Political Evolution of Federal Health Care Regulation

Prologue: In battles over ideology, each side stands ready to accuse the other of a preoccupation with health system regulation — either too much or too little of it. During the 1992 presidential campaign, a Bush spokesperson accused Clinton of forwarding a plan that “would involve massive new government intervention in the medical marketplace and … would enhance the role of a heavy-handed … bureaucracy.” For his party Clinton rejected the “polarizing rhetoric” that insists on a choice between regulatory and private extremes. To sort out the rhetoric from the reality, it is useful to define exactly what is meant by “health care regulation” and to trace its evolution in the health care marketplace. “Paradoxically,” writes Lawrence Brown in this paper, “health care has become steadily more regulated at all levels of government and in the private sector, too, at the same time as other economic sectors —such as transportation, telecommunications, and banking — have moved the opposite way.” The “intellectual puzzle” raised by this paradox is this: “How did a society with sizable ideological and political obstacles to regulation and a heartfelt allegiance to free markets come to adopt as much regulation as it has in the health system?” Given the outcome of the presidential election, it remains to be seen whether health care regulation continues on its current course, or whether a radical change is in the works. Brown, a political scientist, is a professor in and head of the Division of Health Policy and Management of the Columbia University School of Public Health, where he has been since 1988. Before moving to Columbia he was on the faculty of the University of Michigan in Ann Arbor. He received his doctoral degree in government from Harvard. Brown does not shrink from controversial subjects: In Health Affairs, Summer 1991, he published a provocative review of Oregon s Medicaid rationing plan that sparked lively debate within the journal's pages and beyond. Abstract: Although federal regulation of health care faces cultural obstacles and skepticism among policymakers, it has grown markedly over the past two decades. Beginning in the 1970s with decentralized programs aimed at regulating provider behavior (Health Systems Agencies and certificate of need) and budgets (state rate setting), health care regulation grew more centralized in the 1980s as federal policymakers expanded their influence on behavior (peer review organizations and medical practice guidelines) and budgets (Medicare prospective payment and the resource-based relative value scale). Behavioral regulation has increased the heavy micromanagement that providers face in the United States, while budgetary regulation falls well short of the fiscal macromanagement (global budgets, for example) that other Western nations use. As cost increases intensify, the coalitions that supported limited regulation as a compromise designed to forestall more threatening intrusions may yield to political pressure for firmer central budget controls.