THE STATES' ROLE IN HEALTH CARE COST CONTAINMENT*

Under the Social Security Act of 1935, the federal government expanded its involvement in maternal and child health care programs through grants-in-aid to state and local health departments. The Medicaid legislation of 1965 vastly enlarged federal expenditures, and state responsibilities. State performance was frequently criticized, especially in health care cost containment. Recently, the states have initiated several efforts to link cost containment and the quality of health care.     

CHARTING A COURSE THROUGH THE HEALTH CARE POLICY MAZE

Health Policy: Development, Implementation and Evaluation in Australia. By H eather GARDNER (ed.)
The Price of Health: Australian Governments and Medical Politics 1910–1960. By J ames A G illespie
Federalism and Health Policy: The Development of Health Systems in Canada and Australia. By G wendolyn G ray
The President's Health Security Plan. By W hite H ouse D omestic C ouncil
Hospitals in Transition: The Resource Management Experiment. By T im P ackwood , J ustin K een and M artin B uxton     

IDENTIFYING HEALTH CARE COST CRISES IN OECD NATIONS

This study develops an empirical model for determining whether a nation's health care expenditures are experiencing a crisis based on the trend over time of the ratio of total health spending to total domestic expenditures. A dynamic regression model is applied to 22 OECD nations for the 1960–1994 period to estimate whether or not levels of health spending are converging towards a stable equilibrium and, if they are, what this equilibrium is and how long it will take to reach it. Crisis is defined as an empirically divergent process. The principal findings from this analysis are that: 1) three nations (France, Greece, and the United States) are experiencing a crisis according to this definition; 2) although the crisis potential is relatively high in all the OECD nations, there appears to be a critical region or threshold where the tendency towards crisis increases dramatically; 3) the time to reach equilibrium is generally quite long, indicating the opportunity for substantial policy intervention; and 4) Denmark stands out as a successful case where health costs have been contained.     

HEALTH CARE POLICY IN THE GERMAN SOCIAL INSURANCE STATE: From Solidarity to Privatization?

Statutory health insurance is a centerpiece of the German welfare state, which considers itself to be a “social insurance state.” At the same time, due to a large volume of interpersonal redistributions that occur in health insurance, it is the most ambitious branch of the country's social insurance system. The stability of the health scheme thus depends on a “culture of solidarity” to maintain the legitimacy of these redistributions. This article analyzes recent changes in the legislative framework of the statutory health insurance. It asks whether these changes which predominantly aim to contain employers’ nonwage labor costs by making the insured bear a larger share of total health care spending, are possibly weakening the moral infrastructure of the welfare state. To this end, findings from qualitative interviews with insured persons are evaluated in view of recently approved and currently proposed legislative changes to the health scheme. The analytical focus is the question whether the two equity principles of this scheme, delivering health care according to medical need and financing it according to the “ability‐to‐pay,” are becoming endangered.     

MANAGED COMPETITION IN FLORIDA HEALTH CARE: ITS STRENGTHS AND WEAKNESSES

Managed competition in health care is a model for reform that has been adopted by several states and considered as a model for national health care reform. This article assesses the strengths and weaknesses of managed competition in Florida based on the responses of essential participants in the managed competition network and data from network documents. Results of the analysis reveal that the strength of the reform has been in offering small employers and their employees a wide choice of health care insurance and in providing them with information to make informed health insurance choices. In addition to increasing choice and information, the managed competition network has become the small group insurance industry watchdog, applying pressure to keep the market fair and functioning. However, cost control difficulties and a continued limited access to health insurance demonstrate the weaknesses of the Florida reform. The article concludes by discussing the politicization of health care reform in Florida and the future of this reform effort in a changing political climate.     

INTERNATIONAL HEALTH CARE REFORM: THE NEED FOR COMPREHENSIVE MICRO-COMPARATIVE ANALYSIS

Microcomparison, or single‐component analysis, of health care systems offers a potentially better basis for reform than traditional macrocomparison analysis of aggregate elements. Using macroanalysis, available evidence shows that Germany provides cheaper but more effective hospital care than the United States. To find the causes for this outcome, we developed a microanalytic model of hospital administrators’ perceptions, financial ratios, medical outcomes, and pharmaceutical costs. However, only data on pharmaceutical costs were available and similar in both countries. Our significant outcome was development of a microcomparative model that gives world medical care providers new criteria for analyzing and improving cost to care rafios.     

PUSEY ON THE CANBERRA BUREAUCRACY: TWO PERSPECTIVES

Michael Pusey's book titled Economic Rationalism in Canberra: A Nation Building State Changes its Mind (Cambridge University Press, Melbourne, 1991, 310 pp) was launched in Australia in August 1991. In view of the great interest shown in it, unprecedented for a book on a public administration topic in recent times, AJPA has sought reviews from both a practitioner and an academic.     

LONG TERM CARE REGULATION IN THE STATES: A SYSTEMIC PERSPECTIVE

In recent years there has been growing interest in differing state roles in the regulation of the health care industry. Most of this attention has stressed the impact of regulatory policy with only superficial attention directed towards understanding the extent to which states can be counted on to act effectively in the area of health care regulation. Using the regulation of nursing homes as a focus, this study evaluates a variety of sociocultural, political, and economic conditions for their impact on the development of various regulatory policies. The findings suggest that the development of certificate of need legislation and reimbursement controls were not related to significant changes ir, states' budgets for Medicaid services or in bed/population ratios. Instead, regulatory efforts were more closely linked to the sociopolitical environments surrounding the policy arena. While these factors provide some indication of the potential for strong state action in the regulatory arena, ultimately the use of state regulatory policies will depend quite centrally on the innovative tendencies of the state, its organizational capacity for addressing policy issues, and the nature and extent of interest group politics.     

DEREGULATION OF PARAPROFESSIONALS AND HEALTH CARE COST CONTAINMENT: THE CASE OF DENTISTRY

The author argues that the development of satisfactory market models in dentistry and other health care areas is crucial to a realistic examination of various deregulation proposals. He argues that such examinations cannot rely on the logic of economics alone, but must be rooted in empirical analyses well-founded in theory. Using expanded function dental auxiliaries as an example, the author demonstrates the complexities of the issues involved and the relevance of political economy models.     

THE HEALTH CARE FINANCIAL CRISIS: REORGANIZATION AND EVIDENCE-BASED MEDICINE AS A RESPONSE TO AN "UNHOLY TRINITY"

The key issues of the health care system are often conceptualized as involving three basic dimensions: 1) the quality of health care provided, 2) access to the health care system, and 3) the cost of health care. Following two decades of rapidly escalating health costs throughout advanced industrial societies, the relationships among these three dimensions now constitute what has been called an “unholy trinity” in that improvements along one dimension will almost inevitably provoke problems in terms of one or both of the others. This symposium examines two distinct types of reform that have been developed in response to the crisis in health care costs. The first focuses upon attempts to reorganize existing institutions in order to make them more effective and cost‐efficient. The second considers the move toward “evidence‐based medicine,” that is, more critically evaluating health care outcomes to make sure that treatments are effective and cost‐efficient.