MHSA 8635 Health Policy Seminar The Environment of Public Policymaking. ** A simplified model of the policymaking market follows:

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Roland Gray
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1 MHSA 8635 Health Policy Seminar The Environment of Public Policymaking I. The Political Economy of Policymaking ** A simplified model of the policymaking market follows: Producers Consumers (Policymakers) (Interest Groups) ** Using the terminology of neoclassical microeconomics, producers of the product (policy) are policymakers, be it at federal, state, or local level, whether lawmakers, judges, agency bureaucrats, etc., who endeavor to supply public policy in response to the demand of consumers of the product (interest groups, whether special interest or public interest). ** Market transactions within this model are assumed to occur only when the transaction between producers of policy and consumers of policy provides some value to both parties in the transaction. Value to the producer(s) of policy might include more votes at election time, value to the consumer(s) might include a policy that favors their constituency. ** Market transactions typically involve some sort of explicit or implicit negotiation between the parties, each side assumed to be acting in their own best interest. Such negotiations may be cooperative in nature, where both parties negotiate in good faith such that both sides win as a result, or they may be competitive in nature, where each side negotiates in such a way so as to maximize the value to itself resulting from the transaction, often at the expense of the other party (win/lose). In this sense, political markets are very much like the market for any other good. ** Political markets, however, differ in important respects from other types of traditional markets, including: ** The costs and benefits in most traditional markets accrue directly to the parties involved in the transaction and are said to be completely internalized in the process. In political markets, however, the costs and benefits of a given transaction often accrue to parties not directly involved in the transaction i.e. one party receives the benefits of a given policy while another party (not involved in the transaction) pays the cost. (e.g. generational equity issues)

2 ** The decision criteria used by entities in political markets is often quite different than those used in traditional markets. In most traditional economic markets, decision makers (producers and consumers of a product) make production and consumption choices based on short-run as well as long-run time horizons, taking into account both cost and benefits in both cases. In political markets, however, many decisions are made with respect to public policy taking into account only the short-run costs and benefits involved, as producers (policymakers) often are faced with re-election in the short term, and consumers (interest groups) are geared towards a given election cycle as well. ** The most likely result, in terms of public policy, given the above considerations is that policies which yield the largest short term benefit to both producers and consumers and/or minimize the short term cost to each group (irrespective of the magnitude of long-run costs imposed or to whom they accrue) are most likely to be enacted. ** Demanders/Consumers of Public Policy ** Entities that desire to have public policies enacted that contribute to the overall well-being or utility of themselves or the groups that they represent. ** The most effective demanders/consumers of public policy are large special interest organizations, which have the ability to pool effort and resources towards the achievement of a common goal or set of objectives. Due to the time and economic costs necessary to effectively influence the policymaking process, it is rare when individuals or even small groups display the ability to be effective in this arena. ** The first amendment to the U.S. Constitution provides citizens with the right to peacefully assemble and petition the government for a redress of grievances. Thus did the founding fathers lay the groundwork for the establishment of special interest groups and their constitutional right to exist. ** Two very different perspectives can be taken in terms of understanding/explaining the influence of special interest groups in the policymaking process:

3 ** Pluralist Perspective: holds that special interest groups, in the aggregate, have a positive influence on the policymaking process, due primarily to the sheer number of groups involved and the high likelihood that virtually every citizen s viewpoint is represented by some group. Persons who subscribe to this perspective tend to also subscribe to the group theory of politics. ** Elitist Perspective: holds that special interest groups - specifically a few large, powerful, well-financed groups control much of the policymaking process, often to the detriment of the public interest, while advancing the goals/objectives of their own membership. ** Between the two views of special interest activity in the public policymaking process, it can be argued that the elitist view was probably a more accurate depiction of the process historically, and may still be today. With the advent of the internet and , however, there has also arguably been a major seachange in the process, allowing for direct individual input (albeit in large numbers typically to be effective) into the process. ** Suppliers/Producers of Public Policy ** Legislators: federal, state, local lawmakers. Primary suppliers of public policy vis-à-vis laws and statutes at various levels. ** Executives/Bureaucrats: executive branch managers, directors, etc. Primary suppliers/implementers of public policy vis-à-vis the establishment of rules/regulations and operational procedures necessary for the enforcement of laws/statutes passed by legislative bodies. Tend, in the aggregate, to be more concerned with regard to the budgetary implications of policy decisions than legislators, due to differences in nexus of responsibility between the two. Also may contribute to the policy-making process by providing inputs/information to legislators with respect to policy analysis/ evaluation of alternatives. ** Judiciary: acts primarily as a supplier of policy vis-à-vis its duty to interpret law, establish judicial procedure, or interpret the U.S. Constitution. Examples include judging the constitutionality Of a given law/policy passed by a legislature; nullifying, interpreting, and/or applying judicial precedent to the rules, regulations, and/or procedures established by the executive branch. Much more prevalent in state and lower federal courts.

4 ** Interaction Among Policy Suppliers and Demanders ** The ability of suppliers and/or demanders of public policy to be successful in this marketplace depends upon their ability to exercise influence and power towards achieving policy objectives. ** Power is defined as the ability of a party to exert significant influence towards facilitating a market transaction. Influence is the process by which a party is able to successfully persuade other parties to follow their advice, suggestion, or order. ** Power and influence can obviously reside with either/both suppliers and/or demanders of public policy. The AMA, for example, is widely recognized as a powerful and influential lobby (demander) in the health policy arena. Also, specific legislators are widely recognized as powerful and influential in the health policymaking process Rockefeller (D-WV), Stark (D-CA), etc. ** Powerful/influential policy participants typically derive their status from a number of recognized sources of power: ** Legitimate Power power derived from formal position within policymaking process ** Reward Power power derived from the ability of a policy participant to reward compliance in the policymaking process (outgrowth of legitimate power). ** Coercive Power power derived from the ability of a policy participant to withhold or prevent someone from obtaining a desired reward. ** Expert Power power derived as a result of possessing desired expertise in the policymaking process. ** Referent Power power derived as a result of an ability of the policy participant to engender admiration, loyalty, and emulation from others in the policymaking process. (charismatic power) ** Historically, a small number of large, powerful special interest groups (as mentioned previously) retained a significant amount of influence in most health policy domains at all levels these included the AMA, AHA, ACP, and ACS. These large groups, in conjunction with a handful or powerful legislators with oversight in the health policy domain along with the administrators and bureaucrats in charge of the executive agencies charged with overseeing this domain formed an iron triangle of influence.

5 ** Up until the early 1960 s, this iron triangle was considered to be impenetrable to outside groups who desired to change public policy in this area, so much so that public policy with respect to health issues mirrored exactly the goals/objectives of these particular groups. (e.g. no third party interference with MD/patient interaction, fee-for-service reimbursement). ** The early-mid 1960 s, however, saw a substantial weakening of this triangle with the advent and passage of Medicare and Medicaid. The net result was a fatalistic splintering of the theretofore consistent relationships between/among the interest groups, and a net loss of power and influence among these groups in the public policymaking process that arguably persists today. ** Ethical Issues in the Policymaking Environment ** As the policymaking process is controlled and dictated by human activities and interactions, it follows that the outcomes and consequences of the public policymaking process is dependent on the ethical standards of those who participate in the process. ** It is generally presumed that the political marketplace where public policymaking takes place is guided by the following ethical principles: ** Respect for the autonomy of other persons. Involves the assurance of the right of all individuals to independent self-determination regarding how they live their lives and to their rights regarding the integrity of their bodies and minds. This respect for autonomy influences all policymaking efforts that pertain to individual privacy and choice, including behavioral/lifestyle choices. (e.g. Patient Self-Determination Act of 1990). ** Ethical principle of justice for all. Aka fairness or just deserts, which holds that justice is served once individuals receive that which they deserve. The practical implication of this principle in the public policymaking process relates to the concept of distributional justice, whereby the parties affected by a policy are not unfairly put upon relative to their means and needs.

6 ** Ethical principle of beneficence. Participants in the public policymaking process are assumed to act in good faith to do good by the process. This does not strictly mean that they do as much good as they can for one group at the expense of all others, but rather means that they act to maximize societal benefits while balancing the burdens of their decisions fairly, based on their conceptualization of fairness. ** Ethical principle of nonmaleficence. Participants in the public policymaking process are assumed to not knowingly undertake policy efforts where individuals will be significantly harmed with complete certainty. They are also presumed to make policy choices where any potential harm to individuals is minimized.

MHSA 8635 Health Policy Seminar The Public Policymaking Process

MHSA 8635 Health Policy Seminar The Public Policymaking Process I. Policymaking Process Characteristics ** Continuous and cyclical process ** Significant external influences on process (open system) **