Domestic Policy

  1. What If… We had universal health care?
  2. The Policymaking process
  3. Health Care
  4. Poverty and Welfare
  5. Immigration
  6. Crime in the Twenty-first Century
  7. Environmental Policy

LEARNING OBJECTIVES

After students have read and studied this chapter, they should be able to:

·  Describe the policy-making process:

o  Agenda building.

o  Policy formulation.

o  Policy adoption.

o  Policy implementation.

o  Policy evaluation.

·  Discuss the rising cost of heath care and provide several reasons for this trend.

·  Define Medicare and Medicaid.

·  Identify some of the characteristics of the uninsured and the problems they face.

·  Explain how national health insurance works and provide some international examples.

·  Define the Health Savings Account plan.

·  Explain how the government determines who is in a state of poverty.

·  Briefly describe major government programs to reduce poverty, including TANF, Supplemental Security Income, food stamps, and the earned income tax credit (EITC).

·  Describe the Welfare Reform Act.

·  Describe trends in crime rates over the last few decades, including changes in the rate of violent crime, theft, and murder.

·  Give one or more reasons crime has decreased in the last ten years

·  Define the incarceration rate and explain the demographic categories of prisoners.

·  Compare U.S. incarceration rates with those of other nations.

·  Understand the origins of the modern environmental movement.

·  Explain the major provisions of the Clean Air Act of 1990, the Clean Water Act of 1972, Superfund, and the Endangered Species Act.

·  Explain what global warming is, basic provisions of the Kyoto treaty, and the nature of the political dispute over global warming.

TOPICS FOR DISCUSSION

Presuming that national health insurance is off the table in the United States, what else could be done to protect the uninsured population from catastrophic medical costs?

What steps can the government take to control health care costs? Is controlling costs even a good idea? What negative consequences could follow from attempts to control costs?

The Welfare Reform Act poses a controversial solution to a difficult problem. What are the major components of the act? With which facets of the act do critics most disagree? Does giving more control of welfare to the states benefit the taxpayers? The recipients? Why or why not? What are the advantages and disadvantages of devolution in welfare?

How important is income in children’s achievement? What things can money buy that help children achieve? What things can it not?

What are the factors contributing to increases in homelessness?

Are there underlying social changes that may have helped reduce crime rates in recent years?

Why is the problem of juvenile crime so disconcerting? What have states done to attempt to address this problem?

Why are environmental problems often difficult to legislate away? What improvements have been made in air and water quality in recent years? What problems still need solutions?

Do your students believe that global warming is actually a problem that we should address?

BEYOND THE BOOK

Americans have spent many billions of dollars on health care over the last half-century. What kind of return have they received for that spending? One way to answer the question is to observe that since 1950, the life expectancy of the average American has increased about one year with the passage of each span of six years. Much of that increase in life expectancy is doubtless due to health-care spending. In today’s dollars, since 1950 the average American spent $11,400 on health care in every span of six years. Therefore, we could say that on average, Americans spent $11,400 to buy one year of additional life. If someone asked you how much your life is worth in dollar terms, you probably would be hard-pressed to provide a figure. You might reject the question entirely. Insurance companies and government agencies, however, routinely need to estimate the economic value of a person’s life. A typical estimate by economists would be about $75,000 a year. This is about six times what it cost to buy those additional years of life. By these calculations, health-care spending appears to be a bargain. That does not mean, however, that we are spending too little on health care. To ask if we are spending too little, the correct question is as follows: If we spend one additional dollar on health care, will we get one additional dollar’s worth of benefit? This is a hard question to answer.

We stated in this chapter that Americans spend more on health care than the people of almost any other country. It is not an accident that the United States is also the only truly rich country that does not have a national health insurance system. Insurance provision by the government tends to hold down total costs for several reasons. One is that the government is in an excellent bargaining position to demand lower prices from medical care providers and from pharmaceutical companies. But is such bargaining a good idea? The pharmaceutical industry, for example, makes much more in profit selling drugs in America than in Germany, where the government has negotiated lower prices. One effect of the high profits that the industry earns in the United States is that it is able to fund a vast research effort aimed at finding new drugs. Some experts believe that the industry would be unable to mount such an effort if Americans paid German prices for drugs. (Such thoughts may have been on the minds of the Republicans who barred the government from negotiating lower drug prices as part of the Medicare drug benefit.) American spending, in other words, may be providing the rest of the world with a “free ride” in terms of pharmaceutical research. What applies to pharmaceuticals may also apply to other branches of medicine. It is possible that America’s lavish medical spending is one of the main engines driving worldwide progress in medical science.

When most health-care spending is government spending, then anyone who wants lower taxes has an incentive to oppose spending on health care. That may be another reason that health-care spending in countries with national health insurance is lower than it is in the United States. Indeed, it is common to hear political leaders claim that health-care spending is too high. These leaders would never make such a statement about spending on automobiles, but then, the government does not buy cars for its citizens.

Health-care spending, however, is different from some other kinds of spending. You can only eat so much food—and spending on food, as a proportion of total spending, has been falling in the United States for many years. Most items of consumption bring less benefit the more they are consumed. If you do not own an automobile, buying one is important. But how much additional benefit do you truly derive from owning a Mercedes Benz instead of a Toyota Camry? If you are truly rich, will you gain much from owning two, three, or ten Mercedes? In contrast, there is no upper limit to the number of years that most people would wish to live.

Nor is the biblical lifespan of “three score years and ten” the limit that most people take it to be. We are accustomed to fictional depictions of future heroes traversing the galaxy at speeds faster than that of light. This is, in point of fact, impossible. On our current understanding of science, there is no way we will ever be able to travel faster than the speed of light. No such barrier exists to prevent us from someday determining the causes of the “aging syndrome” and inventing methods to combat it. We simply do not know how to do this yet.

CHAPTER OUTLINE

I.  The Policy-Making Process

The first step in the policy-making process is identifying a problem. Numerous problems exist, but their solutions are impossible until they are identified by policymakers. Typically this occurs through public debate. Policymakers also rely on their constituents, interest groups, and the media to bring policy problems to their attention. The identification of a problem, the reaction to the problem and the solution all form the policy process. There are five key steps in this process.

A.  Agenda Building. This is the effort of identifying a problem and getting it on the agenda. This may come about through crisis, or through the lobbying efforts of interest groups or others concerned about the problem.

B.  Policy Formulation. This consists of the debate that occurs among government officials and the public in the media, in Congress, and through campaigns.

C.  Policy Adoption. This is the selection of a strategy for addressing the problem from among the solutions discussed.

D.  Policy Implementation. This is the administration of the policy adopted by bureaucrats, the courts and others.

E.  Policy Evaluation. Groups evaluate the policy to determine if it has had the desired impact. The feedback also evaluates unintended consequences of the policy adoption. The feedback is considered part of the agenda building and formulation process, so that policy can be “fixed” if needed.

II.  Health Care

Healthcare spending has gone up from 6 percent of our income in 1965 to 15 percent today. Compared to other advanced industrial countries, our spending as a percentage of GDP is quite high, double the rate of some countries.

A.  The Rising Cost of Health Care. One cause of the rising cost is that the population is growing older, and older people need more care.

1.  Advanced Technology. While useful, advanced diagnostic machinery is very expensive,

2.  The Government’s Role in Financing Health Care. The government funds about 45 percent of health care spending, private insurance provides about 35 percent, and the rest is picked up by individuals or charity. Key terms: Medicare, Medicaid,

B.  Medicare. Medicare is a federal health-insurance program that covers U.S. residents over the age of sixty-five. The costs are met by a tax on wages and salaries. When created in 1965, Medicare did not cover medicine. Beginning in 2006, the Medicare program began paying part of the cost of medicines. Medicare is the second most expensive federal program after Social Security. To contain costs, the government has placed caps on payments for procedures, with mixed results. Some health care providers now will not serve Medicare clients.

C.  Medicaid. Medicaid is a joint state/federal program that provides medical care to the poor, including indigent elderly persons in nursing homes. The program is funded out of general government revenues.

1.  Why Has Medicaid Spending Exploded? One reason is that the income ceiling for Medicaid eligibility has increased, making it a more attractive option for low-income workers than the health insurance offered by their employers.

2.  Medicaid and the States. While the federal government pays almost sixty percent of Medicaid’s costs, the portion paid by the states has increased rapidly.

D.  The Uninsured. 15 percent of the population lacks health insurance. 35 percent of working Hispanic Americans lack coverage.

1.  The Uninsured Employed. Smaller businesses often find it hard to supply health insurance to their employees, as it costs $9,000 or more per employee. Many of the working uninsured are young and healthy. A health catastrophe for such a person, however, could force them into bankruptcy.

2.  Shifting Costs to the Uninsured. A special problem is that many health care providers charge the uninsured steeply higher rates for services than the insured, because insurance companies and the government have the power to negotiate lower prices for their clients.

E.  One Alternative: National Health Insurance. The United States is the only advanced industrial country that does not have a system of universal health insurance run by the government. Such systems have lower administrative expenses than the U.S. system, but may have trouble controlling spending on unnecessary procedures.

F.  An Alternative: A Health Savings Account. This plan has been passed by Congress under George W. Bush. It allows people to create tax-free savings accounts for health-care expenses, providing the participant also buys a high-deductible insurance policy.

III.  Poverty and Welfare

Key concept: income transfers, transfers of income from some individuals in the economy to other individuals. This is generally done by way of the government.

A.  The Low-Income Population. To define poverty, the government devised a system beginning in 1963 that defined poverty based on family income in comparison to the cost of a nutritious food plan. All families whose income level was not at least three times larger than the food plan were classified as below the poverty line. Since 1969 the government has revised the formula based on changes in the consumer price index (CPI). In an attempt to assist these families, the government made transfer payments to them in the form of programs like food stamps and housing vouchers.

B.  The Antipoverty Budget. In an effort to resolve some of the most pressing problems of poverty, the federal government has established a variety of programs. The 2007 budget allocated about one-sixth of all federal expenditures to programs that support persons of limited income. Of this amount, almost half was for Medicaid.

C.  Basic Welfare. Aid to Families with Dependent Children (AFDC) provided aid to children in poverty. This program was administered by state governments but was financed by the federal government. This program was eliminated by the Welfare Reform Act of 1996 and replaced with Temporary Assistance to Needy Families (TANF). TANF is a state-administered block grant program. The states, not the national government, now bear the burden of any increased welfare spending. The Welfare Reform Act of 1996 had several key components. A key provision provided for devolution of the welfare system. Most welfare recipients are now limited to two years of assistance at one time, with a lifetime limit of five years. The act sought to reduce the number of people receiving benefits and in fact the number has been cut about in half.