Eric Patashnik Discusses Different Types of Healthcare Markets

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From the course by University of Virginia

Public Policy Challenges of the 21st Century

513 ratings

University of Virginia

Public Policy Challenges of the 21st Century

513 ratings

This course introduces class participants to the political significance and societal consequences of challenges facing U.S. and international policymakers. It is designed to help participants develop skills to analyze policy proposals and advocate for their preferred options for issues on the public policy agenda ahead. The class assumes basic knowledge about governing institutions and democratic processes, while recommending supplemental materials for further study to complement reading links provided. The course focuses on future policy challenges, while examining the broad historical context in which policies are adopted and implemented. As the course evaluates how issues are advanced by private sector interests, non-governmental organizations, and government policymakers, it examines how groups become effective policy advocates. Particular attention is paid to how winning coalitions are formed and how issue framing shapes the outcome of policy campaigns. The goal is neither to produce partisan talking points, nor to favor one governance philosophy over others. Rather it is to clarify the public policy challenges ahead and to enhance participants’ understanding of how policy options are adopted in the real world arena of contemporary politics.

From the lesson

Healthcare Systems and Insurance Markets

Professor Eric Patashnik examines healthcare reforms, weighing costs, benefits and the efficacy of alternative approaches, including 'Obamacare.'

Student Introduction to Healthcare Lecture with Eric Patashnik1:15

Gerry Warburg introduction to Eric Patashnik and the Importance of Healthcare Policy6:32

Eric Patashnik Discussing Imperfect Information and the Three Dilemmas of Medical Finance6:27

Eric Patashnik Discusses Different Types of Healthcare Markets5:25

Eric Patashnik Compares International Healthcare Responses to the United States9:40

Eric Patashnik Provides an Overview of the Affordable Care Act10:08

Eric Patashnik Answers UVa Student Questions5:28

Eric Patashnik Continues to Answer UVa Student Questions8:18

Gerry Warburg and Eric Patashnik Post Lecture Discussion4:30

Meet the Instructors

Professor Gerry Warburg
Professor of Public Policy, Assistant Dean for External Affairs
Frank Batten School of Leadership and Public Policy

There are different generic systems, ways in which different advanced countries and

other countries organize their healthcare market.

One model is called the Bismarck model.

Here in this model, you have private doctors and private or

nonprofit insurance companies, who are in turn regulated by the government.

And an example here is Germany.

It's a sort of the German healthcare system.

And it includes frankly most US workers under age 65 who

obtain their health insurance from their employer.

A very different model, is the beveridge model.

Here, there are not, in general, private doctors.

The healthcare workers themselves work for the government.

This is part of the way that England organizes their healthcare system.

And I, I think this is important to point out because there's a tendency in

the United States to talk about the European healthcare system.

That's actually a, a big mistake.

Because there are significant differences across European countries.

England organizes its healthcare very different than Germany and

than France for example.

Another thing to recognize is,

there's a tendency to think that the kind of healthcare systems that

are found in Europe have no relevant at all to the United States.

And that's false.

I've just described the beveridge model, where there are the healthcare workers,

the doctors and the nurses are essentially government workers.

And we do have healthcare in the United States that is like that model.

And that's the Veteran's Administration.

Veterans of the armed forces who receive their healthcare from VA hospitals are for

the most part obtaining their healthcare from VA doctors who

are employed by the federal government.

A third system, a third generic kind of healthcare system, is called the national

health insurance system, here there are private doctors and government funding.

And that includes Canada.

And it also includes senior citizens in the Medicare, mainstream Medicare program

in the US, and the eligible poor who receive Medicaid in the US.

And then finally, there was out of pocket, which is

the case where people were just paying for healthcare out of their own pocket.

And that's the typical in many poor developing countries around the world.

As well as the case for many uninsured Americans,

who do not have insurance either through the government or through an employer.

So these are four very different models.

But all of them, as I suggested, all are responses to those

central dilemmas of health care, insurance and finance.

What did the American healthcare system look like before the passage of

Obamacare several years ago?

Well, about 64% of Americans had private health insurance, either from

their employer or they directly purchased it themselves in the individual market.

About a third of all Americans received health insurance through the government,

either through Medicare which is the program for senior citizens, or Medicaid

for low income Americans, or through various other programs including the VA.

And before the passage of Obamacare, or the Affordable Care Act,

about 16% of Americans, around 46 million Americans, lacked health insurance.

It's important to note that private employers,

which was the way that most Americans received their health insurance, did not

provide health insurance simply out of generosity or out of a desire to recruit

a competitive workforce although I think that is certainly part of the motivation.

Private employers have often,

also provided insurance because the government had subsidized it.

So it's important to recognize that the line between the private sector and

public policy, between the private sector and government can be very blurry.

And it's particularly the case in the healthcare arena.

The federal government has provided a tax subsidy to employers to

provide health insurance to their employees.

And the way this works is that workers are taxed on their wage compensation, but

not on compensation in the form of health insurance.

Which leads indirectly to a subsidy to health insurance provided

through the place of employment.

And these federal tax subsidies encourage firms to offer insurance,

even though this is not well understood.

The subsidy is actually to employees, not to employers.

The employer doesn't really care whether they give you $1,000 in wages or

$1,000 in subsidy for your health insurance.

Employers are profit maximizing entities, if the market's working well.

GAP, if GAP is trying to have a success in the marketplace.

They don't particularly care, from the standpoint of the shareholders and

the board of GAP, whether they are providing $1000 to their workers to

buy health insurance, or $1000 in wages, it's the same $1000.

So the employer is indifferent.

Workers, prefer to paid in health insurance,

however, rather than wages because this reduces tax payments.

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