Health care policy

POLI 352A

Does your health system need reform?

Fundamental reform?

Completely rebuild system?

Canada 59% 18%

United States 51% 28%

United Kingdom 60% 18%

Germany 66%

OK, but what’s the problem?

High cost / inadequate coverage?

Shortage of supply / Waiting times

Canada13%

8%

54%

27%

United States48%

25%

5%

3%

United Kingdom6%

8%

33%

39%

How responsive is the system?

Ranking

United States 1

Germany 5

Canada 7

United Kingdom 26

How fairly are costs distributed?

Ranking

Germany 6

United Kingdom 8

Canada 17

United States 54

Out-of-pocket costs

Amount / person / year

(US$)

Share of health spending

United Kingdom $40 3.1%

Canada $304 17%

Germany $306 11%

United States $696 16%

Overall performance

Responsiveness Fairness Cost-control

United States High Low Low

United Kingdom Low High High

Canada Medium Medium Medium

Germany High High Medium-low

Financing health care

• Unified financing: taxation– Cost distributed fairly

– Easy to cap spending

VS.

• Fragmented financing: Insurers– Hard to cap spending

– Unfair distribution if unregulated

Delivering health care

• Public delivery

• Private delivery (non- or for-profit)– May be more responsive

– But cost-control may be harder depending on

• Payment method – this is crucial– Fee-for-service more care, higher costs

• More common with private delivery

– Salary / capitation

Financing and delivering care

Unified

(Tax-financing)

Fragmented

(Insurers)

PublicUnited

KingdomFrance

(hospitals)

Private

(for- or non-profit)

Canada

Germany (social)

United States (private)

Financing

Delivery

Financing and delivering care

Unified

(Tax-financing)

Fragmented

(Insurers)

PublicNational health

service?

Private

(for- or non-profit)

National health insurance

Social or private

insurance

Financing

Delivery

Why policy differences?:Public opinion?

• Do voters get the health care system they want?

• Comparison– U.K., Canada, U.S. all individualist cultures

• Processes– Elite action in UK and Canada precedes public clamour

– Much NHI support in U.S.

Why policy differences?:Interests?

Could outcome reflect the power of interests for and against?

• Doctors– Oppose state dominance

– But to varying degrees, shaped by past policy

• Labor– Similar strength in Canada/US till 1960s

– Labor unrest in US in 1930s

– NHI not always creature of the Left

Explanation:Hacker on policy feedback

Three policy choices have big feedback effects:

1. Policies that encourage private insurance

2. Policies that target vulnerable groups first

3. Policies that promote medical technology

• Sequence matters.

Explanation:Hacker on institutions

Institutions determine when moves are made and which policies come first.

• Shape opportunities of organized opponents (veto points)

• Shape paths to influence of small, insurgent parties

Policy feedback in health care

• Group interests

• Costs of NHI• Objective

policy problems

• Public opinion

Difficulty of moving to NHI later

Early health policy choice

New politics

Policy feedback in Britain

• Social learning about 1911 failures

• Vested interests in status quo (inhibits reform)

• Shapes doctors’ interests

• Shapes public expectations

Early adoption of NHI (1911)

New politics

Britain: 1911

• Institutions allow early adoption of NHI (1911)– Single-party government

– Party discipline

• But early policy matters– Has to accommodate existing insurers

– Doctors’ interests shaped by poor prior conditions

Policy feedback in Britain

• New ideas

• Still-broken system

• Doctors’ weakened opposition

• Public support

Policy choice (1946):

Socialized finance and delivery

New politics

+ Institutions

Canada: 1945

• Popular support• Federal government support• Little MD-friendly private insurance

BUT

• Federalism as constraint

No reform

Policy feedback in Canada

• Spread of fee-for-service private insuranceNon-adoption of public insurance (1945)

New politics

Canada: 1950s - 1960s

NOW: Federalism as opportunity

1. Regionalism aids socialist insurgent party– CCF wins provincial office

– Launching pad for federal NDP

2. Fiscal equalization encourages innovation

Hospital insurance in SK

Imitation by BC, AB, ON

Policy feedback in Canada

Widespread private insurance + federalism

Public fee-for-service insurance (1966)

New politics

United States

• 1910s: Support for socialist and third parties– But electoral institutions no federal seats

• Weak national party competition, Republican nat’l dominance

Reformers had to fight in states– Inhospitable institutional terrain

• Large number of units• Fear of business exit because of lack of fiscal

equalization• Strong, business-friendly state courts

United States

• New Deal – huge potential opening but:– Veto points

– Lack of party discipline

No reform

• Repeated under Truman+

Policy feedback in U.S.

• Spread of employer-provided insurance– Satisfies doctors

– Satisfies unions

– Excludes old and poor

Non-adoption of public insurance (‘30s & ‘40s)

New politics

Public fee-for-service insurance for elderly and poor only

Policy feedback in U.S.

• Exploding public costs• Best-organized groups

satisfied• Vested interests in current

arrangements

New politics

Failure of Clinton plan (1994)

Health policy and feedback

• Current health policies NOT a direct reflection of nat’l values or public preferences– Narrow, well-organized interests matter– Current policy choices constrained by past choices

• Current organization of interests and public preferences shaped by past policy choices

• Sometimes policy is not chosen– Emerges through political interactions over time

• Especially strongly shaped by past policy choices, sequence

– Large role for investment

– Well-organized vested interests