Us_as_a_Residual_Welfare_System

Comparative Social Policy Resit Essay Final Year Social Science The US has traditionally been viewed as a residual welfare system. Recent health care reforms challenge this. Discuss in relation to empirical evidence on health policy in the US and literature on path dependency and families of nation The US has undertaken recent healthcare reforms which offer a change to the welfare system which it has long been seen to practice. This essay will look to examine has these reforms marked a change in the welfare system by looking at empirical evidence on health care policy in the US, and literature on path dependency and families of nations. Firstly the welfare system as it has been perceived in the US must be examined. The US has long been viewed as a system of welfare which offers minimal welfare support to its citizens. In residual systems welfare is temporary; evidence of need is necessary and is given as a last option of help. This means tested method of social assistance is seen to cater for those most in need and the poor while the private insurance sector caters for the middle and upper classes in society (Esping-Andersen 1990). The residual welfare system seeks to promote economic growth; and aims to protect the vulnerable without affecting the economic growth which is seen to be necessary to promote above all else. This liberal welfare system is argued by some as not being a comprehensive means of safeguarding those most vulnerable in society. Sainsbury (1996) describes it as being an incomplete method of safeguarding the vulnerable, writing: “ In sum, a basic feature of the US welfare state is a lack of a fully developed system of statutory protection….As we have seen US social legislation is characterized by major gaps, especially in the areas of sickness benefits, health insurance, maternity and family policy, social housing and social services. In all these areas market solutions fragmentation, diversity and incomplete coverage prevail.” (Sainsbury D, 1996:28) This attitude that America practices a residual system of welfare is one that is challenged by the more recent reforms in healthcare policy. Castles and Mitchell developed the concept of ‘families of nations’ here they grouped together countries which showed broad similar pattern within their social policy and welfare regimes and developments. They identified that certain countries have similar social, cultural and structural aspects to their societies and welfare states. They grouped these into four families: an English speaking family which include the USA, Ireland, Australia, Canada, New Zealand, the United Kingdom and the United States. A Continental family of nations comprised of Austria, Belgium, France, Germany, Italy and the Netherlands; A Scandinavian family of nations including Denmark, Finland, Norway and Sweden; and a Southern family of nations made up of Greece, Portugal and Spain (Castles and Mitchell 1993). The English speaking family, which the USA belongs to, shows patterns of low welfare spending and weaker social citizenship rights. The USA is distinguished from the rest of the English speaking family when it comes to how its social policy approaches the welfare distribution methods. Castles writes: “the American social policy experience is set apart not only from that of most European countries, but also from that of the other English-speaking countries” (Castles, 2010). The USA economic policy tends to be less involved in the social security of its citizens then that of other countries, with an attitude of tax less and spend less. However, this does not necessarily mean that it is a simple system which leaves the social security of its citizens their responsibility alone. Kimberley Morgan comments on the welfare system: “A closer look at U.S social spending shows that it is indeed distinctive, but not in the ways that many would be led to believe. The United States does tax less and spend less on social programs than most of the rich democracies with which it is usually compared. But even so, the country has developed a large and complex system of social protection, one that involves a mix of government spending, tax-based subsidies, and private social spending”. (Morgan, K 2013) While there are scholars who would argue that the US welfare system is ‘incomplete’ there are others who would claim that it is “not incomplete but different” (Glazer 1988) There is also the argument that the American welfare system should not be looked at negatively but that it should be exemplified as a welfare system which enables its citizens by encouraging them to work and to be self-reliant. (Gilbert 2002) Healthcare is a topic which has long been a topic of debate and contention in the USA with many uninsured and millions more underinsured. The US has long been viewed as being far from the top of countries looking after their citizens’ health. In 2009 over 46 million Americans remained uninsured. While the US has traditionally been viewed as a country which is completely different from leading European countries in its welfare, Castles shows that it is not as far removed as one might be lead to think. He describes how the Netherlands has a private spending expenditure which puts it second behind the United States and how a number of European countries are only one standard deviation away from American child poverty rates. (Castles 2010) In saying that, he reiterates that the United States has consistently been at the bottom of the table when it comes to government healthcare spending and child poverty. The United States has had a long history of debate, reform and attempted reform over its healthcare policy. Many of the attempts to reform healthcare have failed despite continued general public support for access to healthcare for all. This is because the reforms generally hit a stumbling block when it became clear that individuals would need to contribute more to the costs of the healthcare reform. A 2009 paper by Hoffman written for the Kaiser Family Foundation commented: “Over the years the American public, as measured in opinion polls as far back as the 1930s, has generally been supportive of the goals of guaranteed access to health care and health insurance for all, as well as a government role in health financing. However, support typically tapered off when reforms were conditioned on individuals needing to contribute more to the costs. While the general public may largely support reforming the health system, no particular approach towards achieving it rises above another in polls—perhaps not surprising given how complicated, yet personal, health care policy is.” Hoffman (2009) provides a detailed review of the developments within healthcare reforms in the last century. The years of the Great Depression in the 1930s in America were characterised by high unemployment rates, with rates as high as 25 per cent. Lack of income had led for a huge increase in those who had no access to healthcare. Sickness and the inability to get treatment had led to greater levels of poverty. There began a widespread social movement calling for better access to healthcare with the movement made up of both employed and unemployed, young and old. There was a widespread demand for government relief including government sponsored health protection. In 1937 a bill was passed to provide relief for unemployment and benefits for the retired, healthcare reforms were not include as the unemployment assistance was prioritised over the healthcare reforms. In 1938 another push for healthcare reforms was opposed the AMA who was motivated to oppose the bill in the belief that ‘physicians would lose their autonomy, be required to work in group practice models and be paid by salary or capitated methods’. (Hoffman, C 2009) The proposed reforms were also not supported popularly, and were opposed by the private health insurance industry. These oppositions and the Governments prioritising of economic security caused the attempts at health care reforms to be defeated. In the period of 1945 to 1950 another push was made for health care reform. The US economy was booming during and following World War 2. President Roosevelt had indicated that he wanted to push for healthcare reform as part of his economic bill of rights once the war was over. After the war President Truman carried on this intention calling for access to healthcare for all, known as the ‘Fair Deal’ program. The call by reformers was for a national and universal health insurance cover included as part of Social Security. This proposed health care reform if passed would have created a universal single insurance system in which all US citizens would enjoy cover with the poor subsidised by the taxpayers. The bill however was not to be passed. Difficulties in the economy following the cessation of the war and how to return to normal sustainable economics led to a fall in public support of Truman’s presidency. Truman’s campaign in 1948 won back the support of the electorate with promises to broaden the New Deal program. However, leading southern democrats opposed Truman’s reforms due to fears that it would lead to steps to end segregation of blacks and whites in hospitals. Labour unions did not unanimously support Truman’s initiatives with many Unions looking to negotiate benefit deals with employers rather than support the reforms. The AMA again vigorously opposed the reforms for the reasons mentioned before. The strong AMA campaign against the initiatives greatly reduced public support for the ‘Fair Deal’. The Health reform’s defeat was as a consequence as a loss of public support following vigorous opposition campaigning. The increase in popularity for private health insurance and negotiation of employer based benefits led to decreased support for the initiative and the ‘Fair Deal’ initiative was defeated. The 1960s marked a period of increased economic growth in the US with a larger educated work force. The Government looked to promote and maintain this increased productivity by increasing government expenditure and lowering taxes. Central in the defeat of the 1950s ‘Fair Deal’ Bill was the increasing popularity of the private health insurance sector. However by the 1960s the gaps in the private health insurance base became apparent. Private plans generally used ‘experience rating’ when setting the health insurance premiums. The more vulnerable, such as the old and the sick found that the high premiums they were quoted as being unaffordable for many. The vulnerability of these members of society led to new calls for health care policy reforms. In 1960 congress passed an Act which gave states federal grants to provide health care for the elderly who were unable to pay for health care. This was known as the Kerr-Mills Act of 1960. This solution failed however as less than half the states chose to take part in the program, and of those that did many failed to budget for expenditure properly. In 1965 three differing proposals for further health care developments were put forward for consideration. They were the Medicare proposal, the Bettercare proposal and the Eldercare program. Eldercare was an expansion of the Kerr Mills initiative which was supported by AMA. Bettercare was a proposition for federal subsidies to allow an increase in private health insurance coverage, put forward by the insurer Aetna. The final bill was comprised of elements from the three different proposals. The bill meant that the elderly disabled and poor were covered in some areas, and needed private insurance coverage in others. The bill was supported by the workers unions and civil rights organisations that encouraged support for the coverage for the elderly. The bill was also supported by the American Hospital Association as they recognised that care for the elderly could not be catered for by the private insurance industry as there were no profits that could be obtained and so the cover would not be provided. The bill was opposed by AMA who once again opposed it under grounds that it was providing ‘socialised medicine’. Senior citizens mobilised in supper of the bill organising marches and demonstrations in support of it. The bill was signed into the Social Security Act in 1965 and marked a hugely significant health care policy reform. Senator Kennedy’s proposal was the ‘Health Security Act’.” This act was a universal single payer —was a universal single-payer plan, with a national health budget, no consumer cost-sharing, and was to be financed through payroll taxes.” (Hoffman, C 2009) President Nixon and Sen. Kennedy put forward competing reform propositions. Reform does not take place however due to a climate of high inflation, economic recession and the rising levels of health expenditure. In 1986 the American Congress passes the Emergency Medical Treatment and Active Labour Act 1986. This Act meant that hospitals were now legally obliged to treat anyone who was in need of emergency treatment whether they had the ability to pay for their treatment or not. The act also allows for people who become unemployed to enjoy an additional 18 months cover off the health plan from when they are laid off. In 1993 President Clinton and the chair of the white house task force on Health reform propose a health reform that creates competition between private insurance companies regulated by the government. This was a bid to lower the cost of health insurance so as to make health insurance coverage more readily available to the poorer in society. The proposed reform was rejected as it failed to win enough support in Congress or in the wider public. In 1997 Congress approves in the Balanced Budget Act the State Children’s Health Insurance Programme. This act covers children who are just above the threshold for the existing Medicaid program but are in a situation of economic vulnerability. In 2002 President George W Bush creates the Health Centre Growth initiative. This initiative multiplies the number of health centres serving those who have limited access to healthcare. In 2003 Congress broadens the coverage that Medicare offers to include prescription drug expenses. In 2007 President Bush’s proposal that the tax preference for employers be replaces with a standard health care deduction plan is turned down by Congress. The truly major reform of health care spending in America came in the form of a budget proposal by Barack Obama in 2009. The budget proposal outlined eight principles for health care reform pledging more than 634 billion dollars in budget. Congress and Senate passed bills the same year, which attempted to create a near-universal’ health care system. The legislation was delayed when a Republican wins the previous seat of Senator Ted Kennedy which caused the Democrats to lose their hold on Congress. In 2010 the legislation went through and the biggest change of health care policy was brought about. The US government creates a near universal health care scheme. A Republican victory in the race to fill Sen. Ted Kennedy's seat upends the Democrats' hold on Congress and forces them to reconsider the bill. Path dependency is a concept used in social policy whereby policy is seen to continue along a path according to the policy which has been in place before. The definition of path dependency is given as: “An idea that tries to explain the continued use of a product or practice based on historical preference or use. This holds true even if newer, more efficient products or practices are available due to the previous commitment made. Path dependency occurs because it is often easier or more cost effective to simply continue along an already set path than to create an entirely new one.”(www.investopedia.com.) The concept of path dependency and institutionalism are linked. Institutionalism is an approach in examining social policy which institution are used and examined to look at changes in social, political and economic trends over certain periods of time. The institutionalism approach infers the governments are not objective in their policy making and that policy is made with links to historical and institutional past. This means that policy making follows a ‘path’ making large changes or reforms more difficult. While America has been traditionally liberal in their healthcare and welfare policy, and described as a residual welfare system by many, this essay argues that this is not an accurate description. The process of welfare policy reform has been one that has taken many years to come about. It has been one filled with many failed reform attempts, the system as it stands today offers coverage which cannot be described as a residual structure. The US system of welfare provides too many provisions for those who can’t afford private health care for residual to be an accurate term. While there are differences between the American and European welfare systems such as a higher emphasis on private pensions and contributory schemes the U.S government does more through policy to ensure the social stability of the vulnerable in its society than it is given credit for. Alber, J (2013) iterates this attitude to the classification of the US welfare state as residual: “The classification of the American welfare state as ‘residual’ does not square with the empirical facts. The US system is dominated by public provisions for welfare among which social insurance programme, particularly Social Security and Medicare, clearly predominate, while public pensions are more universal, redistributive and generous than in some European countries. Key differences persist with respect to a stronger reliance on private provisions in pensions and health, a stronger emphasis on work-conditioned benefits and a greater importance of selective schemes. The term ‘work-conditioned’ welfare state captures some of these key features more adequately than the concept of the ‘residual’ welfare state. EU member states have not converged towards the US; private welfare spending increased without catching up, and the relative importance of selective benefits shrunk in most countries. There is some convergence on the level of policy discourse, where the idée directrice of European social policies has changed from social protection to activation, whereas the US is moving closer to Europe with respect to health care and the acceptance of state responsibilities.” (Alber, J 2013) The US development of its healthcare policy has been one that has been seen to be influenced by the fore mentioned path dependency theory. As America has traditionally had a liberal or ‘residual style’ structure to its welfare system, throughout the long attempts at policy reform to get the US system to where it is today a more social democratic model was never really considered. Single payer universal social schemes were far removed from the historical and structural past and so reforms could not really move down that path. In conclusion, the description of the US welfare system as being one of a residual structure is both inaccurate and flawed. The reforms in the system have taken a long time and with many failed attempts, especially in healthcare reform. However the social welfare system which is existent today is one which does provide for the vulnerable in its society. While there is a large emphasis on the private insurance sector, the government directs too many provisions for the sick, unemployed and elderly for it to be accurately described as a residual system. The welfare system has developed along a route arguably shaped by the path dependency theory yet it is not as far removed from welfare system in Europe as some would be led to believe. Bibliography Alber, J 2009 What the European and American welfare states have in common and where they differ – Facts and fiction in comparisons of the European Social Model and the United States. Available at: www.econstor.eu Castles, F (1993) Families of nations: Patterns of public policy in Western democracies. Aldershot: Dartmouth Publishing Company Esping-Andersen, G (1990) The Three Worlds of Welfare Capitalism New Jersey: Princeton University Press Hoffman, C (2009) National Health Insurance—a Brief History of reform efforts in the U.S. Available at: http://www.kff.org/healthreform/upload/7871.pdf Investopedia.(2012). PathDependency. Available:http://www.investopedia.com/terms/p/path-dependency.asp#axzz2DKQrCywW. Last accessed 24th Apr 2013. Sainsbury, D (1996) Gender, Equality and Welfare States Cambridge: Cambridge University Press J j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j