Steps For Establishing An Effective MSA Program
SELECTED BIBLIOGRAPHY

The following sources provide excellent background material on the history of health care delivery and consumption. For the reader who wants to know how we arrived at this place in the health care debate, the following references are invaluable.

"The AIER Cost-of-Living Guide 1994 Update." Research Reports Vol. LXI No. 23, December 5, 1994. Published by the American Institute for Economic Research, Great Barrington, MA.

Presents the trend of the Consumer Price Index (CPI) for all items from 1800 to 1994. Breaks down certain items for purposes of comparison to show the effects of price regulation on health services as opposed to less regulated goods and services. Points out the influence of government policies on consumer price movement. Confirms the observation that subsidies of nearly every kind for housing, food, and health care over the long run increase the relative costs of housing, food, and health care for everyone. In contrast apparel, energy, and communication prices have held either very low rates of increase or actually plummeted.

Arrow, Kenneth. 1971; Insurance, Risk and Resource Allocation. Reprinted in Foundations of Insurance Economics, 1992; pp 220-229.

Arrow sums up the problems of risk-shifting under the principle of "coinsurance." "If a complete absence of risk-shifting is bad because it inhibits the undertaking of risky enterprises and if total risk-shifting is bad because it reduces the incentives for their success, then it is reasonable to suggest that partial risk-shifting might be best. This is precisely what is meant by coinsurance; the insurer pays some stated proportion of the loss....whereby part but not all of the risks will be borne by others, reducing as far as possible the obstacles to risk-taking without diluting too greatly the necessary motivation for efficiency."

Beito, David P. "The Forerunner to Capitation—Early origins. From "Lodge Doctors and the Poor." Reprinted in The Freeman, May 1994. 220-225.

Capitation had a fairly early start in American history of modern medicine. Much of the history over the first 30 years, from 1900-1930, seems to be disappearing since it is little noted or quoted in the serious medical literature any more. The exception is the still familiar Committee on the Costs of Medical Care.

As for the beginnings of prepaid medical services, Seattle was the site for one of the earliest forms of prepaid health insurance. The Fraternal Order of Eagles opened their first lodge in the Emerald City in 1898. The Eagles are often remembered for launching the national campaign proclaiming "Mother's Day," a tradition that persists today despite its crass commercialism. They may also be remembered for another initiative. Around 1908 they engaged in what is called "lodge practice (medical)." For $1 a year, members and the immediate family would be assured of receiving basic medical services including minor surgery. There were specific conditions that were excluded from coverage for that sum. They were: "obstetrics, VD, sickness or injury from intoxicating liquors, opiates, or immoral conduct."

Congressional Quarterly Special Report. "The Final Stretch" Fall 1994. pages 7-21.

In a series of three articles replete with graphics and comparison tables, the authors summarize the rise and demise of health care reform in the 103rd Congress. Good summary. Best quote in this set of articles came from Gail Wilensky - "I kept asking, where are the votes for the employer mandate and price controls? They weren't there....I kept looking at it and saying, what are these guys seeing that I'm not seeing?"

"The Economics of Health Care in One Lesson." Research Reports Vol.LX No. 17, September 6, 1993.

Published by the American Institute for Economic Research, Great Barrington, MA. Presenting a basic understanding about health care economics from a purchaser's perspective, the authors make clear that "pricing of medical goods and services in the United States has been distorted by a wide range of nonmarket factors—from the tax-favored treatment of employer-sponsored health insurance to the direct subsidies provided by Medicare and Medicaid.

This article emphasizes the adverse consequences that follow use of subsidy-based policies. It concludes by addressing the relatively higher rate of spending in the United States versus other nations and finds that the U.S. propensity for higher spending may be more of an indication of a greater interest in the quality of life of its people than it is a matter of falling behind in the managing of the care. This article concludes - to the extent reform is needed, there should be less regulation and greater market competition in the health care sector.

Evans, Robert G., Barer, Morris L., and Marmor, Theodore R., editors. "Why Are Some People Healthy and Others Not? - The Determinants of Health of Populations." Published by de Gruyter, Inc. Hawthorne, NY. 1994.

This book provides in-depth challenges to the conventional wisdom that more health care is better. It addresses the considerable opportunity costs of spending on the supply of health care and related services at the expense of non-medical care investments that correlate closely with better, improved, good health. This is an important book!

Finkel, Madelon Lubin. Health Care Cost Management—A Basic Guide, 2nd Ed. Published by IFEBP, Brookfield, WI 1991.

Generally good guide on supply management approaches. Key summary info on historical perspective of employee benefits.

Glazer, Nathan. The Limits of Social Policy. Published by Harvard University Press, Cambridge Massachusetts, 1988.

Nathan Glazer foretold the outcome of the 1994 Health Care Debate. In this 1988 book, Glazer explained the paradox of knowledge leading to less confident action in matters of social policy attempting to correct perceived public ills. He summarized as follows: "Aside from all these problems of expectations, cost, competency, limitations of knowledge, there is the simple reality that every piece of social policy substitutes for some traditional arrangement, whether good or bad, a new arrangement in which public authorities take over, at least in part, the role of the family, of the ethnic and neighborhood group, of voluntary associations. Social policy weakens the position of these traditional agents and further encourages needy people to depend on the government for help rather than on the traditional structures. This is the basic force behind the ever growing demand for more social programs and their frequent failure to satisfy our hopes." Recognizing breakdowns of traditional modes of behavior as the chief cause of social problems, Glazer counsels "...hesitation in the development of social policies that sanction the abandonment of traditional practices."

Glazer's wise counsel awaits a new group eager to apply their prescription for national health reform.

Goodman, John C.and Musgrave, Gerald L. Patient Power: Solving America's Health Care Crisis. Published by CATO Institute, Washington D.C. 1992.

This authoritative text provides background pertinent to the current health care reform debate. The authors have compiled arguments in favor of an alternative to coercive intrusions into clinical and economic transactions between patients and medical providers of care. They provide the rationale and justification for restoring decision making to individuals and their families.

Patient Power is a "must read" book.

Hazlitt, Henry. Economics in One Lesson. Published by Crown Publishers, Inc., New York, 1979.

Hazlitt analyzes economic fallacies and their prevalence as new orthodoxy throughout the entire book. He elaborates upon the adverse consequences of politicizing social security and medicare benefits.

Investors Business Daily. Editorial Perspective—Shifting Costs. August 17, 1994.

Reviews the evidence and orthodox wisdom posed by Michael Morrisey in his book Cost Shifting in Health Care: Separating Evidence from Rhetoric, published by The American Enterprise Institute, Washington, D.C. 1994. The author concludes that cost shifting probably does not occur to the extent orthodox opinion holds. To whatever extent it does, he states this phenomenon is not harming the economy or the health care industry.

Investor's Business Daily. "Perspective: Who Pays For `Reform'?" September 23, 1994.

The theme of this article is clear—benefits cost workers, not employers. Hence this article presents data such as: "Government figures show that between 1970 and 1993, hourly wages fell in 17 of those years. At the same time, however, benefits rose from 10.7% of total compensation (not just payroll) to nearly 18%. In 1970 employers spent $66.2 billion in benefits and $673.6 billion in 1993."

The author adds as fact the following economic observation: "A company won't add a new worker to the payroll until convinced the worker will add more value than he costs."

Law, Sylvia A. Blue Cross—What Went Wrong?. Published by Yale University Press, New Haven, 1974.

Law presents a very good summary of the financing of health care in the early 1920s and the changes that brought about the emergence of Blue Cross and other insurers. Her description of the changes that led to experience rating are useful. Even more useful are the extensive notes throughout this book. For example, Law cites Odin Anderson's work about the history of compulsory medical care insurance beginning in 1910 and ending in 1950. This book is a veritable gold mine of obscure but important information and history about health care, its politics, and its consequences as public policy.

Melchior Polyi. "Compulsory Medical Care and the Welfare State." (1949) Reprinted in The Freeman, November, 1994. 421-430.

Social insurance programs known also as national insurance originated with Bismarckian paternalism in Germany. (If government spending as a percent of GDP is any indicator of continued paternalism, Germany's rate of 50% in 1994 fits.) As perceived by some people, the use of universal social insurance is justified as simply a manifestation of humanitarianism. The continuing humanitarian view "courts the favor of the ailing, the lame, blind, the poor, the underprivileged, and the aged." The purpose is to install widespread governmental benevolence and solicitude for the public welfare which will surely "subdue all individuality." (Is this the fate that awaits a public unaware of the risks associated with allowing a creeping bureaucratic governance to dominate in every aspect of our daily lives?)

Obligatory health insurance started before Bismarck appeased unwittingly a "restless public" with his version of health security for the masses. The Bismarckian model called for economic self-reliance complemented by compulsory medical insurance. Beneficiaries were to carry a major share of costs by their own contributions and partly by deductibles. The state provided health security by fulfilling a social function through centralized organization, governmental administration, and nationalizing medical personnel. Paternalistic as Bismarck's scheme was, clearly there was no original intention to free individuals of all responsibility.

Reinhardt, Uwe. Interview in Modern Maturity. November-December 1994.

Uwe Reinhardt, widely known as one of the nation's foremost health economists, is another proponent for tax-financed, national health welfare for all Americans. Self-described as a notorious contrarian, he emerged from pauperism in Germany, emigrated to Canada at age 19, began study of economics at Yale University, and found intellectual excitement in health economics. He blames corporate executives and union leaders for perpetuating the grand misconception that employers pay the health bill. But according to Reinhardt the perception this is a free lunch is not reality. "Employees pay the bill out of their paychecks."

Hence comes the Reinhardt solution, what he calls the "simple fact of health reform: The upper half of the income distribution has to substantially pay for those in the lower third." Reinhardt assails the role of markets in health care. He prefers to label health care as a "social good, a quasi-religious commodity" immune from the effects of ordinary supply and demand markets.

Renaud, M. "The Future: Hygeia Versus Panakeia?" Health and Canadian Society/Sante et Societe, vol. 1, no. 1, 1993. pp. 229-249.

Renaud defines good health and the expanding limits of medical science. "Achieving and maintaining health are not just matters of curing illness.... further, it has now been well documented that a simple education program will not change behavior significantly, as the single most important randomized control trial of health education in human history—MR. FIT—has shown (Syme, 1990).

There was no evidence for an independent influence from the educational program. Some increases in life expectancy may occur with respect to controls on alcohol, tobacco, and diet but the health gradient between the various social classes might well remain. Hence the best kept secrets of longevity and good health are to be found in social, economic, and cultural circumstances.» Renaud prescribes a necessary reorientation of the social debate over health care reform - The scope, organization, and financing or various social schemes should be reexamined with one central, often forgotten question in mind: What reforms would help improve the health of the population? Most of the reforms focus on the legitimacy of financial demands on the supply side. — (paraphrased from the article.)

Rothschild, Michael. «Why Health Reform Died.» Wall Street Journal. September 22, 1994.

Excellent summary of the health reform process and debate during 1994. " One year after President Clinton unveiled his health care plan to the nation, that plan—along with the slew of compromise versions it spawned—is dead and gone....the American people figured out this much: Though Mr. Clinton promised a `simple' plan that would guarantee choice along with security, he delivered a numbingly complicated 1,342 page plan that put another 14% of the economy under the control of federal bureaucrats.» Rothschild concludes with: «From personal experience (the American people) know that top-down, command-and-control bureaucracies are obsolete. The pundits may dismiss this hard-nosed realism as ornery cynicism, but the real story is a political/media elite utterly out of touch with the deeper forces remaking America's economy, society and politics.

Somers, Anne R. and Herman M. Health and Health Care—Policies in Perspective. Published by Aspen Systems Corporation, Germantown, MD. 1977.

Starting on page 107, this book relates the recent history of health care insurance, payment, costs, systems growth from 1950 through mid 70s—i.e. 25 years. It forecasts the coming debate of the 80s and early 90s. On page 182, the authors set forth a prescription for principles to guide the «public-private mix.»

The book addresses universal coverage, equitable financing, comprehensive and balanced benefit structures, incentives to maximize efficiency and effective use of resources and to discourage health care price inflation.

Established and would-be policy wonks should read this thoughtful work. Though idealistic in many respects, the Somers present a study of health care reform with all manner of cautions about achieving the goal of comprehensive care for everyone balanced against all the interests imaginable in the American culture.

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