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Changing the U.S. Health Care System
Y

Changing the U.S.

Health Care System
Key Issues in Health Services,
Policy, and Management
Second Edition

Ronald M. Andersen, Thomas H. Rice,

Gerald F. Kominski

Foreword by Abdelmonem A. Afifi

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Library of Congress Cataloging-in-Publication Data

Changing the U.S. health care system: key issues in health services, policy, and management/[edited by]
Ronald M. Andersen, Thomas H. Rice, Gerald F. Kominski.—2nd ed.
p. cm. — ( Jossey-Bass health series)
Includes bibliographical references and index.
ISBN 0-7879-5404-7 (hbk. : alk.paper)
1. Health care reform—United States. 2. Medical policy—United States. 3. Medical care—United
States. I. Andersen, Ronald. II. Rice, Thomas H. III. Kominski, Gerald F. IV. Series.

RA395.A3 C478 2001

362.1’0973—dc21 00-050675

SECOND EDITION
HB Printing 10 9 8 7 6 5 4 3 2 1
The Jossey-Bass Health Series
To the late Samuel J. Tibbitts and to Audrey Tibbitts, whose
generosity made this work possible

And to our departed friend and colleague Milton F. Roemer,

contributor to the first edition of this work and
preeminent scholar of health services systems
 CONTENTS

Figures and Tables xiii

Foreword xvii
Abdelmonem A. Afifi

Acknowledgments xxi
The Authors xxiii
Introduction and Overview xxxiii
Ronald M. Andersen, Thomas H. Rice, Gerald F. Kominski

PART ONE: ACCESS TO HEALTH CARE 1

1 Improving Access to Care in America: Individual and

Contextual Indicators 3
Ronald M. Andersen, Pamela L. Davidson

2 Public Policies to Extend Health Care Coverage 31

E. Richard Brown

ix
x Contents

PART TWO: COSTS OF HEALTH CARE 59

3 Measuring Health Care Costs and Trends 61

Thomas H. Rice

4 Containing Health Care Costs 82

Thomas H. Rice, Gerald F. Kominski

5 Pharmaceutical Prices and Expenditures 100

Stuart O. Schweitzer, William S. Comanor

PART THREE: QUALITY OF HEALTH CARE 125

6 Measuring Outcomes and Health-Related Quality of Life 127

Patricia A. Ganz, Mark S. Litwin

7 Evaluating the Quality of Care 150

Elizabeth A. McGlynn, Robert H. Brook

8 Public Release of Information on Quality 183

Elizabeth A. McGlynn, John L. Adams

PART FOUR: SPECIAL POPULATIONS 203

9 Long-Term Care and the Elderly Population 205

Steven P. Wallace, Emily K. Abel, Pamela Stefanowicz, Nadereh Pourat

10 AIDS in the Twenty-First Century: Challenges for

Health Services and Public Health 224
David M. Mosen, Denise R. Globe, William E. Cunningham

11 Health Reform for Children and Families 261

Neal Halfon, Moira Inkelas, David L. Wood, Mark A. Schuster

12 Mental Health Services and Policy Issues 291

Susan L. Ettner
 Contents xi

13 Women’s Health: Key Issues in Access to Insurance Coverage

and to Services Among Nonelderly Women 320
Roberta Wyn, Beatriz M. Solís

14 Homeless Persons 332

Lillian Gelberg, Lisa Arangua

PART FIVE: DIRECTIONS FOR CHANGE 387

15 Managed Care and the Growth of Competition 389

Gerald F. Kominski, Glenn Melnick

16 Medicare Reform 406

Jeanne T. Black, Gerald F. Kominski

17 The Role of Prevention 436

Charles Lewis

18 Public Health and Personal Health Services 457

Lester Breslow, Jonathan E. Fielding

19 The Continuing Issue of Medical Malpractice Liability 470

Ruth Roemer

20 Ethical Issues in Public Health and Health Services 503

Pauline Vaillancourt Rosenau, Ruth Roemer

Name Index 537

Subject Index 539
 FIGURES AND TABLES

Figures
1.1 A Behavioral Model of Health Services Use Including Contextual
and Individual Characteristics 5
1.2 The Policy Purposes of Access Measures 11
2.1 Health Insurance Coverage of the Nonelderly Population,
United States, 1998 33
2.2 Family Work Status of Uninsured Nonelderly Persons,
United States, 1998 34
2.3 Family Income of Uninsured Nonelderly Persons,
United States, 1998 34
3.1 Distinction Between Accounting and Economic Profits 63
5.1 Share of National Health Expenditures by Type, 1960–1997 102
5.2 Annual Percent Change in CPI from Previous Year, 1970–1998 103
6.1 Conceptualization of HRQL 130
6.2 Framework for Measuring Health Status 138
7.1 Distribution of Research Articles Reviewed, by Strength of
Research Design 153
7.2 Conceptual Framework for Quality Assessment 155

xiii
xiv Figures and Tables

7.3 Proportion of Procedures Judged to Be Either Clinically Inappropriate or

of Uncertain Value; Summary of Selected Studies 166
11.1 How Risk-Reduction and Health-Promotion Strategies Influence Health
Development 282
19.1 Medical Injuries, Negligent Conduct, and Malpractice Claims 484

Tables

1.1 Health Insurance Coverage for Persons Under Sixty-Five, by Age, Race
and Ethnicity, and Poverty Level 16
1.2 Personal Health Care Use by Income 17
1.3 Personal Health Care Use by Race and Ethnicity 20
2.1 Percentage of Nonelderly Population Who Are Uninsured, Ages 0–64,
United States, 1977, 1987, and 1997 32
3.1 Consumer Price Index (CPI) for All Items: United States,
Selected Years, 1976–1998 69
3.2 Annual Change in CPI for All Items: United States,
Selected Years, 1975–1998 70
3.3 CPI for All Items and for Medical Care Components: United States,
Selected Years, 1975–1998 71
3.4 Average Annual Change in CPI for All Items and for Medical Care
Components: United States, Selected Years, 1975–1993 73
3.5 Personal Health Care Expenditures, by Type of Expenditure and Selected
Sources of Payment, 1997 75
3.6 Annual Percentage Change in National Health Expenditures, by Source
of Funds: United States, Selected Years, 1975–1993 76
3.7 Total Health Expenditures as a Percentage of Gross Domestic Product:
Selected Countries and Years, 1990–1997 78
4.1 Hospital Payment-to-Cost Ratios, 1985–1999 88
5.1 Prices for New Pharmaceuticals Relative to Those of
Existing Drugs 112
6.1 Conceptual Framework for the Medical Outcomes Study 139
7.1 Example of Quality Measurement Priorities 154
8.1 Illustration of Public Information Released by Entity 185
8.2 Listing of the HEDIS 2000 Effectiveness of Care Measures 187
10.1 Cumulative AIDS Cases in the United States,
Through December 1998 227
Figures and Tables xv

10.2 Change in Rate of Death of Persons with AIDS in the United States,
1992 through 1997 228
11.1 Public Programs in Child Health Service and Health
Need Domains 268
13.1 Health Insurance Coverage by Gender, Ages 18–64,
United States, 1998 321
13.2 Health Insurance Coverage by Ethnicity, Women Ages 18–64,
United States, 1998 323
17.1 Prevalence, Sensitivity, and Specificity in Hypothetical Test Results 440
18.1 Actual Causes of Death in the United States, 1990 458
18.2 Trends in Hospitals and Beds, by Ownership, 1975–1997 462
FOREWORD

he book you hold in your hand is a gift. With his wife, Audrey, the late Samuel
T J. Tibbitts gave a generous gift to the Department of Health Services in
the UCLA School of Public Health to commission a study of key issues in health
policy and management challenging the American health care system. The lead-
ership, scholarship, and charity that Sam exhibited in making this gift typified his
life in a number of ways.
Sam changed the health care system in California and the nation, perhaps in
more ways than anyone else of his generation. After receiving a B.S. in public health
from the University of California, Los Angeles, in 1949 and an M.S. in public
health and hospital administration from the University of California, Berkeley, in
1950, he pioneered the development of integrated health care delivery and financing
systems, a career course that culminated in the 1988 creation of the nonprofit
UniHealth America, where he was chairman of the board until his death in 1994.
Along the way, Sam founded and chaired both PacifiCare Health Systems,
one of the first major health maintenance organizations, and American Health
Care Systems, a group of thirty-two hospital systems across the country that or-
ganized the nation’s first preferred provider system, PPO Alliance. Both a leader
and a scholar, he served as chairman of the board of trustees of the American
Hospital Association and published more than one hundred articles. Sensing the
need to establish a corporate conscience in a changing health care environment,
he was founding chairman of the Guiding Principles for Hospitals, the first pro-
gram to delineate ethical and quality principles in the industry.

xvii
xviii Foreword

Even while entering the twilight of a long and storied career, his concern for
the future of health care remained. For that reason, he invested in the school that
had nurtured him and asked the faculty to address afresh the crucial issues of cost,
quality, and access to health care that now challenge the future of the United States.
The chapter authors in this volume, commissioned to guide us into an un-
certain future, are gifted scholars. As former dean and continuing professor of bio-
statistics for the UCLA School of Public Health, I have known them well and
followed their research closely. Also, as a public health educator, I am keenly aware
of the multidisciplinary nature of our field. To understand public health as a
whole, one must have a basic level of knowledge of each of its core disciplines.1
But to gain a deeper understanding of public health in the United States, one
needs a firm grasp of the issues facing the country in health care policy and man-
agement. Because of the complexity of these issues, discussions have been scat-
tered in a multitude of references. To achieve Sam Tibbitts’s vision, the editors
sought to gather, in a single book, “a comprehensive, yet readable” account of
these issues. I believe that they succeeded remarkably in the first edition, published
in 1996, and in their efforts to update those issues in this new edition.
This book also accomplishes its initial self-prescribed task: “to examine where
we are in achieving our country’s health goals” following the defeat of President
Clinton’s comprehensive health care reform by the Congress in 1994—now up-
dated to the new millennium with the second edition.
As anticipated by Sam, the book begins with addressing three key components
of health care policy: improving access, controlling costs, and ensuring quality. As
noted in Chapter Two, access to health care has always been a focus in the health
care reform debate, and concludes that “the United States cannot escape the need
for fundamental reforms that will extend coverage to its entire population.” Cost,
an element in the trade-off against adequate access and better quality, not only is
the center of the ensuing debate in Congress but will continue to be a focus in
health care policy making for the foreseeable future. Chapter Four explores vari-
ous ways of containing health care costs and emphasizes the need for better data
in order to make sensible policy decisions about alternative types of health care
reform. Chapter Six examines the measurement of health outcomes and health-
related quality of life (HRQL), concluding that we need “careful and appropriate
inclusion of HRQL outcomes in traditional health services.”
A number of subsequent chapters are devoted to segments of the population
with special needs for health care. Subjects include long-term care for the elderly,
providing services for the growing HIV/AIDS community, multidisciplinary
coordination of the fragmented child health care system, improving access to pri-
mary health care for low income women, and increasing services to the growing
homeless population. Various authors advance proposals that might improve the
prognosis for these vulnerable populations.
 Foreword xix

The last portion of the volume contains discussions of the fundamental chal-
lenges facing health care researchers, policy makers, and managers at the turn
of the century. A very basic challenge addressed in this area is to determine the
appropriate role of competitive markets versus the regulatory role of government.
Based on the experience of the managed care market in California, it was noted
that increased price competition leads to reduced access for the uninsured. De-
spite some instances in which governmental regulation appeared to be successful
in controlling expenditures and improving or maintaining access, no conclusion
was drawn as to which approach should be adopted. Rather, we are presented with
several research questions that require further investigation—an indication of the
high degree of complexity of this topic.
The last five chapters proceed to deal with a variety of issues, starting with
Medicare reform, from the role of preventive health care to the role of public
health agencies in delivering personal health services, and from the continuing
issue of medical malpractice liability to the ethics of public health and health care
services. The collective message sent to the reader is clear: the time for health
care reform is ripe, and effective research in this area is urgently needed to support
this fundamental change.
This comprehensive account of important issues facing the nation in health
policy and management is a valuable asset for health care policy researchers and
analysts, as well as managers of health care services, providers, and practitioners.
Moreover, students in health care policy and management or related fields will ap-
preciate it as a guideline to many subject areas in the health care today. Finally, I
believe that this book can serve as a readable guide to health care professionals
and policy makers on health care reform during the next decade.
In the final analysis, health itself is a gift. I commend this volume to you, shar-
ing the hope of Sam and Audrey Tibbitts, that training and discourse shall result,
leading to innovations in policy and management that enable the blessings of
health to be shared by all.
Abdelmonem A. Afifi
Former dean and professor of biostatistics
UCLA School of Public Health
Los Angeles, California
October 2000

Note
1. Afifi, A. A., and Breslow, L. “The Maturing Paradigm of Public Health.” Annual Review of
Public Health, 1994, 15, 223–235.
ACKNOWLEDGMENTS

he authors of this volume met their obligations effectively and much more
T expediently than we had expected. Their rewards for substantial contribu-
tions to the revised edition were largely the intangible ones of providing service
to the students and practitioners of health services policy and research.
Charles Doran, administrative specialist for the Department of Health Ser-
vices UCLA School of Public Health, expanded his good efforts for the first
edition, taking sole responsibility this time for organizing the efforts of the au-
thors, formatting their work, and facilitating communication with our publisher,
Jossey-Bass.
Jeanne Black, in addition to co-authoring a chapter, did a splendid job of edit-
ing another chapter under great stress and time pressure.
Finally, Andy Pasternack, senior editor, health at Jossey-Bass, urged us to un-
dertake this revision and provided high-quality publishing support to complete
the task.

October 2000 Ronald M. Andersen

Los Angeles Thomas H. Rice
Gerald F. Kominski

xxi
The Authors

Ronald M. Andersen is Fred W. and Pamela K. Wasserman Professor and chair of

the Department of Health Services at the UCLA School of Public Health, and
a professor in the UCLA Department of Sociology. Previously he was a profes-
sor at the University of Chicago, serving for ten years as director of the Center
for Health Administration Studies and the Graduate Program in Health Ad-
ministration. He has studied access to medical care for his entire professional
career of thirty-five years. He developed the Behavioral Model of Health Ser-
vices Use that is extensively recognized nationally and internationally as a frame-
work for utilization and cost studies of general populations as well as special studies
of minorities, low-income persons, children, women, the elderly, the homeless,
and people with HIV. He is a fellow of the Institute of Medicine and a recipient
of the American Sociological Association’s Leo G. Reeder award for distinguished
service to medical sociology, the Academy for Health Services Research and Pol-
icy’s distinguished investigator award, and the Baxter Allegiance Prize for health
services research.

Thomas H. Rice is a professor in the Department of Health Services, UCLA School

of Public Health. He is a health economist with a particular interest in health care
cost containment, competition and regulation, health insurance, provider pay-
ment issues, and the Medicare program. From 1979 to 1983, he was a senior
health economist at the Stanford Research Institute. Between 1983 and 1991, he

xxiii