physician. What are known as "right to try" laws aim to allow such patients to gain access to experimental drugs without the permission of the FDA. As of August 2015, twelve states have passed right to try laws.^[72]

Health information technology[edit]

Health information technology (IT) refers to electronic systems that manage, store and transmit health information, such as patient records. The adoption of modernized health IT has been promoted by the federal government as a way to increase quality while decreasing costs. For instance, the American Recovery and Reinvestment Act of 2009 required most health providers to adopt electronic health records by 2015. However, the digitization of health data raises concerns about the privacy of such data, which could be vulnerable to a breach if not properly secured. Since 1996, health IT privacy and security has been governed by the Health Insurance Portability and Accountability Act (HIPAA), which required and set national standards for the confidentiality of patient information "when it is transferred, received, handled, or shared."^[73][74][75]

All-payer claims databases are one form of health IT that a growing number of states are implementing to track healthcare costs. All-payer claims databases are state systems for collecting data from public and private health insurance claims on demographics, types of services and total charges. According to the National Conference of State Legislatures, "the U.S. Department of Health and Human Services plans to build a nationwide all-payer claims database consisting of a representative sample of the population." All-payer claims databases exist in 17 states, while another 17 have demonstrated a "strong interest" in creating one. To view the status of such a program in your state, click here.^{[76][77][78][79]}

Recent legislation[edit]

The following is a list of recent healthcare policy bills that have been introduced in or passed by the United States Congress. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, then no legislation pertaining to this topic has been introduced in the legislature recently.

Recent news[edit]

The link below is to the most recent stories in a Google news search for the terms United States healthcare. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

See also[edit]

• 

  Healthcare policy by state

• 

  Effect of the Affordable Care Act in the United States

• 

  U.S. Department of Health and Human Services

External links[edit]

• United States Department of Health and Human Services
• The Henry J. Kaiser Family Foundation
• National Conference of State Legislatures, Health
• Health Affairs

Additional reading[edit]

• The Henry J. Kaiser Family Foundation, "Health Care Costs: A Primer"
• Deloitte Center for Health Solutions, "Dig deep: Impacts and implications of rising out-of-pocket health care costs"
• The Pew Charitable Trusts, "State Health Care Spending Project Reports"

Footnotes[edit]