All industrialized nations in western countries encounter similar challenges that are associated with aging of population, increased labor force involvement of women, changes in family structure, and expanded public budgets. These dispositions render significant consequences for health care systems. Aging of population creates enormous numbers of vulnerability, older people who require long-term care and help managing daily living activities, while declining fertility and nucleus family systems reduce the number of family members who can provide this support.
As health care expenditures increase, governments often have to choose unpopular choices regarding how to distribute resources between needs for health care, education, and other social requirements. In the U.S, medical care currently employs one-ninth of national resources, and it is the largest focus in the budget of many states. Further, it is one of the largest business expenses for many employers; with an average family`s premiums increasing by 130 percent between 2009 to 2010 some organizations responded to it by reducing health care benefits to employees. In 2000, 68 percent of all companies provided health benefits, compared to 62 percent eleven years later. Among small companies, the decline in medical care has been severe, with 60 percent providing health care benefits in 1999 but only 45 percent by 2009. Other companies continue to provide benefits, but their focus has moved more on the cost burden to workers. Many companies that provide generous health insurance benefits to regular workers increasingly hire contract worker through agencies to perform tasks. Since these people are not regular employees, they do not have an entitlement to fringe benefits. Such problems in the health and medical care have generated a ripple impact throughout the country. The burden of paying medical care expenses is an endless source of economic insecurity for most families. Many people, who announce bankruptcy, do so because of injury or illness and loss of wages. The recession that started in 2008 has accelerated this problem as millions lost their jobs and health benefits. Even hospitals faced closures because of higher borrowing costs, tighter credit, investment losses, and a significant increase in lack of patients. These factors lead to health care debate among various stake holders and interest groups, and Obama promised to bring reforms in the health system, in spite of many other crucial national needs (Amelung, 2003).
The American System of Welfare State
It is essential to discuss the American welfare system, because involvement of interests groups in the American welfare system plays a powerful role in bringing the health care reforms.
In all classifications, based on characteristics of pension, the United States is the classical model of liberal welfare state. Their income security policies contain universal benefit for people granted as an earned right, especially Disability Insurance and Social Security, and also Temporary Relief for Needy People being the primary example. Most distinctive feature about the American welfare state is the large focus on private employment-based health and pension schemes because they are partly funded through tax rebates. Its health system has many distinctive characteristics that include the need of total coverage, but also comparatively generous benefits for citizens older than 65 years, including employment-based benefits for older people, and means-tested gains for the poor.
In many aspects, this organizational structure depicts the income security system. Like social security, Medicare scheme is a universal benefit contributed by a tax on workers and employers with eligibility determination by previous work history. Medicare, however, does not cover all health based expenses; rather, it creates a money making market for private insurers.
Further, unlike social security, where the government offers direct cash payments to beneficiaries, in Medicare scheme, insurance companies compensate the medical expenses. An aftermath of this structure is that it produces several constituencies with a vested interest in obstructing benefit cuts and favoring for additional services. Medicaid is the state initiative of health insurance for permanently disabled and extremely poor people.
Still Medicaid covers the medically destitute people, who are not indigent, but their medical expenditures exceed their income. Since the implementation of Medicaid, it has covered well beyond poverty-related structure through waivers, which permit states to practice without complying federal rules and regulations. States have implemented Medicaid waivers to accomplish broad changes outside of the legislative process. Some of the measures implemented are more generous test assets, higher income levels, and the inclusion of groups, which are not eligible (Busch, 2010).
Programmatic Medicaid developments have also been achieved under the Children’s Health Insurance Program, enforced in 1997. The SCHIP increased government funds to the states` governments to cover children from low income group, and also permitted states to provide SCHIP funding to cover uninsured parents.
This incentive of a federal match encourages states to develop generous programs for both low income adults and children. In 2007, New Jersey’s SCHIP scheme was extended to those children in families with income up to 325- 350 percent of the poverty level; Missouri, Vermont, and Connecticut covered families up to 300 percent. Hence, Medicaid not only signifies means-tested benefit for poor; it also helps in providing heath care for a large number of adults and children who are not poor. The United States health system also incorporates private health insurance i.e., subsidized by the federal tax system. This system allows employers to write off their contributions for worker health insurance premiums as a tax deduction expense, and it relives worker from paying taxes on health benefits received.
The private insurance sector is divided between smaller and larger self-insured companies and individuals who purchase health schemes from commercial insurance firms. This coverage differs in imposing benefits on taxes and their regulation, and the constituents, which they promote, differ on preference on policies. Hence, although the United States health system is consistent with the model of a liberal welfare state in some respects, still the fit is more complex and imperfect than implied by that model (Gilbert, 2008).
Interest Groups and Social Movements
The institutions that comprise the health care system in the U.S, as well as in other countries have surfaced through political conflicts between opposing interest groups. In some cases, the goal has been to amend a perceived injustice. In 1915, for instance, labor leaders and progressive activists condemned insurance firms and sought greater government ordinance of private insurance companies.
Thereafter, during the 1960’s, civil rights activists supported the Medicare drive and then struggled for racial equality in access to health care and hospitals. During the 1990s, the AIDS activist movement was organized to resist insurance companies’ discrimination against people with AIDS, and later in their agenda they demanded the inclusion of children, women, and AIDS patients in a government funded research. In other instances, the aim has been to defend existing advantages.
For instance, when President Carter implemented a plan for an across-the-board cap on hospital charges in 1979, the American Hospitals Federation formed a coalition to defeat it. The AHF formed a national steering committee to integrate activities in all states, mailed letters to all hospitals` administrators and formulated an alternative voluntary cost plan. The Carter plan was never approved by the Senate Finance Committee. Although many privileged groups have often organized health care campaigns to safeguard their market positions, they have discovered it beneficial in some cases to establish coalitions with the less privileged groups. A key example is the managed care movement that flagged off in the 1980s, when large organizations, such as General Motors and Goldman Sachs, hired managed companies to rein in health care costs. As these organizations initiated cost containment measures, they angered medical professionals, who resented the danger to their cultural authority, and disappointed patients, who felt they would receive callous treatment or denial of proper medical services (Beland, 2008).
In the middle of the 1990s medical professionals joined patient group and declared a war against managed care. By campaigning, they filed action suits against managed care organizations and state ordinances to regulate HMO’s, and sought patients’ rights. In reaction, states enforced several measures disallowing HMOs to deny claims, which involved the use of emergency room, directing hospitals to allow patients a minimal stay after childbirth, and providing patients the right to file a lawsuit in case of the denial of treatment that may result to injury or death. Hence, what superficially seemed to be voluntary citizen movement overall reflected the mobilization of advocacy firms, especially those involving medical professionals and physicians. Another key example of formation of the coalition is the comparative effectiveness movement.
The first battle occurred in the middle of the 1990s when the government tried to formulate guidelines by sending a warning to surgeons to be extremely careful in performing spinal fusions for treating severe back pain, because evidence recommended that this procedure was almost ineffective in most patients. Spine surgeons described the report as imperfect, and a medical device maker company, Medtronic, sued to plug the release of the report. Consequently, Republicans also made an effort to abolish the agency, which released the report, and finally did cut its funding.
Comparative effectiveness again appeared in 2009, when there was an addition of $1.2 billion in the economic package for funding studies, evaluating treatments of health problems, such as heart disease, prostate cancer, and back pain. Although medical professionals, unions, consumer groups, and insurance firms anticipated this research as a passage to decrease ineffective treatment and control of costs, individual interested groups mobilized against it. The key trade organizations supported the prominent player, the Partnership to Improve Patient Care, which represented makers of medical devices, biological treatments, and drugs (Glied, 2009).
The pharmaceutical sector spent a million dollars in the second half of 2009 urging to restrict the application of price comparison in drug researches. Brought into the alliance was the National Alliance for Hispanic Health and the National Alliance on Mental Illness that both receive funding from medical product companies. These groups contested that, because there was an underrepresentation of Hispanics and mentally ill persons in clinical trials, any decision about effectiveness, drawn from these studies, should be inconclusive. Social movements have also gained momentum in health care debates to defend beliefs and core principles. President Clinton’s plan for universal medical care demanded all health plans to include abortion, nullifying the laws of all states, which limited state funding for abortion. In retaliation, an alliance of religious groups began a powerful campaign against it, distributing postcards, lobbying legislators, letters through churches, and promoting a national media campaign.
The United States conference of Catholic Bishops launched a campaign of letter writing, opposing the feature of the bill. Several conservative Christian groups opposed the entire plan but aroused their components around abortion. Many economists view the defeat of Clinton’s health plan due to the opposition of small business organizations and health insurance industry that hired thousands of public relation firms and lobbyists and spent more than $145 million in an effort to defeat it. However, opposition aroused by religious and conservative groups was also one of the significant factors (Mitchell, 2009).
Health Care Systems in Debate
The debate over health care, which is recently occurring, is not only in the United States, but in most European nations. Fundamentally, it is an issue of how to level private needs of people with public budget. Many countries have begun restructuring the ways of funding and delivery of health care systems. On the one hand, the existing structure limits any nation’s options, which suggests continuing diversity. While, on the other hand, much alike environmental circumstances may narrow available alternatives resulting in convergence. At issue is how organizational contexts affect opportunities for restructuring. Some of the key issues already include the restructuring of the pension programs. The uncertainty is whether health reforms are pursuing the same principles of pension reform. There exists some evidence that the key direction of change, in both health care systems and pension, is toward privatization. The fact complicates this argument; the way how nations define privatization varies substantially, even though among the nations it is categorized as a similar regime. For instance, Netherlands and Sweden are usually social democratic countries; still each approach towards privatization is made in a different way.
Before the beginning of the reform era, the Swedish health system comprised of universal publicly provided health care services, under the control of local politicians and assisted by the staff of civil services servants. There were negligible private providers. In the 1990s, the government of Sweden allowed profit hospital organizations to acquire public hospitals and also provided local councils broader decision making authority, apparently as a way to enlarge opportunities for citizen involvement. In response to increasing unemployment, these councils rather started using their authority to segregate provider functions and contract out services to private firms for profit motives. Hence, few private providers participated in the delivery of health care services. The outcome was a complicated web of contracts, which diffused accountability lines and left patients in a dilemma about who hold responsibility for providing services. In 2002, the government of Sweden reversed action, banning the sale of hospitals to profit organizations, but permitting councils to carry on contracting out services. Moreover, due to this slight change toward private markets, health care system remained well established in the public sector under the control of government. The Netherland took even larger and more dramatic steps towards privatization. Until 2005, the Dutch medical system never showed universal coverage with liberal public funding. However, unlike Swedish government, it included some private provision of care and private insurance. The Health Insurance Act 2005 eliminated public health insurance and implemented a system of managed competition between private insurers. This Dutch plan required each to purchase a health insurance benefits package, with government subsidies offered for low income families, based on sliding measure scale. Premiums had to be community rated, and insurance firms must accept all applicants without preexisting condition of exclusions, so as to deter cherry picking. The role of government limits to protecting people and making insurers solely liable on quality and price. Since, the harsh regulations turned basic policies unprofitable, insurance firms looked for extra profits by selling supplemental policies not covered under the basic plans. These policies may not necessarily be community rated or guaranteed issue and can include preexisting condition exclusions. Hence, health reforms in the Netherlands shifted the medical care system far from a structural uniform with a social democratic model and toward a generous regime. The categorization of Germany is based on Esping-Andersen’s classification theory as a conservative government. Consistent with the approach of other countries in this typology, Germany designed health care system for a permanent, male breadwinner. As the manufacturing base declined, this model, however, proved deficient for a job of the rising economy, uniquely for those held by female workers.
Several women worked as part-time workers or temporary workers or were self-employed and hence not protected under employment-based system. In response, Germany decreased the direct connection of medical benefits to the labor market and permitted Germans to select among those funds that were not company specific. In this respect, it opened the market doors to greater competition. Germany also adopted a different payroll tax to sustain coverage for pensioners. Although, Germany is still committed to universal coverage through a system of regulated, mandatory sickness funds, the rigid link between health benefits and employment severed, and the sanctioning of funds permitted to openly compete for business (Amelung, 2003).
Health Care Debate Reforms in the United States
The health care system has become an issue of a dead heat debate for the federal government. The United States is facing the similar problems, which the European countries have already begun to recognize. The challenge that stood was how to establish reform within the framework of the current network of private and public benefits while simultaneously meeting the needs of several constituencies surrounding them. The health care debate of 2010 emphasized the relevance of interest groups and institutions in understanding the dynamics of policy formation in the United States. One of the most disputed issues was the public option that would offer a choice to private insurance in a competitive market. This proposal was most vehemently contested by private insurance companies, who doubted that a new public program could oust private insurance on quality and price.
The insurance sector started a campaign on Capitol Hill against it, based on a study published by the Lewin Group, which is a health policy consulting organization, owned by one the powerful insurers, United Health Group. The lobbyists argued that a government initiated plan, favorable for tax and regulatory treatment, would weaken the private insurance industry. Leading insurance companies, including United Health, suggested their employees to speak out. Company statements and operations and sample letters made it available to industry employees in almost all congressional districts.
At town hall debates held by Congress members during the August recess, the yet unspecified plan was criticized; one of the reasons was the conservative radio talk show, presented by Sean Hannity and Glenn Beck. Some insurance firms supplemented the crusade with local advertising, designed to apply pressure on some members of Congress. In late spring, Blue Shield and Blue Cross of North Carolina drafted advertisements to attack the public option. The final bill contained no public option. Another debate concentrated on the future of the employment-based mechanism. In the United States, the system of private health benefits started at a time when the Fordist model of the life course predominated. The Fordist model symbolized an image of continuous work with a single employer and a security of health and income. Incorporation of this model into the trade unions’ bargaining agreements in rigid seniority systems guaranteed automatic increase in cost of living and a package of benefits defending workers against the dangers of old age, illness, and unemployment. Although, the Fordist model promised to be an ideal, but it could be never reachable by all workers, especially minorities and women. It became the standard for public sector employees, unionized manufacturing workers, and especially for upper management levels. As the concept of lifetime employment started to dilute in the early 1970s, it became normative for most workers to work for various employers during their lifetime. The issue is that health care benefits remain attached to the employment contract, even if employers’ obligation to provide them declined. Yet employment related benefits are hard to accomplish because they generated a constituency of employer associations and trade unions, which keep an eye on all efforts to reform the tax structure that supports them (Gilbert, 2008).
There are, however, also opponents, mainly commercial insurance firms, who have interests to weaken the tax subsidy and increase the individual insurance market. For implementation of policies, they lobbied to liquidate the preferential tax authority of employer related plans, and implement health saving accounts that linked to a policy to cover ruinous medical expenses. The result would lead to level the playing ground between the commercial insurance companies and the self-insured firms that provide coverage for small and individual groups. To show their readiness to compromise, the reformers, representing commercial insurers, were ready to accept guaranteed issue without involvement of pre-existing condition exclusions and no lifespan caps coverage on reinforcement of such regulations with individual mandate. The individual mandate would significantly expand the market by introducing healthy, young people into the system to help pay the costs of sicker, older people. Under such conditions, insurance firms will perform quite well. Thus, they would possess a stable pool of clients; they would also possess people having government subsidies to help them purchase coverage. Further, they would be also paid the total costs of the benefits, which they offer to include in their administrative costs. The final bill contained strict regulations on insurance firms linked with the bonus of the individual mandate. A third dispute arose in the 2009 medical care debate over whether it would be possible to use the government funds to pay for abortion, either through subsidies or directly to insurance companies. During the course of debate on this bill by House of Representatives, Catholic bishops worked behind the curtain campaign for abortion restrictions. In order to receive the endorsement of pro life Democrats, the president agreed to sign an executive ordinance banning the use of government funding to pay for elective abortion. Hence, interest groups, ideology, and institutions all shaped the result of reform (Cannon, 2007).
The reconstitution of health care reforms is occurring across the world, establishing a rich source of data for health policy scholars and sociologists. The massive health care reform bill of 2010 will invariably alter the landscape of institutional structures. At the macro level, the issues involve whether an idea of the welfare state is purposeful in understanding health reforms and to what degree organizational legacies lock in policy options.
Within the context of the United States health care reforms, debate should focus on how current organizational structures influence the course of the debate. For instance, any expansion of Medicaid has significant consequences for the states that introduce the program on the state budget priorities. Given the argumentative discussions over regulations of the insurance companies, what role did insurance companies play in the final measure? Policy makers have interests in deciding whose interests may be promoted by any legislation, regarding why some groups succeed, while others fail in achieving their goals. The remarkable relevance for sociological theory is what strategies, tactics, and activities lead to a favorable result for a successful group. There is also an issue on how the health care reform debate was impacted by the structure of power within the insurance sector between the commercial insurers, and the self insured companies that function in the small group market. The next topic of interest is how the media projected interest group activities. Finally, is there a question of application of ideology in the health debate surrounding health care related reforms?
As we observe, the creation of the United States health care reform system was not based on a single ideology, for example, social solidarity or a core principle that health care is right. Instead, an alternative ideology asserts that health care is a commodity, that patients are consumers and that government benefits symbolize socialism. Both these opinions exist in public within the structure of both private and public benefits. Finally, the only assurance is that the analysis of health care reform debate and its aftermath offer a fruitful agenda, which involves entire institutional legacy.