Expository Essay on Healthcare Reform

The systematic search for quality improvement has been introduced and implemented in many institutions all over our workplace and society. The special science that is needed for it is well documented in the Total Quality Management and Continuous Quality Improvement movements (Deming) The health care industry has not been left out of these improvements in management and quality and it is said that the nursing profession discovered the quality improvement frame in the late 1980s. This development took on a stronger form when it was realized that base quality-improvement hard work on the organized compilation and examination of medical data and the implementations of tools and processes to adjust deliverance and outcomes of care. Acute care settings developed the most and a whole lot less attention was paid to organizations that were providing the society with nursing homes or other long term care facilities. But as time goes on, more and more nursing home managers and clinicians are now realizing the quality paradigm (Popejoy et al), but large-scale implementation of policies and programs that would radically transform organizational culture has yet to occur.

Medicare presents a much greater challenge than Social Security, both in the magnitude of the projected deficits and in the complexity of the issues. Unlike with Social Security, reform involves not simply selecting among a list of plausible options, but rather figuring out how to control long- run costs and ensure the efficient delivery of quality care in one component of a very complicated health care system. Medicare is composed of two parts. Part A (hospital insurance) covers inpatient hospital services, care at skilled nursing facilities, home health care, and hospice care. Part B covers primarily physician and outpatient hospital services. Part A is financed by a 2.9 percent payroll tax, shared equally by employers and employees. Like their Social Security counterparts, the Medicare Trustees project the status of the hospital insurance trust fund over a 75- year period. These projections are highly uncertain given the time horizon and the difficulty in estimating future medical costs. Nevertheless, they constitute the best available estimate of the status of the Part A portion of Medicare. The projected 75- year deficit in Part A is more than twice the Social Security deficit in absolute terms, and many times larger relative to the size of the program. As a fraction of GDP, Part A expenditures are projected to triple over the next 75 years, from 1.7 percent in 1996 to about 5 percent in 2070 (Fenz).

Medicare Part A is also facing a pressing short- term problem. If no action is taken, the Part A trust fund is projected to be exhausted by 2001, and the gap between revenues and benefit payments widens very rapidly thereafter. Medicare reforms proposed by this Administration would extend the life of the Part A trust fund well into the next decade. Enacting these reforms is an absolutely necessary first step, but none of the current proposals completely solves the long- run problem.

Medicare Part B is financed primarily from general revenues and enrollee premiums. In 1996, premiums contributed about 25 percent of Part B income, with most of the remainder from general revenues. Although spending from this fund has grown rapidly, insolvency is not an issue, since general revenues are required to cover any shortfalls. However, the growth in Part B spending increases Federal expenditures and contributes directly to the unified deficit.

Reforming Medicare will require slowing the growth in health care prices and utilization. Since either Medicare or private insurance pays for most health care expenditures for the elderly, individuals have little incentive to seek out the most cost- effective delivery of medical care. Moreover, fee- for- service payment still dominates the Medicare market. Approximately 90 percent of Medicare beneficiaries have fee- for- service care, compared with fewer than 30 percent of the nonelderly. Hence, some Medicare providers may have an incentive to supply costly services that offer uncertain medical benefits. This potential misalignment of incentives is reinforced by the fact that the relative effectiveness of alternative treatments is often poorly understood, and consumers generally rely on providers' recommendations. For the nonelderly, any tendency toward overuse of medical services is increasingly kept in check by employers and their insurers. The dramatic movement toward managed care (discussed below) reflects determined efforts to ensure that health care is delivered in a cost- effective manner. Some working individuals may also have incentives to keep costs down because they face substantial out- of- pocket payments. These incentives may be muted for retirees, who frequently have virtually complete insurance coverage on a fee- for- service basis for an array of services.

In short, incentive issues are likely to be more important for Medicare than for Social Security. The government has a large and growing role in national health care, and most of the burden of doing so falls on the shoulders of the local governments. It is the job of the local government to supply its territory with health services, especially to the vulnerable population such as retirees and senior citizens (Price et al). Any changes in incentives, however, must recognize the system's important advantages, such as the wide array of choices available to beneficiaries and their ability to continue longstanding relationships with physicians and other providers.

Moreover, altering incentives is not a call to reduce benefits. Discussions of Medicare are often framed as if the program were excessively generous and the problem one of cutting back. In fact, Medicare's coverage is less comprehensive in some ways than much private sector insurance. For example, Medicare does not cover prescription drugs and provides only very limited mental health benefits. Nor does Medicare place an upper bound on cost- sharing responsibilities for hospital stays, skilled nursing care, or physician services. As a result, participants who have long and complicated illnesses and lack insurance (called medigap insurance) to cover what Medicare does not may incur tens of thousands of dollars of out- of- pocket expenses. Thus, the challenge is not only to control the costs of the benefits currently provided by Medicare, but also to create some room for improvement in the benefit package (Isham).

It is noteworthy to realize here that the hard work and good character of each distinct, separate and an individual member of staff is elementary to the quality-improvement paradigm. To carry out the best task and to make the facility etc an optimum place for the elderly it is vital that the staff at each level of the establishment understands clearly and follows the procedures that relate to specific outcomes the organization values; which means that all members must know how their work affects the end products. Quality in a nursing home improves when nurses and orderlies understand the needs of the elderly and by a continuous process of learning make necessary changes in the way they perform their jobs.

The recent years has seen the emergence of many hospitals and other health care facilities that operate on the basis of earning large profits. Obviously, their approach to the business and the way that they conduct their business is very different from the way that nonprofit organizations work, the most fundamental difference being with regards to the finances. This has been one of the biggest problems that the nonprofit health care centers have been facing the past few years. One such example is that of the HealthCare Company (HCA). This company used a market driven approach to make hospital franchises and to reap in large profits, and in the meantime also exhibited certain very unethical behavior, namely raising the bills of the customers by calling common cases by their complex names. Putting in high tech equipment and making the buildings more appealing attracted the higher clientele, which is not purely unethical, but it did cause them a lot of criticism. Therefore, although not all their practices were unethical, they did not fare well in the eyes of the people. In the end, the HCA chain really did not make better and more efficient hospitals. Nonprofit organizations face a threat from such organizations since they do not rely upon making profits and have to depend upon the government funding and grants to operate.

Even then, Gary and Schlesinger (2002) say that there are some aspects of health care, e.g. nursing homes and HMOs, which cannot be run without having the organization make enough profits. The past few years have seen that many of the people are shifting their preferences into owning these profit oriented health care facilities for their own good. This has been explained by the authors by suggesting a model that depicts the life cycle of the ownership that exists in the health care industry. The general trend has been to see that many of the organizations that offer their services related to research and development of technology are mostly nonprofit. These organizations rely upon philanthropists, government grants or other infrastructure organizations for support and funds. The better the service, the more the government pays and this inadvertently leads to the interest of the capitals from the free market. Once this happens, the organization become profit oriented since investors have invested in it and wants to earn their returns. So, most of the nonprofit organizations in health care today are slowly shifting to the commercial aspects of their business. This has been unfortunate since the line between a profit making and a nonprofit organization has been much obscured. The public has become wary of such organizations many states now require the health care facilities to report their community benefit activities.

Work Cited 

Deming, W. E. Out of the Crisis. Cambridge, Massachusetts: MIT Press. 1986

Fenz, Caton, “State Health Care Spending:A Systems Perspective”. State Coverage Initiatives, Issue Briefs, Volume III, No. 1, 2002

Gray, Bradford H., & Mark Schlesinger, “Health,” State of Nonprofit America. Lester M. Salamon, editor. Washington: The Brookings Institutions Press. 2002

 Isham, Dick. “Can Government Fix Health Care?” Detroit Free Press. 2003

 Popejoy, L., Rantz, M., Conn, V., Wipke-Tevis, D., Grando, V., and Porter, V. “Improving Quality of Care in Nursing Facilities: Gerontological Clinical Nurse Specialist as Research Nurse Consultant”. Journal of Gerontological Nursing 26:6 - 13. 2000

 Price, D. et al. “How the World Trade Organization is shaping domestic policies in health care”. The Lancet, 354:1889-92. 1999