Chapter 19

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Providing Affordable Health Care for All

Health care a central theme of Barack Obama's presidential campaign

About 16 percent of U.S. 2007 GDP spent on health care

Over 60 percent of all personal bankruptcies in 2007 due to medical costs

About 16 percent of population uninsured during a portion of 2007 and 2008

Many denied due to arbitrary definition of pre-existing condition

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Domestic Policy Making More than half of government expenditures

made on Social Security, health care, education, and immigration

Many designed to address economic inequality To evaluate, must address questions involving

conflicts between freedom and order and freedom and equality

State and local governments must also have capacity to carry out national programs

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The Development of the American Welfare State

Most controversial purpose of government promotion of social and economic equality Conflict between freedom and equality Most modern nations welfare states

Social welfare policy based on concept governments should provide for basic needs of members

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A Human Tragedy

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The Great Depression Initiatives related to the New Deal and the

Great Society dominated national policy until reforms in 1980s and 1990s Extended protective role of government

The Great Depression longest and deepest setback of U.S. economy in history Began with stock market crash Oct. 24th,

1929 and ended with start of WWII One in four workers unemployed; more

underemployed7

The New Deal

Franklin Delano Roosevelt, accepting nomination at Democratic Presidential Convention:

“I pledge you, I pledge myself to a new deal for the American people.”

Were programs imaginative public policy or source of massive government growth without matching benefits?

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The New Deal’s Two Phases

First phase aimed at boosting prices and lowering unemployment Civilian Conservation Corps (CCC)

Second phase aimed at aiding “forgotten people” Social Security program

Despite programs, poverty and unemployment persisted until WWII

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The Great Society President Lyndon B. Johnson re-

elected in 1964 with landslide Used support to promote Great Society

programs to combat political, social, and economic inequalities

Vital element was War on Poverty Economic Opportunity Act (1964)

designed to end poverty in 10 years A hand up, not a handout

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Retrenchment and Reform

Despite Great Society’s programs, poverty declined but did not disappear

Ronald Reagan used presidency in early to mid 1980s to re-examine social welfare policy Shifted focus from economic equality to

economic freedom Questioned whether government alone

should look after less fortunate

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Retrenchment and Reform

Reagan’s policies abolished some programs and redirected others Felt state and local governments could

provide social services more efficiently than national government

Congress blocked some cutbacks, but overall spending on social welfare programs fell to mid-1970s levels

George H.W. Bush’s presidency continued President Reagan’s approach

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Retrenchment and Reform

President Bill Clinton’s proposals aimed at reforming system while protecting basic fabric of safety net

President George W. Bush’s administration greatly expanded welfare benefits for seniors with Medicare drug program

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Social Security Government social insurance

programs protect individuals from various kinds of loss, regardless of need First example was workers’ compensation Social security and Medicare also social

insurance programs These programs examples of

entitlements14

Origins of Social Security

Social insurance programs began in Europe as early as 1883

In U.S., needs of elderly and unemployed left to private organizations and individuals until Great Depression

In 1935, President Roosevelt signed Social Security Act

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Social Security Act Act had three approaches:

Social insurance for elderly and disabled, and unemployment benefits

Grants-in-aid to the states to help destitute

Federal aid to the states to provide health and welfare services

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How Social Security Works

Most people think of retirement benefits when thinking of Social Security Program provides other services

Contributions not set aside for individuals but used to fund “pay as you go” system Program began with more paying into fund

than taking out (nine workers to one beneficiary)

Today’s program closer to three workers for each beneficiary

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Will Social Security Remain Solvent?

Baby boomers begin to retire in 2010 Current projections show fund exhausted

by 2037 Politicians face dilemma: lower benefits or raise

taxes to fund program? Current workers’ benefits will be paid by

future participants Solvency depends on growth of base What happens when birthrate falls,

unemployment rises, mortality declines, and/or economy falters?

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Figure 19.1

Day of Reckoning

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Who Pays? Who Benefits?

Congress established automatic cost-of-living adjustments (COLAs) for Social Security in 1972 Changes in payments and wages subject to

tax tied to Consumer Price Index (CPI) Stagflation in 1970s jeopardized fund

solvency President Reagan and Congress agreed

to painful solution in 1983: increased taxes and reduced benefits

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Social Security Reform Changes in 1983 protected Social

Security but future still a concern Majority of adults (61%) in 2009 poll

believe program will not have enough funds to pay for benefits throughout their retirement

In 2000 and 2004, both Republicans and Democrats proposed reforms that involved private investment of payroll taxes

President Obama opposes privatization

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Public Assistance Public aid to individuals with demonstrated

need Some refer to programs as welfare Not all are programs for the poor

Social Security Act has categorical assistance programs Old age assistance for needy elderly Aid to the needy blind Aid to needy families with dependent children Aid to the totally and permanently disabled

These programs have become entitlements administered by the states

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Poverty in the United States

Since 1960s, poverty level calculated as three times cost of minimally nutritious diet for given number of people in a family for a set time Critics believe calculation not accurate

because changes in other costs have lowered proportion of income used for food

Measuring poverty one way to measure public policies’ effectiveness in promoting equality

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Census Estimates in 2008

39.8 million, or 13.2 percent, of Americans live in poverty

19.0 percent of persons under 18 live in poverty

9.7 percent of people over 65 live in poverty

One in two poor Americans live in a family with a woman head of household

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Figure 19.2

The Feminization of Poverty

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The Poverty Level Poverty threshold determines number of

people who live below threshold amount Poverty guideline income level at which a

family is eligible for government help Some believe factors other than income

should be used to determine poverty Use of poverty as indicator reflects

ambiguities in notion of equality

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Welfare Reform Original poverty programs lacked work

incentives A 1994 poll showed 59 percent of Americans

believed welfare recipients taking advantage of system

Personal Responsibility and Opportunity to Work Act reforms enacted in 1996 Designed to “end welfare as we know it” Abolished Aid to Families with Dependent

Children (AFDC) Replaced AFDC with Temporary Assistance to

Needy Families (TANF)27

Features of TANF Adult recipients must be employed within

two years States have burden of job creation

Families can receive no more than five years’ benefits in a lifetime

Control of welfare program design and implementation devolved to states Federal support via block grants totaling

$16.5 billion a year Economic stimulus plan added $5 billion

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Figure 19.3

Families on Welfare, 1955-2008

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Status of TANF Reauthorized in 2006 and being

reexamined in 2010 Questions remain about program

How did system fare in 2008 recession?

To what extent should states be able to consider job training and education as work?

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How Have Recipients Fared?

The number of families on welfare has declined

Large numbers of those formerly on welfare have found work Many jobs do not have good

benefits and involve long commutes Many families still living below or

close to poverty level

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Recession Raises Questions

To what extent do recipients maintain eligibility for other programs?

What happens to TANF benefits if recipient loses their job?

What happens to program as states shift money from job training to benefits as more need arises?

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Health Care U.S. only major industrialized nation

without universal health care Many programs exist, providing a

patchwork quilt of care Medicare Medicaid Children’s Health Insurance Program

(SCHIP) And now, President Obama’s health care bill

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Cost and Access Most agree U.S. health care system

needs fixing Two main issues: cost and access Access issues include:

Nearly 47 million people (16 percent) had no health insurance in 2008

Many more under-insured Numbers vary by age, race, and income Supply of physicians does not meet demand

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Figure 19.4

Poverty in the States

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Cost and Access Health care sector significant part

of U.S. economy In 2008, $2.4 trillion spent on health

care, more than 16 percent of GDP Fastest growing sector: prescription

drugs As proportion of GDP, U.S. spends

more on health care than other nations with more comprehensive care

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Dealing with Cost and Access

Any reforms must democratize health care and control ballooning costs Dilemma of balancing greater equality of

coverage with a loss of freedom of choice in markets for health care and doctors

Private sector already addresses this balance in many ways, but also seeks to limit risk

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Medicare Social Security Act amended in 1965 to

include Medicare for those over 65 National health insurance first proposed by

President Truman in 1945 Medicare program had two

components: Part A for hospitalization Part B for physician’s fees

Program has expanded over years to cover other services

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Medicare Compulsory insurance funded by payroll

tax and premiums deducted from Social Security

Participants can also purchase private sector Medigap plans

Medicare Prescription Drug, Improvement, and Modernization Act passed in 2003 Private sector companies provide

competing plans for seniors to choose from Cost of program continues to increase

faster than rate of inflation39

What are the differences between Medicare Parts A, B, C and D?

Medicare Part A, Hospital Insurance; Medicare Part B, Medical Insurance; Medicare Part C (Medicare Advantage), which was formerly known as Medicare + Choice;  and Medicare Part D, prescription drug coverage.

Generally, people who are over age 65 and getting Social Security automatically qualify for Medicare Parts A and B.  So do people who have been getting disability benefits for two years, people who have amyotrophic lateral sclerosis (Lou Gehrig's disease) and receive disability benefits, and people who have permanent kidney failure and receive maintenance dialysis or a kidney transplant.

Part A is paid for by a portion of Social Security tax.  It helps pay for inpatient hospital care, skilled nursing care, hospice care and other services.Part B is paid for by the monthly premiums of people enrolled and by general funds from the U.S. Treasury.  It helps pay for doctors' fees, outpatient hospital visits, and other medical services and supplies that are not covered by Part A.

Part C (Medicare Advantage) plans allow you to choose to receive all of your health care services through a provider organization.  These plans may help lower your costs of receiving medical services, or you may get extra benefits for an additional monthly fee.  You must have both Parts A and B to enroll in Part C.

Part D (prescription drug coverage) is voluntary and the costs are paid for by the monthly premiums of enrollees and Medicare.  Unlike Part B in which you are automatically enrolled and must opt out if you do not want it, with Part D you have to opt in by filling out a form and enrolling in an approved plan.

Medicaid Main program to provide health care

to Americans with low incomes Since 1965, costs have risen from

$0.4 billion to $336 billion Single largest public program in nation

Program run and financed jointly with states Eligibility and services vary widely by

state42

Medicaid Participants fall into four groups:

Children under age 21 (29.8 million, or 48 percent in 2008)

Adults (5 million) Blind and disabled (6 million) Aged who are also poor (6.1 million)

Last two categories account for over half of Medicaid expenditures

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Health Care Reform President Obama signed Patient

Protection and Affordable Care Act March 23, 2010 Compromises required to balance goal of

equality of access with desire for freedom from government intervention

Notable provisions in bill include protections for coverage despite pre-existing conditions and mandatory participation Bill includes subsidies and tax credits to help

individuals and small businesses pay for coverage

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Health Care Reform Critics of bill concerned about cost – an

estimated $940 billion over 10 years Some, including Congressional Budget

Office, believe bill will pay for itself Those wary of “big government” troubled

by additional regulations and bureaucracy Is mandating individual coverage

Constitutional? Others anxious about effect of reforms on

Medicare45

Elementary and Secondary Education

Historically, state and local governments have primary responsibility for schooling in U.S.

Today, federal government contributes around 8 percent of expenses

Most significant federal involvement has come in recent years

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Concerns Motivating Change: Equity

Most Americans believe social and economic equity can be found through equality of educational opportunity Brown v. Board of Education (1954) Elementary and Secondary Education

Act of 1965 (ESEA) Individuals with Disabilities Education

Act (IDEA) 47

Concerns Motivating Change: Equity

Programs have decreased, but not eliminated, differences in student achievement Significant gaps in math, reading,

and overall graduation rates between advantaged and disadvantaged groups

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Concerns Motivating Change: National Security and

Prosperity To remain competitive globally, U.S.

must have highly educated and skilled workers First federal program the National Defense

Education Act of 1958 (NDEA) Studies relating education to economic

competitiveness began in 1970s A Nation at Risk released in 1983

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Values and Reform At center of current debate is

dilemma of freedom versus equality Equality of opportunity to get good

education Freedom to choose where to live and

what your children will be taught Charter schools and school vouchers

two proposals designed to address problems

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The No Child Left Behind Act of 2001

George W. Bush’s 2000 presidential campaign focused on education

Act designed to reform the Elementary and Secondary Education Act

Most significant component requires states to guarantee proficiency in reading and math by 2014 Along the way, must make Adequate Yearly

Progress in all student groups

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Implementing NCLB NCLB initially praised for highlighting

educational inequalities and need for qualified teachers for all

Critics now charge its requirements mean teachers “teach to the test”

Other critics charge federal government did not allocate enough funding to address existing inequities

Some question if low-performing students “pushed out” to increase scores

NCLB not reauthorized in 200752

Immigration One of most important problems

facing America Immigrants make up around 13 percent

of population; of those, 30 percent here illegally

Twenty-three percent of noncitizens live below poverty line

Americans have mixed feelings about how to approach illegal immigration

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Immigration Foreign workers should apply for

and receive a permanent resident card (“green card”) May eventually apply for citizenship Federal policy limits total number of

people receiving green card each year

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Permanent Resident Status

Priority given to Reuniting families Workers in occupations needed in U.S. Refugees who face persecution in

home countries Mix of persons from a diverse set of

countries Welfare reforms in 1996 prohibits

legal immigrants from participating in safety net programs for five years

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Illegal Immigration Illegal immigrants get most attention in

policy debates If caught, penalties range from being

asked to leave country to imprisonment Most come from Mexico and other Latin

American countries Geographically concentrated in western

states and large urban areas Provide cheap labor in agriculture and

manufacturing56

Illegal Immigration Never eligible for safety net

programs American-born children are Can enroll in public schools and get

treated in hospital emergency rooms Policy debates focus on better border

security with Mexico and sanctions on businesses that hire illegal immigrants

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Undocumented Santa

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Immigration Reform Unsuccessful bill proposed in 2007 would

have allowed illegal immigrants to stay if they met certain conditions Citizenship possibility led conservative critics to

accuse supporters of “offering amnesty” Immigrant groups did not like provisions

addressing temporary workers and change in focus from reuniting families to needed workforce

Union workers feared immigrants would drive down wages and take jobs away from Americans

Liberals did not like E-Verify program requirement

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Immigration Reform Polls show many Americans support

some sort of “path to citizenship” Obama administration supports

major provisions of bill and plans to attempt similar immigration reforms

Given recent battles in Congress, success unlikely

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Benefits and Fairness Two kinds of benefits provided by

national government: Means-tested benefits Non-means-tested benefits

Some question fairness of non-means-tested benefits

Reform debates may center around making more affluent pay for programs

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