HRIR 5062 Healthcare Paper

Center for Human Resources and Labor Studies-- University of MinnesotaHealthcare in the U.S.

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RUNNING HEAD: Treatment and Prevention, or a Lifestyle

Treatment and Prevention, or a Lifestyle: The State of Healthcare in the United States

HRIR 5062

Justin R. Dahl

December 17th 2008


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Abstract

In the past, the U.S. Government has tried to guarantee health coverage to the elderly

population of the United States through Medicare. The government has also given healthcare

coverage to low-income families who meet certain standards (e.g., Medicaid). But what about

the majority of the middle class citizens living in the United States that are either covered by

private employers or self-insured; that are facing skyrocketing healthcare costs? Of those not

insured, due to the fact they do not meet the eligibility requirements to receive state medicaid,

what happens to those who are not disabled or not old enough to meet Medicare

requirements?

There is a staggering 45 million Americans uninsured (Kotlikoff, 2007). After looking at

the current systems in place (Healthcare Safety Nets: Medicare, Medicaid, Privatized Insurance)

a new proposal will be given in which every citizen, legal alien, or national of the United States

who, given by constitution, should be able to pursue life, liberty, and property (viz. collective

happiness), without being hindered by catastrophic medical costs. Universal healthcare,

however not as proposed in its current form, should be a mandated –safety net—in which

everyone will be protected against the costs of healthcare to be in good health.


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In a country where its' citizens are guaranteed certain unalienable rights; specifically the

pursuit of life, liberty, and property (collectively…happiness), cannot be guaranteed to its

citizens an essential component in which these citizens are to be predicated during their

pursuit, the right to affordable and obtainable healthcare. As we move further into the 21st

century, the United States clearly needs to find a viable alternative to the healthcare crisis.

Perhaps by moving from a system where some [people] are government-ally funded, while

others fend for themselves. Is it time to move to a system where each citizen of the United

States is universally covered?

Even though this system may not seem perfect, perhaps by supplementing this

universality of coverage with private secondary coverage, available by employers/or self-

insured, could alleviate the costs of advanced medical procedures—and to avoid the problems

of the countries that already implement universal healthcare systems. This way, universal

healthcare will not be the “the straw that breaks the camel’s back”.

Social safety nets were established after the great depression in order to protect the

general population, as well as to look towards a secure financial future (e.g., Social Security,

Medicare). Today, these safety nets are starting to unravel at an unprecedented speed. Gone

are the days of the “white-traditional middle class America”, but here are the days of multi-

nationalism and nontraditional families (e.g., same-sex, single parent and multicultural

households. Which everyone who meets the American demographic standard for

citizenship/nationalization should be afforded.


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The United States has continually transformed over the years. Using the melting pot

analogy, this country started out as a homogeneous mixture of European decent, divided along

lines of nationality, not so much from color and ethnicity. However, over the decades it was

claimed that this nation would be a melting pot, however as we have became, and become

more diverse, our melting pot is turning into a tossed salad. The citizens and aliens have less in

common today then our predecessors. Perhaps this disparity is causing a greater strain on the

economic resources that were established at a time when the melting pot was still as

homogeneous; and the use of safety net resources were a last resort effort, often times

bringing discontent or even “shame” among middle class families.

Regardless of how the problem arose, the United States is facing a healthcare crisis.

During the 1980s and early 1990s, many private employers started offering their employees

(private) health insurance. Coincidentally, healthcare costs started rising, and today, without

insurance as a benefit, a simple office visit can be very costly.

1. As the baby boom generation says their farewell to the workforce, they will be

dependent on a healthcare system developed at a time when no one questioned,

projected or predicted the future costs of healthcare --namely Medicare or Medicaid.

Our nation continues to be a safe harbor for different nationalities as well as a new

beginning in life. The states' as well as our country’s Medicaid/Medicare systems are

becoming bogged down with those who need a helping start/who are taking unneeded

advantage. Medicaid/Medicare was not intended for this reason—it was developed to

help low-income families/or the elderly obtain coverage for health services, and not to


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be a primary benefits provider for those who can provide but choose to do otherwise. It

is here however, when the prospect of getting something for nothing becomes an

expectation/right/entitlement where a paradox arises . For those who can get a job, in

which a person will make more than the minimum qualification for especially those in

the medicaid system, can pay for their own insurance and the co-pays. But the paradox

is this, on one hand some continue on the border, making enough to barely support

ones’ family, but rely on free government assistance for the rest. It is here the American

dream dies. The safety net has become a safe harbor, that has a maximum weight limit

before the net breaks. But the net is breaking, and once it breaks, the delusions of a

grandiose American dream will break along with it. Perhaps a drastic reform needs to

take place; a reform termed universal health care. However, after looking at examples

from around the globe, this system is far from perfect. But there is hope; each country

is unique, with its own challenges and burdens. The United States is fortunate enough

to have other countries to look at for guidance; the course of action should build off

both our past experiences as well as the successes from those countries who have

adopted universal health coverage for all.

I. Government Programs: Social Safety Net for the Elderly, Disabled, and Poor

A. Medicare: Social Safety Net for the Elderly


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In 1965, Lyndon Johnson signed an amendment to the Social Security act, authorizing

medical benefits to individuals over

65 year of age, disabled, or that have end-stage renal

(kidney) disease (www.cms.hhs.gov). Pictured is

President Lyndon Johnson signing the amendment to

the Social Security Act, along with making former President Truman the first recipient of

Medicare services (Sorry, but the picture comes from Wikipedia)

Medicare is a model for how universal healthcare could be based. Medicare is a social

benefit that is based off of a single –payer system (so are Medicaid and TRICARE—Department

of Defense, insurance programs) which means that the government, or another single entity,

pays for all of the coverage, and not the individual receiving the benefits. This makes the

system more cost effective by keeping overhead and administrative costs low. According to

President Elect Obama’s healthcare plan (discussed later) claims that one-quarter of healthcare

spending currently goes to administrative and overhead costs due to the various payers and

plans (www.barackobama.com). A brief overview of each section of Medicare is provided next.

a. Part A—Hospitalization Coverage

Medicare Part A is designated for hospital stays over 3 days. There is typically no premium

to pay to have Part A coverage as long as the recipient has paid at least 40 quarters of FICA taxes

in their lifetime (www.cms.hhs.gov).

b. Part B—Medical Insurance, and Durable Medical Equipment (DME) Coverage


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Typically those individuals enrolled under Medicare Part B, are subjected to a monthly

premium of $96.00. These benefits include X-Rays, procedures, and some drugs used with

dialysis and chemotherapy (www.kff.org). Durable medical equipment is also covered which

includes Wheelchairs, some Canes, Blood Glucose Monitors, and eyeglasses.

(www.uhealthcare.com)

c. Part C—Advantage Plan

In 2003, President George W. Bush signed into the Medicare Modernization Act

which added supplemental prescription drug coverage to the Medicare system.

(www.cms.hhs.gov). This part has been replaced with Part D.

d. Part D—Prescription Coverage

In 2006, prescription drug coverage was offered to individuals who qualified for

Medicare Part A and Part B. Although not funded directly through Medicare, but by

privatized insurance companies, the Center for Medicare Services does regulate the

individual plans. One notable exception to Medicare Part D is that it does not cover

certain drug classes such as Benzodiazepines (Xanax, Ativan, Valium, Restoril, etc) or

cough suppressants (Dextromethorphan) (www.cms.hhs.gov).

However, it is not feasible to extend Medicare to each citizen of the United States.

According to the Kaiser Family Foundation, that Medicare is running into financial trouble. In

1970, $7 Billion was spent funding the Medicare program, in 2007, this spending had reach an

astonishing $432 Billion. See Exhibit 1. (www.kff.org).


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Besides these costs, when the baby boomer generation retires around 2030, there will

be 2.3 individuals paying into the system for every one beneficiary, which unlike today there

are 4.2 contributors to recipients.

B. Medicaid: Social Safety Net for the Poor


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According to the Minnesota Department of Human Resources website, those Minnesota

residents “who do not have access to affordable health insurance” can be covered. These

individuals are either covered under one of two state plans: MinnesotaCare (MNCare) or

Medical Assistance (MA) (edocs.dhs.state.mn.us). There are different eligibility rules among the

two different programs to receive benefits.

MinnesotaCare (MNCare) has similarities with MA, but acts more like a private health

insurance plan. First, the plan requires that each eligible recipient pays a monthly premium.

Those individuals that join MNCare cannot submit medical costs retroactively, and once their

first month premium is paid, coverage starts on the first of the following month. Furthermore,

you may not have private insurance that is at least half paid for by an employer. The following

chart indicates the counties in Minnesota which offer MNCare (as denoted in green).


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The remaining counties do not offer MNCare, but can receive MA if eligible. The following chart

shows the income requirements for those who qualify for MNCare, along with a sample of the

monthly premium.

Source: http://edocs.dhs.state.mn.us/lfserver/Legacy/DHS-3086-ENG


Even though a premium structure does exist to help off-set the cost of MNCare, it is still

heavily subsidized by state taxes and federal money (www.dhs.state.mn.us). A program like

MNCare could actually be a viable plan in which the federal government could set up a

universal healthcare system. This will be discussed later in the paper. But at the rate healthcare

coverage is increasing, the threshold income before taxes would have to increase. The State of

Minnesota also offers another type of program for low-income families who cannot afford, or

need a greater scope of coverage.


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General Medical Assistance (MA) is slightly different than MNCare. First of all the

income requirements are more stringent, recipients can retroactively bill medical claims

through the system for up to three months prior to MA coverage, and there is no monthly

premium. Moreover, an individual may also have insurance through an employer, or through

other sources in which MA may pay for your monthly premium. The chart below shows the

current monthly income threshold by family size.


Typically it is in this type of Medicaid, abuses start to occur. Do those individuals who

qualify for MA apply for the benefits in order to get back on their feet in order to find a job? Or

is the enticement of free medical coverage, (as well as other welfare benefits) strong enough to

enable those individuals to do the bare minimum to continue to receive benefits?

Who exactly funds these types of programs? Taking a broader perspective, the federal

government provides funding for state Medicaid programs (www.dhs.state.mn.us). Currently,

the Center for Medicare and Medicaid services states that with the aggressiveness of fraud and


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payment abuses, that the system will not be sustainable without significant reform (Brady,

2008).

II. Private Insurance: Assurance to Medical Care, no matter what the cost

Currently, one type of privatized fad that is moving throughout workforce is Health

Savings Accounts (HSAs): Where employees save for their healthcare costs by contributing to a

tax free fund (which can rollover year after year), short of catastrophic care, in which after

meeting a large deductible, co-pays and the like may kick in, or the costs go to zero by the

covered individual. According to the Kaiser Family Foundation, these were established

according with the Medicare Modernization Act of 2003. (www.kff.org). However, there are

limits to the amounts individuals and employers can put into these health savings accounts

(www.ustreas.gov) due to tax reasons. Even though this may seem like a good idea at first, it is

like putting a band aid on a hemorrhaging cut. This type of solution does nothing about the

rising healthcare costs, and in fact, shifts even more of the burden of healthcare onto the

employee. In order for equity to be achieved for everyone, a system should be put into place to

provide benefits to all of the American people.

III. Universal Health Care

A. Hillarycare

The First attempt to address the issue of Universal Healthcare to fix the American health

system was done in 1993, given the nickname “Hillarycare”. In his first 11 months in office,

President Bill Clinton managed to provide free or subsidized immunizations to low income


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families, fund Head Start programs, and fund the Ryan White AIDS foundation (www.hhs.gov).

At the same times as these reforms were taking place, under the request of the President,

Hillary Rodham Clinton set out to develop a comprehensive health reform proposal entitled

“The President’s Health Security Act” which would have guaranteed Americans healthcare

coverage that would be “affordable, portable, and permanent”. (www.hhs.gov)

In 1993, Clinton wanted universal healthcare (UHC) that was to be provided by an

employer, but financed with payroll taxes, put a cap on premiums, federal dollars used to fund

low-income HMO’s, establish healthcare alliances to bargain for the consumer, and finally

provide small business owners with 15 different options in which they were required to choose

from to offer their employees benefits (DoBias, 2007). Now, in 2007, while running for

President, the 1,342 page plan for UHC has changed little, besides how to fund the plan, no

insurance company coverage exclusions—in which companies can deny benefits due to a

preexisting condition (DoBias, 2007), federal subsidies to help low-income families to enroll in

private health plans, and small businesses could receive tax credits for offering coverage.

Clinton’s 2007 proposed that UHC funding would come from revoking President Bush’s tax cuts

on those who earn more than $250,000 per year (Sisk, 2007).

B. Obamacare

Under the Obama administration, a new healthcare reform is being proposed,

“Affordable, Accessible Healthcare Options for All”. To do this, the Obama healthcare has

outline six steps in achieving its goals:

1. guaranteeing eligibility for all health insurance plans


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2. creating a National Health Insurance Exchange to help Americans and businesses purchase private health insurance

3. providing new tax credits to families who can’t afford health insurance and to small businesses with a new Small Business Health Tax Credit

4. requiring all large employers to contribute towards health coverage for their employees or towards the cost of the public plan

5. requiring all children have health care coverage; expanding eligibility for the Medicaid and SCHIP programs;

6. and allowing flexibility for state health reform plans. (www.barackobama.com).

Obama’s current plan intends on working within the confines of the current healthcare

system. With the combination of Hillarycare and Obamacare, we will be able to have a

healthcare system in which every single American can afford to have.

C. Universal Health in Practice

Canada is probably one of the most cited cases of a country with a Universal Healthcare system.

With this system comes free prescription drug coverage as well as hospital care. But this system comes

at a price. Currently Canada is facing the same baby boomer generational problem their healthcare

system that the United States is. Because of this, it would not be feasible to change to a Universal

Healthcare system based off of the current model of Canada (Ionni, 2008).

Over the decades, the United States healthcare system has evolved. From the very beginning,

services such as Medicare and Medicaid acted like universal healthcare coverage, but only for selected

groups, and not the majority. Also, as companies started to offer employees private healthcare

coverage, the healthcare system adapted to this, and costs rose accordingly. But there was a flaw in

this, costs continued to rise, and those on publically funded programs were covered, but a large group of

middle class individuals were left with no coverage and stuck with the increasing costs of healthcare. In

order to fix the abuses and wastes of Medicare and Medicaid, and to help curb the cost of private

insurance premiums, a middle ground must be met. Universal health coverage for all citizens of the

http://www.barackobama.com/


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United States, with the option of private insurance to subsidize those illnesses that may be too much to

be bared by a single entity.


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References

http://edocs.dhs.state.mn.us/Ifserver/Legacy/DHS-3086-ENG Date accessed December 10th 2008

http://www.hhs.gov/news/press/pre1995pres/931222.txt December 22, 1993 United States Department of Health and Human Services News, 1993 - - A Year of Accomplishments

Daily News (New York) September 18, 2007. Richard Sisk. Pg. 4 (News) Hillary ’93 vs. Hillary ’07. Accessed www.lexisnexus.com December 10th 2008.

Kotlikoff, Laurence., 2007 The Boston Globe. We are all Uninsured Now. Retrieved from Lexus Nexus.

DoBias, Matthew.,9/24/2007 Clinton health plan, take two; Experts weigh in on senator’s new health coverage plan. Pg. 12 Modern Healthcare. Retrieved from Lexus Nexus.

http://www.cms.hhs.gov/History/ history of Medicare.

http://www.barackobama.com/pdf/issues/HealthcareFullPlan.pdf

http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/Downloads/PartBandPartDdoc_07.27.05.pdf

http://www.kff.org/medicare/upload/7731.pdf

http://www.uihealthcare.com/topics/aging/agin3390.html

Ionni, K., 2008 Times are A’ Changing. Canadian Underwriter. 30-34.

Brady, M., (2008) CMS Head: Fast Action On Sales Abuses. National Underwriter. Life & Health p.6

http://www.cms.hhs.gov/History/

http://www.lexisnexus.com/

Documents

HRIR 5062 Healthcare Paper