The Affordable Care Act and Why we Need Health Insurance

This week we read about the Patient Protection and Affordable Health Care Act (sometimes referred to as the Affordable Care Act). The article from CQ Researcher gave us a good overview of the provisions of the act, a timeline of health care policy history, and a debate over some of the Act's more controversial policy changes. The chapter covers the most important aspects of the bill, but may not go into as much detail on the policy provisions that are of interest to you. If that's the case, here are some resources that you may find helpful. This dynamic timeline shows you when different parts of the healthcare law take effect, and what aspects are already in place. You can click on the policy change that interests you for more information about the specifics. Kaiser Family Foundation is a liberal-leaning think-tank focused on healthcare. They have a whole section on the health care reform law. If you are interested in the conservative perspective on the Affordable Care Act, the American Enterprise Institute will give you a nationwide take on the issue and the Goldwater Institute, located in Arizona, describes their case against the federal health care reform bill here.

Rather than give you even more information about the Affordable Care Act, I'd rather take a step back and talk about why we have health insurance in the first place. One of the comments I sometimes get in class about healthcare reform is that it's not fair to have a system where the healthy pay for the sick and the wealthy pay for the poor. Setting aside the second half of this comment, the healthy paying for the sick is the essential idea behind health insurance. Borrowing from Karen Pollitz, one of my former MPP professors at Georgetown and an expert in the individual health insurance market,  I present the swoop. (Please note that this is a very informal graph and would not be acceptable to include in an academic paper)

When it comes to healthcare, at any point in time most people cost very little, but there is a small group of very sick people who cost a lot. Pretty much everyone will fall into this small group of costly healthcare consumers at some point in their lifetime, and they have almost no control or ability to anticipate when that will be. Heart attack, pregnancy, cancer etc. can all shift someone into the high cost group. Sure, there will be some unlucky people who spend more time in the costly group and some very lucky people who remain relatively low cost throughout their lives, but we have no way of knowing who that will be. This is what we call "an information problem", using applied economic speak. Because we don't know how much we would need to save to pay for our healthcare needs or when we may need it and because we can all anticipate being high cost healthcare consumers at some point, it makes sense to enter an insurance pool.

When you have a large insurance pool where there are lots of people who do select in based on some reason: (employment, residence, citizenship etc.) aside from health status, you create a system where the healthy transfer money to the sick (because remember, most people are relatively healthy most of the time) with the knowledge that when they are sick, the healthy will in turn transfer money to them. The bigger the insurance pool, the more healthy people there will be to transfer money to cover the very sick, and the less costly one major illness will be for everyone. This is why the individual insurance market is so inefficient. It creates a system where more of the sick select into the insurance pool, and the relatively healthy stay out. This is also why the individual mandate is an important component of healthcare reform from the perspective of the insurance companies. They need healthy people in their pool to keep premiums low and ensure a profit.

In terms of the wealthy paying for the poor, the evidence is more mixed on this case. You can argue from a public health perspective the wealthy benefit from the poor having healthcare coverage. When people are able to get treatment for infectious diseases more quickly, it reduces the likelihood that the diseases will spread. Also, immunizations are an important aspect of preventive care. Children with certain diseases are unable to tolerate vaccines and have to rely on herd immunity to keep them well, if access to immunizations is reduced, herd immunity becomes less likely, and these children are more likely to get sick. This becomes especially true with the current cultural movement against immunizations that some more well off families are participating in. Preventive care also reduces the strain on our emergency systems, freeing up medical personnel for true emergencies. Finally, a healthy workforce is a productive workforce so greater healthcare coverage of low-income families is good for business' bottom line.

A recent ground-breaking study from the National Bureau of Economic Research  evaluated the impact of Medicaid coverage on low-income Americans and found that despite the issues with lower acceptance of Medicaid by doctors and healthcare providers, individuals on Medicaid had better outcomes than those without insurance. They got better health coverage, had better mental and physical health status, and were financially more stable. The study used a randomized design to avoid selection bias, and is a very strong study methodologically. This paper illustrates the importance of health insurance, especially for individuals and families who are already struggling.

If you want to learn more about healthcare access in the individual market prior to health care reform, the Frontline documentary Sick Around America  features Americans telling their stories of denial for pre-existing conditions and insurance recissions for incomplete medical histories. It's a moving documentary that is eye opening for those of us who have never had to purchase health insurance using the individual market. It does a great job of illustrating the problems with health care access in America. If you want to learn more about health care systems in comparable developed nations, the Frontline documentary Sick Around the World shows you how other five other countries have decided to address health care access, cost, and quality. This documentary does a great job illustrating health care policy alternatives. While both of these documentaries offer good insights into the healthcare system, we are talking about policy choices this week and the assigned documentary Obama's Deal shows us how we arrived at the health care reform bill that was actually passed.

What do you think about the Affordable Care Act? Have any of the enacted changes benefited or burdened you? Do you think the individual mandate is a "necessary evil" or should it be overturned as unconstitutional? Do you think the other parts of the Affordable Care Act can survive without it?

Theories Explaining Policy Choices

Often when we discuss the study of public policy, we are actually talking about two types of analysis. For the sake of simplicity we usually separate studies where policy is treated as an outcome of political and social causes, and studies where policy is treated as a cause of some social outcome. Of course, the world is not so simple and policy is is caused by and causes politics, society, and culture simultaneously; but for the purposes of discussion and academic research it is much easier to divide the field in this way. In this class, we are primarily focused on policy as an outcome. While the substantive chapters touch on the effects of policy, we will not be doing policy evaluation in this class. We will leave that to PAF 471-Public Policy Analysis.

In this class, we are primarily concerned with studying the policy process. How do policies get passed? Why are some policies passed and not others? Why do policies persist? Chapter three introduces us to some of the major theories for understanding the policy process. We will spend all next few weeks on the policy stages heuristic (I hope you all looked up this word) so I will skip over that for now and discuss some of the other perspectives. Remember, public policy is an interdisciplinary field so you will see theories here that are based in political science, economics, and sociology.

Currently, the study of public policy in the United States is dominated by economic thinking. If you went to the annual APPAM (Association of Public Policy and Management) conference, you would, for the most part, see presentations of papers using market-based theories or institutional models to explain policy choice. The easiest assumption to make about human behavior in public policy analysis is that individuals act on their rational self-interest, but sometimes that interest is constrained by organizational culture, history, or social norms. We may also think of them as making decisions based on "bounded rationality", not only are they constrained by outside factors, they are also constrained by limited cognitive capacity. We tend to assume that they "satisfice" or choose an option that works, or seems the best, out of limited options. This may seem like the obvious way to think about human behavior, but it's not the only alternative. Think about how different our policies would be if we adopted the assumptions of psychoanalysis, that individuals acted largely based on irrational urges and passions.

Peters also offers us theories that explain policy choice based on who advocated for specific policies. The Advocacy Coalition Framework and policy networks perspectives try to explain policy choices using this logic. Both of these perspectives tell us who is working together to pass a policy and who they are working against. They can also help to explain why problems are defined in certain ways or how relevant groups change alliances over time. There's an adage that "politics makes strange bedfellows", and both ACF and policy networks analysis can help us parse out occasionally strange alliances.

Peters talks about other perspectives too. Lowi's idea that policy causes politics has been very influential in explaining why we see strong interest groups in some policy discussions and not in others. Many have used his theory in conjunction with constructivism and economic theories to understand differential power relationships, particularly in the context of redistributive and regulatory policy areas. The constructivist approach is more popular in Europe and really delves into the role that social control and stratification play in the policy process (in other words examining how race, gender, class, able-bodiedness, sexuality etc. influence policy decisions.)

I hope that you will keep these various theories for explaining policy choice in mind when we read the substantive chapters. Often, we look at policies from one single perspective and assume we have the right answer, when other perspectives can shed an interesting light on a particular substantive area. If you think about healthcare policy, constructivism might help explain why there is more support for Medicare than Medicaid even though they serve many of the same people (so-called dual-eligibles) because we perceive the recipients as two different groups; seniors and the disabled who deserve our help and poor people who do not. On the other hand, historical institutional models might explain the evolution of a public healthcare system that covers the elderly, the destitute, and veterans but not others. The optimal design perspective would explain why the market cannot provide sufficient healthcare to these groups, in particular.

What do you think of the theories that Peters discusses in this chapter were there any that sounded particularly interesting? Were there any that you just "didn't get"? Do you think that public policy experts should assume recipients are "rational actors" when designing policies? Are there better ways to explain human behavior that we should consider?

Taking and Giving Away Power in a Federalist System

This week's podcast A City Throws in the Towel and documentary Cheney's Law tell us two different tales about power in a federalist system with a separation of powers. On one hand, we have a story about the Bush Administration successfully attempting to consolidate power in the national executive branch. In the other we have the city of Reading, Pennsylvania ceding its power to the state in order to avoid financial ruin. In both of these instances we can see how a policy decision like re-defining torture and selling off government property can have a larger meaning in terms of the distribution of power between branches and levels of government. We can also think beyond the effects on the executive branch (in Cheney's Law) and the city government of Reading (in A City Throws in the Towel) and hypothesize about the long-term consequences of these decisions for other branches and levels of government. Giving up power is a very difficult thing to do, and once power is consolidated or distributed it tends to stay that way until another emergency or shock to the system emerges.

In terms of the executive branch, it remains relatively powerful since Bush and Cheney have left office. The Obama administration continues the practice of issuing signing statements to laws, but I think the debt ceiling negotiations revealed that Obama is more hesitant about exercising executive power. Here's a NYTimes article about executive power under Obama.

In A City Throws in the Towel we heard about Reading, PA as an example of a city that was taken over by the state as a financial disaster area. The podcast hints at the fact that many cities throughout the nation are facing the same issues, as population decreases and poor economic conditions decimate their tax bases. In Reading's case they chose a state takeover, but this is not always the case. The city of Detroit, Michigan is currently at risk of being involuntarily taken over by the state if they cannot cut $200 million in spending.  Local governments are not protected by the Constitution, unlike state governments, so this may be a coming threat for many cities and counties. State governments are feeling similar financial crunches, particularly because so many have balanced budget provisions in their constitutions or state laws. The question remains, what will happen to our federal system if states can no longer meet their financial obligations to residents?

The Complex Systems of American Government - Peters Ch. 2

In this chapter Peters discusses the structures of the American political system. The unique way that the United States' government is structured creates both barriers and opportunities in terms of public policy. The United States is a federalist system with federal, state, and local governments. Our constitution allocates powers to the federal government and the remainder is reserved for the states. For the most part, state governments determine the powers left to local governments. Many court battles arise out of conflicts concerning which level of government has jurisdiction over particular issues. Normally, federal law supersedes state law and state law supersedes local laws, but not when it concerns powers reserved for lower levels of government.You should keep this in mind when we discuss the individual mandate part of health care reform next week.

At each level, there is also a separation of powers. At both the federal and state levels power is balanced between a legislative, executive, and judicial branch (hopefully, at this point you are familiar with the idea of separation of powers and checks and balances. If not, go to Google and look it up.) We also have strong bureaucracies that act as part of the executive branch. The bureaucracy has significant powers in executing laws and making public policy. In fact, some scholars argue that the bureaucracy has more influence on how citizens experience policy than the policymakers. We will talk about this more in week five when we discuss implementation.

The interactions between the legislature, the bureaucracy and private interest groups is often referred to as an iron triangle. In some ways, iron triangles make our government more efficient. They allow policymakers and bureaucrats to specialize in areas that they care about. It creates connections between the experts in the private and public sectors, and certainly increases the degree to which technocratic expertise plays a role in our government. Unfortunately, this means that the public interest at large is largely left out of the conversation. It can lead to revolving doors, where politicians and upper level bureaucrats who leave public office are rewarded by interest groups with good positions in the private sector. It also increases pork barrel politics and log-rolling where legislation is made to serve the interests of specific policymakers, districts, and agencies.  Rather than acting as agents of the public good, bureaucrats in these agencies often become agents of the very industries they were mandated to regulate.

As I mentioned in the "What is Public Policy" post, we also have a system that encourages a blurring of the line between public and private. Since the 1980's the dominant political perspective has assumed that competition leads to better service provision, and many of the services that had been administered by government for much of the 20th century have been contracted out to non-profit and for-profit organizations. This means that government policies are often carried out by private actors, and new businesses have been created for the primary purpose of public service provision. We often refer to this as the "shadow government". Once these private employees are taken into account, we see that the federal government has increased significantly in size (and dollars) since the 1950s.

Peters emphasizes the ways in which the unique and complex American system hinders policymaking, but it also creates advantages. There is an old adage that states are the laboratories of democracy. Our federal system allows us to try public policies at the state and local level before we implement them nationally.Obama's healthcare reform bill was loosely modeled after the Massachusetts' universal health care program.  It also allows for diversity across different localities. Not everyone in this country agrees on the definition of good public policy. Our federal system allows California to make appropriate laws for its citizenry and Alabama to make appropriate laws for its citizenry.

The blurring of private and public creates a symbiotic relationship between the private and public sectors. Business owners have greater buy-in to the public sector and government can work with local non-profits who may have better training and experience in working in certain areas with certain populations. Americans tend to be less suspicious of the private sector than the public sector, which may make contracted out programs more politically palatable.

On the other hand, there is some evidence that contractor jobs are not as good as government jobs in terms of their salary, benefits, and stability. Contracted projects may also be planned primarily for short-term cost savings rather than long-term stability. Diversity in policy can lead to inequalities and a "race to the bottom" where fewer and fewer social services are offered to avoid attracting "undesirables" to a specific locality. The complexity of our system means that policymaking will often be reactive and slow to move when major changes are needed. Finally, iron triangles, log-rolling, pork barrel politics, and multiple veto points mean that the effectiveness and efficiency of policies become less important than their political palatability to interest groups and constituents.

 It is important to keep these structures in mind when we talk about substantive public policy areas and policy analysis. Are you surprised by the complexity of the American political system? Do you think this complexity helps or hinders American government in meeting the needs of its diverse citizenry? What would you change about the structure of American government to make it more effective?

The Instruments of Government - Peters Ch. 1

The second question Peters attempts to answer is "What tools or instruments does government have at its disposal?" Peters lists six major policy instruments that government can use to distribute benefits and burdens to groups and individuals.

The first instrument is law. Laws are probably what you thought of when you considered the definition of public policy. According to Peters, laws are "authoritative decrees" (p. 7). Unlike the other instruments of public policy, only a legitimate government can make laws. The more legitimate a government is perceived to be, the less authority is necessary to make sure that individuals obey the laws. During the Arab Spring, we saw quite a few governments whose citizens deemed them to be illegitimate, we also saw these regimes attempt to enforce their laws through extreme force. In contrast, most of us obey the laws of the United States, even when we are not being observed and coerced. This is because most Americans view their government as legitimate, even when they disagree with its policies. Laws can either confer rights or prohibit actions. Sometimes these are basically the same thing. For example, the Voting Rights Act of 1965 gave the right to vote to all citizens over the age of 18 by prohibiting states and counties from barring people of color from voting. To ensure rights for one group, they had to prohibit the actions of another group.

Government also provides direct services, although this is becoming less common in the United States, as government often contracts with for-profit and non-profit organizations to provide services. Still, there are two major areas of public policy where government continues to provide direct services: education and defense. Many have argued that the government is not the most efficient provider of services, so we are even seeing the privatization of these major areas of government provision.

Government increasingly provides its citizens with money. Usually, this is accomplished through tax credits. Paradoxically, the distribution of money directly to citizens can be considered inefficient and efficient at the same time.On one hand, it does not require separate specialized institutions and organizations to distribute money through the tax code. If you define efficiency as a lack of administrative costs, then the direct provision of money is very efficient. On the other hand, government has no control over how individuals spend the money they receive so it can be very inefficient in terms of regulating behavior. The federal government also distributes money to lower levels of government through grants. These grants may be categorical grants, which are very restrictive and require that the money be spent in specific ways. They may also be block grants, which allow states and localities to spend the money on a variety of projects. Categorical grants are one way that the federal government can increase its power over the states.

Tax expenditures are very similar to tax credits. Peters breaks them up in his chapter but sometimes they are discussed together. Tax expenditures are funds that the government did not collect because individuals were able to "deduct" them. Of course, in order to benefit from tax deductions you have to already have made enough money to have income tax liability. Therefore, tax deductions often benefit wealthy and middle class individuals, while credits may benefit even those whose income is so low that they do not have to pay income taxes.

Government may also tax certain behaviors instead of passing laws prohibiting them. For example, pollution may be taxed rather than regulated. The money gained from these taxes may then be redistributed to individuals or cities affected by pollution. Usually, when we talk about government incentives or disincentives for certain behaviors we are talking about a tax credit or a tax on something that benefits or burdens society.

When a government is viewed as legitimate suasion can also be used as a tool of government. Suasion can basically be thought of as persuasion. When governments attempt to influence behavior without actively passing legislation, that is suasion. We have observed a lot of examples of suasion throughout our history. Some have been very successful like John F. Kennedy's call to service: "Ask not what your country can do for you, but what you can do for your country." Others, like Jimmy Carter's call for energy conservation in the 1980s have been unsuccessful. Suasion tends to be most effective when it does not ask citizens to significantly change their behavior, and when the country's political leaders are well-liked.

Peters also discusses other economic tools that government can use. These include the guarantee of loans and the issuance of insurance. These programs tend to be small and represent very low levels of government expenditures. They greatly benefit their recipients; students and residents in flood and hurricane zones, but are often invisible to other citizens.

As Peters points out, governments draw on these tools to distribute goods, services, benefits, and burdens. By examining them, we can determine "Who gets what, when, and how". I hope that you will continue to think about these tools when we talk about substantive policy areas. The choice of instrument can make a real difference in how individuals and groups experience policies. Which tools do you think are most efficient? Which are most effective at changing behaviors? Which would you prefer governments use?

What is Public Policy? - Peters Ch. 1

Our readings for this week are meant to set the stage for the rest of our class. For most of the subsequent weeks will be discussing a policy area - like healthcare policy or immigration policy - but first we need to understand what we mean when we use the term public policy and how the American context affects our policy choices and decisions.

In this first chapter, Peters tackles these two primary questions "How do we define public policy?" and "What policy tools does government have at its disposal?" In reference to the first question, Peters defines public policy as "the sum of government activities, whether pursued directly or through agents, as those activities have an influence on the lives of citizens" (p. 4). This is certainly not the only way to define public policy, but lets pull apart this definition a bit.

• The sum of government activities: Peters define public policy as the totality of government action. This definition is broad in the sense that it includes implementation, all levels of government, and action on a variety of substantive issues.  It can be interpreted as somewhat narrow by today's standards, however, as many have sought to redefine what it means to be public versus private. Many scholars want to extend the definition to activities taken by corporations or NGOs working on their own behest. We can draw from history for an example. At the turn of the 20th century many workers were living in company towns where healthcare, housing, schools etc. were provided by the company. In Peters' definition this would not be considered public policy even though the services provided by the companies are very similar to what government provides today.
• Pursued directly or through other agents: Peters broadens his definition back out here. He allows for businesses and non-profits to be public policy actors if they working on behalf of the state. "Contracting out" to for-profit or non-profit organizations has become an increasingly popular strategy for delivering government services so this is an important part of the definition.
• As those activities have an influence on the lives of citizens: Peters restricts his definition once again to those activities that affect the citizenry. I think that this is unintentionally narrow. We have foreign policies, trade policies, and immigration policies that directly affect individuals who are not citizens. As a world leader, American public policies also affect non-citizens indirectly. Further, our policies have an effect on the animal and natural world. I doubt that Peters would argue that foreign policies are not public policies so I think the use of citizen here is just poor word choice.

Hopefully, you came into this class with at some ideas about what public policy might be. How did your definition differ from Peters? Do you think his definition is too broad, just right, or too narrow?

Comments from the Syllabus Quiz and Student Questions

Before I get into discussion of this week's readings, I wanted to comment on a few things related to the syllabus and the assignments.

• First, I have added a revised syllabus with the Peters 7th edition readings in parentheses for the relevant weeks. I think this will cut down on some future confusion, but again please make sure that the content you are reading for the week matches the content listed on the syllabus. That being said, because this is an online class you MUST be familiar with the syllabus. Unless I state otherwise, follow the schedule and directions outlined there.
• Second, I know some of you are anxious about the reflection papers. Although there are 13 documentaries listed on the syllabus, you only need to turn in five over the course of the semester, but you have to turn them in the week that they are due on the syllabus. So, for example if you choose to write your first paper on Obama's Deal which is assigned for next week, you must turn it in by 9/4 to receive credit. This is because I have chosen the documentaries to go with the readings we have each week. In terms of content there are four things I am looking for:
• The paper needs to be well-written: The papers do not need to be as formal as a research paper, and it is expected that you will write in the first person, but you need to be able to adequately communicate your ideas to your reader.
• The paper needs to reference the substantive reading for the week. Most weeks this will be fairly easy. For example, the reading for next week is on healthcare reform and the documentary is on the process of creating the healthcare reform bill. You should be able to pull out parts of the documentary that parallel with the reading.
• The paper needs to reference the theoretical reading for the week. This will often be a little harder, but again, I have matched these up so that you can do this for every week. How did the documentary bring a concept from the reading to life? For example, next week's theoretical reading is on explaining policy choices. When watching the documentary, you should keep in mind which theories discussed in the chapter explain the final health care reform bill as a policy choice.
• Finally, I want to hear your thoughts about the documentary. What did you like? What didn't you like? Do you think the filmmaker was overtly biased or were they more or less presenting the truth? What, if anything, did you learn? etc.
• Most importantly, I do NOT want a summary of  the film.
• I have also had some students express concerns about the weekly participation credit. You only have to participate once per week to get full participation credit. You can participate by posting a comment or question on blackboard, tweeting using the #paf340F11 tag, or posting a comment or question on my blog. Again, you only have to do one per week so it is your choice which you want to use.
• Finally, for those of you who are nervous about twitter, I know it can be overwhelming at first, but the best advice I can give is to start using it. I sent out my first tweet in May and now I am using it for class. Tweetdeck is a really great resource to keep things organized. You can set up a column with the course hashtag and anytime someone tweets with the tag for the class, it will show up. Here's what mine looks like:

The people I am following are on the left hand side, tweets that mention me are in the middle, and those that use the #paf340F11 tag (this is a column that I created, the others are default columns) is on the right hand side. There isn't anything here that twitter can't do, but it looks a little nicer. 

Welcome to Contemporary Policy Challenges Fall 2011

Hi everyone! I hope you had a great summer and you are ready to get back into the swing of things. If you are reading this post, you are either someone who really loves public policy or (more likely) a student in my online section of PAF 340 for the Fall semester of 2011. This class is an intermediate undergraduate class that will guide you through some of today's theoretical, critical, and applied issues in public policy. My hope is that you have come into this class with some knowledge of current events and an interest in learning more about how policy decisions are made. For each week, you'll have a theoretical chapter on the policy process or policy theory and a chapter on a substantive policy issue. You will also be assigned optional documentaries and podcasts to help you understand the readings better. I will be blogging at least twice a week, and you can ask me questions here. It's a big class so we have two TA's who are also doctoral students in the School of Public Affairs who may be weighing in from time to time, Matt Heil and Mark Martz.

My hope is that by the end of the course you will have a better idea of how policy is made in the American political context. I also hope that you will understand the complexity of public policy issues and emerge a public policy skeptic whenever you hear that a problem is simple and a solution obvious. I hope that you enjoy the multimedia components of this class and the use of blackboard, twitter, and this blog. I look forward to getting to know you better as the semester progresses.