 |
Web Hosting by Netfirms | Free Domain Names by Netfirms |
|
|
|
Group Abstracts and Papers
Research Methods: Back to Home
16th Annual
Health Care Administration Research Conference
U.S. Army-Baylor University Graduate Program
Academy of Health Sciences
Ft. Sam Houston, TX 78234-6100
13 December 2002
Broken Soldiers: A Descriptive Correlational Study of the
Army Medical Evaluation Board (MEB)
MAJ Charles Sizemore
CPT Philip Ginder
Capt Jonathan Richards
Abstract
Rising costs due to Medical Evaluation Board (MEB) losses have led to a need for investigation of MEB factors, demographics, and descriptive statistics. The objective of this study was to perform a descriptive correlational study of MEB data elements for hypothesis formulation to aid future research. The Army Medical Department MEB Tracking Tool data set (MEBITT) consisting of all recorded MEB information for the year 2001 (n=11301) was used. 51 variables were examined; 224 statistically significant correlations were deemed operationally relevant. The three highest observed diagnosis for MEB were orthopedic (n=4801, 42.5%), mental (n=1456, 12.9%), and respiratory/ systemic (n=1396, 12.4%). These factors were studied along with demographic variables. A correlational matrix was developed to identify specific areas for future study. The study was successful in identifying areas worthy of further investigation to control cost within the MEB process, as well as cost effects of medical disability. Additionally, the study also shows areas of weakness within current data collection procedures, and how future data may be collected to draw more specific conclusions.
Health Management Information Systems:
Feasibility of An Online Appointment System at Brooke Army Medical Center
MAJ Charles Sizemore
CPT Kay Hadley
CPT Richard Keller
CPT Timothy Sharpe
U.S. Army-Baylor Program in Health Care Administration
Introduction
BAMC is a state-of-the-art, 450-bed health care center. It prides itself on providing a high-quality health care environment. BAMC clinics support 640,000 outpatient visits annually and serve a beneficiary population of 573,000 active duty soldiers, family members, and retired service members (Brooke Army Medical Center [BAMC], 2002).
Beneficiary expectations will eventually require web-based transactions. In keeping pace with the trend in modern business practices and expectations of the public, the value-added benefit of web-based services cannot be discounted. Recognizing the return on investment of such a tool, Fort Leavenworth took the lead and tested a web-based patient appointment system. Initial feedback from their test indicated a higher degree of patient satisfaction related to the accessibility. Likewise, BAMC has the option to implement a similar program, if they choose proprietary over standardization (R. Salgueiro, personal communication, August 27,2002). In the case of proprietary, this means that the model is primarily a product of a private firm and the model is custom fit for a specific hospital and patient population. Conversely, the standardized model is government owned and designed to create a uniform standard among the Department of Defense health care system.
The purpose of this paper is to examine the feasibility of implementing an online appointment system at Brooke Army Medical Center (BAMC). Toward that goal, we consulted with the resident experts at BAMC, including the Chiefs of Clinical Operations, Patient Appointments, Communications Section, Adolescent Clinic and Information Management Division.
In keeping pace with cutting edge technology, the TRICARE Management Agency (TMA) is cognizant of the potential value of online information and the increased access it provides to the consumers via the Internet. Accordingly, TMA has initiated a project to implement standardized e-health programs for all Department of Defense (DoD) medical treatment facilities. The release or fielding of this program is expected to occur in fiscal year 2004 and will provide online services (TRICARE Management Activity [TMA], 2002). Considering these benefits and demonstrated value, it is logical that the flagship of the Army Medical Department, Brooke Army Medical Center, must consider the importance of online services and should begin planning for the release of the TMA model.
Analysis
Data
In an effort to get a better understanding of the beneficiary population, we obtained patient information data from BAMCs Composite Health Care System (CHCS). This data included appointment mix information for the Family Medicine and Adolescent Clinics. Upon reviewing this data, it was evident that the Family Medicine Clinic had a significant number of “established” appointments while the Adolescent Clinic had a large number of “routine” appointments. These two categories of appointments are the targets of opportunity for most web-based patient appointment systems (V. Hamlin, personal communication, August 9,2002).
Leadership
BAMC’s Executive Committee understands web-based appointments and recognizes the benefits of expanding online services (S. Bentz, personal communication, August 9, 2002). Presently, they are at a crossroad regarding the best method of implementation. The success of their endeavor is contingent upon their commitment to manage the migration to web-based services. This goal must be linked to the strategic plan of the hospital and tailored to the needs of the patient population.
Web-based appointments have a potential positive impact on BAMC patient care. However, the benefit of may vary in degree among clinics of a health care organization. Some clinics will implement a broader range of services, while simultaneously modifying business practices to adapt to e-healthcare. While other clinics may do minor or no changes. The main point being that incremental implementation of web-based appointments is expected to vary from one clinic to the next, based on the types of services provided and administrative constraints. Similarly, there is dichotomy of thought among healthcare providers. There are physicians, nurses, and technicians that want greater inclusion of web-based appointing and e-health, while other providers may be more resistant to the idea of change (C. Dillon, personal communication, August 27, 2002). These facts present some minor obstacles for BAMC. However, organizational buy-in can be enhanced through the appointment of a “champion,” to implement an education program.
Additionally, the impact on staffing and workload remain unknown factors. Clinics, Central Appointments, and Information Systems sections have to evaluate their workload and determine the need for additional manpower (C. Dillion, personal communication, August 27, 2002). The importance of conducting this assessment cannot be underestimated and must be addressed early in the planning phase. Currently, there are some indications that business practices are disjointed among a few clinics. Our clients pointed out that several clinics barely manage the appointment-booking workload, while Central Appointments tends to book appointments incorrectly, for various reasons (C. Dillion, personal communication, August 27, 2002). This problem creates redundancy and inefficiency, which negatively impacts on patient care. Workload is a product of web-based appointments. This too is a challenge, which must be addressed. Fortunately, web-based appointments are able to help both the clinics and Central Appointments overcome many of their administrative challenges. Obviously, the goals of all quality health care organizations are to maximize patient access and increase patient satisfaction. Assisting in this effort, TMA will provide staff training and facilitate the process of converting business practices to online services (Kelly, 2002). However, BAMC should expect to incur some costs with implementation. These costs involve personnel training time and initial set-up costs.
The scope of implementation for web-based appointments can be limited in the number of participating clinics and type of appointments booked. For example, a clinic with high routine and established appointments can highly benefit, and should be included in this implementation. However, a specialty clinic with very specialized appointment types may not benefit from this implementation, and probably should be excluded. Suffice it to say, BAMC has an opportunity to take advantage of a tool, which has significant return on investment, in terms of overall patient satisfaction, with minimal implementation expenses.
General concerns from the clinics must be addressed prior to implementation. A major concern is the confidentiality of patient records. As an example, the Adolescent Clinic, which delivers healthcare to teens, has many confidentiality concerns and already works diligently to protect sensitive patient information (C. Dillon, personal communication, August 27, 2002). All clinics must be assured that web-based appointments adequately guarded against unauthorized access. Additionally, clinics must know the nature of the appointment that is booked online, not just the type of appointment; permitting them to prepare and set schedules accordingly (C. Dillon, personal communication, August 27, 2002). This infers that there must be some form of triage associated with web-based appointments. Clinics are also concerned that beneficiaries can double book appointment slots. This can increase the no show rate and fill up their templates quickly (C. Dillon, personal communication, August 27, 2002). If these concerns are not addressed, they will seriously hinder the success of the system.
BAMC’s information system’s capability offers a clear advantage. It has an adequate network infrastructure and the expertise to handle this initiative. BAMC has adequate firewalls and security for the TRICARE Online web site that includes 128-bit encryption, and this should alleviate some security concerns. However, BAMC has only one web master and recognizes the potential need for additional manpower (M. Ross, personal communication, August 27, 2002).
Costs
Costs of implementation will vary according to the degree of diffusion throughout the organization. Costs can be expected in hardware and software modifications, Health Information Portability and Accountability Act (HIPAA) compliance, training, additional staffing, and marketing costs. At this point, exact costs remain unknown and will likely among facilities, depending on the current status of their network systems. Fortunately, TMA will provide training and contractors to implement the system. Cost estimates are an issue and must be disseminated early to ensure resources are available to all facilities (Kelley, 2002).
Patient satisfaction is the basis on which every healthcare organization evaluates its services. The primary goal of web-based appointing is to increase patient satisfaction through empowerment. Empowerment is accomplished through increased access, more beneficiary involvement, increased participation in healthcare decisions. Web-based appointments will augment the existing appointment system. Indications from dialogue with the Adolescent and Family Care Clinics are that web-based appointing would be favorably received among the patient population (C. Dillon, personal communication, August 27,2002). BAMC can measure patient satisfaction through surveys.
If due consideration is not given to the rules and regulations associated with patient protected information, HIPAA compliance can also be a limiting factor. The primary concern being the protection of patient data, as it passes over and through the internet and among various networks. These are just some of the points of contention with HIPAA privacy and security requirements. Needless to say, electronic transmissions must adhere to HIPAA. These issues should be reviewed at every health care organization that is contemplating conversion to web-based appointments. Each organization should be prepared to explain to JCAHO how they meet the requirements of HIPAA.
Conclusion
TRICARE Online is the DoD answer to e-health and web-based patient appointments. It is the standard for all military treatment facilities and will be the platform on which to operate a web-based patient appointment system. After a review of all factors, we concluded that BAMC should implement the TMA model of web-based appointing. Benefits of this model are (1) reduced overall cost for BAMC, (2) standardization of appointment booking through TMA, (3) empowerment of beneficiaries by enhancing access to care, (4) improved quality of care and outcomes, (5) built in security features are built into web site, (6) streamlined health care delivery (Kelley, 2002). Furthermore, TRICARE Online goes beyond patient appointment services and offers expanded e-health and transaction based services. The MTF Commander and Executive Committee must perform the following duties to enable the TMA model of web-based appointing: (1) drive change and show enthusiasm and support for the new system, (2) appoint a champion or empower a team to implement the program, (3) ensure staff is available for training, (4) decide which clinics will have online appointing, (5) develop an implementation plan, (6) provide site access to contractors, (7) market capability to MTF staff and beneficiaries, (8) coordinate efforts with Lead Agent (Kelley, 2002).
Based upon lessons learned from proprietary models, in terms of high maintenance costs and rigid flexibility to adapt to the dynamic health care environment, the preferred choice is the standardized product. TMAs standardized model has the potential to be the legacy system of the future because its government owned and more readily adaptable to the federal health care system. Implementation method aside, the value of online patient appointment is obvious. In San Antonio alone, over 55 other civilian facilities have implemented some form of web-based access among their services.
References
Brooke Army Medical Center. (August 13, 2002). Brooke Army Medical Center Health Care Focused on the 21st Century [On-line]. Available: http://www.bamc.amedd.army.mil/factsheet.htm
Kelly, B. J. (2002). TRICARE Online What You Need To Know As It Comes To Your Neighborhood. Briefing at TRICARE Management Activity, Washington, DC.
TRICARE Management Activity. TRICARE Online Services. [On-line]. Available: http://www.tricareonline.com/xleftnav.jsp
Health Policy:
An Examination of Policies for an Aging Society
MAJ Kevin Bonds, CPT Erich Felps, CPT(P) Kay Hadley, Capt Richard Keller, CPT Richard Morton, and MAJ Charlie Sizemore
U.S. Army-Baylor Program in Health care Administration
Policies for an Aging Society
Policies for and Aging Society (Altman & Shactman, 2002) examines a number of issues that pertain to the provision of entitlements for the elderly in America. Through the writings of the authors, it is clear that entitlements for elderly persons are a social good. However, politically there are problems that must be overcome if these entitlements are to flourish as they do today. First, among Democrats and Republicans, there are fundamental ideological differences in the way each party believes entitlements should be delivered. Party partisanship will be the fundamental obstacle to equitable solutions with regard to entitlement programs. Second, it is clear that we must act now to avoid problems in the future. Whether we plan to limit health care coverage through rationing, or change our system so that it becomes one of defined contributions, we must act now so that a train wreck does not occur in the future. Third, as the proportion of the retired population increases, projections point to the fact that there may not be enough younger workers to finance entitlements since taxes paid by workers today finance today’s entitlement costs. Since World War II, the retirement age has decreased and resulted in more beneficiaries claiming retirement benefits. This problem may be magnified as the baby boomer generation begins moving into their retirement years and the fact that seniors are living longer. The book represents an almost up-to-date account of what has happen in the past 20 years with regard to policies for elderly persons. During the conclusion of the paper, we will examine current legislation that may be the first steps toward lasting health policy (Shactman & Altman, 2002).
Our class text offers some comparisons to the ideas presented here. One example of this is partisanship. Classically, Democrats and Republicans disagree on how much involvement the open market should have in entitlement programs. Weissert and Weissert (2002) describes that Democrats have a perceived need for redistributed policies that would take money from one group (the wealthy) and give it to another group (the poor) to finance health care for all, while Republicans would prefer to use such methods as defined contributions to allow richer Americans to pay for a larger portion of their health care. Which approach will prevail is unclear. What is clear is that the current administration favors personal responsibility among Americans as an approach. United States Surgeon General Richard Carmona made that clear during his recent visit with Baylor faculty and students (R. Carmona, personal communication, February 7, 2003).
When one realizes that early action is critical to solving the coming problem with entitlement programs, one also realizes that our government, particularly the Congress, is not prone to prompt action. Weissert and Weissert (2002) described several reasons for this. First, they say that members of Congress ask themselves two questions before casting their vote. The issue is whether this decision will enhance my chance for reelection, or if opponents will use it against me. In the case of actions regarding entitlements, the affects solutions will take hold too far in the future for the full affect of the decision to have a bearing on reelection status. Furthermore, as Weissert and Weissert (2002) point out, Congressmen prefer to have the option to take credit for their actions. Again, the future effect of changes does not allow taking full credit for these actions.
Understanding Health care Financial Management, (Gapenski, 2001) further supports the notion that there will be fewer workers capable of funding elderly entitlements in the future. According to Gapenski (2001), employed individuals pay all of the Social Security tax and most of the Income tax in America. The growing percentage of the aging population creates funding concerns.
All the talk about the future of Social Security and Medicare is based on estimates of future budget surpluses or deficits. One good thing about that is that it enable congress to cut spending or programs. Estimates about future budgets and their impact can go out as far as seventy-five years. These estimates of the future have little impact on the legislative process today because the problems are not viewed as impacting us today (Aaron, 2002).
Interestingly, one may disregard stock market predictions about the near future but take to heart very seriously predictions about the solvency of Social Security and Medicare decades from now, despite potential inaccuracies of such a long forecast. With that said, most agree that it is better to try to understand and predict the future, even with inaccuracies, than to ignore this information when budgeting for the future. The government owes the taxpayers an honest assessment of the future of these programs (Aaron, 2002).
If planners were able to accurately predict the future state of these budgets, the planning process would be clear. Congress would know the shortages and surpluses and act accordingly. Uncertainty plays a major role in predicting long-term budget estimates and is also the reason for the inaccuracies. If we make enact reform, we should know that it is harder to repeal an entitlement than it is to create it. If lawmakers enact new entitlements, they should be prepared to live with the decision many years from now (Aaron, 2002).
The mistake in forecasting the amount of a surplus is more acceptable than a mistake in forecasting the amount of a deficit. Forecasting includes financial forecasts and forecasts of health statistics. For example, inaccuracies in the age for life expectancy could have enormous impacts on the Medicare and Social Security budgets (Aaron, 2002).
Economic forecasts are going to change and that uncertainty will sometimes have unintended consequences. We should be prepared and have the ability to adjust these policies, budgets, and plans as necessary. Making such change may not be easy. Many interest groups may stand in the way of making necessary changes. The attitudes of the interest groups today may be far different twenty years from now (Aaron, 2002).
Models that include uncertainty are so unpredictable, unreliable, and complex that they go beyond scientific capabilities of accurate forecasting. The same experts who design and use these models admit that the complexity and inaccuracy is a joke. The reality is that lawmakers need the best information to form policy even with the limitations and inaccuracies (Aaron, 2002).
While there is great uncertainty in predicting future budget estimates, there is a great deal of certainty with regard to some population predictions. If we could predict increased birth rates, it could mean increased revenues for Social Security and Medicare. It is safe to say however, that the aging population will continue to grow and that the birth rate will not return to the post World War II record highs (Aaron, 2002).
There are many things that we cannot predict about the future. What will be the quality of life for the elderly in years to come? How long will people be willing to work in the future? Will people who live longer be healthier in the later years of their lives or will the additional years of life be unproductive and debilitated? Will technological advances increase the cost of health care? Will the gap between the rich and poor get smaller or grow even wider (Aaron, 2002)?
Long-Run Budget Projections and Their Implications for Funding Elderly Entitlements
Long-term budget projections and their implications affect policy formation and decisions. They will most likely become more commonplace. But, more than just numbers drive policies for the long-term. Policymakers need to understand their underlying concepts, assumptions and limitations. If current laws and policies continue, the Congressional Budget Office (CBO) estimates that 43 percent of the budget and 7.1 percent of the gross domestic product (GDP) will be devoted to elderly persons only by the end of the ten-year period. To analyze fiscal situations beyond the usual ten-year period, the CBO produces long-run projections of receipts and expenditures. Making policy decisions in advance is often very difficult. As budget deficits are projected to grow, the federal government will have less flexibility, because the three large entitlement programs will absorb an increasing share of the budget. Even small projected deficits can lead to an explosion of debt if continued for many years, and a projection that the debt will eventually explode provides no information about the size of the policy actions that must be eventually taken to put the budget on a sustainable path (Steuerle & Van de Water, 2002).
Most of the people who will be working will draw benefits during the next twenty or thirty years, and consequently the biggest demographic factor affecting budget projections is the pattern of births. In 2008, baby boomers will begin becoming eligible for social security. At that same time, Generation Xers will be reaching peak earnings and Generation Y will be entering the labor force. This demographic shift will strain the federal budget by causing spending to increase faster than taxes paid by the working. Improvement in longevity and improvements in health status also add to the pressure. In addition to demographic factors, the structure of entitlement programs themselves is a critical element in their projected growth. If benefits were reduced, they would have less of an impact on the federal budget. Clearly, health-care spending cannot continue to absorb an ever-increasing share of our economic output. Determining where and when an unsustainable process must stop is the critical question and is very difficult to make, politically (Steuerle & Van de Water, 2002).
It is incorrect to say that our economy cannot afford the elderly and higher shares of the national income spent on health and retirement. What we can afford is different than what we should spend. There is the political problem. There are many issues we can examine to determine if taxes should be raised or if money is being distributed fairly. But, those decisions carry along with them the element of uncertainty in terms of the overall impact of policies. No government entity has produced consistent long-run estimates of the economy and budgetary effects of specific policy proposals. The President’s Commission and the CBO are looking at effects of policy decisions on savings, impact of savings on economic growth, effect of economic growth on the budget, increasing the labor supply, and directly controlling the growth of health-care costs. All of these issues ring of reform in our system, which relies on projections, impacts, policies and politics (Steuerle & Van de Water, 2002).
Methods for controlling the costs of health care usually limit one of these three items: the quantity of health care consumed, the price of that health care, or the use of costly technology. To date, the federal government has made no attempt to control quantities. Efforts to limit quantity and deny services are largely bound to fail as beneficiaries speak out strongly against it. More efforts are usually made to control prices, such as Medicare fees and charges. To be considered effective, any proposal must include specific details on the mechanisms for setting, monitoring, and enforcing spending limits. Many observers believe that insurers normally cover new technology, and that the cost of technology eventually will drive up overall costs. Therefore, the way to constrain cost is to constrain technology itself. Market-based reforms and defined contribution systems impose additional costs on recipients at the point of health care. These two can give the beneficiary more control over the decision to consume health care (Steuerle & Van de Water, 2002).
As long as federal policy becomes increasingly dominated by entitlements that grow faster than the revenues, long-range budget projections are crucial. They are not perfect. But, they give the government an idea of slack in the system, influence policies, and redefine benefits to our society. Most of this is aimed at reacting and adjusting to new requirements and possibilities (Steuerle & Van de Water, 2002).
Increased Public Spending on the Elderly: Can We Afford It?
From the author’s perspective (Primus, 2002), major issues involve the intersection of politics, economics, public choice, and individual freedom. Reaching public consensus on these will be extremely difficult. Under the current Social Security system, an individual has the choice of collecting benefits between 62 and 70 years of age. The trend is for Americans to retire earlier rather than later. The choice to retire has been made in the context of the current Social Security rules, private and public pensions, and tax subsidized savings vehicles. To ease the overall burden on society of an aging population, the entire system will probably need to encourage or mandate later retirement. In a free market, prices would change enough to make the necessary adjustments. However, the retirement decision is not a free market decision; it depends on program rules across a wide variety of institutions and programs like Medicare, Supplemental Security Income, Social Security pensions, and other retirement plans. Unless changes are coordinated, rules governing private programs can counteract the changes made in public programs. The problem cannot be solved by incentives that make the entire retirement system more expensive. There must be a push to increase the retirement age. Increasing the retirement age across all institutions will be difficult to achieve politically.
One way of improving elderly benefits without imposing additional burdens on the overall society would be to insist that those additional services be financed primarily from the incomes of the elderly population. Congress made that choice not too long ago for catastrophic caps, but it was repealed, as the financing was too progressive. It was the high-income elderly that influenced the repeal. As a society, we will not tolerate having old and disabled persons not receive medical care and other necessities even if they do not pay for it. If there is a perceived limit to public resources, and elderly persons (using political power) lay claim to those resources at the cost of spending or investment for children or the poor, we will have a serious misallocation of resources. There is no legitimate public reason why the goals of the elderly citizens should take priority over the needs of other Americans. Our economy can afford elderly persons. It is less clear if our political system can appropriately weigh the short-run benefits and costs of a tax cut or expenditure increase versus the long-term financing needs or burdens of the elderly population. Very few elected officials are seriously considering either reducing long or short-term budget expenditures for elderly persons. Most are considering increases. Reaching a consensus on those trade-offs is the difficult decision-making process that must be undertaken (Primus, 2002).
No public consensus has been formed regarding appropriate reforms for Social Security and Medicare. It is difficult to judge the desirability of continually increasing the share of the nation’s resources devoted to supporting the elderly. Supporting the elderly persons in longer and longer retirements as expected life increases should not be a high priority of our nation. This makes increasing the normal retirement age an appealing option. But, there is little public support for this idea. If medical spending for the elderly is increased, it is imperative that it be financed through an increased tax bill. Unfortunately, policy is now moving in this direction and is hastening the day that the economy will face severe difficulties (Primus, 2002).
The expansion of support for elderly persons may have important effects on work effort and savings; therefore, it could reduce the efficiency of the overall economy. Clearly, increased retirement benefits hasten retirement. The effect on the nation’s work effort and savings is less clear. In any case, a continuation of current policy implies an abrupt slowdown in growth of non-federal resources after 2010. Whether there will be dissatisfaction in these programs or a call to reform remains to be seen (Primus, 2002).
The Entitlement Crises That Never Existed
For Americans "universal" means all "workers" or "contributors", not all citizens or residents. We should take note of the profoundly conservative or market-oriented vision that American universalism embraces. It says not that you are entitled because you are a part of the nation, but that you are entitled because of your contribution to the nation. Funding is linked to earnings and entitlement is defined by work. Hence for Americans, universal entitlements have always been a concept tied to, supported by, and supporting, a market economy (White, 2002).
Critics continue to use the fearful language of insolvency to describe Medicare's future, a dreaded one in which the program's trust fund will literally run out of money. This language represents the triumph of metaphor over thought. Government, unlike a private household, has the power to adjust its patterns of spending and raising funds. The trust fund is an accounting term of art, one applied in this case to Part A of Medicare, the hospital insurance program. The term reflects the convention we have developed for describing earmarked revenues for spending both now and in the future. The Congress can change the taxes that finance Medicare. Likewise, it can change the benefits and reimbursement provisions of the program. Or, it can do a combination of the two. Channeling the fiscal consequences through something called a "trust fund" changes nothing in the real political economy. Thus, when we think of the “entitlement programs” we think of an unfair, unfunded program that only serves a small, minority portion of the population and will eventually ruin the economy (White, 2002).
To achieve lower rates of increase in Medicare's expenditures does not require change in the program's status as an entitlement. What does have to be changed are the amounts of income medical providers of all sorts receive from the Medicare program. The restraint of costs necessarily means reductions in payments to those in the medical industry. The real question is whether the reduction comes from fewer needed services, fewer unneeded services, or lower payments for services (White, 2002).
We need debate over how Medicare should be improved. What we do not need is debate that scares the country about its future by disseminating false claims about Medicare affordability. It would indeed be a "crisis" if the legitimate health costs of our aged and disabled were unaffordable. It is true that a pattern of health expenditures increasing at twice the rate of national income growth in unsustainable over the long run. But, there is no reason to believe that this future is inevitable (White, 2002).
The Case for Universal Social Insurance
The case for universal social welfare programs in contemporary America is the subject of vital interest to the public. There are two major arguments made by the authors. First, the economic, political and social grounds for regarding universal social insurance programs should serve as preconditions for a workable system of industrial or post-industrial capitalism and political democracy. However, it must be placed in the context of two decades of skepticism about the affordability and manageability of universal programs. The second argument the authors (Marmor & Mashaw, 2002) discuss are examples of the misinformation that passes for characterizations of what programs like Social Security and Medicare are actually like.
American social insurance rests on the premise that we should protect workers and their families from dramatic losses of economic status through programmatic interventions that are socially respectable, economically sensible, and politically stable. For virtually all Americans, a socially respectable protection against economic loss means one that is earned through participation in funding the insurance pool. Whatever the details of particular programs, social insurance rejects safety nets made of means-tested welfare programs as stigmatizing and unreliable. The social insurance recipient is not a pauper or a supplicant (Marmor & Mashaw, 2002).
In the opinion of the authors (Marmor & Mashaw, 2002), the contributor's Social Security card, not a poverty level, means-tested safety net, is the central metaphor of social insurance. Rather than catching those who have fallen through the net, the card of social insurance symbolizes the collective effort to prevent a radical decline in a family's living standards. Social insurance thus affirms a social ideal of individual dignity guaranteed through participation in a collective social enterprise.
The economic rationale for universal social insurance has several facets. Insuring retirement security, and loss of family income through premature deaths or disability, confronts the acknowledged narrow views and over optimism that limits family saving for retirement. Further, it recognizes the economic difficulties of insuring against the loss of earning capacity. When work life has just begun, earnings are relatively low and other family obligations relatively large. Collective provision for these risks also protects the prudent against the "free riding" of the imprudent, who would ultimately claim social insurance from general taxation to which they had not contributed (Marmor & Mashaw, 2002).
Between exaggerated fears of unmanageable budget deficits and mindless incantations of the lack of sustainability of "big government," the sensible discussion of the American public household has been practically paralyzed. Presidents -- Democrat or Republican -- announce the end of big government. Fiscal elites wring their hands about the affordability of public budgets. A kind of collective amnesia blots out the reasons why the nation should have embarked on social insurance programs in the first place and where gaps remain that only social insurance can fill efficiently, equitably, and affordably (Marmor & Mashaw, 2002).
The most prominent gap remains in medical care, where some forty million Americans remain without health insurance despite the risks of unbudgeted expenses from unexpected illness or injury. The fact that most Americans will not tolerate refusal of treatment to the uninsured does not remove the insecurity the uninsured are bound to feel. Nor does the readiness to pay by some, through haphazard cross-subsidization, remove the increased pressure on hospitals, doctors, and health insurance plans as the growth of competitive pricing in health insurance has increased in recent years (Marmor & Mashaw, 2002).
On economic grounds, the unwillingness to let people die or suffer from lack of health insurance is the premise that justifies universal coverage and the extension of health insurance "contributions" from those with income. On political grounds, the case for widening coverage and expanding the insurance pools from which the currently uninsured can draw payments is familiar and powerful. Most Americans are healthy most of the time. Most health outlays are for the sickest ten percent of the population. In the absence of legislative reform, the impact of competitive pricing in health insurance will force the sick to pay more or get less. The race to the bottom will proceed relentlessly, unless the principle of sharing the costs of illness widely is once again brought into prominence. In other words, the unfinished agenda of late twentieth century American social insurance includes program expansion as well as program protection (Marmor & Mashaw, 2002).
It is the authors’ opinion that Medicare reimbursement should be widened to include the coverage for chronic illnesses, prescription drugs, and long-term care. This is precisely what the Clinton Administration had hoped to do in its ill-fated health insurance overhaul. Widening the benefits package does not mean that total expenditures must raise proportionately. Many other nations have not only universal coverage and wider benefits than Medicare, but spend less per capita than we do for their elderly. Canada, for example, is able to do this because they pay their medical providers less, spend less on administration, and use expensive technology less often (Marmor & Mashaw, 2002).
The Moral Imperative of Limiting Elderly Health Entitlements
Richard Lamm (2002), former governor of the state of Colorado from 1975 to 1987, wrote a compelling piece about limiting or cutting back the health entitlements we provide to the elderly. Governor Lamm (2002) argues that it is ethical to ration health care for individuals in order to provide basic universal health care to all.
All of the familiar questions are presented. How is America going to fund the health care benefits for an aging population? How are we going to fund twice as many beneficiaries as we do today? Gradual changes can be made now or draconian measures must be taken in the future. Governor Lamm (2002) predicts that age may be as divisive as race and sex have been in our culture.
Elderly people are living longer than ever before. The growth in the size of the elderly population will bankrupt the Social Security and Medicare programs. The United States spends a disproportionate amount of money on the elderly. Medical doctors who have been trained to prolong lives no matter the cost make the problem worse. The largest investment most Americans will make is no longer a home but their health care (Lamm, 2002).
Making changes to Medicare and Social Security will be difficult because they are popular with both political parties. As noted in our class lectures and the Weissert and Weissert text, entitlements are virtually impossible to reign in once established. Governor Lamm argues that the national debt is understated at $5.5 trillion and is actually closer to $20 trillion. Lamm (2002) states that no matter how popular these programs are, they are unjust to our children. Americans agree that we cannot pay for everything, except when it comes to the individual. We have a moral and ethical obligation to value the needs of the public over the needs of the individual. According to Governor Lamm (2002), everyone should be provided a basic amount of health coverage and individual spending of public funds on health care should be rationed. Governor Lamm (2002) praises the Oregon health plan for its decision to ration care in order to provide universal care.
The Merits of Changing to Defined Contribution Programs
Dr. Mark V. Pauly (2002) approaches the problem of rising health care costs for an aging population from a different angle, defined contribution. Pauly (2002) argues that without changes, future tax increases will be unacceptable. Defined contribution in the traditional sense refers to private pension plans. The amount that one invests into the plan is agreed upon ahead of time in return for a retirement benefit.
Pauly (2002) proposes updating Medicare and Social Security to include defined contribution options. Pauly (2002) recommends changes to Medicare that resemble Social Security that include letting the individual spend the money as they wish. This would include the ability for patients to supplement Medicare payments as they see fit. This would give patients more freedom in the purchase of health care but it would also raise questions about individual responsibility. The HMO option of the current Medicare program is proof that lawmakers are at least willing to make some incremental changes in this direction.
In order for Americans to keep tax rates below certain thresholds in the future, Pauly (2002) affirms that modifications to our current forms of social insurance are inevitable. Interestingly, Pauly notes the changes with respect to equity and efficiency but does not mention effectiveness, which has been touted as the most important of the “three E’s” with regard to health care in our class discussions.
Pauly’s (2002) recommendations for the future include keeping Medicare in its current form for the poorest of the elderly. The vast majority of recipients would pay deductibles that would rise according to income levels and the top five percent; the wealthiest elderly would not receive any benefits. A modified contribution based on risk would be available for patients with chronic conditions.
Other features of a defined contribution plan include the ability for individuals to invest a portion or all of the contribution into the financial markets and reduce entitlements for the well to do. The recent decimation of the stock markets may stave off any push in this direction for the near future. Would the growth rate of private investments be able to keep up with the rising costs of health care? Dr. Pauly (2002) and Governor Lamm (2002) question the disproportionate spending on the elderly in a time when their income is equally disproportionate. The fact is that by the time many reach the age of retirement, they have amassed significantly more wealth than the younger, working generation.
Private Accounts, Pre-funding, and Equity Investment Under Social Security
The options of the States Social Security program include implementing privatization, diversification, and pre-funding. The authors (Geanakoplos, Mitchell, and Zeldes, 2002) note that, as the Social Security system has matured and evolved, the rate of return received by participants has fallen. In the future, the system will actually experience a budget shortfall. Thus, they take a realistic look at the options of reforming the system via pre-funding, privatization, and/or diversification. Each of these elements is considered distinct, in and of themselves, and in combination to paint a realistic picture of their advantages and disadvantages.
Geanakoplos, et al. (2002) purport that these options are not necessarily the panacea of Social Security reform. The common belief that is advocated is that the creation of individual accounts invested in private capital markets, and especially in the stock market, will produce better rates of return for individuals than the Social Security system. Geanakoplos, et al. (2002) argue that households with access to diversified capital markets, privatization without pre-funding, would not increase Social Security returns, when properly measured. They acknowledge that privatization combined with pre-funding would eventually raise the rate of return to future generations. However, this result would be at a cost of lower rates of return for early generations. According to Geanakoplos, et al. (2002), the real economic benefit of privatization is the diversification made available to households normally unable to participate in diversified capital market investment portfolios on their own.
Geanakoplos, et al. (2002) clearly distinguish between privatization, diversification, and pre-funding. Privatization is the replacing of the current, primarily unfunded, defined benefit program with a defined contribution system of individual accounts. These individual accounts would be held in the workers’ names, specifically. Diversification is the investing of these funds into a broad range of assets that may include U.S. private sector stocks and bonds, foreign securities, and/or government bonds. Finally, pre-funding is a method of reducing the system’s debt. This is accomplished by raising contributions and/or cutting benefits in order to lower the sum of the system’s explicit and implicit debt (unfunded liabilities). The Social Security system has amassed substantial unfunded liabilities, since the assets on hand are insufficient to pay for the present value of benefits that have been accrued and promised to workers and retirees based on contributions that have already been made. Although most of this debt is implicit, it is still economically significant and must be addressed.
An analysis of the Social Security system begins with a look at the possibility of higher returns under a privatized, diversified system. Geanakoplos, et al. (2002) then examine whether low Social Security returns are a valid reason to support a privatization that does not involve any pre-funding. Given that individuals are only allowed to invest in individual accounts with government bonds, Geanakoplos, et al. (2002) demonstrate that the rate of return of the present system and the new system would actually be the same. They attribute this to the transition costs, which would require approximately a 25 percent tax on all payments into new accounts. This 25 percent estimate naturally depends on forecasts of future growth rates and future real interest rates. Regardless of the fluctuation, all of the gains to privatization would be completely offset in extra taxes to pay off the unfunded liability. In the next scenario, adding risk, the privatized system contains no special insurance provisions. The actual risk-adjusted rate of return of privatization, would actually be lower than the current system. Households with current access to capital markets that are unconstrained in portfolio choice would realize no higher risk-adjusted rate of return than the risk-adjusted rate of return if the individual accounts were held entirely in bonds. Geanakoplos, et al. (2002) concede, however, that households without access to capital market investing, the risk-adjusted rate of return would be somewhat higher, due to diversification. Finally, if the system’s funding is increased, pre-funding, in conjunction with diversified privatization, would most likely produce a rise in the rate of return for future generations. This is, of course, at the expense of earlier generations, due to the pre-funding.
In essence, Geanakoplos, et al. (2002) argue that the Social Security reform debate should focus on the trade-off between returns for current generations/cohorts and future cohorts, the risk bearing benefits to the economy, and whether diversification is better applied to privatized personal accounts or through trust fund investments. They make special note that the benefits from privatization must be counterbalanced with the fact that there would be a loss of social risk pooling, higher administration costs, and ramifications of individuals making poor investment decisions. Thus, the popular argument that Social Security privatization would provide higher returns for everyone, present and future, is misleading.
Changing Retirement Trends and Their Impact on Elderly Entitlement Programs
Here Joseph Quinn (2002), explores the likely reasons for the changes in retirement trends and the potential impacts on individuals, as well as the nation. He argues that the trend of elderly persons leaving the labor force at earlier ages has finally come to an end, and that these past trends may not be good indicators of what the future holds. He indicates that the reasons for the changes are cyclical (a booming economy), and that working later into later years of life has gained increasing attractiveness. From World War II through the mid-1980s, elderly persons began leaving the workforce at earlier ages. The average retirement age for men in 1950 was 70 years, with more than 70 percent of all 65-year old men in America either employed or seeking employment. By 1970, the average retirement age was 65 years and had dropped to 62 years of age by 1985. Additionally, by 1985 only 30 percent of 65-year old men remained in the labor force, a decline of nearly 60 percent since 1950.
Quinn (2002) explains why seniors, since the mid-1980s, are working longer. He illustrates how consistent and irreversible societal changes have caused seniors to continue working later in life. The mandatory retirement age was extended from 65 to 70 years of age in 1978, and mostly eliminated in 1986 entirely. Persons who were age constrained were now free to seek employment. There has also been an increasing shift from defined benefit pension plans to defined contribution plans. The latter are age neutral by design and do not contain the age-specific work disincentives that defined benefit plans often have. Another factor is that the nature of jobs in America is transitioning from manufacturing to greater opportunities in the service fields. These service jobs are usually easier, or less labor intensive, and are viable options for many seniors. Finally, elderly persons are living longer, healthier lives than past generations.
The cyclical view promotes a strong American economy, making later life employment attractive. The resulting demand for labor has offered prime opportunities for senior citizens to remain participants in the labor force. Many Americans retire gradually, seeking “bridge jobs” after full time employment or careers, as a transition to complete withdrawal from the labor force. Bridge jobs can either be part-time employment, short duration jobs, or self-employment. Studies have shown that post-retirement employment may actually be psychologically beneficial to men, at least. Naturally, the more elderly persons remain in the labor force and the longer they contribute, the more beneficial it is to the productive capacity of employers, and the nation in general (Quinn, 2002).
Enacting Reform: What We Can Expect in the Current Political Context
The 2000 elections were pivotal in that there were a number of political positions at stake. What made the elections even more important was the political climate of the decade just past. The election of President Clinton in 1992 ended twelve years of Republicans controlling the White House, and his reelection represented the first second term for a Democratic president since Franklin Delano Roosevelt. The Republican victory in 1994 created the first GOP majority in forty years. Therefore, the stage was set for the 2000 elections with Republicans seeking to win back the White House and Democrats seeking to win back the Congress (Ornstein, 2002).
When everything was said and done, the Republicans won the White House. However, President Bush lost the popular vote and the U.S. Supreme Court was forced to intervene to solve problems with the presidential election process. In addition, Republicans won a narrow majority in the House of Representative and the Senate ended in a tie with 50 seats held by Republicans, and 50 held by Democrats. In contrast to the presidency of Ronald Regan, in which the presidential election was won by landslide and Republicans controlled Congress, President Bush was set up for a weak presidency. Weissert and Weissert (2002) identified that this type of political landscape for a presidency is not optimal. They contended that in order for a president to be effective, he must win the presidential election by a convincing margin, and he must have the backing of his party’s dominance in the Congress. Nonetheless, President Bush, quickly settled in and made his top two issues, education and tax cuts, known to everyone. One result of his budget approach was that fiscal protection for Medicare was absent (Ornstein, 2002).
The 107th Congress was marked by ideological differences and the fact that the characteristics of the membership had changed. Ideologically, the Congress was polarized. Moderates were not prevalent and members were more likely to follow the party line. In terms of physical make-up, three-fourths of the members of the 107th Congress were new since 1990, which made for a post World War II and a Generation X Congress. The number of military veterans in Congress was also down. Medicare, however, was not totally out of the picture. President Bush proposed to give cash to states with the poorest elderly. Some members of Congress rejected this plan. Furthermore, the issue of a prescription drug benefit for Medicare recipients caused a great deal of division among the members of the two parties in Congress. Democrats insisted on running any program through Medicare, while Republicans preferred to somehow privatize the benefit (Ornstein, 2002).
Social Security became an issue in the 2000 election when candidate George W. Bush proposed to divert 2 percent of Federal Insurance Contributions Act (FICA) taxes into partial private to reform the program. Candidate Gore, however, opposed the idea. This debate and the debate regarding Medicare illustrate the fundamental ideological divide between the two parties as it pertains to entitlement programs. Weissert and Weissert (2002) articulated this ideological split. The authors, when writing about the subject of Medicare, discussed the Republican desire for means-testing. According to Republicans, means-tested co-payments would cause wealthier recipients to pay for more of their medical care, and as a result, allow forces of the open market to come into play. Market forces, Republicans contended, are the only way to save money, and avoid excessive government intervention. However, the Democrats opposed this idea because they contend, the Medicare program would end up as one with full government sponsored benefits aimed solely at poor Americans. Democrats further feared that this would lead to a poor program. According to the Democrats, a program for the poor is a poor program (Ornstein, 2002).
With the political landscape as it was, and continues to be, it is clear that a major political event must occur in order for things to change. One such change, or crisis, could evolve from the fact that the Medicare population is rising. It is projected that the component of the federal budget made up by Social Security, Medicare, and the long-term care portion of Medicaid will rise from about 40 percent to 70 percent by the year 2030. If this plays out, then pressure on other programs to survive fiscally will be great. The competition for funding could affect programs such as Head Start, student loans, and environmental cleanup (Ornstein, 2002).
With regard to the political landscape, we see a climate in which each party is polarized around its fundamental ideals. Also, we see two parties that are eager to take credit, but at the same time willing to blame the other party for things that go wrong. The leadership in each of the parties is seen as not possessing the political muscle to make deals across party lines. As a result, there are no easy answers or solutions (Ornstein, 2002).
Financial Problems of the Elderly: A Holistic View
Victor R. Fuchs (2002) examined the issue of how elderly entitlement programs receive funding and what would happen to the strength of the elderly dollar if current trends are continued. A holistic view of the problem is undertaken. This, according to Fuchs (2002), is a shift from the conventional arguments in which pieces of the funding puzzle, with regard to the entitlement programs for the elderly, are discussed separately from funding other aspects of elderly life.
When speaking of elderly income, Fuchs (2002) asked two questions. First, how much of the elderly’ full income is devoted to health care and how much is devoted to other goods and services? The second question asks how much of the elderly full income is provided by transfers from the population under age 65, and how much is provided by personal earnings, pensions, income from savings, and other sources.
Health care figures presented from 1997 indicated that persons over the age of 65 contributed about 8 percent to their overall health care costs and 36 percent to other pursuits. Additionally, the share of full income paid by persons under the age of 65 was 56 percent according to the same figures (Fuchs, 2002).
Medicare expenditures per person grew approximately 2.8 percent per year from 1970 through 2000. The pace of technology advancement is closely related to the rise in health care expenditures. In the coming decades, the influence of technology is not expected to wane. Fuchs (2002) noted that there were 700 new drugs in development for problems associated with aging. In addition, medical research and development of elderly health will continue to grow.
If the overall cost of health care continues to rise, and the ability to transfer these costs to younger generations reaches a limit. The elderly will then be forced to increase their cost share in order to maintain the desired level of health care coverage. With incomes for the elderly increasing at only a moderate rate, many elderly persons could find themselves “health care poor” (Fuchs, 2002, p.385). This situation is precipitated further when one considers that the income level of most elderly persons is one in which everyday expenses are barely met. This would seem to preclude one solution in which the elderly would simply save more money to defray medical expenses.
Proposed Legislation
Policies for an Aging Society (Altman & Shactman, 2002) is almost up-to-date with regard to the issues that affect elderly entitlements. However, there are several recent legislative proposals that highlight the direction that the nation may be heading. In January 2003, Congressman John Dingell (D-MI) introduced the National Health Insurance Act. The goal of the act is to make services available to eligible individuals. Also, among other things, the act establishes the National Health Care Trust Fund. As defined by the bill, appropriated funds under this act can only be used to carry out programs under this act. The bill also calls for a tax to be imposed to pay for the program (AARP, 2003). This is an attempt to take action now to mitigate future problems.
While the National Health Insurance Act speaks to a global health care program, the Generic Pharmaceutical Access and Choice for Consumers Act of 2003 is aimed at reducing cost for federal programs. As the name implies, the act will require that generic drugs be offered when filling prescriptions. Specifically mentioned in the bill are the Federal Employee Health Benefit program (FEHBP), Medicare, Medicaid, programs affecting Native Americans, veterans, the uniformed services, and prisoners. In terms of the Iron Triangle; cost, quality, and access to health care, this bill addresses cost. On the other hand, Senator Susan Collin (R-ME) attempts to address the issue of access through the Access to Affordable Health Care Act (AARP, 2003).
The Access to Affordable Health Care Act offers tax credits for employee health insurance expenses and grants for health insurance purchasing groups. The act also targets rural and underserved areas through revisions to the loan repayment and scholarship programs. Other key features of this bill include language that directs the Secretary of Health and Human Services (HHS) to provide grants to states for community wellness programs, establish Medicare demonstration projects that explore the use of bonus payments for high-quality, low-cost inpatient hospital or physician’s services, and clinical practitioners to hospitals servicing beneficiaries in underserved areas. Another bill addressing access is the Medicare Equity Act of 2003. Under this legislation the geographic physician work adjustment factor under Medicare would be eliminated. The goal of the act is to allow hospitals that serve beneficiaries in underserved areas to attract educators and clinical practitioners (AARP, 2003).
Elderly entitlement programs are an integral part of American life. So much so that they are hard to get rid of once enacted (Weissert & Weissert, 2002). However, there are recognized problems with the system. Also, one must take into account that since the programs are government sponsored, they are subject to political posturing. Republicans and Democrats, who have traditionally represented the haves and the have-nots, have ideologically different approaches to how entitlement programs should be administered. In coming years, the proportion of retired person to working persons is projected to be skewed toward those over the age of 65. If this happens, then it is doubtful that funding for entitlement programs will be adequate under the current structure of the system. Policies for an Aging Society (Altman & Shactman, 2002) presents many points of view with respect to programs for the elderly. An equitable solution is attainable. However, work is a great deal of work left to do.
References
Aaron, H. J. (2002). Budget Estimates: What We Know, What We Can't Know, and Why it Matters. In Shactman, D. & Altman, S. (Eds.), Policies for an Aging Society (pp. 63-80). Baltimore: Johns Hopkins University Press.
AARP. (n.d.). American Association of Retired Persons. Retrieved February 23, 2003, from http://capwiz.com/aarp/issues/bills
Altman, S. H., & Shactman, D. I. (Eds.). (2002). Policies for and Aging Society. Baltimore: Johns Hopkins Press.
Fuchs, V. (2002). The Financial Problems of the Elderly: A Holistic View. In Shactman, D & Altman, S (Eds.), Policies for an Aging Society (pp. 378-390). Baltimore: Johns Hopkins University Press.
Gapenski, L. C. (2001). Understanding Health care Financial Management (3rd ed.). Washington, DC: Health Administration Press.
Geanakoplos, J., Mitchell, O., & Zeldes, S. (2002). Private Accounts, Pre-funding, and Equity Investment Under Social Security. In Shactman, D & Altman, S (Eds.), Policies for an Aging Society (pp. 266-292). Baltimore: Johns Hopkins University Press.
Lamm, R. D. (2002). The Moral Imperative of Limiting Elderly Health Entitlements. In Shactman, D. & Altman, S. (Eds.), Policies for an Aging Society (pp. 199-216). Baltimore: Johns Hopkins University Press.
Marmor, T. R., & Mashaw, J. L. (2002). The Case for Universal Social Insurance. In Shactman, D. & Altman, S. (Eds.), Policies for an Aging Society (pp. 169-198). Baltimore: Johns Hopkins University Press.
Ornstein, N. J. (2002). Enacting Reform: What Can We Expect in the Current Political Context. In Shactman, D & Altman, S (Eds.), Policies for an Aging Society (pp. 333-345). Baltimore: Johns Hopkins University Press.
Pauly, M. V. (2002). The Merits of Changing to Defined Contribution Programs. In Shactman, D. & Altman, S. (Eds.), Policies for an Aging Society (pp. 217-235). Baltimore: Johns Hopkins University Press.
Penner, R. G. (2002). The Economic Consequences of Funding Growing Elderly Entitlements. In Shactman, D. & Altman, S. (Eds.), Policies for an Aging Society (pp. 127-139). Baltimore: Johns Hopkins University Press.
Primus, W. E. (2002). Increased Public Spending on the Elderly: Can We Afford It? In Shatcman, D. & Altman, S. (Eds.), Policies for an Aging Society (pp. 109-126). Baltimore: Johns Hopkins University Press.
Quinn, J. F. (2002). Changing Retirement Trends and Their Impact on Elderly Entitlment Programs. In Shactman, D & Altman, S (Eds.), Policies for an Aging Society (pp. 293-315). Baltimore: Johns Hopkins University Press.
Steuerle, C. E., & Water, P. N. (2002). Long-Run Budget Projections and Their Implications for Funding Elderly Entitlements. In S. Altman & D. Shactman (Eds.), Policies for an Aging Society (pp. 81-108). Baltimore: Johns Hopkins University Press.
Weissert, C. S., & Weissert, W. G. (2002). Governing Health: The Politics of Health Policy (2nd ed.). Baltimore: The Johns Hopkins University Press.
White, J. (2002). The Entitlement Crisis That Never Existed. In Shactman, D. & Altman, S. (Eds.), Policies for an Aging Society (pp. 140-168). Baltimore: Johns Hopkins University Press.