The Challenge of Healthcare Reform


Such issue as healthcare reform in the United States has repeatedly been debated by journalists, public administrators, and scholars. The main question is the ability of this initiative to solve the problems encountered by the healthcare system of the country. In March 2010, President Obama signed the Health Care and Education Reconciliation Act. Its key purpose is to help people, who live beyond the poverty line, and reduce the number of uninsured patients (The United States Federal Government, 2010, unpaged). The reaction to this legislative act and to the reform in general is quite varied. Its advocates believe that this reform will eventually achieve its eventual goals while the opponents argue that in this way, the government will only increase the burden of taxpayers without actually improving the quality of health care (Williams, 2011, p 29).

This paper is aimed at discussing the challenges associated with the healthcare reform and ways of overcoming these difficulties. It is also necessary to better explain the goals that it strives to achieve. Furthermore, it is vital to show the reasons which prompted the government to launch these programs. This discussion will enable us to make recommendations about the implementation of the healthcare reform. In part, this research will be based on the tools and methods of public administration theory. This approach will explain social, economic, or political factors that may affect the implementation of this reform. Overall, it is possible to say that this attempt to introduce a universal healthcare system can avail a great number of people. Most importantly, it can make the healthcare system more efficient. This is the major thesis of the paper.

Issue or Problem Affecting Public Administrators (Healthcare Reform)

In order to understand the challenges of the healthcare reform, one should first speak about the problems which necessitated it. The key issue is the inability over already existing system to support the needs of uninsured population. According to the data provided by the U.S. Census Bureau, in 2007, more than 45 million Americans were at least partially uninsured (U.S. Census Bureau, 2007, p 20). Within the period between 1987 and 2007, this number increased by more than twenty percent (U.S. Census Bureau, 2007, p 20). In turn, the country’s spending on healthcare continuously increases. Therefore, the major question is how to eliminate this inefficiency and the rising costs of healthcare. Another task to be performed is to improve the quality of healthcare in the country and promote better quality of people’s lives. Those people who attempt to introduce a universal healthcare system and carry out the reform do not see that the increasing expenditures cannot provide for the needs of the population.

There are several challenges associated with the healthcare system and its reform. One of them is the cost which has been continuously rising. According to Margaret Anderson and Howard Taylor, the cost of medical care constitutes 14 percent of the country’s gross domestic product (Anderson & Taylor, 2010, p 366). In part, such situation can be explained by population growth. However, one should not overlook internal inefficiencies of the healthcare system, for example, cumbersome bureaucracies in many hospitals and insurance companies which are practically unregulated by the government (Coakley, 2010). Laisser-faire or market-based attitude toward the healthcare system is the factor which could explain that situation.

As it has been said before, the second cause of concern is the large percentage of uninsured population. Such a problem can be partially accounted by demographic growth and economic development of the country. Yet, this approach may overlook some unscrupulous practices of insurance companies which deliberately try to avoid at-risk people who are more likely to have health problems (Sultz & Young, 2010, p 49). The cost of health insurance for this group is much higher than it is for young adults (Sultz & Young, 2010, p 49). Thus, such people are practically denied the access to high quality medical services. This is another difficulty that should be resolved by the reform and establishment of a universal healthcare system.

The third issue, which continues attracting the attention of policymakers, is the shortages of health care providers, especially nurses (Hart, 2009, p. 73). This factor also greatly contributes to the increased costs. Therefore, this reform is supposed to reduce this shortage and encourage more people to work in medical institutions.

These are some of the challenges which were and continue to be associated with the healthcare reform. Prior to the implementation of this reform, a great number of journalists and scholars argued that the government was to take a more active part in the solution of this problem. For instance, Simon Kosali called for a universal health care system adding that no individual should have had to spend more than 10% of his or her income in order to cover health services (2003, p. 1865). These are the main problems that made the reform necessary. On the whole, the policymakers and public administrators, responsible for the implementation of this reform, intend to use several strategies. First of all, they encourage employers to provide coverage to their workers, and even make this coverage obligatory in the future. In fact, this is not one of the provisions of the Health Care and Education Reconciliation Act. However, a year later, the federal government intended to introduce that mandate (The United States Federal Government, 2010, unpaged).

The second important area is increasing governmental control over health insurance companies. On the one hand, in this way, public administrators can make health coverage more accessible or affordable to the population. On the other hand, increased regulations can prevent those companies from excluding at risk populations, especially elderly people (Sultz & Young, 2010, p 49). The third area of reform is individual responsibility of every citizen. By the end of this reform, the vast majority of the U.S. population will be obliged to have medical insurance (Fisher & Shortell, 2010). Finally, we need to discuss by far the most important aspect of this incentive, namely, the intention to make healthcare organizations more accountable for their work (Fisher & Shortell, 2010, p. 1715). This notion of accountability implies that hospitals will bear responsibility for the cost and quality of patient care. This strategy is reflected in the Patient Protection and Affordable Care Act which was put into effect in 2010. Therefore, we can argue that this reform may touch upon many stakeholders. Its final goal is universal healthcare that does not exclude any member of society. Judging from these examples, we can say that this reform is supposed to change the very nature of the healthcare system in the United States; namely, it is aimed at ensuring that market-based model does not exclude impoverished people. The adoption of the Reconciliation and Affordable Care Acts indicates that the government is willing to exercise much more control over medical institutions and insurance companies. Nonetheless, during its implementation, many other difficulties have arisen. They will be discussed in the next section of this paper.

Literature Review

One of the goals that this reform is to attain is the creation of a universal healthcare system, which will provide a coverage to every member of the community. At this point, we need to show whether this goal can be fully achieved, and to what extent it is compatible with current economic and financial situation in the country. First, one should bear in mind that the government’s incentives have received much criticisms because the cost of its implementing fell largely on the shoulders of the American taxpayers. This issue is of particular importance of employees. The healthcare reform implies that small firms with more than 50 workers risk paying modest penalties if they do not offer insurance to their employees while those with over 200 employees are required to sign up all their workers in their health plans (Andersen, Rice, Kominski, & Afifi, 2007). Therefore, this reform may have profound implications for the economy of the country since a great number of small and middle-sized companies are to increase their operational expenses. Under such circumstances, small firms will find it very difficult to compete with their larger counterparts, especially if we take into account economic downturn (Monheit and Vistnes, 1994). Yet, one should bear in mind that this reform offers various credits to small businesses. These credits will make it easier for them to provide insurance to their workers. The key task is to explain the intentions of the government to small entrepreneurs for them to know that policymakers try to help them. Still, it is necessary to admit that this reform will be more affordable to large companies rather than to small ones. Policymakers and public administration are to make sure that this reform will not drive them out of business (Andersen, Rice, Kominski, & Afifi, 2007).

Another aspect of this reform, which is discussed by public administrators and scholars, is regulations of health insurance companies. We need to speak about The United States National Health Care Act, which is yet to be signed into law. The adoption of this law will result in the creation of a universal healthcare system. The main issue is that this system will replace private health insurance companies which currently operate in the United States. By adopting of such an approach, the government will be able to eliminate administrative costs. Some economists, for instance, Paul Krugman believes that that in this way, it will be possible to save at least 200 billion dollar per year (Krugman, 2005, unpaged). This argument is partially supported by the findings of other scholars; Steffie Woolhandler, Terry Campbell and David Himmelstein point out that administration costs constitute approximately 30 percent of the expenses (2003, p 768). This percentage is much lower in other countries, for example, in Canada. Therefore, public administrators and policymakers intend to reduce these expenses by introducing universal single-payer system. Nevertheless, this idea is opposed by a great number of people. First, it is perceived as an attempt of the government to take control over the healthcare system. Additionally, the adoption of this legislative act will eliminate a great number of jobs, especially if we are speaking about health insurance industry (Krugman, 2005, unpaged). This is one of the difficulties which prevent the government from introducing a universal healthcare system. The task of public administrators is to reconcile the interests of different stakeholders. The establishment of a universal healthcare system can increase universal coverage, but at the same time, it may result in unemployment. This is one of the dangers that policymakers and public administrators should be aware of. They must find ways of minimizing potential adverse effects of the reform.

Medical workers also express their concerns about the introduction of a universal healthcare system. They believe that in this way, the government will encroach upon the rights of hospitals and healthcare providers (Hart, 2009, p. 65). This argument is particularly important if we are speaking about ways of managing resources, quality standards, and medical practices (Hart, 2009, p. 65). From their standpoint, the establishment of a universal healthcare system will prevent medical organizations from competing with one another. Yet, we should point out that such perception of the reform is not quite accurate. This reform is primarily aimed at making hospitals more accountable to the patients (Fisher & Shortell, 2010, p. 1715); total control of medical institutions is not one of its goals. Thus, public administrators have to insure that their intentions and objectives are not misinterpreted. Without support of medical workers, this reform is rather unlikely to attain its original goals.

Another thing which they believe to be very important is the shortage of qualified workers. For instance, in rural areas of the country, there is a continuing shortage of physicians and nurses (Hart, 2009, p 73). Their main argument is that by introducing a universal healthcare system, the government will not be able to improve the quality patient care because many medical institutions will be still understaffed. This is another problem that is to be resolved by policymakers and public administrators. They must find ways of encouraging young people to become healthcare professionals.

There are also legislative challenges related to the healthcare reform and introduction of universal system. As it has been said earlier, the reform is supposed to make health insurance compulsory for every citizen of the country, especially in the long term, but this requirement is considered to be unconstitutional by some legal scholars. For instance, David Rivkin and Lee Casey believe that the fundamental law of the United States contains no provisions that can make health insurance mandate compulsory for the citizens (cited in McDonough, 2011, p. 316). Currently, this issue does not attract much attention of the public because this mandate will be implemented only in 2014. However, in the future, this issue can become a subject of a heated debate. There is a great likelihood that many people will refuse to accept health insurance mandate. This conflict can be avoided only if the government explains the benefits of acquiring this insurance.

Hence, it is possible for us to say that the introduction of a universal healthcare system can conflict the interests of many stakeholders, namely, the workers of health insurance companies, some healthcare providers, and those people who are not willing or cannot afford to purchase health insurance. Still, even despite these challenges, one should not suppose that the idea of universal health care system is unrealistic or unnecessary. This approach has already been adopted by many advanced countries, such as Canada, and it has proved to be effective. For instance, in Canada, administrative costs are much lower and constitute only 14 percent of total spending while in the United States, this number is more than 30 percent (Woolhandler, Campbell, Himmelstein, 2003, p. 768). Again, we should note that even before this reform, a great number of scholars criticized laisser-faire attitude of the government toward the healthcare system. For example, in his article, Simon Kosali notes that the raging high costs of health care in the United States can be explained by lack of regulations in the industry. He asserts that overdependence on a market-based health care system is the underlying cause of this reform (Kosali , 2003, p. 1865).

One of the crucial points identified by public administrators and scholars is the factor which determines the prices of healthcare. For example, in her report, Martha Coakley, Massachusetts Attorney General, points out that the prices set by medical institutions and insurers are often arbitrarily determined during negotiations, and that they vary across the country (Coakley, 2011, p. 11). These prices are not determined only by the actual costs incurred by medical institution. Martha Coakley believes that healthcare organizations are to be made more accountable for the cost and quality of their work.

According to this author, the policies of healthcare providers and insurance companies lack transparence, and governmental regulations can make these policies more objective and evidence-based. It is necessary to admit that this scholar does not overlook such a factor as inflation, but in her opinion, high costs can be explained by lack of cost-control tools (Coakley, 2011). Judging from her findings, we can say that increasing price of healthcare services is not always determined by purely economic factors. Perhaps, this is the main reason why the quality medical services become more unaffordable to many people.

This literature interview that we have written indicates that the establishment of a universal healthcare system can really benefit both patients and medical workers. The reform undertaken by the government can make functioning of medical institutions much more transparent and effective. As it has been mentioned in the previous section, overdependence on the market-based model of healthcare results in the elimination of price-control mechanisms and eventually only aggravates the situation. In the next sections, we will show how theory of public administration can be applied to this problem and how it may help policymakers and administrators.

Public Administration Theory Applications and Analysis

The theory of public administration can be of great avail to those people who are responsible for the implementation of the healthcare reform. By relying on this discipline, they will be able to determine social, political, and economic factors which affect the interests of different people. In addition, by adopting the methods of public administration theory, one can make the functioning of governmental organizations much more efficient. First of all, we can apply such concept as lean government to federal agencies and healthcare organizations. This idea has been borrowed by public administrators from manufacturers who attempted to reduce their operational expenses (Milio, 2005, 240). The essence of this approach lies in the elimination of every kind of organizational waste. At first, it is of vital importance to identify those costs which are not crucial for the effective work of a company or organization (Wilrick, 2009, p 133). It is possible to single out several types of waste that are typical of public service organizations, in particular, conveyance or shifting responsibilities between departments or agencies, excessive paper work, and over-processing. Each of these so-called wastes raises the costs of healthcare and diminishes their quality. As it has been identified in the previous parts of the paper, the U.S healthcare system incurs considerable administrative costs which equal thirty percents of total expenses (Woolhandler, Campbell, Himmelstein, 2003, p 768). This is why public administrators decrease the necessity for excessive paper work. One of the ways to do it is to develop a single database that will contain the information about patients. Overall, more active adoption of online technologies will make hospitals more suitable for the needs of patients and physicians. The advocates of lean govern approach view public service as a mechanism that may have its defects. This is one of the ways in which public administration theory can contribute to the successful implementation of the healthcare reform and adoption of a universal healthcare system. To apply lean government model, it is necessary to examine carefully the functioning of the healthcare system and its components and understand how it is affected by social and economic factors.

The second tool provided by this discipline is stakeholder analysis. In order to use this method effectively, it is important to identify major groups of people who will be affected by the healthcare reform and who can influence its implementation. We can speak about the healthcare providers, workers of insurance companies, hospital administrators, impoverished people, taxpayers, small businesses and so forth. Some of these stakeholders can oppose to this reform. For instance, the employees of insurance companies can object to it because they run the risk of losing their jobs. Moreover, insurance companies can influence legislators through lobbies. This is why policymakers should find ways of compensating them, at least partially; otherwise, they will stand in direct opposition to the reform and the idea of a universal healthcare system. The same thing can be said about small businesses since they may find it very difficult to provide insurance to their workers, especially those ones who are employed on a part time basis. This is the main reason why the government should provide these organizations with subsidies. Again, they should see that the government is willing to assist them with this task. Overall, the success of this reform is dependent on the ability of the government to take into account the concerns of different interest groups. The public administration sector has gone through many drastic changes in recent years. The healthcare reform in particular and complexity of the sector have created the need for public administrators to employ new methods of decision-making and analysis. The tools that we have described can assist policy makers with solving some of the administration issues that are caused by the reformation of the healthcare system. This reform has to be based on thorough analysis of social, economic, and political environment. If it is not done, governmental incentives are more likely to harm people rather than help them.


The application of public administration theory shows us what kind of actions the government should undertake in order to successfully put the reform into action. First of all, a centralized national database should be developed to make the transfer of medical information much easier for medical practitioners. This will go a long way in eliminating inefficiencies, such as claim approval, duplicate paper work, or insurance submission. This database will enable the physicians to focus their efforts on treating the patients instead of taking care of insurance procedures and malpractice liability. Again, this may be the first step to the solution of such problem as administrative costs. This recommendation is based on the concept of lean government. It will be quite applicable to the needs of the healthcare system in the United States.

The second strategy or recommendation is to make various stakeholders more interested in the success of the reform. The government should give tax discounts to those small businesses which provide health insurance to each of their workers. If these businesses are simply forced to comply with the rules, they will not be able to compete with larger companies. One should take into account that these organizations have to cope with the effects of economic recession. Without financial support of the state, they will fail to meet the requirements of the federal government.

The third task is to make sure that there are no disparities in the prices set by healthcare providers. As it has been noted by Martha Coakley (2011), these prices are not always directly dependent on the actual costs. They are often determined through negotiations between healthcare providers and insurance companies. The government should impose some regulations on them and insure that patients do not have to pay different amounts of money for the same medical services. This is a crucial step for the implementation of a universal healthcare system.

Finally, one of the difficulties to be overcome is the shortage of qualified medical workers. It seems that the government should increase the wages of healthcare providers, especially nurses. In this way, they will be able to encourage more people to work in medical institutions. This policy will enable the government to attain one of the most important goals, namely, the improvement in the quality of healthcare. One should suppose that medical institutions are only unwilling to help uninsured people; in many cases, they are simply unable to do it because they are understaffed (Hart, 2009, p 73).

Currently, the United States is the only industrialized nation that does not have a universal healthcare system where basic healthcare coverage is provided to the entire population through public funds. Instead, they continue to rely on the most privately funded system which cannot effectively help every member of the community. Aside from the lack of a universal healthcare system, the country has the highest health care expenses, which should be reduced. A universal healthcare system should ensure that the healthcare, which has become increasingly unaffordable for individuals and organization, is available to every citizen. Additionally, free medical services will encourage people to take preventive measures and seek for medical opinions much earlier when treatment is cheaper as opposed to the present state where Americans tend to shy away from the healthcare services to avoid the exorbitant cost. It does not mean that the costs of this reform will inevitably lie on the shoulders of taxpayers. By reducing administrative expenses and regulating the prices, the government will increase the overall coverage of the U.S. population burdening taxpayers.


The health care system of the United States is a subject of contentious political debates, and in the future, the situation will not change. The signing of the Reconciliation and Affordable Care Acts by Barack Obama is an important landmark of the healthcare reform. It is apparent that the rising costs of health care have become virtually unaffordable to many members, and studies show that these costs will continue to rise unless the government intervenes. This reform has to address several issues, namely, the increasing number of uninsured people, the rising cost of healthcare, and lack of transparency. In this paper, we have identified several obstacles that have to be overcome by public administrators, in particular, 1) inability of small businesses to offer full health insurance to the employees, 2) increasing job insecurity for those people who work in insurance companies, 3) lack of price-control mechanisms, and 4) shortage of qualified healthcare professionals. Policy-makers can resolve these problems by making more effective use of information technologies and providing financial help to the small businesses. This transition to a universal healthcare system shows that market-based model of healthcare is not fully suitable for the needs of American people because it is exclusionary in its nature. At this point, it is necessary to discuss the consequences of governmental intervention. If public administrators manage to reconcile the interests of different stakeholders, the establishment of a universal healthcare system can be beneficial.

Reference List

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