Experts Examine Health Care Policy Divide

Features, Top Stories — By Patricia Krapesh on February 25, 2011 3:30 pm

The people of the United States, have been steadfast for close to a year in their almost evenly divided views on health care reform and policy, according to a profusion of public opinion polls. They were divided before the Patient Protection and Affordable Care Act was signed into law in March last year and that divide has lingered as efforts to repeal the new law are expected to accelerate in weeks to come.

“Is it health care or are we just divided?” says Virgil Sheets, professor of psychology at Indiana State University and department chairperson. “I have the sense that as a society we’re more divided than we used to be. We’re not coming together on issues.”

During his growing-up years, Sheets recalls that television broadcast media choices were networks NBC, ABC, and Walter Cronkite on CBS. “It was perceived that news was objective. Now there’s so much blending of news and commentary. People tend to listen to perspectives with which they agree. Seeking agreement reinforces the opinion that we have and that results in polarization, making us more divided.”

Sheets is one of a short list of ISU faculty members who were interviewed in November and December. The complex issue of health care policy reform, they say, is as much about “how” — as in “How are we going to pay for this?” — as it is about “why.”

“Is it health care or are we just divided?” Virgil Sheets, professor of psychology and department chairperson.

Both the “how” and the “why” are linked to social stratum, economics, literacy, cultural, political and emotional issues.

“Expanding access to health care seems like a goal that most people would support. However, it is important to remember that the health care bill was designed to reform the overall health care system, including how people purchase health insurance and how the health care system operates,” says Nathan Myers, an assistant professor of political science. “While I believe that the reforms included in the Affordable Care Act will improve the system for all Americans, with all these moving parts a lot of Americans will be called upon to make sacrifices in the short term.”

Myers, whose research interests include state and federal health care policy, suggests that a combination of factors have fueled the divide in public opinion. “Health care is one of the most deeply personal issues to people — literally a matter of life and death in some cases,” he says. People who have insurance coverage are concerned that the plan will lead to loss of benefits or inferior replacement coverage.  A large segment of the population has a fundamental mistrust of government, says Myers. The perception is that government is ineffective and that the private sector is a better and more efficient source of health care.

In the midst of national economic crisis, when people were confronted with a change to something as significant as the American health care system, some were concerned this was another domino that was going to fall, says Myers.

The process that the bill went through, coupled with lack of clarity about what was in the bill likely contributed to the divide, he explains. “Anybody who knew very little about the health care bill, but saw snippets of nightly news coverage of town hall meetings with people getting very angry — that outrage that people saw on the part of the strongest opponents of the bill dampened some of the enthusiasm that other people may have felt.”

“Everybody agrees it’s desirable to expand health coverage. Very problematic is figuring out how to pay for it and peoples’ views tend to be shaped by their vested interests,” says William J. Warfel, professor of insurance and risk management. Specific elements of the reform plan have created the division, he says.

For example, Medicaid expansion is dubious because of how it is funded, Warfel says. Under the new law, the number of Hoosiers eligible for Medicaid will grow from 1 in 6 to 1 in 4 — from about 1 million people to 1.5 million, he says. The state contributes funding and, based on per capita income, the federal government contributes. “To get buy-in from the U.S. Congress it was agreed that the federal government would put up all the costs associated with the Medicaid expansion. That’s going to cost a lot of money.”

Another element of the divide is that “insurance companies have gotten a lot of flak over the exclusion of pre-existing conditions,” says Warfel. “The insurance concept is based on fortuity. You can’t buy insurance for a loss that’s going to occur. The whole concept is based on the premise that the loss is unlikely.

“In order to remove the pre-existing conditions exclusion, there must be a mandate that all people be required to procure medical coverage,” explains Warfel. “If such a mandate is in place, a subsidy must be provided to help low-income people pay for the coverage. A  ‘divide’ then occurs because we cannot agree on how to pay for the subsidy. And a ‘divide’ occurs because we cannot agree whether a mandate is consistent with the U.S. Constitution — and this issue will ultimately be decided by the U.S. Supreme Court.”

Carl Klarner, assistant professor of political science, says that income inequality has increased dramatically since 1973, and that has polarized politics in the United States between the rich and the poor. “The poor have more of an incentive to want to redistribute income downward when inequality is greater. The rich are resisting this desire. Accordingly, we’ve seen an increase in the relationship between peoples’ incomes and whether they vote for Democrats or Republicans.

“Paying for government programs means increasing taxes and reducing some peoples’ incomes,” says Klarner. The divisiveness is because “Some people stand to lose a lot from expanding health coverage, while others stand to lose a lot by not expanding coverage.”

According to Terrie E. Troxel, executive director of the Gongaware Center and associate professor of insurance and risk management, health care costs continue to escalate because we demand more and more of the system. “There are 300-plus million of us that all want the best available health care. There are limited resources. When you socialize costs that literally means that some people are in the pockets of other people.”

The fact the United States spends about 17 percent of its GDP on health care doesn’t mean anything to citizens until it impacts them personally, he says. The health care reform law doesn’t address some of the central cost factors that will continue to push health care costs up, says Troxel.

The government will have to deal with the cost side of the equation at some point, he says. “One of the problems with our health care financing system is that it really tries to do two things — it tries to be a budgeting system by estimating income and expense for a period in the future but also provides benefits for people who don’t participate in the revenue side of the system. In doing this, the insurance mechanism breaks down and becomes a welfare system that is inherently under-funded,” says Troxel.

“Insurance is for catastrophic events,” he says. “It exists to protect against financial losses that are consequential.”

Robert Guell, professor of economics, says that health care reform is divisive “because things that Americans fundamentally believe in their souls should be possible are actually impossible to achieve in the system that we have created.”

The current health care system — a public-private mix — is unsustainable “because individuals don’t take price into account,” says Guell. “They have no motivation to do so. It would be as if the only way that we could eat would be to go to Ruth’s Chris Steak House and pick up 20 percent of the check because our insurance was picking up the other 80 percent. People have no motivation to choose the cheaper form of health care.

“We have employer-provided health benefits and the result is people tend not to know what their health care is actually costing them and when they do, they don’t care because most of the expense is being incurred by their employer or their fellow workers. So the price of the health care is not considered by the person making the decision,” says Guell.

“If you want to have a diet of chicken wings, beer and coffee and grow to be 450 pounds you should be free to do that, but if that same person then had a heart attack and couldn’t afford the hospitalization, most Americans would view it as immoral to not provide that person with health care.” Robert Guell, professor of economics

Americans generally believe in the notion of individual liberty, says Guell. “If you want to have a diet of chicken wings, beer and coffee and grow to be 450 pounds you should be free to do that, but if that same person then had a heart attack and couldn’t afford the hospitalization, most Americans would view it as immoral to not provide that person with health care.

“If you’re willing to spend an unlimited amount of money on health care then the two are not necessarily incongruent, but we’re now facing in every business that exists a binding constraint on the amount of money we spend. Decisions have to be made on how to allocate those resources.”

According to Sheets, “We don’t perceive our costs on shared resources the way we do when we’re paying for something individually. There’s a whole history of research on trying to get people to understand the cost they’re imposing when taking advantage of a shared benefit, but it’s not easily solved. People just don’t seem to pay much attention to those costs in making individual-level decisions.

“The Republicans have argued ‘How can we afford this?’ but their concern is cost at a global level, that is, the shared costs, but I’m not confident that concept is actually motivating peoples’ thinking on the subject,” says Sheets. “People who think in big-picture terms, see the issues. But for the everyday individual, I’m not sure they’re processing it that way.”

The process by which health care was passed is psychologically problematic because it is perceived as something being done to us, says Sheets.  “Politicians often focus on the end point, but people want to feel involved in the decision-making process. The Democrats’ partisan approach of accomplishing health care reform made people — especially Republicans — feel like they weren’t involved, like their concerns were not addressed. We have a basic human need to feel like we make our choices. Whenever it’s perceived that our power or authority to be involved is taken away, that’s a problem. In my opinion, that’s part of why it’s become a target of Republican concern.”

With health care in particular, fear of the unknown is an issue for individuals, Sheets says. “Health issues make us feel vulnerable. When we think about our own death, we tend to retreat into ideologies that we know and believe. We tend to be resistant to change and to new ideas at that point.

“We often talk about how much we’re willing to spend to save a life,” says Sheets. “Even if we can’t necessarily afford that as a society, we don’t want to be responsible for making the hard decisions that affect individuals.”

Tags: Carl Klarner, College of Arts and Sciences, Donald W. Scott College of Business, economics, health care, health care reform, insurance, Medicaid, Medicare, Nathan Myers, Patient Protection and Affordable Care Act, Robert Guell, Terrie Troxel, Virgil Sheets, William Warfel