II. THE HEALTH SECURITY ACT MAINTAINS A STRUCTURALLY AND IDEOLOGICALLY FLAWED SYSTEM
Unfortunately, for ethnic Americans and the poor, the ethical foundations of health reform are ideological, financial and legalistic terms. By framing the need for health care reform in terms designed to appeal to middle-class European Americans, the Clinton administration denies the existence of the health crisis among ethnic Americans and the poor. In particular, it fails to place the issues of race, class or culture at the forefront of health care reform.
Ethnic Americans need a health system that is structurally and ideologically focused on improving health status. Thus, for ethnic Americans, the reformed health care system proposed by the Act is structurally and ideologically flawed because its ethical foundations are incomplete and inadequate; it focuses on states' rights; it continues an employment- based health insurance system; it expands the private sector role in health care delivery; and it does not insure representation of ethnic Americans in policy-level decisions.
A. Incomplete and Inadequate Ethical Foundations
As articulated by President Clinton's administration, (t)he values and principles that shape the new health care system reflect fundamental national beliefs about community, equality, justice and liberty. The Administration articulates several principles forming the basis of its proposal. It is these principles that will direct the ongoing development of the reformed health care system. Two principles of particular significance to ethnic Americans are universal access and equality of care.
The HSA acknowledges that delivery of health care under the current system lacks equality. When it discusses the issue of equality, however, it does so in vague terms that indicate that the magnitude of barriers to health care for ethnic Americans were not adequately contemplated. Furthermore, the Act, itself, does not recognize equality as an essential component. Rather, essential foundations articulated in the Act clearly center on autonomy, regional independence and competition.
Unfortunately, rather than facilitate effective health reform for ethnic Americans, the foundations could actually serve to erect or maintain barriers. This will be particularly true when the needs of ethnic Americans can be met only by some restriction on either autonomy, regional independence or competition.
For instance, if providers are unwilling to practice in underserved communities, that service may need to be mandated. Such a requirement would certainly conflict with an essential Act element-autonomy. Similarly, regional independence may be restricted if states are required to do more than provide financial incentives to assure health services to ethnic Americans. Such requirements would necessarily restrict a state's option in designing and implementing a health care system.
In an effort to promote competition in the health care system, the HSA relies on the principles of managed competition. Although supported by many organizations and groups, the idea of managed competition has never been tested. Presumably, managed competition controls health care expenditures because consumers become more cost-conscious. Managed competition assumes large enrollment in managed care products, such as HMOs and PPOs. Since these organizational forms limit the number of participant providers, providers will compete for selection by charging less or providing services in a cost-effective manner or both. But, in reality, managed competition will not succeed in controlling U.S. health care expenditures.
A number of factors will contribute to its failure. First, many consumers will continue to purchase expensive health plans. Second, the greater enrollment in HMOs will provide few savings. At present, managed care organizations have not been successful in controlling the rate of increase in health care expenditures. Third, some providers will continue to have considerable bargaining power in their dealings with health plans. Consequently, as one commentator has noted, managed competition may be this decade's intellectual and moral equivalent of the Laffer Curve, the construct which purported to demonstrate that cutting federal taxes would increase federal revenues, inspiring George Bush to coin the phrase 'voodoo economics'.
Moreover, in an effort to be effective, the HSA may in fact promote behavior in the system that might be harmful to the interests of ethnic Americans and the poor. For instance, since fee-for-service plans lack the gatekeeping aspects of managed competition necessary for cost control, the Act must discourage enrollment in higher cost-sharing plans (fee-for-service plans) and encourage enrollment in the lower cost-sharing plans (HMOs). The HSA attempts to do this by requiring significantly higher premiums for fee-for-service plans and requiring significant co-insurance. But, many individuals who want to enroll in the lower cost plan may not be able to do so because it may be at capacity and unable to accept new enrollees, or its providers may not be accessible. While the HSA makes provisions for some consumers who cannot enroll in the lower cost- sharing plan to obtain subsidies, what will happen to ethnic Americans who cannot enroll in the lower cost-sharing plan and do not have adequate resources to pay for the other plans?
By defining the foundation for health care as centered on autonomy, regional independence and competition, the HSA becomes grounded in the rhetoric of choice and responsibility rather than the improved health status of Americans. Thus, this installment of health care reform is no more capable of rectifying the extensive race- and class-based health deficits suffered by ethnic Americans than the previous attempts at reform. The Act's failure to deal specifically with inequality and discrimination in the delivery of health care means that the reformed health care system will continue to place the concerns of ethnic Americans after other considerations.
B. Protecting States' Autonomy to the Detriment of Ethnic Americans
The HSA delegates the responsibility for ensuring that all eligible individuals have access to a health plan that delivers the nationally guaranteed comprehensive benefit package to the states. Although the Act provides states with significant flexibility, there are measures that ensure some structure to the state systems's development, and in the process, protect consumers. Ultimately, however, the HSA protects a state's right to develop its system as the state sees fit.
The potential exists that some states will exercise the flexibility in ways that will be counter-productive to the interests of ethnic Americans. In fact, traditionally ethnic Americans have not fared well under state's rights-supervised social programs. The possibility exists that states will fail to design programs that meet the needs of ethnic Americans.
For instance, states ultimately approve health alliance risk adjustments. In exercising this responsibility, states could provide for an alteration to the risk-adjustment methodology that would encourage (rather than discourage) health care plans to enroll ethnic Americans. This type of variation is important since, as a group, ethnic American patients are a medically high risk group. Those who are medically high risk are likely to need more medical services; consequently, ethnic American patients may be the least desirable financially, and health plans may try to avoid the risk posed by their enrollment by avoiding the patients. States, in exercising their ultimate power over health alliance risk adjustment, could provide inadequate or little adjustment to risk, resulting in health plans that might develop ways to avoid serving ethnic Americans.
More important than how the states might exercise their discretion, however, is that the HSA does not require states to assure that citizens have access to culturally competent care. Rather, the Act permits funding of special programs by the Department of Health and Human Services (HHS). These provisions are troubling. Are ethnic Americans a disadvantaged group? Since the Act doesn't define disadvantaged group, it is possible that regulations will focus, if at all, on income and not necessarily race, culture or language. If plans avoid serving ethnic Americans, and if disadvantaged is narrowly defined by income, many ethnic Americans will be hindered in their ability to obtain care. By including permissive provisions, one wonders to what extent the states will provide incentives.
Even without a clear definition, why doesn't the HSA require health care plans to enroll disadvantaged groups? Why continue to perpetuate the image that providing for ethnic Americans is an extra burden-an add-on service? Why must serving ethnic Americans be something that health care plans are enticed to undertake rather than something that they are expected to do? Why not bring ethnic Americans into the mainstream of the reformed health care system by stating flatly that states must assure that health care plans provide culturally competent services to all? Without these requirements, financial incentives merely open ethnic Americans and the poor to exploitation, without any assurance that their needs will be integrated into the mainstream of the health care delivery system.
Indeed, because ethnic Americans never fared well under state's rights-supervised social programs, as compared with the rest of the population, it is not likely that they will fare well under this system either. While providing states with flexibility, the plan lacks the necessary safeguards to assure that all eligible individuals have not only access to a health plan that delivers the nationally guaranteed comprehensive benefit package but in fact have access to culturally competent health care.
C. The Continuation of a Complex Employment-Based Health Insurance System with No Assurance of Cost Containment
The Act maintains that the health care system should build on the strength of the employment-based coverage arrangements that now exist in the United States. By expanding the employment-based health insurance system, the HSA perpetuates several problems. First, the distribution of jobs is based on race. Ethnic Americans are systematically excluded from trade and professional employment. By tying a person's health care insurance to the person's type of job, the Act imports the racism that exists in the employment system into the health insurance system. In particular, the HSA does not consider that ethnic Americans' unemployment and underemployment are at crisis levels. High unemployment and poverty levels among ethnic Americans suggest that many will be limited to the basic health care plan. But even when employed, ethnic Americans will continue to be limited to the basic plan in disproportionate numbers. An employment-based insurance system fragments the insurance market based on race and class, resulting in the channeling of a larger percentage of European Americans into the higher cost-sharing plan (fee-for- service) or the combination plan (preferred provider). This difference in plan distribution will result in different services, both in kind and quantity.
Second, an employment-based health care system is unstable for the individual because it does not factor in the likelihood of massive job cutbacks and a national economic recession. Consequently, some individual's type of health insurance could be in constant flux. Third, employees may have to change health care providers every time their provider changes plans, as nothing in the Act prevents the provider from changing plans as often as they wish. This may be particularly problematic if the employee has coverage through a corporate health alliance rather than a regional alliance. Since large employers are allowed to opt out by providing coverage through a corporate alliance, an employee's choice may be limited. Employees of these opt out firms are forced to accept coverage through corporate alliances.
Fourth, employers may reduce their health care coverage to the minimum requirements of the basic benefit package, thereby requiring many to obtain additional coverage through supplemental policies. If many ethnic Americans cannot afford those supplemental policies, then discrepancy in access to services based on race and class will continue. Fifth, even employees with supplemental, job-based health care coverage could be locked into a job because of insurance benefits. Cost- sharing plans provided by an employer could exceed the basic plan. If those benefits are needed by the individual or family, an individual may be unable to change jobs for fear of losing the necessary health coverage. Finally, complicated systems will be necessary to deal with the 38 million Americans who work neither full-year nor full-time.
Furthermore, many health economists maintain that an employer-based, market reform-based competitive approach will not achieve the cost savings necessary to provide high quality universal health care for the entire nation. Thus, an employment-based health insurance system raises many complex problems with no assurance of cost containment. As one observer has noted:
The current system of employer-based health insurance arose through historical events and accidents, rather than through a deliberate and morally thoughtful process. In its wake, patterns of injustice in the distribution of jobs linked to health insurance have compromised justice in health care. . . . [p]roposals that call for mandatory employer insurance and an expanded public system for the poor and unemployed do not eliminate justice concerns. Such proposals fall short because they do not ensure that the most vulnerable members of society receive adequate protection . . . .
D. Expanding the Role of the Private Sector Despite Its Past Failure to Provide Adequate Care to Ethnic Americans and the Poor
For [Prudential] the best-case scenario for reform-preferable to even the status quo-would be enactment of a managed competition proposal.
By employing a managed competition approach, the Act attempts to bring the growth in health care costs in line by increasing competition in health care. Under the HSA, regional health alliances are given the authority to entrust the care of ethnic American communities to corporate and institutional giants. The motives and interests of these health conglomerates are driven primarily by profit. The private sector is not committed necessarily to assuring culturally appropriate care to high-risk communities. Consequently, the transfer of the delivery of care to health care conglomerates has the potential for transforming ethnic American communities into a new generation of substandard medical ghettos at worst and peripheral colonial outpost health subsystems at best.
The HSA is based on the belief that competition will ensure that plans and providers will be efficient and charge reasonable prices. Both the private sector and major government programs (including Medicare and Medicaid) will operate under a budget restraining the growth of health care spending. This reliance on market forces to generate savings, improve quality, and generate efficiency is not based on objective justification but rather on unsupported ideology. As one author has suggested:
A careful search of employee-benefits experience . . . suggests that competitive markets in America have produced results that do bear out (or even contradict) predictions (that competition would reduce costs, increase efficiency, and increase quality). . . . These are the American facts . . . . But American health policy has long been dominated by ideology, and it remains so. America's destiny is supposed to lie in economic markets, and the market must be made to work successfully in health. If facts deviate, they must be forced to conform; if the facts prove recalcitrant, they can be imagined away, since only the theory is true. Perhaps at some date the facts will prove inescapable.
Thus, this enlargement of the role of the private sector is irrational given its role in creating the existing health care crisis. The insurance industry will seek to maximize its revenues; if it can't do so by raising premiums, it will do so by restricting access to care. In restricting access to health services, the target will be vulnerable populations: ethnic Americans and the poor. Furthermore, expanding the private sector's role is irrational since the private insurance industry is not as efficient as a publicly run system. For instance, while private health insurance policies divert an average 14% of their premium dollars to pay for administrative costs, Medicare spends only 4% of revenues for administration.
It is also irrational to delegate to private health plans the health policy information system (gathering, analyses, and interpretation). The government information system that exists today is considered one of the best. Yet, the HSA turns over the responsibility to an incomplete, inadequate, and inferior private system. Furthermore, from an ethnic American's perspective, reliance on the private sector for health data could be dangerous. Often the private sector fails to collect data about the impact of its policies on ethnic Americans, as such data would often reveal its inadequate service. For instance, although other demographic information is collected, the current claims form designed by the private sector for use with Medicare and Medicaid recipients has no field for collecting information about a patient's race.
Of course, the Act does require that states ensure that the private sector enroll ethnic Americans. Furthermore, states are allowed to administer financial incentives to achieve such objectives. Unfortunately, financial incentives are not a good substitute for requiring the private sector to serve adequately ethnic Americans. By not requiring the private sector to provide culturally competent health care to all populations, the health care system will maintain a second-class attitude toward serving ethnic Americans.
More importantly, the private sector, whose interests are more financial than service-oriented, may merely exploit ethnic American communities-and then leave. Health plans will leave when they no longer have the capacity or financial stability to serve the community. Ordinarily, each health plan must accept for enrollment every eligible individual. Furthermore, the plan may not engage in any practice that has the effect of limiting enrollees on the basis of personal characteristics such as health status, anticipated need for health care, age, occupation, or affiliation with any person or entity. With the state's approval, however, a health plan may limit enrollment because of the plan's capacity to deliver services or to maintain financial stability. Given the poor health status of ethnic Americans, it is likely this exception will allow plans to exclude many ethnic Americans. Private insurance has not competed to provide services to the uninsured, the homeless, the lower income, the ethnic minority populations, and the mentally ill. It is irrational to expect the reformed system run by the private sector to embrace these populations.
E. Failure to Insure Ethnic American Representation in Policy-Level Decisions
While the Act creates another bureaucracy and extends the power of the executive branch, there are no mandates or mechanisms to ensure that the historical pattern of the absence or underrepresentation of ethnic Americans in bureaucracy is not repeated. Unless there are specific provisions assuring representation on the National Health Board and the Regional Health Alliance Board, these boards are not only likely to be dominated by European American middle-class males, but will not articulate or advocate the needs of ethnic Americans.
Specifically, the HSA creates two new levels of bureaucracy: the National Health Board and the Regional Alliance Board. National Health Board members are to be selected on the basis of their experience and expertise in relevant subjects including the delivery of care to vulnerable populations. While the term vulnerable population is used in several provisions in the Act, it is not defined. Just who is in this category? Who will decide what is meant by a vulnerable population? Does it include all ethnic Americans or just low-income ethnic Americans? Without a definition there is no ongoing assurance that ethnic Americans will be represented on the National Health Board.
As to the Regional Alliance Board, the HSA requires that it consist of an equal representation of employers and consumers. However, nothing in the HSA requires representation of ethnic Americans or even vulnerable populations.
If the health care system is to be an evolving entity, it will only evolve into an equitable system if ethnic Americans who understand the needs of ethnic American communities are assured representation at policy-level positions. Appointing individuals who understand the needs of ethnic Americans will be particularly difficult since the Act prohibits the appointment of health care providers to the Regional Alliance Boards. From the ethnic American community perspective, this is unfortunate since ethnic American providers are often the most knowledgeable about ethnic American communities' needs.
F. Summary
As to ethnic Americans, the reformed health care system proposed by the Act is structurally and ideologically flawed because its ethical foundations are incomplete and inadequate; it focuses on state's rights; it continues an employment-based health insurance system; it expands the private sector role in health care delivery; and, it does not ensure representation of ethnic Americans in policy-level decisions. This is more than unfortunate for ethnic Americans. It is tragic. This race and class-based health care system has serious structural, medical, social and cultural deficits and it will not correct itself if left to serendipity.
