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The Robert Wood Johnson Health Policy Fellowships Program I N S T I T U T E O F M E D I C I N E Shaping the Future for Health On the Archeology of Health Care Policy Periods and Paradigms 1 1975-2000 Lynn Etheredge S ociologists report that professional groups the acronyms and jargon used by the health develop specialized vocabularies and policy community in the last 25 years would "Among the jargon. That certainly is a valid observa- include entries such as the following: 2 notable aspects of tion about the health policy community in · DRGs, RBRVS, AAPCC, and DSH the health policy Washington, D.C. One of the major contribu- (payment policies and methods); community culture tions of the annual Institute of Medicine (IOM) · HCFA, CBO, AHRQ (formerly AHCPR), orientation for the Robert Wood Johnson in Washington is and MedPAC (government organizations); Foundation Health Policy Fellows is to intro- its lavish use of duce each class to the arcane and often chang- · PROs, HEDIS, NCQA, FAcct, TQM, acronyms--such as ing language that needs to be mastered for CQI (programs and methods related to "inside-the-Beltway" health policy discussions. quality measures); `DRGs' or `RBRVS'." Among the notable aspects of the health · HMOs, PPOs, POSs, PSNs, MSAs policy community culture in Washington is its (health care organizations and health insur- lavish use of acronyms--such as "DRGs" or ance products); "RBRVS"--that yield no clue to the uninitiated · ERISA, CLIA, OBRA 90, COBRA, HIPAA, as to their meanings. This paper will begin its BBA 97, and SCHIP (federal legislation); archeological task of providing an overview of · SLMBs and QMBs (beneficiary groups) the major eras that have taken place in health · HIPCs and MEWAs (purchasing policy over the past 25 years--eras that build organizations). on the foundations (or ruins) of past eras--by An archeologist would also note that a few reviewing some of these acronyms. acronyms that appeared during the past 25 In the archeology of health policy, acronyms years have disappeared. can be considered the analogs to pottery shards Among those acronyms no longer in use are: in archeological excavations . . . new acronyms (or policy shards) arise while older ones disap- HSAs, a nationwide system of local health pear as different eras come and go. A sample of systems agencies, established by the national health planning legislation of 1974, which 1An earlier version of this paper was commissioned for the 25th Anniversary of the Robert Wood Johnson Health Policy Fellowships Program. 2A full glossary of health policy acronyms, as used in this paper, is provided at the end of the paper.
were repealed in 1986; the unintended side effects of the policies, and "Three major eras COLC, the Cost of Living Council, which other features. occurred in operated a national system of health sector As summarized in the following table, the price controls from 1971 to 1974; three health policy eras can be identified as: national health MODVOPPs, the health professions schools of · the "Age of Traditional Health Insurance" policy over the past medicine, osteopathy, dentistry, veterinary (1965-1982), which began with the enact- 25 years. Like an medicine, optometry, podiatry, and pharmacy ment of Medicare and Medicaid, and which archeological site, these that united to receive federal capitation grants was based on open-ended, fee-for-service eras have mostly to expand enrollment; and health insurance; accumlated on top UCR, the Medicare program's original method · the "Age of Regulated Prices for Government ("usual, customary, and reasonable") for Programs" (1983-1992), which was launched of one another, rather paying physicians' services. with the enactment of the Medicare DRG than fully replacing Clearly, as indicated by such repealed or system; and what has come before." extinct acronyms, a lot has been going on in · the "Age of Markets, Purchasing, and national health policy over the past 25 years. Managed Care" (1993-present), the era that Similarly, the experiences of 25 classes of RWJ began at the same time as President Clinton's health policy fellows have also varied. The tra- first term and has seen most of the popula- jectory of events over this period, however, was tion move to managed care plans in both pri- "Each of the policy not predicted, nor, even in retrospect, is it easy vate and public coverage programs. to understand. For example, a historian who eras occurred in Three general observations can be offered investigated the early years of this 25-year period about this succession of national health policy response to a crisis that might have found the remnants of a national eras. First, each of the policy eras occurred in resulted from the message on health policy from President Nixon response to a crisis that resulted from the previ- previous era." in 1972, with a warning that the U.S. health ous era. The decision to adopt new national care system had entered a crisis due to high policies resulted from a diagnosis of failed poli- inflation and a lack of health insurance. In cies and a prescription for a new action agenda. 1970, national spending on health care was $73 In turn, when the new policies failed to work as billion, and in the mid-1970s, an estimated 20 well as expected, or produced undesirable side million to 25 million people were uninsured. effects, reformers, politicians, or major interest Our historian, noting that national health groups laid the groundwork for a new reform spending surpassed $1 trillion in 1996 and that agenda. 43 million people are uninsured in 2000, might Second, although a major political act often wonder what had happened or had not hap- marks the move to a new paradigm, a decade or pened in the interim. more of reformers' work to build the case for a Periods and Paradigms needed change in the agenda precedes this tran- sition. For much of this incubation period, the Three major eras occurred in national health reformers are frustrated by the status quo. policy over the past 25 years. Like an archeologi- Third, although there have been three major cal site, these eras have mostly accumulated on health paradigm shifts, six presidents (Nixon, top of one another, rather than fully replacing Ford, Carter, Reagan, Bush, and Clinton) were what has come before. It is possible, however, to in office during this period, and most successful identify political events that presaged fundamen- legislation required bipartisan support. Indeed, tal changes. Following these events, health Republican leaders brought the largest expansion policy discussions take on a different framework of government regulation (e.g., DRGs and and vocabulary from previous eras. The three RBRVS), whereas a Democratic leader (Clinton) major eras differ in their precipitating crises, the was a catalyst for national market reforms. Large diagnosis of the main problems, the prescrip- expansions of Medicaid came under Presidents tions for new policies, the technologies applied Bush (e.g., OBRA 90) and Clinton (e.g., SCHIP). to address the problems, the benefits realized, 2
Preliminary Findings from Archeological Excavation of the National Health Policy Site, Washington, D.C. The Age of The Age of The Age of Traditional Regulated Prices for Markets, Purchasing, Label for Period Health Insurance Government Programs and Managed Care Dates 19651982 19831992 19932000 Presidents Johnson, Nixon, Ford, Carter Reagan, Bush Clinton Presenting problem (major Inadequate insurance for the Chronic, high inflation in gov- Chronic, high inflation in crisis of old policies) elderly and poor (fiscal crisis) ernment costs for health care employer and government costs (fiscal crisis) for healthcare (fiscal crisis) Diagnosis of old policies' Gaps in private insurance cov- Providers free to raise prices, Insurers and providers not problems erage, hospital oversupply cost pass-through insurance, competing to manage costs "regulatory capture" of health and quality planning Prescription for new Government health insurance Government-set payment rates Purchase of health care services national health policies (Medicare and Medicaid), for Medicare and Medicaid, from managed care plans national health planning elimination of national health planning New technologies used Government bill-paying insur- Government price setting Competitive purchasing by ance, health planning, certifi- (DRGs, RBRVS), employers try health plans, consumer choice cate of need many market approaches managed care plans, practice guidelines, report cards (HEDIS), technology assessment Benefits from prescription for Coverage for 30 million plus Slowing of Medicare and Lowest rates of inflation in new national health policies elderly and poor, rapid expan- Medicaid cost increases national health care costs in sion of health care system over 30 years Unintended side effects of Hyperinflation of health care Cost shifting to employers, Public backlash against man- new prescription costs, ERISA preemption of most increased gaming of price aged care, competition on the state reforms controls basis of price rather than quality Enacted legislation National health planning, Hill- National Medicare price con- Medicare+Choice reforms, Burton law repealed, reduced trols, Medicaid price controls, expanded coverage for chil- support for expanding physi- COBRA, DSH legislation for dren (SCHIP), tax deduction for cian supply, ERISA uncompensated care, Medicaid health insurance premiums for expansions (OBRA 90) self-employed, HIPAA Failed legislation National health insurance, Tax credits and state grants to Comprehensive health system national price controls (Nixon, expand coverage, incentives for reform based on employer Ford, Carter) employer group purchasing mandates, government budg- (Bush) ets, and managed care (Clinton) Public and private sectors Convergence: private health Divergence: public programs Convergence (?) toward con- insurance models and compre- and employer plans evolve sumer choice among small hensive reform measures separately number of managed care plans Emerging (next) paradigm Price controls Managed care ????????????? 3
The current era is already giving way to a grant "certificates of need" to regulate con- "The era of traditional new health policy paradigm, one that we might struction projects and other large capital health insurance tentatively label "Beyond the Market Model." investments; lasted from Will history suggest the likely features of the · establishment of a national system of next policy paradigm? Let us return to this ques- 1965 to 1982." provider-sponsored quality review organiza- tion later in the paper. tions (PSROs) for Medicare and Medicaid through contracts with groups sponsored by Traditional Health Insurance Era physician associations; The era of traditional health insurance lasted · enactment of national legislation to provide from 1965 to 1982. From a health care federal support for rapid expansion of the provider's point of view, the "good old days" health maintenance organization (HMO) would be an apt label for this era. Public and industry and development of national health private payers, however, would probably refer to reform proposals that featured consumer this era as "the dark ages." The enactment of choice and "managed competition" among Medicare and Medicaid in response to crises in HMOs. The new "market" approach to coverage for more than 30 million of the health policy was developed most promi- nation's elderly and poor marked the start of this nently by Paul Ellwood, M.D., a Minneapolis period. During this era, most federal health physician, and Alain C. Enthoven, Ph.D., a policy focused on the need for far-reaching Stanford economist; "During this era, most reforms to address issues of runaway costs and · start of the RAND health insurance experi- lack of health insurance coverage. Although federal health ment to test whether patient out-of-pocket many of the reform proposals associated with policy focused on the costs affected utilization of health care serv- the era were not enacted, they laid a foundation ices. At the time, there was much controversy need for far-reaching for later initiatives. surrounding economists' views that the reforms to address The following are highlights of federal policy behavior of consumers, physicians, and hospi- issues of runaway costs activity from 1965 to 1982: tals were affected by economic incentives; and lack of health · repeal of the Hill-Burton law, to halt the · identification in the Healthy People 2000 unnecessary construction of hospitals; insurance coverage." project of attainable improvements in health · reduction of support for training of health status through improved preventive care (this professionals, based on the 1980 Graduate was partially inspired by the Canadian Medical Education National Advisory Lalonde report); Commission (GMENAC) report, which pro- · support through the 1972 Medicare amend- jected that there would be a possible surplus ments for further research on two concepts of 70,000 physicians by 1990; about future payment policies, diagnosis · national price controls for the health sector, related groups (DRGs) for hospital payments administered by the Cost of Living Council and relative value scales (RVSs) for physician (19711974), and national hospital rate set- services; ting legislation (which passed the Senate · enactment of the Employee Retirement and during the Carter administration but was Income Security Act (ERISA) in 1974, which defeated in the House by opponents who led to a rapid increase in employer self-insur- argued that competition would be a better ance policies and activism in support of answer); market-oriented reforms; and · enactment of a national health planning · introduction of national health insurance structure, with the `National Health Planning proposals by three Presidents (Nixon, Ford, and Resource Development Act' that estab- and Carter), many other leading political fig- lished 200 community-based health systems ures (Senators Edward Kennedy, D-MA; agencies (HSAs) that covered every area of Russell Long, D-LA; Abraham Ribicoff, D-CT; the country with state health planning and and Rep. Wilbur Mills, D-AK), and major development agencies given the authority to interest groups (the American Hospital 4
Association [AHA] and the American ment system for the Medicare program. Medical Association [AMA]). These were "This era also saw the Under the new political constellation, the often far-reaching proposals. The Nixon and move to DRG and RBRVS payments proceeded launching of the Ford plans, for example, provided for univer- rapidly from concept to reality. This switch to RWJ Health Policy sal coverage based on employer mandates; regulated pricing had strong bipartisan support, they also featured a nationwide system of Fellowships Program as well as the endorsement of the AHA and "all-payer" hospital budgets and physician fee AMA. Nearly all state Medicaid programs (1973)." schedules, to be administered by state quickly followed the federal lead, moving away governments. from traditional unrestricted fee-for-service pay- Between 1965 and 1982, national health ments to government-set rates. policy emerged as a new professional field. A The use of new price control authorities was new generation of "action intellectuals," inspired not limited to cost-containment objectives by President Kennedy's New Frontier and alone. The new payment methodologies offered President Johnson's Great Society, was confident a major new set of tools for health system that brains, energy, social science, and good reformers. Many of the health policy initiatives policy analysis could solve most of the nation's of the 1980s were based on payment rule domestic problems in short order. The changes. For example, the Department of Department of Health, Education, and Welfare Health and Human Services (DHHS) and (DHEW), through the office of the Assistant congressional committees used the new DRG Secretary for Planning and Evaluation (ASPE), and RBRVS systems to pursue the following "The use of new price led by Stuart Altman, Ph.D., became a focal objectives: control authorities point for generating many proposals to improve was not limited the health system. With support from the RWJ · a shift in medical care toward primary care and away from overuse of surgical care Foundation and others, the National Health to cost-containment through substantial increases in payments for Policy Forum was created in 1972 to bring objectives alone." office visits and substantial cuts in payments national health experts to Washington, D.C., to for medical procedures; inform legislative and executive branch staffs. This era also saw the launching of the RWJ · an improvement in access to care in rural areas by increasing payment rates relative to Health Policy Fellowships Program (1973) to the rates in urban areas; help outstanding midcareer health professionals in academic settings learn first-hand how health · a rationalization of rural delivery of care policies and programs are developed in the through special programs for rural hospitals Nation's capital and to contribute clinical (e.g., the "Essential Access Community expertise to health care proposals. Hospital" and "Primary Care Hospitals" [EACH/PCH] programs); Price Regulation for Government · an incentive to increase Medicare HMO Programs (19831992) enrollment through the establishment of capi- tation payments (adjusted average per capita The next era in national health policy (1983 cost, AAPCC) based on 95% of the cost for 1992) was precipitated by the need to deal with the fee-for-service system; the fiscal crises resulting from continuing rapid inflation in the costs of Medicare and Medicaid, · generous financial support for medical for which spending rose by an average of 17% schools through Medicare's Direct Graduate annually from 1965 to 1982. President Reagan's Medical Education (DGME) and Indirect tax cuts and economic conditions drove federal Medical Education (IME) payments; budget deficits above $200 billion annually and · expanded financial support for hospitals that exacerbated the health care costs crisis. served large numbers of poor and under- Recognizing that comprehensive reforms were served patients through disproportionate politically unattainable, federal initiatives share hospital (DSH) add-ons to Medicare focused on moving toward a prospective pay- and Medicaid payments. A provision in the 5
Omnibus Budget Reconciliation Acts of 1980 The Reagan administration's policies, and its "This was a period and 1981 required state medical programs to explicit downsizing of government staff at that also saw the "take into account the situation of hospitals DHHS and other agencies, prompted many largest expansions in that serve a disproportionate number of low- analysts to look for more hospitable locations to income patients with `special needs' when do their work. Democrat-led congressional com- Medicaid coverage determining payment rates for inpatient hos- mittees (that had counted on executive agencies since the program's pital care." In addition, the Omnibus for much of their staff work) were glad to attract enactment in 1965." Reconciliation Act of 1996 included provi- first-rate analysts. In addition, the enactment of sions that allowed states to pay hospitals that highly technical DRG and RBRVS payment sys- serve large numbers of low-income patients tems created a new demand for experts. more than Medicare rates; Organizations such as the Congressional · relocation of many procedures (e.g., cataract Budget Office (CBO), the Congressional operations) from inpatient settings to outpa- Research Service (CRS), the General Accounting tient and ambulatory surgical centers, based Office (GAO), the Prospective Payment on the more generous payments available for Advisory Commission (ProPac), the Physician outpatient care; and Payment Review Commission (PPRC), and the · rapid growth of "post-acute care" services, Office of Technology Assessment (OTA) particularly the home health care industry, increased their health policy staffs as well as based on generous payment rates and cover- their power. Key congressional leaders such as "a number of efforts age rules. Henry Waxman and Edward Kennedy were able were made to to recruit professionals that made these offices This was a period that also saw the largest consistently influential in shaping health policy advance capabilities to expansions in Medicaid coverage since the pro- agendas. assess and improve gram's enactment in 1965. A series of legislative accomplishments, led by Rep. Henry Waxman Reflecting the growth of health policy health care quality." (D-CA), resulted in expanded entitlements (and experts, Health Affairs, the first national journal state options) for low-income pregnant women dedicated to health policy, was launched in and children. OBRA 90, which expanded 1981. In 1983, the Association for Health Medicaid (on a phased-in basis) to cover all chil- Services Research (AHSR),3 the professional dren in families whose annual incomes were organization for health services researchers, was below the federal poverty level, was the high- created. Specific efforts to support state-level water mark of these efforts. health policy work were initiated by the Alpha Center and by the Robert Wood Johnson In addition, creative state public financing led Foundation's state initiatives grant program. to rapid expansions of the Medicaid program as states took advantage of "voluntary contribu- Although price-control policies dominated tions" from hospitals and other providers to this era and consistently showed better results bring in more federal Medicaid dollars. The than market-oriented approaches, a number of shards of the enacted and later repealed researchers, analysts, employers, and insurers Medicare catastrophic insurance legislation developed ideas that would form the basis for included expansion of Medicaid benefits for the next health policy era of managed care. low-income elderly and disabled Medicare For example, a number of efforts were made enrollees (Qualified Medicare Beneficiaries to advance capabilities to assess and improve [QMBs] and Specified Low-Income Medicare health care quality. These included the develop- Beneficiaries [SLMBs]). The Consolidated ment of quality and patient satisfaction meas- Omnibus Budget Reconciliation Act (COBRA) ures (e.g., the RAND study), outcomes studies also guaranteed workers who lost their jobs con- (advocated by individuals such as Paul M. tinuation of coverage through the employer's Ellwood, Jr., M.D.) as well as clinical effective- group insurance. ness and evidence-based guidelines. Studies of The era from 1983 to 1992 included major variations in health care services utilization by expansions in congressional health policy staffs. geographic area (by individuals such as John E. 3In 2000, the AHSR and the Alpha Center combined to form the Academy for Health Services Research and Health Policy. 6
Wennberg, M.D., M.P.H.) highlighted the wide A Market Paradigm (19932000) differences in clinical practices from area to area "The third of the without clear scientific justification. Researchers The third of the successive national health successive national (e.g., David M. Eddy, M.D., Ph.D.) began to policy periods is the current Age of Markets, health policy periods is study the scientific bases for clinical practices Purchasing, and Managed Care, which began in and often reported that foundations were not 1993. Once again, a fiscal crisis that arose from the current Age of strong. In addition, health care quality studies the failure of the previous era's national policies Markets, Purchasing, (by individuals such as Robert H. Brook, M.D., prompted national reforms. Rising health care and Managed Care, Sc.D., and Mark R. Chassin, M.D., M.P.A., costs that increased at double-digit rates were which began in 1993." M.P.H.) examined clinical practices and found identified as the leading reason for stagnation in that quality often differed from professionally wages, profits, and economic growth and as a accepted standards. drain on government budgets. The number of uninsured people was rising by more than 1 mil- Other important quality assessment tech- lion each year. niques (e.g., Total Quality Management [TQM] and Continuous Quality Improvement [CQM]) In the 1992 elections, presidential contender in health care came about during this era under Bill Clinton and President Bush found them- the leadership of individuals such as Donald M. selves agreeing on the need for expanded insur- Berwick, M.D. The Health Care Financing ance coverage and for comprehensive reforms Administration's (HCFA's) "centers of excel- built around competition among managed care lence" demonstrations showed that it was plans. In fact, in October 1992, a New York "in October 1992, a possible to use quantitative quality measures Times editorial declared, "The debate over New York Times to select providers. health care reform is over. Managed competition has won." editorial declared, Many of the nation's large employers, freed `The debate over health from state regulations and traditional insurance The health policy developments of the cur- by ERISA, began to take charge of their pur- rent era can be summarized as follows: care reform is over. chasing of health care coverage. Indeed, given · President Clinton proposed a comprehensive Managed the government decision to focus on Medicare health plan for universal coverage that com- competition has won.'" and Medicaid reforms, private purchasers had to bined market-oriented incentives (competi- rely on their own cost-control efforts; without tion among managed care plans) and the federal government's regulatory authority. regulations (federal limits on health insurance Employers began to develop their own market- premiums, enforced by backup national price oriented solutions. controls on provider payments), under a new A host of ideas was tried. Most did not work administrative system of "health alliances." 5 well, but ideas about prudent purchasing of · The nation's large employers led the way in a health care services and managed care gained rapid shift from the traditional fee-for-service support as more practical solutions than open- system to managed care. Within 5 years, the ended fee-for-service insurance. A number of rates of enrollments in managed care employer-based purchasing organizations or increased from 30% to 80% among those coalitions were created during this period. The insured by the private sector. Most of this Jackson Hole Group 4 began meeting to devise growth in enrollment occurred in a variety of market-oriented reforms as a basis of national managed care plans that were less restrictive health care reform. than the traditional HMO model. Cost man- agement technologies such as negotiated prices and health plan networks quickly became mainstream, and the use of quality 4As Paul Ellwood and Alain Enthoven continued to work on managed care and market reform, they met regularly with health sector and business leaders in Jackson Hole, Wyoming, where Ellwood owned a vacation home. The national health care reform proposal that resulted from these meetings came to be known as the "Jackson Hole Plan" and the people who contributed to it were known as the "Jackson Hole Group." 5The health alliances were based on the Jackson Hole proposal for health insurance purchasing cooperatives (HIPCs) through which small firms, the self-employed and other individuals could buy policies at better rates than they would otherwise obtain. Unlike the HIPCs, however, the alliances included significant regulatory responsibilities. 7
management tools such as the National roller coaster plunged downward very quickly "The Age of Markets, Committee for Quality Assurance's (NCQA's) when health care reform was defeated. As Purchasing, and HEDIS quality reports, TQM and CQI, Congress changed hands in 1994, many Managed Care is still guidelines, and benchmarking also increased. Democratic staffers lost their jobs and commit- Most state Medicaid plans moved to managed tee staffs were pared down to minimal levels. the dominant paradigm care for their populations enrolled in the Aid With foundation funding, many health policy for the Washington to Families with Dependent Children analysts and researchers now work in various health policy enterprise." (AFDC) program, using federal waivers. As a think tanks and policy research organizations. cost-containment strategy, these develop- The Age of Markets, Purchasing, and ments proved to be quite successful. National Managed Care is still the dominant paradigm health care spending increases fell to their for the Washington health policy enterprise. lowest rate in more than 30 years. The upcoming legislative agenda will include a · Following the failures of comprehensive patient bill of rights in managed care plans and reforms, Congress and President Clinton a Medicare prescription drug coverage proposal implemented a series of incremental meas- that would be administered by private sector ures, including: firms instead of government-administered price the 1997 Balanced Budget Act Medicare controls. provisions created a new market system The leading proposal for the next round of (Medicare+Choice) for beneficiaries to select Medicare reforms features a "premium support" "Surely there will be private health plans. However, model that would make Medicare much more another era of health Medicare+Choice was enacted only after a like the consumer-choice Federal Employees policy and new major partisan confrontation occurred, the Health Benefits Program (FEHBP) system, federal government was shut down, and the which has long been the prototype for reform of acronyms with which 1996 elections took place; the health care marketplace. Tax cuts to support we must contend." the Health Insurance Portability and purchase of health insurance on the open Accountability Act (HIPAA) of 1996 was market by individuals were featured in plans by passed to make employer-provided group both major-party candidates in the 2000 presi- health insurance more portable between jobs dential election. A host of Internet enterprises and more available for people who become now compete to inform consumers about health self-employed; issues, report cards, and their health care choices. the State Children's Health Insurance The Next Era Program (SCHIP), offered a new federal grant-in-aid program aimed at reducing the Surely there will be another era of health number of uninsured children; and policy and new acronyms with which we must a provision allowing deductibility of health contend. The signs are growing that the Age of Markets, Purchasing, and Managed Care leaves insurance premiums for self-employed workers. much to be desired. With unprecedented pros- The last several years have been a remarkable perity and lower rates of inflation, health care period for professional health policy staffs. costs no longer dominate health policy agendas. Through much of the 1980s, health policy Quality of care is rapidly emerging as a national experts concerned with universal health insur- concern. In 1997, a major IOM report con- ance, for example, began feeling like monks on cluded that "serious and widespread quality the coast of western Ireland during the Dark problems exist throughout American medicine," Ages. Their roller coaster went from the lows of and patient safety (e.g., hospital medication the 1980s to dizzying heights in the early 1990s errors) has recently attracted national attention. when the Clinton health plan was being On Wall Street, the hot money flits in and debated. Suddenly, the Old Executive Office out of the health care market in search of the Building was hosting work group meetings for next best thing (preferably Internet-based). 500 staff members, and nearly everyone inside Many of the companies touted as transforma- the beltway became a health policy analyst. The 8
tional leaders of the medical marketplace only a few years ago (e.g., Columbia/HCA, the "All paradigms tried Oxford Health plans, and physician practice and implemented management companies) have continued to thus far have journey in and out of hard times or, in some cases, bankruptcy. fallen short of their For health care reformers, the next few years proponents' may be a promising period for addressing the high aspirations." problems of the over 40 million uninsured people. The economy is enjoying unprecedented growth while the federal government and states foresee large budget surpluses. There is no longer much point in engaging in politically ide- ological controversy about health care reforms. Government health programs, as well as private employers, offer competing health plans instead of socialized medicine. There will be fiscal resources and no reasonable excuse for inaction. Should we be surprised by the developments of the past 25 years? In many respects, yes. The status of the health care system today represents no particular individual's or group's grand design, intention, or prediction. All paradigms tried and implemented thus far have fallen short of their proponents' high aspirations. Undoubtedly, the current class of RWJ health policy fellows and those that will follow them will have a hand in shaping new eras for national health policy. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author and do not necessarily reflect the view of the Robert Wood Johnson Foundation that provided support for this project. 9
Glossary AAPCC adjusted average per capita cost AFDC Aid to Families with Dependent Children AHA American Hospital Association AHCPR Agency for Health Care Policy and Research AHRQ Agency for Health Care Research and Quality AHSR Association for Health Services Research (now called the Academy for Health Services Research and Health Policy) AMA American Medical Association ASPE Assistant Secretary for Planning and Evaluation, DHHS BBA 97 Balanced Budget Act of 1997 CBO Congressional Budget Office CLIA Clinical Laboratory Improvement Act COBRA Consolidated Omnibus Budget Reconciliation Act of 1985 CQI continuous quality improvement CRS Congressional Research Service DGME direct graduate medical education DRG diagnosis-related group DSH disproportionate share hospital EACH essential access community hospital ERISA Employee Retirement and Income Security Act FAcct Foundation for Accountability FEHBP Federal Employees Health Benefit Program GAO General Accounting Office GMENAC Graduate Medical Education National Advisory Commission HCFA Health Care Financing Administration HEDIS Health Plan Employer Data and Information Set HEW (Department of) Health Education and Welfare 10
HHS (Department of) Health and Human Services HIPAA Health Insurance Portability and Accountability Act HIPC Health Insurance Purchasing Cooperative HMO health maintenance organization HSA Health Services Administration IME indirect medical education MedPAC Medicare Payment Advisory Commission (new name for combination of PPRC and ProPac) MEWA multiple employer welfare arrangement MSA medical savings accounts NCQA National Committee for Quality Assurance OBRA 90 Omnibus Budget Reconciliation Act of 1990 OTA Office of Technology Assessment PCH primary care hospital POS point of service plan PPO preferred provider organization PPRC Physician Payment Review Commission PRO Peer Review Organization ProPac Prospective Payment Assessment Commission PSN provider Service networks PSRO Professional Standards Review Organizations (now PROs) QMB qualified Medicare beneficiaries RBRVS resource-based relative value scale SCHIP State Children's Health Insurance Program SLMB specified low-income Medicare beneficiaries TQM total quality management 11
Lynn M. Etheredge Lynn Etheredge is an independent consultant specializing in health policy and retirement issues, and works with the Health Insurance Reform Project at George Washington University. Mr. Etheredge's career started at the White House Office of Management and Budget (OMB), where he served as a fiscal economist developing multi-year projections of the federal budget and the U.S. economy. During the Nixon and Ford administrations, he was OMB's principal analyst for Medicare and Medicaid and led its staff work on national health insurance. After a detour to the Department of Energy, as head of a strategic planning office, he returned to OMB as a senior career executive and headed its professional health staff in the Carter and Reagan administra- tions. Since leaving government service, Mr. Etheredge has worked with the public and private sectors in consulting, academic positions, and policy think tanks. As a principal of the Jackson Hole Group, he helped to develop managed competition concepts that have influenced changes in the health system. During the last several years, he has authored a number of policy studies about Medicare reform, expanding Medicare's benefits to include prescription drug coverage, and using tax credits to assist uninsured workers for health insurance and pension coverage. Mr. Etheredge is author of more than 70 publications and is a graduate of Swarthmore College. The Robert Wood Johnson Health Policy Fellowships Program The Robert Wood Johnson Health Policy Fellowships Program is designed to develop the capacity of outstanding mid-career health professionals in academic and community-based set- tings to assume leadership roles in health policy and management. The program, initiated in 1973, is funded by The Robert Wood Johnson Foundation and conducted by the Institute of Medicine (IOM) of the National Academy of Sciences. Six Fellows participate each year in a one- year program of orientation and full-time work experience in the nation's capitol. For more information about the program, please contact: Office of Health Policy Programs and Fellowships INSTITUTE OF MEDICINE 2101 Constitution Avenue, N.W. Washington, DC 20418 Tel: 202-334-1506 Fax: 202-334-3862 Email: hppf@nas.edu Web: www.nas.edu/rwj 12
