Chapter 6 Structure and Economics of Community and Public Health Services

Overview of the United States Health Systems

• The Dual System Structure: Health in the United States is addressed through two overlapping systems: the healthcare system and the public health system.

• Nature of the Systems: Both systems are described as a patchwork of private and public programs. They contain gaps that are intermittently addressed or filled by new programs or specific funding streams.

• The Public Health System: This is defined as a loosely affiliated network comprising federal, state, and local agencies. Notably, this system has been chronically underfunded for decades.

Historical Development of Public Health and Insurance

• First Federal Public Health Action ($1878$): The U.S. Congress created a federal quarantine system in $1878$. The Marine Hospital Service was the entity responsible for enforcing it. This service eventually evolved into the U.S. Public Health Service. Note that this is distinct from Medicare and Medicaid, which were created much later in $1965$.

• Foundations of Health Insurance ($1929$): Baylor University Hospital began offering prepayment plans for teachers. This single initiative formed the foundation for what became Blue Cross (hospital coverage) and Blue Shield (physician coverage) plans.

• Creation of Medicare and Medicaid ($1965$): Established under President Lyndon B. Johnson, these programs were designed to cover older adults and low-income families, respectively.

• State Children's Health Insurance Program / SCHIP ($1997$): This legislation extended health coverage to children whose family income was too high to qualify for Medicaid but too low to afford private insurance.

• Medicare Modernization Act ($2003$): This act expanded Medicare by adding Part D, which provides prescription drug coverage.

• Affordable Care Act / ACA ($2010$): This landmark legislation expanded Medicaid, regulated the insurance industry, and mandated coverage for preventive healthcare visits.

Impact and Scope of the Affordable Care Act (ACA)

• Primary Beneficiaries: The ACA most significantly benefited clients with preexisting conditions who were previously considered uninsurable.

• Specific Exclusions of Benefit: Adults over the age of $65$ did not see the most benefit as they already had Medicare. Similarly, very low-income individuals already had access to Medicaid.

• Key Provisions:

  • Required coverage for preventive visits without a copay.

  • Expanded Medicaid in participating states.

  • Made insurance available to those with preexisting conditions.

• Statistical Impact: The uninsured rate in the United States dropped from $16.3\%$ to $8.8\%$ within two years of the ACA's implementation.

• State Disparities: States that chose not to implement Medicaid expansion have uninsured rates that are nearly double those of states that did expand the program.

Legislative Involvement in Healthcare

• Increased Federal Involvement: The following laws increased the role of the federal government in healthcare:

  • Social Security Act.

  • Medicare and Medicaid legislation.

  • State Children's Health Insurance Program (SCHIP).

  • Affordable Care Act (ACA).

• Decreased Federal Involvement: The Omnibus Budget Reconciliation Act stands as the law that DECREASED federal government involvement. It shifted the responsibility for public health and welfare back to state and local governments and diverted federal funding away from healthcare.

Private Health Sector vs. Government Health Agencies

• Private (Nonprofit) Agencies:

  • Funding: Supported by contributions and membership dues.

  • Focus: They target specific populations or specific health issues.

  • Examples: American Heart Association, American Diabetes Association, and the National Society for Autistic Children.

• Government Health Agencies:

  • Responsibility: Tasked with promoting the health of every individual within their jurisdiction.

  • Operations: They require interdisciplinary collaboration and cannot operate with complete autonomy.

  • Specific Government Entities: WIC (Women, Infants, and Children), NIH (National Institutes of Health), and the U.S. Public Health Service are all federal government agencies, not private sector.

• Professional Associations: Organizations such as the American Nurses Association (ANA) are health-related professional associations where nurses join to lobby legislators on behalf of nursing practice.

Core Public Health Functions

• Assessment: Involves monitoring health status and diagnosing community health problems. Disease surveillance is a primary example of an assessment function.

• Policy Development: The process of using data gathered during the assessment phase to develop policies that address the identified community health problems.

• Assurance: The responsibility of ensuring that the services identified through assessment and policy development are available and accessible to the members of the community.

Local Health Department Scope of Service

• In Scope (Primary and Secondary Prevention):

  • Food preparation safety education (Primary prevention).

  • Smoking prevention education (Primary prevention).

  • Immunizations.

  • STI (Sexually Transmitted Infection) screening and treatment.

• Out of Scope (Tertiary Prevention):

  • Cardiac rehabilitation.

  • Physical therapy for work-related injuries.

  • Local health departments generally do not provide tertiary services.

Structure of Medicare

Medicare is a federally funded program for adults age $65$ and older who have paid into Social Security, as well as certain individuals with disabilities. It consists of four parts:

• Part A: Covers inpatient hospital services.

• Part B: Covers outpatient services and physician visits.

• Part C (Medicare Advantage): A private plan alternative that provides the benefits of both Parts A and B.

• Part D: Covers prescription drugs (added in $2003$ via the Medicare Modernization Act).

Medicaid Eligibility and Funding

• Funding: Medicaid is a jointly funded program by both federal and state governments.

• Eligibility Factors: Eligibility is determined by comparing household income to the Federal Poverty Level. The two required factors for determination are:

  1. The monthly income of household members.

  2. The number of people living in the household.

• Non-Factors: Employment status, the ages of children, and the presence of chronic conditions are NOT used to determine Medicaid eligibility.

Healthcare Economics: Payment Systems and Coding

• Diagnosis-Related Groups (DRGs):

  • Consists of approximately $500$ codes.

  • Provides fixed Medicare reimbursement to hospitals based on the specific diagnosis and procedure.

  • The code itself determines the reimbursement amount.

  • DRGs do not affect the quality of service and do not apply to self-pay clients.

• Prospective Payment System:

  • A provider receives a fixed payment in advance.

  • Profit/Loss Scenario: If costs are lower than the payment, the organization keeps the profit. If costs exceed the payment, the organization absorbs the loss.

  • The organization does not refund clients, report surpluses to payers, or reduce future rates based on savings.

High-Deductible Health Plans (HDHP) and Health Savings Accounts (HSA)

• HDHP Features: These plans have a higher deductible than standard insurance. Once the deductible is met, the plan typically pays $100\%$ for in-network services.

• HSA Features: Created and funded by the employee, not the employer or the insurance company. Contributions are pre-tax and roll over from year to year without expiring.

• Clinical Implications: Research indicates that HDHP clients tend to reduce their use of preventive care due to concerns regarding out-of-pocket costs. The priority for a Community/Public Health Nurse (C/PHN) is helping these clients find resources for preventive care.

Economic Principles in Healthcare

• Moral Hazard: A phenomenon where health insurance changes a person's behavior toward more risk-taking and wasteful use of services (e.g., a client making unnecessary clinic visits because the care is free).

• Adverse Selection: Occurs when individuals seek insurance specifically because they already have an urgent healthcare need.

• Rationing: This occurs when limited resources cannot meet all healthcare needs. Inability to pay resulting in denial of care is a form of rationing. The primary driver of rationing in the U.S. is an aging population, which increases demand.

• Macroeconomics vs. Microeconomics:

  • Macroeconomics: Focuses on broad national variables such as inflation, economic recession or growth, and overall production/consumption (e.g., a national recession affecting health funding).

  • Microeconomics: Focuses on supply (quantity of services providers offer) and demand (consumer willingness to buy). The allocation of scarce resources is a microeconomic concept.

The Competition Model and Social Justice

• C/PHN Role in Competition Model: Because consumers often lack the knowledge to make informed healthcare choices in a competitive market, the nurse's primary role is to educate clients to navigate options effectively. This model may discriminate against high-risk, high-cost clients.

• Social Justice Framework: Healthcare is viewed as a collective good accessible to all.

• Fair Rationing: Resources are distributed rationally, equally, and fairly based on clinical need and potential effectiveness rather than income, market forces, or location.

Medical Bankruptcies and Social Determinants

• Prevalence: Medical bankruptcies represent a significant portion of total bankruptcies in the U.S.; they are not a small percentage.

• Trends: The number of medical bankruptcies has not decreased since the passage of the ACA.

• Global Context: The incidence of medical bankruptcy is not similar worldwide.

• Legal Status: Filing for medical bankruptcy is legal.

• Triggers: High out-of-pocket costs, the inability to work due to illness, and accumulating medical debt are all factors that negatively impact social determinants of health and financial security.