Saturday, June 5, 2010

The Patient Protection and Affordable Care Act of 2010: A Policy Analysis


I take to my long-idle blog in the midnight hours of my last finals' week at Stanford to bring my loyal readers a few morsels of academic thought.. As many of you know, I have a deep and vested interest in public health and health policy. This passion led me to write an honors thesis in the Public Policy Program that focused on policy considerations and recommendations for overcoming barriers to hepatitis B vaccination and control in the Asian and Pacific Islander Population. When we were assigned the task of analyzing a policy from the perspective of the material presented in PUBLPOL 101: Politics and Public Policy, I jumped at the opportunity to examine the health care reform bill from a different perspective. In my first foray into the world of political punditry, I present to you all the sum total of a quarters' worth of deep rumination.

I. Introduction

The road to passage of The Patient Protection and Affordable Care Act (PPACA) was bumpy and uncertain. It seemed unlikely to pass at many junctures, yet President Barack Obama signed it into Public Law 111-148 on March 23, 2010. This nuanced, complex, novel-length law contains many reform measures; crafted by experts in the field; and justified by ostensibly sound economic, legal, and medical reasoning. However, I will examine how this policy was created and passed, examining several key facets in the process.

The successful institution of this landmark health care reform legislation was a great victory for the policymakers that supported it. Indeed, health care has consistently hovered on the post-war governmental agenda, experiencing periodic upswings in attention. While not all of these upswings resulted in policy changes, they were characteristic of Schattschneider mobilization as described by Baumgartner and Jones;[1] increased media and popular criticism of the status quo state of health care led to the expansion of the issue in government. While the years and months leading up to PPACA were no different, its appearance on the decision agenda and eventual passage are better explained by John Kingdon's model of coupled problem, policy, and politics streams.[2] In my analysis, I will demonstrate the shortcomings of Baumgartner's and Jones' model. I will then frame the policy in terms of Kingdon's model by describing each stream as they pertain to PPACA. I will then round out my analysis with participatory policy-making theory, which expounds upon certain aspects of the bill and its passage that are inadequately explained by Kingdon's model. My goal is to pull from various topics presented in class to give multifaceted insight into the politics of policymaking with respect to the Patient Protection and Affordable Care Act.

II. Baumgartner and Jones vs. Kingdon: A Policy-making framework

I begin by demonstrating the shortcomings of Baumgartner's and Jones' model. Baumgartner and Jones argue that, for any given issue, an interaction of changing image and changing venues leads eventually to policy change. They further claim that the policy implications for issues that arise out of increasing negative attention, which they call Schattshneider mobilization, is the transformation of policy subsystems into either "conflictual issue networks...or weak vestiges of their former selves." However, the issue of health care reform fits poorly into this model for the following reasons. First, unlike the examples of tobacco, nuclear power, or pesticides, the health care state in 2009 was not a solitary industry or policy monopoly. Rather, it was a complex network of federal bureaucrats, state and local governments, insurance firms, pharmaceutical companies, and both private and public health institutions. Second, this fact precludes the argument that shifting venues cause issues to move onto the decision agenda. In the case of health care, so many venues already lay claim to the issue that a policy subsystem has already ceased to exist. Therefore, this apparent "Schattschneider mobilization" does not have the results implicated by Baumgartner and Jones.

Health care reform is better described by Kingdon's "revised garbage can" model. This model identifies three streams – problems, policies, and politics. When joined together, the coupling of these three streams "…[dramatically increase] the probability of an item rising on the decision agenda." Furthermore, these streams arise and develop more or less independently of each other. The strategic and timely confluence of these events, brought about by a policy entrepreneur, is illustrated by presence of health care reform on the decision agenda. My analysis will continue by examining these three streams in the context of health care reform.

III. The Problem Stream

In recent years, evidence has accumulated that suggests our health care system is dysfunctional. Indicators such as health care spending as a percentage of GDP, rising costs of insurance premiums, and the costs of preventable illnesses due to poor health outcomes pointed to the increasingly urgent need for reform[3]. Systematic indicators demonstrated severe gaps in health access. The U.S. Census Bureau[4] estimated that, between 2007 and 2008, the number of people without health insurance coverage rose from 45.7 to 46.3 million; the number covered by private health insurance decreased from 202 to 201 million, and the number covered by government health insurance climbed from 83 to 87.4 million. In addition, the rising cost of Medicare and Medicaid was a budgetary concern that helped promote the issue to prominence on the agenda. Both the Congressional Budget Office[5] and the Government Accountability Office[6] issued reports that deemed current government spending on health care unsustainable.This sort of feedback led President Obama to say that the current system is bound to "break the federal budget."[7] Finally, comparisons made of the United States' health care system with those of other OECD countries lent credence to claims for reform. [8] These differences were highlighted in the media, which focused on the U.S.'s relatively high infant mortality rate and low life expectancy; the costliness of the U.S. system, and the fact that the U.S. is the only OECD country without universal care. The increasing attention paid to these concerns placed health care reform in greater prominence, thus hastening its ascent to the decision agenda.

IV. The Policy Stream

The "garbage can" nature of the political process often incorporates often-divergent expert opinions and research at various moments in time. Although experts are by no means the sole determinant of policy outcomes, they do play a crucial role in many steps of the process. Policy recommendations are consolidated and distilled through time and seemingly endless debate to a consistency that can guide and inform public policy. PPACA, a complex and controversial law, incorporated the opinions of a diversity of experts at every step in the policy process. To describe the policy stream of Kingdon's model, I will analyze the role that experts played in crafting the policy proposals that would eventually become a bill.

One of the primary considerations in the debate for health care reform was rising health care costs. As early as 2008, the Senate Committee on Finance held hearings to address the growing costs of health care in light of imminent legislation. Peter Orszag, then director of the Congressional Budget Office, was one of the main experts who testified before the committee.[9] An economist with a vested interest in health policy, Orszag was key in bringing the health care reform debate to the forefront of policy-makers' attention. During his tenure as the director of the CBO, he added 20 full time health analysts, purportedly to prepare the CBO for health care reform.[10] The CBO would go on to play a large role in crafting the bills that would eventually become PPACA. Multiple hearings in both the House and Senate Finance Committees relied heavily on projections by health analysts and budget experts; indeed, the nascent Senate bill drew from numerous other resolutions that originated in these hearings.[11] Thus, the health policy community of the Congressional Budget Office played an instrumental role in designing the bill that would eventually become law. Their expertise in the economics of health care gave weight to their insistence on reform, and lent credence the measures they prescribed. This community of specialists is part and parcel of John Kingdon's policy stream, [12] and are enormously important to the process of proposal generation, debate, redraft, and acceptance.

V. The Politics Stream

The second major factor leading health care reform to the decision agenda was the shift in the political climate in Washington. After the 2008 elections, Democrats held majorities in both the House and the Senate, and a Democratic president sat in the Oval Office. The shift in the partisan distribution of Congress created an atmosphere more favorable to health care reform, which has long been considered a pet issue of the Democratic party (the final House and Senate votes reaffirm the partisan nature of health care politics: not a single Republican voted for the bill). Both the change in administration and the shift in the "complexion of Capitol Hill" acted as impetuses for the recognition of health care as a problem and prompted its higher agenda status.

The final component of the politics stream was President Obama himself. As a candidate in 2008, he pledged to reform health care. He was elected with the promise that it would be one of his four major priorities as President.[13] Upon his inauguration, he was immediately bombarded with other pressing issues (e.g. the financial crisis, Afghanistan), which engulfed the decision agenda for the better part of 2009. Even so, he demonstrated many of the qualities of policy entrepreneurship enumerated by Kingdon, and successfully coupled the problem, policy, and politics streams to firmly establish health care reform on the decision agenda.

The first of these qualities is claim to a hearing. President Obama was in a unique place to be heard; he is in perhaps the most "authoritative decision-making position" in the country and, with the nation as his constituency, has perhaps the greatest ability to speak for others. Furthermore, he has the advantage of appoint key cabinet members, thus stacking the federal bureaucracy in favor of his agenda items. An example is his appointment of Peter Orszag, a long-time advocate of health care reform, to the position of Director of the Office of Management and Budget. In addition, President Obama is known quite well for his negotiating skill and political savvy. Finally, his persistence in keeping health care reform on both the public and governmental agendas (meeting with Congressional committees, holding press conferences, making appearances on The Tonight Show and 60 Minutes)[14] kept the issue alive and eventually brought it to the forefront of the decision agenda. While he is not a policy entrepreneur in the traditional sense of the word, he used his authority as president and an entrepreneurial spirit to pass PPACA. Indeed, by capitalizing on the favorable political atmosphere and emphasizing the problems of the status quo, President Obama was able to couple the three streams in a way that transformed health care from idle debate to an action item.

Kingdon's model of problems, politics, and policies is an adequate framework for analyzing the passage and content of the health care reform bill. However, this complex bill deserves deeper analysis and is not fully explained by Kingdon's model. Rather, participatory policymaking played key role in this policy, especially with regards to Medicare. This consideration forms the remainder of my analysis.

VI. PPACA and Participatory Policy-making

Since its passage in 1965, Medicare has held a special place in American politics. Along with Social Security, it comprises a political "third rail," – "touch it and you die." As Richard Morin, author of the Washington Post blog Unconventional Wisdom, puts it: "The bottom line on the public's attitude [toward social insurance] is: Spend whatever is needed – particularly on me – just don't bill us for it." [15] Indeed, Medicare enjoys broad support from both young and old, and has grown from $36 billion in 1970 to nearly $600 billion in 2008. [16] The changes made to the Medicare program over the years serves as an example of the participation-policy spiral:[17] the policy design of Medicare uniquely encourages participation, which leads to increased outputs for beneficiaries, which further feeds back into the policy design. The effect of reciprocal participation-policy relationship on Medicare policy design is exemplified most recently by program changes introduced in the Patient Protection and Affordable care Act (PPACA). To further explore this relationship, I will first demonstrate how Medicare policy design is an input that affects future policy. I will then show how the trajectory of Medicare's resultant growth placed reform on the decision agenda. Finally I argue that this reciprocal relationship profoundly affected PPACA policy with respect to Medicare provisions.

There is strong evidence for the claim that Medicare program participants participate at higher levels than they would in the absence of the program. A model for this explanation is provided by Schneider and Ingram, who argue that

…motivations of elected officials are linked to the types of policy designs they construct, which affect people's experiences with the policy and lessons and messages they take from it. These, in turn, influence people's values and attitudes (including their group identities), ther orientations toward government, and their political participation patterns…[18]

In the case of Medicare, beneficiaries are able to collect insurance benefits once they reach the age of 65. The original Medicare comprised two parts, A (hospital insurance) and B (medical insurance). The Balanced Budget Act of 1997 introduced Part C, or Medicare Advantage, which gave beneficiaries the option to receive benefits through private insurance plans. In 2006, Medicare Part D passed despite looming budget deficits to expand prescription drug coverage. The expansion of Medicare over time was concurrent with two other trends. First, senior citizens have become an increasing percentage of the electorate. Between 1972 and 2004, voter turnout amongst senior citizens aged 65+ climbed 8% despite a general decline in overall voter turnout.[19] Furthermore, increasing senior electoral participation was backed by participation in other forms of politics. Membership in the American Association for Retired Persons (AARP) has been climbing rapidly since the 1970s[20]; the AARP is now the nation's largest interest group, boasting some 35 million members.[21] It lobbies on behalf of its members, and was hugely influential in the passage of the Medicare expansion acts of 1997 and 2006. Finally, senior citizens are more likely to write letters to elected officials and contribute money to political campaigns.[22] These indicators give credence to the claim that the distribution of benefits as a result of Medicare policy design led to increased participation of beneficiaries, which in turn led to policy-making to expand those benefits.

Many policymakers viewed the expansion of Medicare as unsustainable. Both in absolute terms and as a percentage of the federal budget, Medicare spending grew tremendously since its inception; only Social Security and Defense outrank Medicare expenditures. The Congressional Budget Office projected that this trend would continue until it dried up the Medicare trust fund.[23] Claims of Medicare's insolvency was part and parcel of the general mobilization in the problem stream, and eventually led to the movement of health care reform onto the decision agenda.

The policy provisions for Medicare that ended up in PPACA were influenced in two ways by the reciprocal participation-policy relationship. First, the historic expansion of Medicare that led to claims of insolvency encouraged policy-makers to include provisions to curb spending and seek new sources of funding. These included setting new standards for Medicare payment to hospitals and doctors that moved away from a costly, ineffective fee-for-service method and toward reimbursing for the value of care delivered. [24] In addition, PPACA included a Medicare tax increase on the wealthy (taxpayers earning over $200,000), and cuts to the costly Medicare Advantage program[25] Finally, PPACA created the Independent Medicare Advisory Council to oversee future Medicare policy and reduce expenditures in the long term. [26]

Second, although reform policies were the result of historical policy feedback effects, Medicare beneficiaries still played a role in policy design in PPACA. During the reconciliation process, the AARP lobbied heavily to pass the Health Care and Education Affordability Reconciliation Act of 2010. I.[27] In November of 2009, Obama announced endorsements by the American Association of Retired Peoples (AARP) and the American Medical Association, saying at a press briefing "The AARP knows this bill will make health care more affordable. They know it's a good deal for our seniors, and that's why they are standing up for this effort."[28] In their letter to the Senate, the AARP said that a yes vote on the bill would be a "Key Vote," that it would track how Senators voted, and report the results back to its members.[29] In particular, the AARP supported three major objectives of the bill. First, PPACA would close the "donut hole" drug coverage gap introduced by Medicare Part D for all beneficiaries. Second, PPACA would extend Medicare services to rural settings. Finally, PPACA would provide free annual wellness exams and preventative tests for all seniors. The AARP knew well that endorsements and other acts of support experts in the field are part of a long history of garnering political capital to pass legislation through Congress. Their efforts proved successful, as the reconciliation act was signed into law on March 30, 2010.

The process of Medicare reform policy during the passage of PPACA was influenced in many nuanced ways by the reciprocal participation-policy relationship. The original policy design of Medicare set the stage for increased political participation by beneficiaries. Their participation, in the electorate and as members of a powerful interest group, led to further expansions of benefits. These expansions became insolvent, leading to momentum that would initiate reform vis-à-vis PPACA. Even still, the policies of PPACA were influenced by participation, leading to the accruement of more Medicare benefits. Medicare thus exemplifies how policy design is a policy input, leading to a cascade of events that ultimately results in modification and/or expansion of the original policy design.

VII. Conclusion

The Patient Protection and Affordable Care Act of 2010 is a case study of the passage of a bill into law. In this case, John Kingdon's model of coupled politics, policy, and problems streams provides an adequate framework for understanding how numerous political actors cobbled together a bill from several policy options that aimed to address growing problems in the status quo. Yet, while Kingdon's model provides only a foundation on which to build a political analysis. An understanding of PPACA's content and the reasons for its passage are bolstered by participatory-political theory. In the case of PPACA, Medicare beneficiaries played a pivotal role in moving health care reform forward. PPACA is thus a case study for the complex nature of American politics today.

[1] Baumgartner, Frank R, and Bryan D. Jones. Agendas and Instability in American Politics. Chicago: University of Chicago, 2009. Print.
[2] Kingdon, John W. Agendas, Alternatives, and Public Policies. New York: Longman, 1995. Print.
[3] "Obesity and Overweight for Professionals: Economic Consequences | DNPAO | CDC." Centers for Disease Control and Prevention. 19 Aug. 2009. Web. 27 Apr. 2010. <>.
[4] Income, Poverty, and Health Insurance Coveragein the United States: 2007. U.S. Census Bureau. Issued August 2008.
[5] Orszag, Peter. The Long-Term Budget Outlook and Options for Slowing the Growth of Health Care Costs. Congressional Budget Office Testimony before the Committee on Finance, U.S. Senate, 17 June 2008.
[6]Walker, David. U.S. Financial Condition and Fiscal Future Briefing. United States Government Accountability Office, 17 January 2008.
[7] The White House. Office of the Press Secretary. News Conference by the President, July 22, 2009. The White House. Http://, 23 July 2009. Web. 9 Apr. 2010. Obama, Barack. News Conference by the President, July 22, 2009.
[8] Davis, Karen et al. Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care. The Commonwealth Fund, May 2007.
[9] United States. Cong. Senate. Committee on Finance. By Peter R. Orszag. 110th Cong. S. Rept. Congressional Budget Office, 17 June 2008. Web.
[10] Klein, Ezra. "The Number-Cruncher-in-Chief |." The American Prospect, 14 Jan. 2009. Web. <>.
[11] "Health Care Bill -- H.R. 3590: Patient Protection and Affordable Care Act (" Tracking the U.S. Congress. Web. <>.
[12] Kingdon, John W. Agendas, Alternatives, and Public Policies. New York: Longman, 1995. Print.
[13] The New York Times. The First Presidential Debate. 26 September 2008. Transcript.
[14] Reuters. Timeline: Miliestones in Obama's quest for healthcare reform. 22 March 2010.
[15] Quoted in Chuck Henning's Wit and Wisdom of Politics, Fulcrum Press 1992, pp. 95.
[16] Fact Sheet: Medicare Spending and Financing. The Henry J. Kaiser Family Foundation. September 2008.
[17] Frisby, Tammy. How Policy Affects Policy Making: The Reciprocal Participation-Policy Relationship. Lecture. Stanford University, 10 May 2010.
[18] Quoted in Joe Soss' Unwanted Claims: The Politics of Participation in the U.S. Welfare System. University of Michigan Press 2000, pp. 159.
[19] US Bureau of the Census. Voting and Registration in the Election of November 2004. March 2006, Table B, pp. 4.
[20] AARP membership, 1958 – 98. Figure 4.7. AARP Membership Office. Shown in class.
[21] AARP Annual Report, 2002, pp.5
[22] MacManus SA, Turner PA. Young v. Old: Generational Combat in the 21st Century. Westrview 1996. Boulder, CO. pp. 60, 141.
[23] Orszag, Peter. The Long-Term Budget Outlook and Options for Slowing the Growth of Health Care Costs. Congressional Budget Office Testimony before the Committee on Finance, U.S. Senate, 17 June 2008.
[24] Responsible Reform for the Middle Class: The Patient Protection and Affordable Care Act. Summary by Senate Democrats. Web. http://democrats.senategov/reform
[25] Wells, Rob and Shayndi Raice. Summary of Patient Protection And Affordable Care Act. Wall Street Journal, March 21st 2010.
[26] Orszag, Peter R. "Another Look at IMAC." Web log post. The Office of Management and Budget. The White House, 4 Aug. 2009. Web. 27 Apr. 2010. <>.
[27] Cobiella, Kelly. Health Reform Tweaks Seniors' Medicare. CBS Special Report. 24 March 2010. Web. <>
[28] Zeleny, Jeff. "Obama Anounces Endorsements for Health Care Bill." Web log post. The Caucus. The New York Times, 5 Nov. 2009. Web. 27 Apr. 2009. <>.
[29] AARP. Press Center. AARP Letter to Senate: Let's Finish the Job on Health Reform. 24 Mar. 2010. Web. <>.

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