Major Characteristics of the U.S. Health Care System Part 1

welcome to the US healthcare system lecture series by Monica wah he based on essentials of the US healthcare system by she and Singh these first two lectures are on chapter one on major characteristics of the US healthcare system they are split into two different lectures the first lecture covers the different subsystems and how they interrelate in the US healthcare system the second lecture covers how the US healthcare system is different from other healthcare systems of similar countries in the first lecture which we will do now we will look at all the different subsystems in the US healthcare system and how they fit together or how they don't as a matter of fact if you can find a way to make them fit together that would be chapter 1 major characteristics of the US healthcare system first half learning objectives at the end of this lecture students should be able to name three subsystems of the US healthcare delivery system describe at least one way healthcare delivery is financed and define what an integrated delivery system is introduction healthcare delivery and health services delivery have slightly different meanings but both terms to refer to major components of the system they refer to processes that enable people to get health care and the provision of healthcare services did you know that the primary objectives of any healthcare delivery system are to enable all citizens to receive healthcare services whenever needed or universal access and to deliver services that are cost-effective and meet certain pre established standards of quality if you grew up in the United States these two objectives may come as a complete surprise to you the u.s. is different from other systems and other developed countries most developed countries have national health insurance programs and these are referred to as universal access these take care of the one of those two primary objectives I just stated in these other countries that system is run by the government and provides routine and basic health care by contrast the u.s. system does not currently have a national health insurance program that provides universal access all Americans are not entitled to routine and basic health care services however we are entitled to a public defender what if you grew up in the United States and went on vacation to another country and God hurt this happened to somebody it happened to a young man who went to the Bahamas he put his hand through a window he got all cut up and because I was standing at the bus stop I helped him as we were in the bus which was actually a van driven by a bus driver I had met who had given me his phone number while we were talking the young man looked at me with his arm bleeding and said how am I going to pay for this and I reminded him that the Bahamas were not part of the United States and so therefore it was likely he would be able to afford his care he was happy to learn when he arrived at the emergency room that everybody got charged the same amount $45 the textbook on which these lectures are based was new as of July 2012 and so the Affordable Care Act is mentioned however when these lectures were recorded in May of 2013 a lot of updates had occurred the textbook approaches dealing with talking about the US healthcare system by using a systems framework I will discuss this at the end of the next lecture over the second half of chapter one although we say it is a health care system it's not really a system and that the components are loosely or sometimes not really connected and there's a lot of components what those components actually are and how they are loosely are more tightly connected and also which ones are connected to which ones are the subject of this course subsystems in the US healthcare system there are many many many system components there are healthcare plans there are rehab therapists there are dental schools they are osteopathic schools there's private health insurance medicated Medicare there's too many to mention in the large US health care delivery system there are many subsystems six are highlighted in the textbook these include managed care the military special populations integrated delivery long-term care delivery and the public health system these systems are not independent these subsystems interact however it would be impossible to write the book and explain the u.s. health care delivery system if we didn't separate some of them out and talk about them separately so that's what we're going to do here the first of these subsystems we will talk about is managed care the philosophy behind managed care is about integration determining price and managing lis utilization managed care is a system health care delivery that seeks to achieve efficiency by integrating the basic functions of health care delivery it employs mechanisms to control or manage the utilization of medical services and it also determines the price at which the services are purchased and therefore how much providers get paid remember managed care itself is just a philosophy it's just a way of approaching trying to deliver healthcare managed care organizations on the other hand are organizations that actually try to do that managed care is the most dominant health care delivery subsystem in the u.s. it's abbreviated MCO for managed care organization and these are available actually to most Americans the primary finance ears of these organizations are employers and the government so the MCO ends up acting a lot like an insurance company employers in the government contract with them to offer a selected health plan to employees of it's an employer or to Medicare and Medicaid beneficiaries if we are talking about government insurance financing and managed care organizations is quite complicated this is simply because they want to set it up such that they manage utilization efficiently they want to make sure to put all the right cost controls on utilization and on payment so everything works out so everybody gets optimal care one approach to doing that is to use capitation capitation means for one set fee per member per month in other words for a certain amount of money per person in the MCO plan per month the MCO promises deliver all needed health care services whether the enrollee has a good month and doesn't need any services or has a bad month and needs a lot that's one approach another approach is discounted fees and there are different ways of doing this insurance in the case of the MCO they assume the risk and acts as an insurance carrier so if you have a catastrophic accident the MCO will take care of you also in terms of delivery the MCO arranges to provide health care services to the enrollees either directly or through contracts so the MCO makes sure that everybody who is enrolled in their plans can have services however they implement various types of control to manage that utilization and that also manages cost also payment when it comes to paying the MCO acts as the payor the MCO disperses the payments to the providers based on capitation or discounted fee arrangements many terms are used in MCO speak so we need to make sure we understand them and then Rolly refers to a member of the health plan that the MCO offers and of course the health plan then is that contractual arrangement between the MCO and the enrollee which involves providing access to health care includes a list of the services the enrollee can expect to get as part of being on the health plan also there are selected providers the enrollee can go to often the MCO uses primary care or general practitioners PCPs as gatekeepers to specially providers you need to ask yourself why all this control over providers and health services why does the MCO want to do that why is it in its best interests in 2009 many Americans were on different kinds of MCO plans which we will talk about as you can see the yellow bar represents the number of Americans in millions who are on an HMO plan the red bar represents a number of people who were on the PPO plan as you can see those are the two most popular plans the POS plan is not very popular probably because that's not a very good abbreviation the next plan the HDHP turned out to be not very popular although it was a fad in the early 2000s let's examine how managed care integrates functions and it's care starts by operating like an insurance this insurance creates contracts with providers to deliver health care and by that way enrollees in the MCS OHS insurance now have access to certain providers the insurance also pays those providers that's wonderful I would love it if my car insurance limited what gas stations I could go to because it would be wonderful they'd pay for my gas of course my car insurance would probably be astronomical sound familiar let's move on those providers end up in a way financing the insurance because every patient that comes to them has to go through being served by this contract and so if the patient doesn't have the right chance they won't be served right and so all of the marketing of getting patients to sign up for insurance –is that then take the providers is done by the providers and so they are able to finance back the insurance the insurance sets up risk underwriting capitation or discounts and utilization controls the purpose of this is to keep everybody honest since all this money is being passed around first risk underwriting mitigates the situation between the financing and the insurance in other words the risk underwriting tries to run interference there so that risk is managed properly the insurances won't want to take on too much risk but it has to meet its obligations if it has taken on risk so this financing and risk underwriting is a balancing act that the insurance does the pterence is also very cap careful to use capitation or discounts as described in earlier slides that way they don't have to pay that much and they can make sure that the enrollees do not overuse the health care provided by the providers one thing that's very interesting about this diagram is there are no patients in it where are the patients I don't see them in fact do you really understand this diagram it might be a little bit easier to simply give you an example here is an example of Hennepin health Minneapolis Minnesota where I grew up is located in Hennepin County and Hannah mental health is a health plan administered by an MCO called metropolitan health plan this MCO has a list of selected providers to choose from and provides a list of covered care and pharmacy formulary and I used to work there it was one of my favorite jobs next we leave managed care and move on to the military sub system in the military sub systems two main groups are served active service members and veterans active service members are covered by the TRICARE system when they leave active service they are given a choice between joining the VA system or just going into a civilian system those I choose the VA system then remain in it so basically the problems that are created during the TRICARE system when a person may be serving active duty and may even be at war those problems get handed off often to the VA system where they pile up the characteristics of the military sub system are interesting there are three main ones on one hand they combine medical care with Public Health and that bodes well for prevention there's high quality of care in the military social system but there is little choice and there's a mixture of uniformed and civilian providers together this mixture provides good prevention and treatment TRICARE is where active service members get their medical care it is free of charge to all of them unlike the rest of us they have no co-pays and no deductibles which seems fair doesn't it the following are enrolled and TRICARE you have the army the Navy the Air Force and the Coast Guard but certain other governmental entities TRICARE includes access to care at military treatment facilities or MTFs which are on location and bases as well as treatment in regular hospitals in the community like newton-wellesley Hospital TRICARE is financed by the military the VA healthcare system is available to veterans people who used to be in TRICARE the VA health care system focuses more on hospital mental health and long term care given its population it's one of the largest and oldest health systems in the world and it provides medical care education training and research and all kinds of support for the Department of Defense Medical Care System the VA system is organized into 23 visits a vision is a veteran's integrated service network spelled VISN and pronounced visit the VA budgets over forty million dollars per year and employs over 280,000 people therefore if you want a job you probably should go over there because they have 40 million dollars as you can see at the bottom of the slide there's a screenshot from our local vision impossible in the United States how we address these problems of access to care in these groups of people that we care about but don't have much means is that we set up a governmental agency so if you'll notice at the bottom of the slide you will see that we have the Department of Health and Human Services that's that big governmental agency in the u.s. that takes care of all this stuff inside them is hersa hersa is the health resources service administration that's another agency in the US government that's in charge of health stuff underneath them is the agency that's in charge of all these special and vulnerable populations that get kicked to the curb when they do not have insurance and that is called the bureau of primary health care you may not have heard of it but it's been around for over 30 years and it has been providing primary and preventive health services to all these populations on the slide are you homeless are you stuck in public housing did you find yourself a single parent of a school-aged child are you suddenly uninsured did you lose your job in the recession maybe you're part of one of these groups now that is being served by the Bureau of primary health care in 2010 the bphc supported over a thousand Community Health Organization's those Community Health Organization's served almost 20 million people well I just checked the US census on the census population clock and there are about 315 million people in the United States right now so in 2010 the BPHC served about 6 percent of them so 6 percent at least of the United States did not have health insurance and went to the BPHC although that kind of doesn't make sense because if you see way over on the right side of the slide only 38 percent of those who were served by the BPHC were uninsured so why is it that people who actually had insurance theoretically had access to care in 2010 but still went to the BPHC there are only about 8,000 service sites and when you think about the entire United States there are probably a lot more service sites for other places the BPHC was handling 77 million visits in 2010 that's a lot of visits 93 percent of the people who came to these community health centers in 2010 we're making less than 200% of the poverty level that is very poor yet a lot of them had insurance and couldn't use it hmm that really doesn't look very good for the richest country in the world does it to add to the complexity some people actually do have health insurance but it's public health insurance a lot of those people who went to those BPHC sites probably already had public health insurance what is public health insurance in the United States that's health insurance that's supported by the government we have two main kinds the first kind on the left side of the slide is Medicare Medicare is one of the largest sources public health insurance and it covers elders disabled and those with end-stage renal disease that's a group of people that's very important it certainly isn't everyone so over on the right side is Medicaid this is the third largest source of health insurance in the US and it covers 16 percent of the population these people are not the elders who are covered in Medicare but they are low income adults children's and elders and disabled who need additional care according to Medicare or simply do not qualify yet for Medicare also Medicaid has been expanded over the years to make sure that low-income children especially are covered and this is through the children's health insurance plan which is part of Medicaid it's called CHIP and we will learn more about this in subsequent lectures back on the left side of the slide in Medicare remember those governmental agencies remember that big one on top of the BPHC called DHHS well DHHS has another agency called CMS or the Centers of Medicare and Medicaid Services that CMS runs Medicare and Medicaid and Medicare the one for the elder is disabled and those with end-stage renal disease covers hospital care post discharge nursing care hospice outpatient and prescription drugs as you will see as you go through this book there are many differences and similarities between Medicare and Medicaid one of the important similarities to highlight here is that both of them are public health insurance both of them are ways that the u.s. tries to cover special and vulnerable populations with insurance so that they can have access but as you can see by our last slide it doesn't always work you may be an American who has used or needs to use safety net providers if you are not you may not understand how hard it is to actually do that first of all these safety net providers are not secure even though there are those community health centers different programs start and stop depending upon availability provider types may not be available when you need them and other providers may be available that you don't need for example I have a friend who only responds to acupuncture she can go to community acupuncture when those programs are available however when they go away she is stuck taking pain drugs which kill her some individuals forgo care and seek hospital emergency services if they are nearby simply because the provider type and availability varied such that they didn't exist anymore and there was no safety net so there was a whole and falling through that hole they were caught in the emergency room at the emergency room the providers were pressured to see the number rising of uninsured there are laws that make it so if you go to the emergency room in the United States you have to be seen but there are other pressures in the United States recently with the recession and a lot of people being unemployed and therefore losing their health insurance and not being able to see the doctor providers in the community feel bad for these people they care about the community so they have worked very hard to put together community funds to try to serve the community however at some level these providers are businesses they simply can't give away free care and Medicaid the primary financial source for the safety net does not allow much cost shift imagine you budget $100 a month to repair your car however your car doesn't need a wreck to be repaired very often so after the first few months of the year you find that you have an emergency your child is ill you need to use that three or four hundred dollars that you had saved for car repair for your child's illness cost-shifting in a family is not hard you simply reallocate that cost however in Medicaid if a certain amount has been budgeted for preventive care such as mammograms and the certain amount has been budgeted for curative care such as chemotherapy sometimes it is hard to move those things back and forth between the buckets what are the implications of this we can see a real-life illustration of the trouble with safety net providers when we look at komen for the Cure coming for the Cure is an important organization that is known internationally it has a high reputation for fundraising for breast cancer prevention treatment and research many women have been helped because they have gotten mammograms or treatment that was funded through work that was done by komen for the Cure however in February 2012 there was a Public Relation snafu at komen for the Cure first they said that they were not going to forward funds to Planned Parenthood which was one of the places the delivered services then they changed their mind and said that they would however by then they had turned off a lot of their donors for example ins the Seattle area with the puja towned komen for the Cure the komen there reported losing seven hundred and fifty thousand dollars in donations that would have gone to mammograms for disadvantaged women so if you were a woman in hujj its sound and you are getting your yearly mammograms supported through komen then last year you probably didn't get a mammogram this is what happens in the richest country in the world we have to rely on outside nongovernmental organizations to get all our women mammograms to prevent breast cancer that's where our ethics life now we will move on to the next US healthcare subsystem integrated delivery system in the integrative delivery systems concept you will see the objective is to have one healthcare organization deliver a range of services this new IDs approach is the hallmark of the US healthcare industry basically rather than having the government control all of our healthcare in one big organization run by the government private organizations and public organizations are coming together into these large integrated delivery systems in reality this is a network of organizations that provide or range to provide a coordinated continuum of services to define population so in other words integrated delivery systems is an example of our little subsystems trying to come together around particular populations I gave some examples of the military populations and we just heard some examples of special populations so these define populations are are targeted by the integrated delivery system and then the subsystems are set up around it to try to make sure those define populations get care and so that integrated delivery system that set up around that defined population is held clinically and fiscally accountable for the outcomes for their health statuses isn't that a lot easier than just having the government take care of its entire population so the IDS involves various forms of ownership and links among hospitals physicians and insurers isn't it more important to have a million people at the table than just have the government run it because actually if you don't have all these people involved they won't have jobs and there's no place for all that extra money to go I will give you an example of an IDs with which I'm familiar Allina health systems in Minnesota in the 1990s Allina health systems started to acquire a lot of different health care entities in Minnesota maybe that sounds greedy but to be a lot of them were struggling Minnesota is a big place and there were a lot of rural clinics that really needed the support Allina went around and bought up a lot of these and so therefore now there are many facilities throughout urban and rural Minnesota that are part of a line of health systems Allina acquired Abbott Northwestern Hospital downtown Minneapolis and also has hospitals in rural areas so these network of hospitals and clinics offer all type of care including mental health which can be very hard to get to in the rural area think about the advantages of being a large organization that offer all different types of healthcare although I may sound cynical about a lot of these IDS's one good thing that Allina brought to Minnesota was a way of making sure people in the rural area did have access to all the different kinds of things that you can get at the various hospitals such as different diagnostic techniques laboratory techniques surgical techniques all of that became available however you still have to drive long-term care consists of medical and non-medical care that is provided to individuals who are chronically ill or who have a disability normally when we think of long term care it calls to mind older people and skilled nursing facilities however there are plenty of Americans who have to live in long-term care as far as the regular adult lives such as certain autistic adults who cannot live on their own or particular older adults who get Alzheimer's and needs to live in special Alzheimer's treatment units these are just two examples but there are other examples of long-term care that adults use that are not skilled for nursing facilities this is why by 2020 more than 12 million Americans are projected to require one of these long-term care settings given the previous subsystem I talked about IDs I want you to think about this question how are LTC and IDs connected right they're not connected anybody who has had a loved one in a skilled nursing facility who is starting to fail in their health knows how disconnected long-term care is from the integrated delivery system in that situation often the elder gets pinballed back and forth between being admitted to a hospital and being sent back to the skilled nursing facility everyone gets angry in this situation the skilled nursing facility gets angry that the patient is failing and that they do not have the ability the way the hospital does to take care of those advanced medical needs the hospital gets angry because when they receive the patient they have a different opinion they feel like the patient could have been managed at the skilled nursing facility the family gets angry that the patient is being transferred back and forth because it's hard on the patient often they get confused or hurt or some sort of care problem occurs in that transferring back and forth the patient tends to get angry because well once you insurances get angry because they don't like to pay for this and if the taxpayer is paying for Medicare or Medicaid for this person who keeps getting transferred back and forth that person gets angry too so this is a good way of making everyone angry and that is keeping the LTC disconnected from the IDS finally we move on to my favorite subsystem public health there are many functions of public health you will see on the slide in the next what public health is supposed to do in fact I would say in the US public health does a pretty good job of doing all these things on a dime that's right a dime you will see in later lectures how much we fund public health in the United States which is almost nothing you will see that the military really funds it and that other countries with national health care funded because they have figured out that it is cost-effective it is cheaper to prevent cancer than to treat it it is cheaper to prevent infection disease than treated is cheaper to prevent mental health problems than to treat them that is a secret known by other countries but we don't seem to understand it here so we under fund our public health and try to make it do all these things on the next two slides and then when it doesn't we give all the money to the healthcare system to try and cure what public health in perfect here's what public health is supposed to be doing right now is trying to do with almost no budget and would love to do more of if you would just give them some more money the first one is monitoring the health status to identify and solve community health problems one good way to avoid having a reputation of having a lot of foodborne illness is to simply not study it so therefore places that appear to have very little foodborne illness generally don't have departments of Public Health or studying it if you monitor the health status of your community you will find bad news and so one way we avoid doing that is by just not funding those efforts Public Health also diagnosed and investigates health problems and hazards so for example I heard a lecture from somebody who investigated whether factory farming in North Carolina was contributing to asthma in the population that person was attacked by industry a lot of my colleagues are attacked by industry all you have to do is read about Big Tobacco and what they did to public health and epidemiologists and you will see that it is kind of anti industry to do this to diagnose and investigate problems and hazards in the United States so we try to avoid that public health also informs and educates people about health problems and hazards of course nobody is very angry about health problems and hazards which means we haven't been doing our job if you've been listening you should be angry however not everybody is listening because not everybody can get the message we also are supposed to be mobilizing our community solve health problems however it's pretty hard to mobilize your community if you don't have any money and it's pretty hard to do so if you have a lot of confusion in your public health field about what you're supposed to be doing because remember that's only one thing on this slide in public health we try to develop policies to support individual and community health efforts however there's only so many policies we can develop and there's only so much we can do with those policies if you don't give us any money there are more functions of public health and they can barely get done did you know that in that the public health department in your state make sure that the providers practicing health care in your state are licensed to do so public health enforces these laws and regulations in addition to doing everything on the last slide public health is focused on providing people access to necessary care so public health tries to help the BPHC and other efforts to covering people who are uninsured who otherwise have barriers to access public call says to train a lot of people public health trained me it's trying to make it a competent and professional health workforce of course if you don't give it much money and you don't really care about it it's not going to do a good job of that so I can't say that all my colleagues are as good as I am finally public health has to look at the effectiveness of things and the research behind things we have to look at programs we put in place to see if they actually work and we have to look do research to try and find solutions with all the other stuff we have to do and we have no money we spend all this time competing for grants from the government to try and do these things we don't get paid for competing for grants and half the time we don't get them so therefore if you don't want to give public health a lot of money the good news is you won't find out a lot of bad news but the bad news is you'll still have the bad news you just won't know about it here are two examples of public health in the United States the first is an example of our flu vaccine system which is run by the Center for Disease Control or CDC throughout the year the CDC monitors the different flu strains to figure out which ones are becoming popular it does research on these strains and also does research on who in the u.s. we'll need the flu vaccine once it's made it also arranges for the vaccine to be made and for people to have access to the vaccine and develops informational campaigns and educational campaigns for providers and patients this is how we all managed to have access to this vaccine every year a different effort which is totally different has to do with the behavioral risk factor surveillance array this is a national survey in the u.s. that is designed to try and figure out the rate of risk factors in the u.s. that are behavioral risk factors such as smoking if smoking levels rise in the u.s. how would we know without the survey so this monitors these risk factors and looks at diagnoses and investigates health problems such as asking everybody if they have obese children to figure out if that's going on visits from the BRFSS are available online from the government and so if you're a researcher you can use them to do research a lot of researchers use them and they publish and this informs and educates the public health effort in the United States about what to do about these things this is the conclusion over the first half of chapter one as you learned through this lecture there is not one big system there are several subsystems and they are integrated in kind of a loose fashion and sometimes they're not even integrated however managed care organizations are jumping in to try and help us integrate they are now the dominant way in which Americans access healthcare providers and if you aren't lucky enough to be part of one of those safety net provisions are put in place for those who do not have access to health care by way of insurance through a managed care organization now we are at the end of this lecture and you should be able to name three subsystems of the u.s. healthcare delivery system describe at least one way health care delivery is financed in the US and define what an integrated delivery system is I hope you enjoyed the first lecture over the first half of chapter one I hope you now understand the different subsystems in the US healthcare system and how they fit together or they don't fit together into an integrated or not so integrated delivery system in our next lecture over the last half of chapter 1 we will see how different we are from other countries who are also trying to make these things fit together but they fit a little


  1. Hi Monika, your lecture are great and has helped me in my Healthcare Administration major in college. Please contact me for more career choices and education , jobs etc. Thank you.

  2. Active duty members get free healthcare but not their dependents and not retirees. TRICARE is not free though it is cheap in comparison to other insurance. I have TRICARE and retired from the military almost 15 years ago. A premium is paid monthly, quarterly, or annually for individual plans or family plans. If seeking care away from the military medical treatment facility (which most retirees are recommended to primary care providers off-post, but within the network) there is a co-payment and I will never complain about my $12 copay. The co-pay is much higher (or TRICARE may not pay at all) if the member seeks care from a provider outside of the network and without a referral from their authorized primary care provider. Retirees can still seek treatment at the VA for conditions related to the service in the military without losing their TRICARE benefits. They can do both. Of course when I joined the military many years ago, I was promised free healthcare for life…

  3. It's amazing that Americans can only get great healthcare if they're in the military or paying through they're noses. what a scam

  4. I saw your course on it was great. I am following you since I got into Healthcare administration program. Your course is great i hope to see something on medicare-analytics.

  5. Much better and succinct than my prof's lecture. You should come to UMN-SPH!!!

  6. obama care is a tax controlled by the i.r.s. they had to make it a tax, cause our founding fathers made sure that government could not get involved with citizens health care. this ACA, obamacare, or whatever you want to call it, is socialism. no government should be allowed to pick what treatment you get or what docters you get to see. health care should be universally free for all. not great care if you have money, and less care if you are just working class, etc.PERIOD.
    And is this WELFARE or is this a FAREWELL. this system was designed exactly this way, broken. far to many hurting and hungry people in this world to ever think any of these programs or scams going on, ever worked or ever will work. since obamacare started i cant get medical attention, perscriptions filled, nothing! now i am hearing the i.r.s. will be starting to charge 4,400 off of your taxes, if you meat a certain requirement, starting 2015, and i think i do". but i dont know how true this is, yet.
    All in all most health care, world wide really sucks. unless your rich, and thats a fact. good day friend.

  7. Well done.

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