Obama’s Health Care Reform 2010: From Change to Concession?
Health care reform as an example for structural resistance of the American political system to needed change
Term Paper 2011 20 Pages
Table of Contents:
2. The US Health Care System Until 2010: Urgency to Reform
3. From Change to Concession: Obama's Initial Plan & the Final Reform
3.1 Obama's Vision: America's Affordable Health Choices Act of and the Public Option
3.2 Obama's Concession: The Patient Protection and Affordable Care Act & the Health Care Education Reconciliation Act of 2010
4. The Legislative Process: Major Obstacles to Health Care Reform
4.1 The Republican Opposition in the Legislative Process
4.2 The Impact of Interest Groups in the Legislative Process
"It's been a long time coming.. .but change has come to America"
With this statement, newly elected president Barack Obama did not primarily intend to emphasize the change in office, but his promise to address major problems that Americans were facing for decades. One of Obama's most ambitious subjects for change was the US health care system, which made him very popular among many voters. In the election year 2008, 45,7 million people or 15,3% of the population did not have any health insurance (US Census Bureau, 2008), and the US health care system was by far the most expensive one in the world (OECD Health Data, 2010). Rovner, specialist in the politics of health care, commented, that "pretty much no matter how you measure it, our health care system stinks" (Rovner, 2010).
From this perspective, the inaugurations of the Patient Protection and Affordable Care Act 2010 (PPACA) and the Health Care Education Reconciliation Act of 2010 (HCERA) were not surprising. Nevertheless, Obama hailed his reform as a response to "the call of history" (Obama, 2010). In fact, for decades democratic presidents had failed to establish health care reforms, although the problems in the health care system were as present in the past as they are today. Accordingly, Obama's reform had to face strong headwind as well and nearly fell several times. Regarding the legislative process of the PPACA and HCERA, this paper aims to examine a supposed incongruence of the social democratic ideal of an affordable health care system with the US political system. It tries to shed light into the paradox of an unequal and ineffective health care system on the one hand and strong resistance against any type of reform on the other. Major obstacles in the legislative process, such as the Republican Party and the impact of interest groups, are examined.
First, regarding the internal structure and the international context, this paper outlines major shortages of the US health care system, making the urgency of reform clear. Moreover, Obama's initial reform ideas based on the America's Affordable Health Choices Act of 2009 (AAHCA) on how to overcome these shortages are introduced. Second, the final health care reform law, the PPACA and HCERA, are analyzed. The final law was heavily watered down from Obama's initial ideas and many even deny its improving character. Thereafter, major obstacles in the process of legislating are scrutinized in order to find reasons why the law differs so much from the AAHCA. The impact of the Republican Party and interest groups are reviewed. It should become clear that the neo-liberal ideal of a free market coined by many Republicans, was an important obstacle to Obama's health care reform. However, much more important was the enormous impact of interest groups, which can be regarded as the main driving forces in hindering smooth legislation.
2. The US Health Care System Until 2010: Urgency to Reform
"Today, we are spending over $2 trillion a year on health care — almost 50 percent more per person than the next most costly nation. And yet, as I think many of you are aware, for all of this spending, more of our citizens are uninsured, the quality of our care is often lower, and we aren't any healthier. In fact, citizens in some countries that spend substantially less than we do are actually living longer than we do" (Obama, 2009)
In following Obama's harsh criticism, this section reveals major shortages of the US health care system and underlines the urgency of establishing reform. The US health care system is a multi-payer system (Chua, 2006), meaning that private insurance companies as well as the government share the responsibility for financing the system through the collection of money for health care as well as the reimbursement of health service providers for health care. Nevertheless, the US multi-payer system is unique because of the strong dominance of the private element in comparison to health care systems of other OECD countries (OECD Health Data, 2010). In 2007, 59,3% of US citizens received private employer-sponsored insurance and 8,9% of US citizens purchased insurance on the private market whereas only 27,8% were enrolled in public insurance programs (US Census Bureau, 2008).
There are two major public health insurance programs, which aim to provide a basic set of coverage: Medicaid and Medicare (US Department of Health and Human Services, 2011). Medicaid is designed for people and families with low incomes. However, a major problem of Medicaid is its eligibility requirements. Besides low income, also assets or any other resources, which can be sold for cash, are considered as criteria of eligibility (ibid.). Therefore, Medicaid does not provide medical assistance for all poor persons. In fact, many people remain without insurance because they neither qualify for Medicaid, nor can afford private insurances. Another point of critique is Medicaid's ineffectiveness. Due to its low reimbursement rate, many enrolees have difficulties in finding a provider that accepts Medicaid and thus leave many de facto uncovered (Chua, 2006).
Medicare, which is designed for senior and disabled people, reveals similar deficiencies (US Department of Health and Human Services, 2011). First, because there is an incomplete coverage for skilled nursing facilities, incomplete preventive care coverage, and no coverage for dental, hearing or vision care, seniors pay around 22% of their income for health care costs despite their Medicare coverage (Chua, 2006). Second, the soaring costs of Medicare seem to become more and more unmanageable. In 2008, 43 million Americans were insured through Medicare while costs added up to around 450 billion dollar, which is 3,2% of the GDP. Since its installation in 1965, Medicare's costs have virtually doubled every four years. In 2080 the costs of Medicare would add up to 11% of the GDP (Congressional Budget Office, 2009).
In the private sector of health insurance, two major distinctions can be observed (Chua, 2006). First, there are employer-sponsored insurances, which represents the main way in which Americans receive health insurance. Employers provide health insurance as part of the benefits package for employees. However, the benefits vary widely according to the specific health insurance plan. Additionally, due to the fact that insurance is not compulsory, many employers cannot even afford to insure their employees (Harbage, 2009). Second, there is the individual insurance market, which covers people who are self-employed, retired or unable to obtain insurance through their employer. In the individual insurance market, individuals pay insurance companies out-of-pocket for coverage. However, the costs depend on the health risk factor of the patient: Whereas, low-risk healthy patients have low premium, high-risk or sick patients need to pay significantly more (ibid.). Private insurance companies can even deny people coverage based on pre-existing conditions. Jerry Flanagan, health care policy director of Consumer Watchdog outlined that "insurance companies want premiums without any risk" and go to the extreme "lengths.to go to make a profit" (Hilzenrath, 2009).
According to the OECD Health Data 2010 report, which provides a comparative analysis of OECD countries in the fields of costs, quality and access, the US has by far the most expensive health care system in the world (OECD Health Data, 2010). In 2008 health spending accounted for 16% of the GDP, which is almost twice as much as the OECD average of 9%. Moreover, although there is a strong dominance of the private element, public health spending per capita in the US is greater than in any other OECD country. This is interesting, because most OECD countries have a universal primary health insurance, covering every citizen, while in the US public insurance only covers seniors, veterans, low- income individuals, and children. Further, the US is the only OECD country, which does not have a universal health care system. In 2009, the number of insured residents rose to 50.7 million, which equals 16,7% of the population (US Census Bureau 2010). Finally, although the costs are almost twice as much as the OECD median, the quality of US health care is not significantly advanced. In some fields, the US system ranked at top, however in many others it did not. Robert Coulam, research professor in health care administration highlighted that "for our massive extra cost to be worth, we should see clear cut superiority. But we don't " (Coulam, 2009). Concluding, a fundamental reformation of the current US health care system is overdue.
 On 4th November 2008, the newly elected US-President Barack Obama gave his victory speech in front of more than 200,000 enthusiastic supporters in Chicago (Obama, 2008).
 Some citizens have changed their status of insurance during the year. Thus they were recorded numerously.
 Other public systems are the State Children's Health Insurance Program (coverage of children whose families are uninsured) and the Veteran's Administration (extremely affordable coverage of veterans).
 It needs to be noticed that the federal government and the states share the administration and finance of Medicaid. Thus, Medicaid programs differ from state to state.