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- Health Policy Definitions
- Health Policy Values
- Health Policy Context
- Health Policy Actors
- Health Policy Options
- Health Policy Reforms
Health policy denotes normative and procedural dimensions of assuring physical, mental, and social well-being, including but transcending medical care. Spanning normatively and empirically contested domains, however, health policy means different things to different people. Sometimes it concerns content such as financing or organizing health services; sometimes it emphasizes the process by which valued ends are sought and occasionally attained; and sometimes it implies power and whatever else may influence the formation and implementation of health-related activities. This research paper describes the values and practices intrinsic to health policy, focusing on six areas:
- definitions of health,
- values underlying responsibility for health,
- the context of health care practices,
- political actors in the health policy process,
- options in providing health care, and
- reforms in health care systems.
Health Policy Definitions
Definitions of health range from perfect well-being through functional capacity to psychological perceptions. According to the World Health Organization, health is considered a state of physical, mental, and social well-being and not merely the absence of disease or infirmity. For the functionalist Talcott Parsons (1964), “Health is a state of optimum capacity of an individual for the effective performance of the roles and tasks for which he has been socialized” (p. 274). For the postmodernist Walsh McDermott (1977), “Health is a relative state that represents the degree to which an individual can operate effectively within the circumstances of his hereditary and his physical and cultural environment” (p. 136).
Health was originally an individual concern, then a concern of the family, and then of larger collectivities up to and including society. Given the changes in technology, health moved beyond physical encounters (the germ theory of disease) to socioeconomic concerns (contributions to productivity) and postmodern reconstruction of well-being (cultural coping with chronic disability).
Different societies perceive health in different ways and differ about the meaning of disease and ill health. Beliefs about health, disease, and illness also differ according to gender, socioeconomic status, profession, and social role. As definitions of health change over time, perceived health needs of people change. Paradigms about what constitutes health have been broadened by scientific investigations as well as the emergence of new ideas.
Prevention of illness is the first line of defense; restoration or rehabilitation of health through medical intervention is the remedial approach; and capacity to cope with chronic conditions is a third method. Systems of health services (which include a gamut of opportunities and interventions ranging from psychosocial supports through episodic pharmaceuticals to invasive therapies such as surgery) are valued in all societies and provide an arena within which occur struggles over the allocation of values as well as the pursuit and exercise of power that represent both policy and politics.
Health Policy Values
Anthropologists note that the most important thing to know about people is what they take for granted. Unarticulated values guide behavior and generate consensus about its intrinsic propriety. Only when challenged by other deeply held views do such basic orientations become manifest—and then perhaps only dimly. But although elusive and pervasive, basic orientations serve as selective filters that inhibit or distort comprehension of alternative viewpoints based on other equally basic but unarticulated values.
Common values and beliefs determine the demands made on health policymakers. The more widely values and beliefs are shared, the easier and greater the public’s acceptance of proposed policies. Public opinion sets the boundaries and direction of health policy, while the social system sensitizes policymakers about health demands and supports. Most countries share basic goals in health policy: universal (or near-universal) access to health services, equity in sharing the financial burden of illness, and good-quality health care. Given the ever-larger share of public money in funding health care, governments are increasingly concerned about cost control and efficiency. Patient satisfaction, patient choice, and autonomy of professionals are important goals too.
Normative preferences about responsibility for health care range from a commitment to individualism, where a person is the only one responsible for his or her well-being, to an abiding concern for general welfare, where the state (acting on behalf of all of society) ensures an all-inclusive system of health care for all. Empirical practice involves three dimensions of health care services: (1) equitable access, (2) effective quality, and (3) efficient production.
One cleavage that informs health policy divides those who stress an essential solidarity among all humans (at least those within a delimited territory) from those who espouse the individual responsibility of each human being (with perhaps concessions for age-specific categories such as children and the elderly). The former view is egalitarian or solidaristic; the latter is characteristic of libertarianism or radical individualism. As modern communications globalize Western orientations, their spread elicits challenges and responses from non-Western societies about how to regard, amend, or replace these values. “Great” traditions (to use Robert Redfield’s term) such as the Confucian and Islamic as well as “little” traditions such as regional variants and local folkways provide options as they interact with the globalized values of a secularized Judeo-Christian culture.
Health Policy Context
Health policy cannot be divorced from the situational and historical context in which it is made. The legacy of previous policies, including the absence of such policies altogether, provides a contextual limit on policy options. The situational environment provides demands for policy action plus support for as well as constraints on what policymakers can do. The environment within which policy is made as well as the substantive processes that underlie the formation and implementation of specific health policies must be understood.
Health policy analysis is applicable to all societies. Regularities in the policy process and similarities among actors who try to influence it transcend differences in levels or degrees of development. Within government are policymakers including politicians, advisers, judges, and administrators. Outside governments are groups with major stakes in policies that affect them; these range from organized institutions to social forces and latent interests, and even foreign entities. How far such groups participate in policy making depends on how open or closed the political system is. Even if the array of problems and their solutions are different, procedures and routines in policy making are comparable.
While empirical experience with goals and means for health policy indicates potential global convergence on patterns of performance, countries implement changes within their own historical legacies and within the constraints of existing national institutions and political boundaries. The timing and speed of change vary as well. Some governments implement major changes rapidly whereas others, including those characterized by well-organized stakeholders, adjust, delay, or even abandon health policies.
The health sector comprises a major share of the economy in each country. It employs many workers, accounts for a considerable portion of gross national product (GNP), absorbs large amounts of resources (including often unrecorded payments out of pocket), and generates vested interests. Since any expenditure is income for someone else, a “penny saved” deprives someone somewhere of his or her earnings.
Health is also influenced by public policies that initially appear to be unconnected with health care or services. Civic insecurity, political instability, environmental pollution, revenue generation, and economic regulation—all affect changes in morbidity and mortality, not to mention the provision of health services per se. Health policy draws on many sectors whose relevance is not at first glance self-evident.
Health policy is of global concern beyond the boundaries of the nation-state. Efforts to promote health cannot be restricted to a particular country because diseases do not confine themselves within geographical borders. They are transferred from one place to another through travel, migration, commerce, and social exchange. Efforts to prevent disease and to promote health require cooperation and collaboration among agencies at local, national, and international levels.
Health Policy Actors
Structures and procedures of political institutions have important consequences for the adoption and content of health policy. Enduring institutions— both governmental and nongovernmental—interact in the policy-making process. Policy actors are individuals and groups, both formal and informal, that seek to influence the creation and implementation of public policies. Potentially such actors include everyone, but degrees of activity over time vary. Some potential players never enter the game; others dominate almost every stage of play. In the health sector, actors include branches of government, governmental agencies, commercial enterprises, nongovernmental institutions, organized interest groups, and professional associations. The role each actor plays, in combination with relationships among actors in formal and informal settings, determines health policy outcomes.
Interest groups are fundamental partners in policy making. To the extent that health policy interests are shared, collective pressure allows greater policy influence. But the dynamic of interest groups is not simple. While salient interests are represented by groups, the strength of representation is not tied to the salience of an issue. Some groups are already vested due to past history, and salience itself may be a consequence of interest group action. The study of health policy must identify the policy actors and their political resources. Common resources include information and bureaucratic knowledge, a network of contacts, citizen support (including size as well as strategic location of constituency), an ability to make political contributions, and an ability to mount a public relations campaign. While few groups ever use all such resources at all times, the profile of an organized group’s ability to make use of some combination of them is critical for policy influence.
In addition to organized interests, political legacies matter as do key political processes. For example, the United States developed a health care system that relies on private financing and voluntary hospitals for the provision of health services. Public sector responsibility is confined to targeted financing for the poor, the elderly, and a limited public hospital network. Subsequent efforts to reform the American health system face increasingly vested interests and widely accepted routines of private health care.
Significantly for health policy, the American system of government is built on an enduring Madisonian system of checks and balances that gives well-mobilized interests the ability to impede or block policy initiatives. The American health system has numerous groups powerful enough to oppose any reform that might harm their own economic interests.
Robert Alford’s classic conceptualization of health policy posits three categories of actors engaging in “dynamics without change”: (1) professional monopolists, (2) corporate rationalizers, and (3) citizen-consumers—the latter getting the proverbial short end of the stick. While institutions of representation, government, policy making, and intergovernmental relations may be stable, processes by which health policy are shaped and implemented have undergone marked changes during recent decades. These changes challenge the notion that health policy is made by a unified center or by coordinated pillars at the helm of representative political regimes.
Health Policy Options
Health care systems are characterized by country-specific mixes of public and private funding, contracting, and modes of providing services. The five main sources of funding are (1) taxation (general revenues, earmarked taxes, and tax expenditure), (2) public insurance, (3) private insurance, (4) direct patient payments (copayments, coinsurance, deductibles, and uninsured services), and (5) voluntary contributions. For some low-income countries, external aid is a major source as well.
Among the three basic contracting models, the integrated version places funding and ownership of services under the same (public or private) responsibility. The best known example is the British National Health Service (NHS) that provides tax-funded health care for all. The second contracting model allows governments or third-party payers (often administrative agencies for social health insurance but sometimes private health insurers) to negotiate long-term contracts with health care providers. The third model, common in private insurance, is reimbursement when a patient pays the provider and then seeks reimbursement from the insurance agency. Therefore, the ownership and management of health services can be public, private (both for-profit and not-for-profit), or a mix of those. Moreover, there are country-specific mixes of formal and informal care, traditional and modern medicine, and medical and related social services.
Combinations of those core elements—funding, contracting (including payment modes), and ownership—determine the allocation of financial risks and decision-making power among the main players in health care. Government ownership and tax-funded services require strong government influence, whereas private funding (insurance and direct patient payments) combined with legally independent providers restricts the role of the state even though governments can—and often do— impose rules to protect patients or safeguard the quality of and access to health care.
National arrangements for financing health care vary. In Scandinavia, Italy, and the United Kingdom, the major share of health care funding is financed by general taxation, whereas systems of health insurance are the major source of funds in Germany, France, and other continental countries. In all countries, patients are expected to pay a proportion of health care costs out of their own pockets through copayments or deductibles. In most cases, however, governments mitigate the effects of user fees by exempting certain groups or by setting annual limits on how much families must pay.
Variations in funding and contracting models in health care can be traced to country-specific historical developments, but two events in Europe played a crucial role as models for policy. The first was the introduction of mandatory social health insurance for industrial workers and their families in Germany in 1883. Several other countries in Europe followed the German example of state-sponsored (but not state-administered) mandatory social insurance to protect the family income of industrial workers against the risks of illness, disability, unemployment, and old age. Mandatory membership enforced by social insurance meant that the so-called sickness funds had stable revenue streams and could create wider pools of shared risk. In the past decades, these nongovernmental funds became core actors in the public policy arena by sharing the responsibility for social policy making but under ever-greater government regulation.
The second major innovation in the funding of health care was the establishment of Britain’s NHS in 1948. The NHS extended the German insurance model by providing coverage to the entire population with costs paid out of general taxation. Although hospitals in the United Kingdom were nationalized, family physicians remained independent as practitioners. Postwar reconstruction in Europe was characterized by popular support for the expansion of state-sponsored schemes. Some countries followed the German example of employment-based schemes; others preferred the population-based NHS model.
The spread of the two models was not restricted to Europe. Nations throughout the world sought to implement policies to protect the incomes of their populations (or population groups) against the financial risks of illness, disability, and old age. By the end of the 20th century, funding for health care in most countries had become hybridized by adopting elements from both the British and German models. Employment-based arrangements for certain categories of workers were combined with population-wide and tax-based universal schemes.
Health Policy Reforms
The 1970s saw a shift from expansion and popular support for welfare state arrangements to reassessment and retrenchment. Economic, demographic, and ideological factors contributed to the reshaping of the popular notion of the welfare state as a solution for social problems to that of an economic burden and a cause of economic stagnation. After the oil crisis, economic stagflation with persistently high levels of unemployment meant that state revenues stagnated or declined while public expenditures continued to grow. Moreover, as the end of the postwar baby boom became visible, demographers revised earlier demographic projections downward and future pension outlays upward.
Ideological views about the role of the state also changed. On both the left and right of the political spectrum, critics agreed that state powers had become too intrusive in the lives of individuals. Discontent over fiscal burdens and disappointing results of public programs, rising consumerism, and patient advocacy groups claiming a stronger say in the allocation and organization of health care—all challenged existing arrangements for providing welfare. Governments sought alternative models of governance to reduce the dominant role of the state and decentralize decision making, with more space for choice and entrepreneurial ideas. Some countries introduced market competition in health care by reducing state control over the funding and planning of health care services. They also sought to broaden patients’ choice of provider and health plan. Other countries turned to traditional tools of controlling public expenditure by setting strict budgets, reducing the scope of public insurance, and increasing direct patient payments.
During the past few decades, attempts to change health policy have been stimulated by economic recession and by severe fiscal problems in the state treasury rather than by an ideologically driven taste for reform, although the 2010 health reform bill in the United States was intended to address not only economic concerns but also issues of social justice. Declining government budgets have adversely affected service delivery, even in countries that previously had reasonably well-performing systems for the public delivery of health services. Pressures for changes in health policy often emanate from central ministries such as finance and planning. In many cases, the ministries of health struggle to reinterpret and to respond to policy directives outside their control.
Economic realities of recession and fiscal crises affect not only the types of policies that are implemented but also reactions to them by the users, beneficiaries, and citizens. The stage of raising revenue through the introduction of user fees to supplement government budgetary resources was critical for many governments because of the endemic economic crisis. But the success of the policy, however logical in theory, was constrained by the dwindling capacity of citizens to pay for health care. Furthermore, the administrative cost of collecting user fees and of monitoring exempted categories of users often exceeds the revenue collected. Although well intended, the initial policy had not considered inevitable transaction costs.
For several decades, health policy reforms have been premised on the assumption that improving the ability of government to manage its business will lead to improved social and economic progress. The first generation of reforms sought to cut public expenditures and to revive the private sector. Measures included budget cuts, tax reforms, limited privatization, liberalization of prices, and, most conspicuously, efforts to downsize the public sector. The latter was invariably described as bloated and in need of surgery followed by a strictly enforced diet.
When it became evident that the transformation of government would require a long time and that the savings from reduced bureaucratic costs would be insufficient to provide even basic levels of public services, a second generation of policy reforms sought to improve the efficiency and effectiveness of government. While the first-generation reforms stressed downsizing, contracting, and improved control over budgeting and public expenditures, the second generation advocated decentralization to subnational levels, creation of semiautonomous agencies in the central government, and reforms of human resource management (recruitment, selection, and training).
Recently, the agenda of health policy refocused yet again as a third generation of reforms seeks to improve social outcomes through better service delivery. This strategy emphasizes sector-wide approaches, particularly in health and education, to produce a coherent program for delivery of services that involves both governmental and nongovernmental organizations. While these generations of policy reforms are overlapping rather than strictly sequential, all have been driven by a combination of external and internal agencies. Multilateral and bilateral aid entails conditionalities that require a (commitment to) change in governmental behavior before money can be transferred. In turn, national planning commissions and ministries of finance require line agencies to adopt reforms that may include a combination of these generations.
Policy reforms range across a repertoire of instruments: streamlined budgets, staff reductions, raised tariffs, contracting out, and other forms of privatization. Reform of the health sector has focused on four main options, none of which is mutually exclusive and all of which may occur at the same time. These are the establishment of autonomous organizations, introduction of user fees, contracting out of services, and the enablement and regulation of the private sector.
While these issues characterize features of health care systems and health policy, they do not explain the causes or effects of policy change. To understand why countries embark on particular reform paths, not only external and internal pressures for change must be investigated but also structural features of social policy making that enable politicians and policy entrepreneurs to change the system despite the fact that institutional legacies and popular support for existing policy arrangements create barriers to change.
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