HMG 6110 Final Term Paper Important Historical and Current Trends in Health Care that have Led to the Demands for Change

RunningHead: Historical andCurrentTrends in HealthCare that have Ledto the DemandsforChange
Important Historical and Current Trends in U.S. Health Care that have Led to the Demands for
Change
Ardavan A. Shahroodi
Northeastern University
Professor James J. Ferriter
HMG-6110- The Organization, Administration, Financing and History of Health Care in the U.S.
Final Term Paper
Thursday, May 16, 2013

Historical and CurrentTrendsin HealthCare that have Ledto the Demandsfor Change
Introduction
Our system of health care is facing a number of crucial decisions in the coming years.
An era of ever increasing cost over runs in the health care environment has placed unsustainable
financial pressures on our economy and public treasuries. In spite of these uncontrollable
expenditures, the quality of the health care products and services suffer from inconsistencies and
lack of uniformity in effectiveness and implementation. In addition, until very recently a sizable
minority of the population did not enjoy the protection of any health care insurance coverage.
The reforms of the Affordable Care Act (ACA) aim to rectify some of the most intractable
problems in the care system such as the lack of health insurance for so many Americans. ACA
will also create a number of initiatives, organizations and financial incentives that will contribute
towards improving quality and controlling the cost escalation associated with delivering health
care in this country.
Unsustainable Cost Structure in the Present and the Specter of Ever Increasing Cost
Escalation on the Horizon
In a historical analysis of the health care expenditures in the U.S., Barr (2011) brings
attention to the fact that in 1970, “people in the United States spent a total of $73 billion, or an
average of $ 341 per person per year, on all types of health care combined” (p. 19). At the time,
this amount represented 7.1 percent of the gross domestic product (GDP) of the country (Barr,
2011, p. 19). Sisko et al. (2010) estimate that total health care expenditures in 2009 had
escalated to $2.5 trillion that was 17.3 percent of the GDP and the average per person cost had
risen to $8,200 on a yearly basis (as cited by Barr, 2011, p. 19). Truffer et al. (2010) project that
by 2019; health care costs will have risen to 19.3 percent of the GDP (as cited by Barr, 2011, p.
19).

With respect to the cost of the Medicare Insurance program that covers those over 65
years old and represents a significant portion of health care expenditures in this country, Barr
(2011) informs us that the price of this particular entitlement had risen “from $4.2 billion in 1967
to $9.3 billion in 1973” (p. 140). Barr (2011) adds that “in 2009…Medicare expenditures for
Part A + Part B totaled $448 billion” (p. 140) and by 2010, “the cost of all Medicare programs
combined was $504 billion. As a result, presently, the cost for Medicare programs comprise
approximately 1 in every 5 dollars spent on health care, in light of the above figure for total
national expenditures of $2.5 trillion dollars on a yearly basis. The Kaiser Family Foundation
(2013) has estimated that “Medicare spending is projected to grow from $551 billion to $1
trillion in 2022” (Medicare at a Glance, Nov 14, 2012).
Some important additional statistics here are that when Medicare was introduced in the
U.S. during the 1960s, “approximately 9.5 percent of the country’s population was 65 years or
older” (Barr, 2011, p. 143). However, by 2010, this number of persons over 65 years old had
risen to 13 percent of the population (Barr, 2011, p. 143). Furthermore, Barr (2011) states that
“current projections predict that the proportion of the population 65 or over will rise to 16.1
percent by 2020 and 19.3 percent by 2030” (p. 143).
Kaiser Family Foundation (2010) has estimated that in 2006, “Medicare spent an average
of 8,344 per elderly beneficiary (not including the cost of prescription drug coverage” (as cited in
Barr, 2011, p. 143). This is a very interesting number since Kaiser Family Foundation (2010)
also tells us that “the sickest 10 percent of beneficiaries had an average annual per capita cost of
$48,210, and accounted for nearly 60 percent of all spending” (as cited in Barr, 2011, p. 143).
On the other hand, Kaiser Family Foundation (2010) informs us that in 2006 almost 34 percent

of the beneficiaries in the Medicare program spent in between zero to one percent of the total
expenditures (as cited in Barr, 2010, p. 143).
Kaiser Family Foundation (Medicare at a Glance, Nov 14, 2012), has estimated
that from 2000 to 2012, Medicare and private health insurance per capita spending has
experienced an average annual growth rate of 6.9 percent, while per capita GDP has increased by
2.9 percent and the Consumer Price Index (CPI) has increased by 2.5 percent. Kaiser Family
Foundation (Medicare at a Glance, Nov 14, 2012) projects that from 2012 to 2021, Medicare and
private health insurance will increase an average annual growth rate of 3.6 and 5 percent
respectively, while per capita GDP will be enhanced by 4 percent and the Consumer Price Index
will increase by 2.1 percent.
In spite of the aforementioned costs estimates and projections, it is most important to
keep in mind that “the Medicare system, despite being one of the largest government programs in
history, has proven to be one of the most efficient administrative systems for providing health
care to a defined population of patients” (Barr, 2011, p. 161). When we take the percentage
insurance programs spend on administrative expenses, we observe that these costs for Medicare
Parts A and B vary between 1 to 2.5 percent, while employer-based insurance programs
experience non-patient care costs that run anywhere from 10 to 30 percent and nonprofit HMOs
experience non-patient care costs of 3 to 7 percent (Barr, 2011, p. 161). The conclusion that we
may draw from the above figures is that cost escalation in the case of Medicare is unrelated to
matters of administrative efficiency.
In regards to the Medicaid program, Kaiser Family Foundation (The Medicaid Program
at a Glance, March 04, 2013) estimates that in FY 2011 “total Medicaid spending excluding
administration (5%, data not shown) totaled $414 billion”. Kaiser Family Foundation (The

Medicaid Program at a Glance, March 04, 2013) does bring to our attention that two-thirds of
Medicaid spending “was attributable to acute care and one-third went toward long-term care”
while “roughly two-thirds of Medicaid spending is attributable to elderly disabled beneficiaries”.
Here, Barr (2011) adds that “Sixty-seven percent of Medicaid costs go to provide care for 25
percent of beneficiaries” (p. 173). As much as low income children and adults comprise 75
percent of Medicaid beneficiaries, only 32 percent of spending is attributable to these population
groups (Barr, 2011, p. 173). The Office of the Actuary (OACT) in the centers for Medicaid and
Medicare Services (CMS) (March 2012) has projected that Medicaid expenditures are to
“increase at an average annual rate of 6.4 percent over the next 10 years, and to reach $795.0
billion by 2021 (total outlays not just federal)” (as cited in Kaiser Commission on Medicaid and
the Uninsured Issue Paper, March 2013).
The rising expenditure on prescription drugs is another factor contributing to the
escalating health care cost structure in the U.S. Prescription drug expenditures in 1980, U.S.
Centers for Medicare and Medicaid Services (data from website) inform us, totaled 4.9 percent
of all heath care costs (as cited in Barr, 2011, p. 215). In 1990, those costs had risen to 5.8
percent and by 2003 the expenditures had a 10.7 percent of the national health care costs (Barr,
2011, p. 215). Barr informs us that “between 1993 and 2003, while national health expenditures
increased 89 percent, expenditures for prescription drugs increased 249 percent” (Barr, 2011, p.
215). Nevertheless, Barr (2011) relays to us that “the cost of prescription drugs is projected to
remain at approximately 10 percent of national health expenditures through 2019” (p. 215). A
Kaiser Family Foundation (2004) study of the period 1997-2002, attributed the increase in
expenditures of prescription drugs to the “increases in the number of prescriptions issued/44
percent” (as cited in Barr, 2011, p. 216), “manufacturers’ price increases for existing drugs/25

percent” (Ibid) and “shifting from a less expensive drug to a more expensive drug for the same
illness/34 percent” (Ibid).
Barr (2011) points towards a number of factors in the U.S. that are causing and will cause
in the future for the cost of health care to increase. First, an expanding population and as
suggested in the preceding sections an ever larger population of elderly Americans enhance
health care expenditures. Second, “the number of people receiving treatment for a specific
illness may go up” (Barr, 2011, p. 22) due to the pattern that “either the illness is becoming more
common, or more people with the condition may seek treatment” (Ibid). These illnesses or
treatments could be diabetes, cardio vascular disease, mental illness, orthopedic surgery or other
maladies and therapeutic solutions. Third, the expense of treating an illness may increase based
on “new, more advanced (and more high-tech) treatments becoming available, replacing older,
less expensive (and more low-tech) treatments” (Barr, 2011, p. 22).
Barr (2011) also argues that in the U.S., “technology and technological advances” (p. 56)
occupy a special place in our national purpose and psyche and as a result advances in medical
technology are highly valued, “even when the added benefit of these treatments is small
compared to their cost” (p. 56). Fuchs (1983) refers to this tendency as “the technological
imperative” (as cited in Barr, 2011, p. 57) where both physicians and patients understand quality
in terms of the aggressive usage of more advanced technologies in the treatment of disease. This
inclination “to equate technology with quality” (Barr, 2011, p. 57) has brought us to a belief
system that asserts “the more technological a treatment is, the better it is” (Ibid) and that “as
patients we have not received complete treatment unless we receive the most advanced
technology” (Ibid).

Barr (2011) uses a number of examples to illustrate the above phenomenon such as the
practice of ordering MRIs for an overwhelming number of orthopedic related conditions
regardless of the severity of the patient’s injuries (p. 56). The same situation is prevalent with
the usage of the “relatively expensive” (Barr, 2011, p. 57) prostate specific antigen (PSA) blood
test that possesses “a high risk of false-positive results” (Ibid). In addition, there is also the case
of medications for controlling blood pressure where ALLHAT Collaborative Research Group
(2002) found that the standard treatment of “diuretics are superior in preventing one or more
major forms of cardiovascular disease and are less expensive. They should be preferred for first-
step anti-hypertensive therapy” (as cited in Barr, 2011, p. 59). Nevertheless, other more
expensive and technologically advanced medications are still being widely used in spite of the
scientific evidence to the contrary regarding their superiority to diuretics in treating high blood
pressure.
Barr (2011) also introduces the opinions of Hillman and Goldsmith (2010) in describing
the roots of health care cost escalation in the U.S. Hillman and Goldsmith (2010) argue that
“there has been an imaging boom in U.S. health care” although “an unknown but substantial
fraction of imaging examinations are unnecessary and do not positively contribute to patient
care…the evidence basis for using imaging is incomplete” (as cited in Barr, 2011, p. 64). In a
similar observation, Leff and Finucane (2008) describe this all-consuming prevalence of “high-
tech imaging and other devices as gizmo idolatry” (as cited in Barr, 2011, p. 64) based on the
belief that “a more technological approach is intrinsically better than one that is less
technological unless, or perhaps even if, there is strong evidence to the contrary” (Ibid). Barr
(2011) contends the prevailing inclination of physicians in this country to practice “defensive
medicine” (p. 65) based on concerns for malpractice lawsuits has added “billions of dollars to

our health care budget by ordering extra tests and procedures that add little to care but present a
stronger defense ” (Ibid) in the event of patient oriented litigation.
The Inability of Managed Care and Managed Competition to Mitigate Cost Escalation
and Improve Quality
The concept of managed care health plans or health maintenance organizations (HMOs)
was first introduced by organizations such as the respectable Kaiser Permanente system in the
state of California. These non-profit operations were also labeled as “prepaid group practice”
(Barr, 2011, p. 106) who charged a “fixed monthly fee” (Ibid) or “capitation rate” (Ibid) and in
exchange provided for their members hospital care, physician care and “other outpatient
services” (p. 107). In the beginning, these health care plans “were consistently able to provide
comprehensive care at a substantially lower cost than the insurance plans using the traditional
fee-for-service method of paying for care” (Barr, 2011, p. 107).
A study by Manning et al. (1984) at the Rand Corporation found that “given comparable
patient populations, prepaid group practice service plans could be as much as one-third less
expensive than fee-for-service insurance plans for comparable care” (as cited by Barr, 2011, p.
107). Nevertheless, a further study by Davies et al. (1986) pointed towards “lower patient
satisfaction in a number of aspects of the primary care process” (as cited in Barr, 2011, p. 108)
with respect to the HMO operations. A third large study, called the Medical Outcome Study by
Safran, Tarlov and Rogers (1994) spanning a period of four years and involving “1208 patients
with chronic diseases” also found that “group HMO had a lower cost of care and better
communication among specialists and primary care physicians” (as cited in Barr, 2011, p. 113).
However, in this study, HMOs had lower ratings than other care arrangements (fee-for-service)
in “access to care, continuity of care, and comprehensiveness of care” (Barr, 2011, p. 113). In all

these and other studies, HMOs projected lower “patient satisfaction” (Barr, 2011, p. 114) ratings
“versus traditional fee-for-service practitioners” (Ibid).
The success of HMOs in controlling costs led some reformers such as Enthoven
(1980) to propose the creation of “a national system of health care centered on the concept of
groups of health care purchasers banding together to obtain health insurance from competing
health insurers” (as cited in Barr, 2011, p. 116). Enthoven (1980) proposed “a system of fair
economic competition in which customers and providers of care, making decisions in an
appropriately structured private market” (as cited in Barr, 2011, p. 116) would replace a system
of health care based on “built-in cost-increasing incentives” (Ibid) with one structured on “built-
in incentives for customer satisfaction and cost control” (Ibid). However, Barr (2011) reminds
us that the inherent inefficiencies in our system of health care such as the non-taxable nature of
health insurance premiums and the “system of paying physicians a separate fee for each service
provided regardless of the added benefit of that service” (p. 119) has created an environment
with “patients expecting and physicians providing a great deal of expensive care with relatively
little marginal benefit” (Ibid). Nevertheless, Enthoven (1980) did propose the creation of a
system of health care where “on a regional basis…patients choose between competing systems
of managed care” (Managed Competition) (as cited in Barr, 2011, p. 118).
However, as North (1986) would argue and Barr (2011) paraphrases “many types of
institutional force inhibit the ability of markets to achieve efficiency” (as cited in Barr, 2011, p.
124) such as the “technological imperative” (Ibid) discussed in the preceding paragraphs. In
addition, the concept of managed competition has remained largely theoretical with many small
and medium size firms offering only one or two managed care plans to their employees. The
Kaiser Family Foundation and Health Research and Educational Trust reported that in 2009,

almost 80 percent of employees nationally had the choice of access to only one or two health
plans (as cited in Barr, 2011, p. 127). Where, managed care operations did endeavor to control
costs they utilized strategies that was meant “to reduce the use of care, and through a reduction in
the amount they would pay physicians and hospitals for care” (Barr, 2011, p. 128). Both these
strategies created the “managed care backlash” (Barr, 2011, p. 128) that led the purchasers of
insurance “to accept the reality of increasing health care costs” (Ibid).
The aforementioned measures that some managed care organizations (mostly for-profit)
utilized in order to control expenses included the usage of primary care physicians (PCPs) as
gatekeepers “for other care the patient might need” (Barr, 2011, p. 194). The usage of the
PCPs as gatekeepers proved on occasion to be a controversial practice when physicians
“received a fixed amount of money to provide all out-patient care and tests for each patient in his
or her practice for a given period of time” and this total amount would also include their salary.
Consequently, the PCPs would continuously have to face the predicament of potential conflict of
interest scenarios that placed them in an untenable decision making quandary. As Barr (2011)
would argue, “linking the gatekeeper function directly to the physician’s income created an
obvious ethical conflict” (p. 195).
A further practice of managed care organizations that proved to be problematic was the
usage of the “utilization review department” (Barr, 2011, p. 195) that monitored and “reviewed
the care provided by physicians” (Ibid). The utilization review department would have to grant
prior approval in order for physicians to be able to order expensive tests such as MRIs or admit
their patients to hospitals. In addition, the utilization review departments would also monitor the
patients while they were in the hospital so that physicians do not keep them in those
environments for “too long” (Barr, 2011, p. 195).

In many instances, managed care organizations “gathered statistics on how often each
physician used expensive resources such as MRIs, drugs, hospitals, operations and the like”
(Barr, 2011, p. 195). Managed care organizations would then “penalized physicians whose
profile exceeded what the reviewers thought was appropriate” (Barr, 2011, p. 195) with the
usage of these “physician practice profiles” (Ibid). On the other hand, a number of managed
care operations followed the practice of rewarding physicians that “had kept down costs during
the year” (Barr, 2011, p. 196) by directly linking a physician’s bonus to “the cost of the care that
the physician had ordered during the year” (Ibid).
The aforementioned annunciated procedures of evaluating a physician’s performance
primarily on the basis of her or his financial decision making was not replicated in all managed
care operations. Some managed care operations have developed “structured programs of
education and feedback to remind physicians which type of care are most appropriate and which
type may be inappropriate” (Barr, 2011, p. 196). In addition, highly respected non-profit
managed care organizations such as the Kaiser Permanente system have never utilized a direct
bonus system and the physicians have always received an indirect bonus. In the event that the
cost of care “was less than the amount budgeted, the surplus was not added to the bonus pool but
rather was invested in the Kaiser Permanente system” (Barr, 2011, p. 198). Furthermore, the
Kaiser Permanente system places a heavy emphasis on “physician education and feedback, and
on gatekeeper systems that were not linked to physician compensation” (Barr, 2011, p. 198).
In spite of the credibility that organizations such as the Kaiser Permanente system bring
to the managed care environment, Arnold Relman (2007), a former editor of the authoritative
New England Journal of Medicine has stated that “the entry and growth of innumerable private
investor-owned businesses that sell health insurance and deliver medical care with a primary

concern for the maximization of their income” (as cited in Barr, 2011, p. 211) has dominated the
delivery of health care. In a most troubling statement that may possess profound consequences
for all of us, Relman (2007) argues that,
“the continued privatization of health care and the continued prevalence and intrusion of
market forces in the practice of medicine will not only bankrupt the health care system, but also
inevitably undermine the ethical foundations of medical practice and dissolve the moral precepts
that have historically defined the medical practice” (as cited in Barr, 2011, p. 211).
Gawande (June 1, 2009) argues that in certain communities “physicians who see their
practice primarily as a revenue stream” and view their patients as “profit centers” have come to
“predominate” the health care profession. In citing the research of Woody Powell (a Stanford
sociologist) regarding the “anchor-tenant theory of economic development”, Gawande (June 1,
2009) observes that in these health care communities the aforementioned anchors/practitioners
“set the norms” for medical practice. However, on the other end of the spectrum, world class
and highly effective health care organizations such as the Mayo clinic promote leaders “who
focused first on what was best for patients, and then on how to make this financially possible”
(Gawande, June 1, 2009).
In the Mayo Clinic, Gawande (June 1, 2009) observes “The needs of the patient come
first-not the convenience of the doctors, not their revenues” and in this mission the entire work
force sill have weekly meetings in order to “make the service and the care better”. In addition, in
the Mayo Clinic, all the employees including the physicians receive a salary so that the “doctor’s
goal in patient care couldn’t be increasing their income” (Gawande, June 1, 2009). One of the
central challenges of our health care system is how to evolve form a process oriented and
transaction based structure susceptible to the abuses, cost overruns and inefficiencies

annunciated in the Gawande (June 1, 2009) article to a system replicating the standards of an
organization such as the Mayo Clinic that are outcome oriented, accountable, quality laden,
patient centered and effective. As Professor Ferriter (Class 6, Lecture Outline, P. 4) has stated
such a system will also be cognizant of the fact that “profit in and of itself is not inherently bad,
but should not drive the decision to deliver the best care in a competitive market”.
The Problem of the Uninsured and other Barriers that Compromise Access to Health Care
Barr (2011) informs us that in 2009, approximately “16.7 percent of Americans-50.7
million people-faced the prospect of illness or injury with no health insurance” (p. 253). This
number of people without coverage does not include those who “were without insurance for
some period of time during the year but were not uninsured for the entire year” (Barr, 2011, p.
256). A number of people change jobs and careers and are without insurance for a period of time
and many college students do not have coverage in between the period between graduation and
full or partial employment (Barr, 2011, p. 256). Many “self-employed may cancel their coverage
for a period of time and enroll with a new insurance carrier” (Barr, 2011, p. 257). The important
point being that the 16.7 percent statistic of Americans who are uninsured for the entire year
does not include those who are without insurance for a partial segment of the year.
In order to acquire a picture of who are the uninsured we must realize that “only 30.5
percent of the uninsured come from low-income families (families with income less than
$25,000)” (Barr, 2011, p. 258). Consequently, almost half of those who have no insurance “are
from families with a household income between $25,000 and $75,000 per year” (Barr, 2011, p.
258). In regards to the age of the uninsured, Barr (2011) informs us that “forty-one percent of
the uninsured are young adults 18 and 34” (p. 258) and “Fifteen percent of the uninsured are
children” (Ibid). The Hispanic population of this country comprises 32 percent of the uninsured,

the black population is 13 percent of the uninsured and the Asian/Pacific Islanders make up 5
percent of the uninsured (Barr, 2011, p. 258).
Crucially, approximately 34 percent of uninsured workers were “employed full-time
during the year” (Barr, 2011, p. 259) and 35 percent of the uninsured were employed in part-time
work. Furthermore, “only 31 percent of uninsured adults did not work” (Barr, 2011, p. 258).
Barr (2011) brings to our attention that the uninsured are not only the “poor and the
unemployed” (Barr, 2011, p. 260), rather the uninsured are mostly from “middle class, working
families” (Ibid).
The employment related aspects of the uninsured problem is rooted in the fact that low-
wage workers are not offered health insurance by their employers as often as higher-wage
workers (Barr, 2011, p. 260). In addition, many low-wage workers simply cannot afford the
health insurance coverage that is offered through their place of employment although “many
employers make coverage available” (Barr, 2011, p. 260). Furthermore, Kaiser Family
Foundation and Health Research Educational Trust (2010) estimated that in 2010 “only 44
percent of workers employed in firms with fewer than twenty-five employees were covered by
their employer’s health insurance” (as cited in Barr, 2011, p. 261) as compared with “60 percent
of employees in firms with 25 to 199 employees, and 63 percent of employees in firms with 200
or more employees” (Ibid).
Barr (2011) reminds us that when health care costs increase “many at the margins of the
health insurance market lose coverage” (p. 268). On the other hand, when the economy is
contracting, a falling GDP and rising unemployment rate interchangeably will also lead to lower
rates of employment-based insurance.

A number of other factors compromise or act as barriers in “gaining access to high
quality care” (Barr, 2011, p. 273). As an example, Braveman et al. (1994) found that in a study
of patients that suffered from acute appendicitis, those who were covered “with either Medicaid
or no insurance had approximately a 50 percent greater risk of developing a ruptured appendix
than patients with HMO coverage” (as cited in Barr, 2011, p. 274). In addition, those who were
covered with a fee-for-service plan were at a 20 percent increased risk of developing a ruptured
appendix in comparison to those on a HMO plan (as cited in Barr, 2011, p. 274). Barr (2011)
surmises that patients on HMO plan are required to choose a primary care physician (PCP) upon
joining and consequently “Having a previously identified provider can facilitate care in an urgent
situation” (p. 275). On the other hand, patients on a fee-for-service plan may delay finding a
PCP and “may end up finding care in the emergency room” (Barr, 2011, p. 275). In general,
patients on fee-for-service plans pay higher deductibles and co-payments than those on HMO
coverage that “may lead to patients delaying necessary care” (Barr, 2011, p. 275).
A further potential barrier to care is the out-of-pocket expenses that a patient may have to
pay in order to secure medical services. Newhouse et al. (1981) found “an association between
the amount a patient must pay and the frequency with which the patient will obtain care” (as
cited in Barr, 2011, p. 275). Barr (2011) concludes from this study that “when a patient is
responsible for paying for part of the cost of care, he or she is less likely to use that care. This
association applies to necessary care as well as to unnecessary care (p. 276). A related barrier
that emanates from economic/financial limitations is experienced by Medicaid patients who are
at times unable to access care due to their particular insurance coverage. Here, Asplin et al.
(2005) conducted a study of patients that suffered form “a potentially serious medical problem”
(as cited in Barr, 2011, p. 278) such as “pneumonia, sever high blood pressure” (Ibid). In this

study when trained callers (graduate students) would inform “clinics and doctors’ offices” (as
cited in Barr, 2011, p. 278) regarding their Medicaid insurance, only 34 percent of the time they
would be able to receive an appointment within a week. In contrast, callers who were trained to
state that they were covered by private insurance “were able to get an appointment for follow-up
care within one week” (as cited in Barr, 2011, p. 278).
An additional barrier to care is rooted in the racial characteristics of patients. When
comparing white and black patient who had suffered a heart attack and were seeking treatment in
a VA hospital, Peterson et al. (1994) found that “among male patients…blacks were significantly
less likely than whites to receive aggressive care involving revascularization” (as cited in Barr,
2011, p. 280). A number of other studies also have reported “racial differences in access to care”
(Barr, 2011, p. 280) and “paint a disturbing picture of continuing racial differences in access”
(Ibid). Barr (2011) also states that “For a variety of serious medical conditions and in a variety
of settings and geographic locations, black patients receive less aggressive and lower-quality
medical care than white patients with the same disease. Even after taking into account the type of
insurance” (p. 281). Barr (2011) traces some of this unequal treatment of black patients to
“subtle often unconscious bias” (p. 284) that “nonetheless can result in lower-quality care for
black and other minority patients” (Ibid).
Lozano, Connell, and Koepsell (1995) and Rosenstreich et al. have found that other
barriers such as unsanitary and unhealthy living conditions that lead some parents of children
susceptible to asthma attacks to rely “more on the emergency room for care than the doctor’s
office” (as cited in Barr, 2011, p. 285) also compromise care. In addition, “many patients in
rural areas are not as close to health care facilities” (Barr, 2011, p. 286) in comparison to those in
urban areas and those in low income neighborhoods in urban locations face a shortage and lack

of health care resources regardless of insurance. All these barriers are also elevated with issues
having to do with securing transportation, child care and taking “time off work” (Barr, 2011, p.
286).
Cultural, ethnic and linguistic barriers also compromise access to quality health care.
U.S. Department of Health and Human Services (2000, website) has mandated that “all health
care providers that receive federal funds” (Barr, 2011, p. 287) to “provide language
assistance…at no cost to each patient/customer with limited English proficiency” (as cited in
Barr, 2011, p. 287). Nevertheless, with respect to serving multi-lingual care seekers, Blendon et
al. (2007) have found “persistent problems in communication between patients and physicians or
other providers of care” (as cited in Barr, 2011, p. 287) and many educators in the medical field
and government officials have called for “better training of physicians and other health care
providers in what has come to be called cultural competence” (Barr, 2011, p. 287).
Barr (2011) has referred to “organizational complexity” (pp. 288-291) as a further barrier
to receiving quality health care. Here, Barr (2011) brings to our attention that the “managers of a
human service organization…tend to emphasize efficiency in the work of the organization” (p.
290). In this context, efficiency is measured on the basis of how many patients have been seen
or have received treatment per hour. However, Barr (2011) argues that such a dynamic will
create an inherent conflict in the health care environment where a provider is “caught between
the patient’s desire for good service and management’s emphasis on efficient work” (p. 290).
Eventually, Barr (2011) contends this “role conflict often leads to decreased worker satisfaction
and a tendency to become less sensitive to the needs of patients’ (p. 290).

The Reforms of the Affordable Care Act Intended to Expand Access, Improve Quality and
Control Cost in the Health Care System
Under the Affordable Care Act (ACA) Medicaid coverage is extended to “all citizens and
permanent residents with incomes below 133 percent of FPL/Federal Poverty Level” (Barr,
2011, p. 271). ACA also provides a tax credit for those in between 133 to 400 percent of the
FPL in order to facilitate the purchasing of coverage from “health benefit exchanges (HBEs),
operated by the state government or by a nonprofit organization” (Barr, 2011, p. 271). In
addition, under ACA, primary care physicians (PCPs) who treat Medicaid Patients will be
reimbursed “100 percent of the rate paid by the Medicare program” (Barr, 2011, p. 293) with the
hope that physicians who accept Medicare patients will also begin accepting those who are
covered under the Medicaid program. With respect to entities that have a work force of more
than 50 employees, ACA mandates that employers extend coverage to their employees or pay a
penalty of $2,000 for each staff member without coverage (Barr, 2011, p. 271) All in all,
approximately 32 million people will begin gaining access to health insurance coverage under
ACA.
ACA will “invest heavily in the expansions of nonprofit community health centers”
(Barr, 2011, p. 293). These organizations are referred to as the “federally qualified health
centers” (FQHCs) (Barr, 2011, p. 293) that will receive additional funding in order to treat
Medicaid patients and hire extra staff members. ACAs vision of FQHCs is to become a model of
what the American Academy of family Physicians, American Academy of Pediatrics, American
College of Physicians, and American Osteopathic Association (2007) call “patient-centered
medical home” (as cited in Barr, 2011, p. 293) organizations by “developing a team-based
approach to the management of chronic disease” (Ibid) that will enhance “the comprehensiveness

of care, the continuity of care, and ultimately the quality of care” (Ibid). In addition, ACA has
created a new organization “to study…new arrangement for care” (Barr, 2011, p. 164) called the
Center for Medicare and Medicaid Innovations (CMMI). One of the concentrations of CMMI is
to research strategies for “groups of physicians and hospitals to come together to form
accountable care organizations (ACOs) that will be responsible for “planning, coordinating, and
providing the care of a group of Medicare beneficiaries” (Barr, 2011, p. 164) ACA has also
mandated that care providers must collect data “on race, ethnicity, primary language, disability
status, and similar demographic characteristics of the patients cared for” (Barr, 2011, p. 293) in
order to evaluate “racial and ethnic disparities in access to care” (Ibid).
In regards to insurers, under ACA, “companies are prohibited from considering pre-
existing conditions to deny coverage to an applicant” (Barr, 2011, p. 212). In addition, those
who apply for insurance must be charged a similar premium “regardless of pre-existing
conditions” (Barr, 2011, p. 212). Although some exceptions are made in rate differentiation
having to do with age, tobacco use, “participation in a health promotion program” (Barr, 2011, p.
212), etc. Furthermore, ACA does not allow “caps on the amount an insurance plan will pay for
care, either per year or for a patient’s lifetime” (Barr, 2011, p. 212).
In order to address the issue of health care cost escalation and particularly the rising cost
of Medicare, ACA has created the Independent Payment Advisory Board (IPAB) that is
composed of fifteen members appointed by the president and confirmed by the Senate. IPAB
will appraise/forecast the rate of growth of Medicare spending on a per beneficiary basis and
compare that increase with the target rate of growth for this federal program that will be
estimated by ACA. The target rate of growth set by the ACA for Medicare spending is based on
the rate of growth of the consumer price index (CPI) and the rate of growth of the GDP. In the

event that the rate of growth of Medicare spending is projected to “exceed the target amount,
IPAB is charged with the responsibility of coming up with a plan to rein in spending to meet the
target amount” (Barr, 2011, p. 164)). Nevertheless, IPAB’s recommendations must not include
any measures that may “ration health care, raise revenue [that is, taxes] or Medicare beneficiary
premiums…or increase Medicare beneficiary cost sharing (including deductibles, coinsurance
and copayments), or otherwise restrict benefits or modify eligibility criteria” (Barr, 2011, p.
164).
Conclusion
Our process oriented and transaction based system of health care is in a state of cost
escalation crisis. At these rates of ever increasing expenditures other major segments of our
economy will suffer and the public sector will be unable to support the fiscal viability of the
health care system. Nevertheless, in spite of this massive investment of financial resources
major issues remain concerned with the creation of an effective, accountable, patient centered,
quality laden and outcome oriented system of delivering health care. One of the primary goals of
the Affordable Care Act (ACA) is to offer health insurance protection to more than 50 million
Americans who possessed no coverage in the past. Through the creation of a number of
organizations and financial incentives in addition to the adoption of several initiatives promoting
patient satisfaction, provider team work and increased communication among care givers ACA
hopes to improve quality, expand access and effectively manage the growth of health
expenditures.

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