BRUIN

BUSINESS
VOLUME 3 ISSUE 3
WINTER QUARTER, WEEK 4
REVIEW
Costs of Healthcare
What Obama Healthcare Costs You: p. 20

Pharmaceuticals
Companies and Healthcare Reform: p. 16

Wharton Business School

What U. Penn Can Do For You: p. 6

THE HEALTH CARE ISSUE

 INSIDE
Overview 14
An Overview of the Healthcare Industry

Recent Legislation 16
Obama’s Healthcare Bill
News of the Week 4
Massive Earthquake hits Haiti
Pharmaceuticals 17
Companies and Healthcare Reform
Calendar 5
Events January 27 through February 18
International Healthcare 18
Coverage, Prescriptions, and Financing
Business School Profile 6
Wharton, University of Pennsylvania
History of Healthcare Bills 20
Investment Banking 8
Recent News in the Banking Industry Costs of Healthcare 23
What Obama Healthcare Costs you
Accounting 9
News and Recruiting Tips

Consulting 11
News in Consulting

THE HEALTH CARE ISSUE

 BBR STAFF
PRESIDENT | Sunny Wong
EDITOR IN CHIEF | Benjamin Lo
VICE PRESIDENT, OPERATIONS | Julie Chen
VICE PRESIDENT, FINANCE | Eric Park
VICE PRESIDENT, MARKETING | Christine Liu
ASSOCIATE EDITOR |Cristina Carillo
COPY EDITOR | Jesus Heredia
OPERATIONS | David Vayzner
FINANCE | Andrew Edwards
Stephen Moock
Jin Sun
MARKETING | Robert Chang
Jane Kim
Stephanie Ju
Steven Laird
Chris Young
MARKETING | Jane Kim
CREATIVE DEVELOPMENT | Junior Bustamante
Amorette Jeng
Lona Zhao
ADVISORS | Fred Kim
Dmitry Shuster

PHOTO CREDITS
Cover | Patrick Tran
Table of Contents | Lona Zhao, Christian Svensson,
‘LittleMan’
Credits Page |Andrzej Gdula, Cathy Kaplan, Jyn Meyer
News of the Week | Shaul Schwarz
Calendar | G & A Scholiers, Mike Johnson
Business School Profile Pictures & Charts | Wharton
Business School
Investment Banking | Jakob Lyng, Styledbits.com
Accounting | Darren Shaw, Shaun W
Consulting | Martin BOULANGER, “FOTOCHROMO”, Ivan
Petrov
Healthcare title page | Michelle Morales
Overview of Health Care | “yenhoon”, Vangelis
Thomaidis , Will Thomas
New Health Care Legislation | Rabi Raj
Pharmaceuticals | Aleksandra P.
International Health Care | Dominik Gwarek, “RAWKU5”
History | Sundeip Arora, Tijmen Van Dobbenburgh,
Lona Zhao, Christy Thompson, Thiago Miqueias
Costs | Melissa Balkon, Keith Syvinski

NEWS OF THE WEEK
MASSIVE
EARTHQUAKE
HITS HAITI
By Stefanie Ju
Staff Writer
On January 12th, a 7.0-magnitude earthquake shook Haiti,
devastating the already impoverished nation. A death count
has not yet been confirmed, but as search crews have contin-
ued to clear through the disaster that the quake has left be-
hind, the body count rises. As of January 15th, estimates
ranged from 100,000 to 150,000 casualties.
The United States responded to this tragedy quickly, pledging
$100 million for Haiti relief efforts two days after the quake
took place. The United States military has lent their services
in order to provide humanitarian aid to Port-au-Prince, Haiti’s
capital and a hard hit area of the earthquake. U.S. helicopters
have dropped supply packages, and U.S. soldiers are support-
ing search-and-rescue missions; by January 18th, over 6,000
military personnel arrived in Haiti. Also, the United States
sent its naval ship, the “Comfort”, which houses the equiva-
lent to a fully equipped hospital.
Other international organizations have also mobilized and
donated their efforts; relief organizations such as the Red
Cross and UNICEF have directed their efforts towards aiding
victims of the Haiti earthquake. Relief efforts have poured in
from various countries and organizations, but affected citi-
zens are still in dire need of increased aid. As injured and
starving Haitians continue to die every day, these organiza-
tions must find ways to funnel water, food and supplies to
the suffering victims.
“monetary donations are the
best way to contribute to the
humanitarian relief efforts”
The United Nations peacekeepers and Haiti government have
teamed up and kept control of the situation in the Port-au-
Prince. The United Nations has also worked on finalizing a
$562 million plan that will help 3 million Haitian victims for 6
months. The United Nations Food Program has also been
working to get food to the starving victims; they were able to
supply 2 million people with “one-week rations of ready-to-
eat-food” (U.N. World Food Program).
Bruin Business Review - News of the Week 4
The Red Cross has donated its efforts to help victims of the
Haiti earthquake as well by focusing its fundraising on this
cause. The organization has also reached out to young people
by involving cell phone providers and such social networks as
‘Twitter’ in order to increase donations collected. The Red
Cross has enabled those that want to lend a helping hand to
Haiti in this time can simply text or ‘tweet’ a donation to the
Red Cross. By January 15th, 3 days after the earthquake, these
campaigns had generated more than $10 million for Haiti
relief funds.
“this tragedy has also
prompted the growth of
fraudulent organizations”
UNICEF has contributed to the relief efforts by distributing a
plethora of supplies to victims. These include: dehydration
salts and water purification tablets. They fear that the al-
ready devastating conditions that many Haitians have lived in
have further intensified; their need for fresh water has be-
come dire, and UNICEF has focused its efforts on providing
supplies to “halt diarrhea infections and diseases” (CNN).
Relief agencies have reinforced the message that monetary
donations are the best way to contribute to the humanitarian
relief efforts in Haiti. And the charitable donations have
poured in from across the world to organizations that are
currently represented in the Haiti relief efforts. However, this
tragedy has also prompted the growth of fraudulent organi-
zations, trying to scam charitable people out of their money.
There have already been reports of fraudulent organizations
that link potential donors to “malicious software sites” (CBS
News). Shortly after the earthquake hit Haiti, the FBI warned
Americans to make their donations to reputable organiza-
tions, and to avoid emails that ask for donations. But despite
the threat of these organizations, people all over the world
have banned together to help Haiti in this moment of tragedy
and crisis.
 Bruin Business Review - Calendar 5

CALENDAR
January 27th

Event: Gallo Wine Company Info Session

Time: 6-8pm
Location: Broad 2100A

Event: Deloitte Speaker: Interviewing*

Time: 12:00pm
Location: Ackerman 3517

January 28
February 9
Event: Internship Search, Job Search Jumpstart
Time: 4-7pm Event: Media and Entertainment Night
Location: Career Center Time: 7-9pm
Location: Grand Horizons Room, Covel Commons

February 10*

Event: BDO Seidman Speaker: Resume Writing

Time: 12:00pm
Location: Ackerman 3517

February 11

January 29* Event: Econ / Finance / Accounting Job Search Jump-

start
Event: Mock Interview Session Time: 4-7pm
Time: 8:15am-5:00pm Location: Career Center
Location: Career Center
February 12
February 2
Event: Google BOLD internship applications due
Event: Mid-Tier Madness (Meet mid-tier accounting Location: www.google.com
firms)
Time: 6:00-9:00pm February 17
Location: Grand Horizon Room, Covel Commons
Event: Interview with a Bruin
February 3* Time: 6-9pm
Location: Grand Horizon Room, Covel Commons
Event: Moss Adams Speaker
Time: 12:00pm February 18
Location: Ackerman 3517
Event: Government & Community Fair
* See Student Accounting Society website for further Time: 4-8pm
details Location: Grand Horizon Room, Covel Commons
 Bruin Business Review - School Profile 6

Business School Profile

By: Christine Liu
Staff Writer

T ied 1st place internationally with Harvard Business

School as well as the London Business School in 2009,
Wharton School of the University of Pennsylvania is
one of the world’s top graduate business schools. Interestingly,
Forbes Magazine found that about 90% of billionaires get their
MBA degrees from Harvard, Columbia, or University of Penn-
sylvania. As a business school with 250-plus faculty who are
the most published and cited business school faculty Wharton
is one of the premier schools among companies to recruit. The
top full-time hirers include the likes of McKinsey & Company,
Boston Consulting Group, Goldman Sachs & Company, Morgan
Stanley, Johnson & Johnson, etc. A highly selective institution,
high GPAs, GMAT scores, and strong credentials in the work
field are the norm among those who receive admission. ¹Current Students of the MBA for Executives program

MBA for Executives

A two-year program offered in San Francisco and Philadelphia,
the MBA for Executives offers students, usually more experi-
enced professionals, the same curriculum as the regular MBA
program. It is a residential program that allows students to
come together every other weekend for the entire year.

“…almost 200 electives (the largest

elective offering among business
schools)”
Wharton does have an undergraduate business program that
high school seniors can directly apply to, but this article fo- Doctoral
cuses mainly on its graduate programs, which include: In the Wharton PhD program, students can research in any one
MBA of nine areas of study. It takes approximately four to five years
MBA for Executives to complete the PhD degree program. As an extremely com-
Doctoral petitive program, only a total of 37 students were admitted to
Executive Education the doctoral program in 2009.

MBA Executive Education

Usually for individuals who own or manage their own organiza-
The Wharton MBA program is different among other top
tion, the Executive Education is a multi-month process that
graduate business schools because it offers eighteen majors,
allows their students to choose a program in various different
as well as almost 200 electives (the largest elective offering
areas such as healthcare, leadership development, innovation/
among business schools), such as entrepreneurship, the fi-
technology, etc. The school helps students learn new strate-
nance of buyouts and acquisitions, sports business manage-
gies and go more in-depth in a specific area directly corre-
ment, urban real estate economics, etc.
sponding to their organizations’ needs.
 Bruin Business Review - School Profile 7

Admission Deadlines
and Expenses
MBA
There are three different rounds throughout the year in
which students can apply for the MBA program. However,
the later the round, the more competitive it is to enter the
program. For 2010, deadlines for rounds one and two have
already passed, but round three’s deadline is March 9, 2010
and the decisions release date is May 14, 2010. Total ex-
penses per year are $81,000, including room and board.

“Forbes Magazine found that

about 90% of billionaires get
Wharton takes a customized approach to addressing the
their MBA degrees from needs of an individual or organization, the tuition/fees are
based on the various programs and courses taken.
Harvard, Columbia, or
University of Pennsylvania.”
MBA for Executives
The deadline for both the San Francisco and Philadelphia For more information on application materials and proce-
campuses is February 1, 2010. For the two-year program, dures, visit: www.wharton.upenn.edu
total costs for San Francisco is $ 165,900, and $ 156,600 for
Philadelphia. The differences in cost are due to a higher cost
of living in San Francisco.

Doctoral
For 2011, students need to submit their applications and ma-
terials by December 2010. As an extremely selective pro-
gram, the admissions committee reviews previous academic
work, GMAT or GRE scores, and instructor and job evalua-
tions. All PhD students receive a stipend as well as a fellow-
ship that covers tuition of $24,720.

Executive Education
Individuals and organizations can apply at any time. Since

RECENT NEWS IN THE
BANKING INDUSTRY
By Sunny Wong
Senior Staff Writer
OBAMA ADMINISTRA-
TION PROPOSES TAX ON
WALL STREET BONUSES
O
ne of the major recent head-
lines dominating the banking
industry striking up consider-
able controversy has been the
large bonuses banks have been paying
its employees. Four of the largest
American banks plan to announce bo-
nus payments of up to $100 billion for
their staff this week. JP Morgan, for
instance, plans to pay its staff up to $6
billion in bonuses. Citi on the other
hand, has plans to cap bonuses at
$100,000, a move that may help dimin-
ish the public outrage over Wall Street
bonuses, but may make it more difficult
for them to retain top talent.
“If banks can afford to pay
out bonuses, then they can
repay taxpayers too”
To address complaints of “Main Street”,
the Obama administration has proposed
a $90 billion tax on the largest banks.
Obama emitted an air of confidence at a
recent public announcement saying that
“if banks can afford to pay out bonuses,
then they can repay taxpayers too.” The
Obama administration estimates the
0.15 percent tax should affect as many
as 50 of the largest banks and should
raise approximately $90 billion within a
span of 10 years. The money raised will
be used to pay back the costs of the
$700 billion Troubled Asset Relief Pro-
gram (TARP) that the U.S. Government
implemented during the peak of the
financial crisis back in 2008 to bail out
the largest U.S. banks. If this proposal
Bruin Business Review - Investment Banking 8
passes with the approval of Congress,
the proposed tax could be set into ef-
fect as early as June 2010. To become a
law the bill must pass both houses of
Congress and then be approved by the
President.
Despite Obama’s confidence in passing
this proposal, he faces opposition from
Republicans and the financial services
industry. Jamie Dimon, Chief Executive
of JP Morgan Chase, said, “Using tax
policy to punish people is a bad idea. All
businesses tend to pass costs on to cus-
tomers.” The banks could simply tighten
their credit and raise interest rates,
making it more difficult for consumers
to borrow money. Similarly, small busi-
nesses relying heavily on credit from
banks may see a tightening of loans is-
sued by banks. Other banks have also
raised their objections by stating that
many of them have already repaid the
TARP money with interest.
BANKERS PREDICT AN
INCREASE IN TECH IPOs
Technology initial-public offerings (IPO)
are picking up again. In the recent polls
that have been conducted, many capital
markets executives are optimistic about
the IPO activity this year. 68% of those
polled believe that IPO activity will see
an increase this year. Overall, there is a
definite sense of optimism in the air.
The increase in IPO activity will un-
doubtedly help the banking industry as
they will see an increase in workload
among the capital markets group, po-
tentially leading to more hiring.
Some other potential IPOs to look
out for:
Skype
Twitter
Yelp
Linkedin
Digg
Facebook is most likely one of the top
candidates to look out for an IPO in
2010. Recently, Facebook implemented
a dual-class stock structure, a move that
many companies utilize prior to issuing
an IPO. Although Facebook has kept its
revenues a secret, it has been growing
very quickly, with a current user count
of 350 million worldwide. If Facebook
were to issue public shares any time
soon, it could potentially be valued at
around $14 billion as many investors
said that they were willing to pay ap-
proximately $32 per share. A Facebook
IPO may very well lead to what many
analysts coin as the “Netscape Mo-
ment,” a surge in technology IPOs that
characterized the dot-com boom back in
the late 1990s.
 Bruin Business Review - Accounting 9

ACCOUNTING NEWS AND

David Vayzner: Staff Writer RECRUITING TIPS
New Responsibilities
IRS: The New Health Care
If the current health care bill under proposal were to pass, the
Enforcers IRS would have additional tasks of executing administrative and
The IRS (Internal Revenue Service) is the federal govern- accounting duties of the health care overhaul. These new duties
ment agency in charge of collecting taxes from its citizens. would include:
The IRS has been suspect of fraudulent abuses in the past
according to the Treasury Inspector General for Tax Ad- As part of the state exchange program, the IRS would be in
ministration. They reported not having collected $290 bil- charge of handing out federal subsidies to those who earn
lion worth of taxes owed to them in 2001. Problems of low income.
fraud and abuse of the IRS’s current tax credit system have Making sure people follow laws of the new health care bill.
also occurred, causing the loss of potential government For example, showing proof of the coverage on their federal
revenue. A tax credit is a subtraction from total taxes a tax returns. If this is not the case, the individual in question
person owes to the government. The United States offers will have to pay a fee, subject to the IRS.
tax credits to people who fit certain necessary require-
Determining the tax on insurance plans which are high cost-
ments. Example of tax credits include:
ing
Monitor Health Saving Accounts and make sure distributions
Earned Income Credit- tax credit given to people who
are proper and legal.
earn low wages. Wage boundaries are set by number
Overseeing the flexible spending account and making sure
of qualifying children of the collector.
that contributions made to it are valid and legal.
Hope Credit- education credit given to those who pay
expenses to receive a higher education degree
The IRS will need to develop verifiable information systems to
The IRS has had trouble enforcing rules and procedures of execute provisions under the health care bill. This means imple-
tax credits. In 2005, $40 billion was paid out as part of the menting procedures that help verify information they receive.
Earned Income Tax Credit. The Treasure Inspector General Many important officials, such as Senator Charles Grassley, ques-
for Tax Administration determined 11 billion dollars of this tion the IRS’s ability to perform such tasks due to their recent
was improper. Other tax credit programs such as the Child prior history with programs such as the First Time Home Buyer
Tax Credit and the First time Home Buyer Credit also lost Credit.
billions of dollars based on fraudulent tax returns. In one
instance the IRS gave a First Time Home Buyer Credit to a Steps Towards Improvement
four year old child on a 2008 tax return.
The IRS is looking to implement policies cutting the 290 billion
dollar gap and making the tax credit system more reliable and
verifiable. These changes will set down heftier information re-
porting standards and other changes in tax law, making it easier
for the IRS to monitor information that they receive. The IRS
would also like to receive more funding and a simplification of
the tax code. This would make it easier for them to enforce the
tax law. These changes will help instill confidence in the IRS’s
ability to administer the new proposed health care bill.

“Be sure to be able to highlight your

strengths with specific examples.”

Members of Congress Request for
Comptroller General to Be a
Qualified CPA
In a recent bipartisan move, Rep. Collin Peterson, D-Minn and
Rep. Mike Conaway, R-Texas, sought to introduce new legisla-
tion to the house floor guaranteeing that the Comptroller Gen-
eral be required to be a CPA. The Comptroller General is the
head of the Government Accountability Office. The Govern-
ment Accountability office is in charge of making sure the Fed-
eral Government of the US is held accountable to the people
that it serves. Many are happy with this move including the
American Institute of Certified Public Accountants (AICPA).
Barry Melancon, CEO and president of AICPA stated,
“Taxpayers are rightly demanding ever-increasing accountabil-
ity and transparency from the U.S. government. It is essential
that the comptroller general have the education, skills, back-
ground, training and discipline of a CPA.”
“The IRS gave a First Time Home Buyer Credit to a
four year old child.”
Currently there is no comptroller general, as the seat has been
vacant since 2008 due to the resignation of David Walker. The
acting comptroller general is not a CPA, but belongs to the Na-
tional Academy of Public Administration and the Association of
Government Accountants.
Former Deloitte Partner Found Liable
for Accounting Violations
Thomas Flanagan, a former Deloitte partner, was determined
liable in court for not adhering to conflict of interest laws. He
invested in companies immediately after performing auditing
services for them, thus using his professional position to gain a
personal benefit. The ruling, by Judge Noble, stated that
Flanagan was improperly trading with Walgreen Co., Motorola
Corp., and Allstate Corp. Thomas Flanagan had also purposely
obscured these actions from Deloitte and therefore Deloitte
was to be awarded a penalty.
Noble stated, “Because an auditor sells, at base, its independ-
ence, and integrity, the firm relies heavily on the purported
honesty and independence of its professionals.”
Deloitte claims that Flanagan had invested over 300 times in
companies that he had previously audited between the years of
2004 and 2008. One particularly flagrant example of this oc-
curred on July 17, 2008; Flanagan attended a meeting where a
draft of Allstate’s second quarter earnings was handed out.
Flanagan then purchased and sold call options on Allstate’s
stock, earning a net profit of 85 percent.
Bruin Business Review - Accounting 10
Recruitment Tips for Summer
Internships
It is that time of year, where
accounting firms all over the
Los Angeles area are looking
to recruit young and ambi-
tious students for summer
internship positions. Here
are some last minute tips to
give you an edge in the re-
cruiting process.
NETWORK
Make sure you network and meet your potential future em-
ployers before the actual interview takes place. That way
you will establish a cordial familiarity with them and also
show that you are committed to the recruitment process.
Many times, your interviewer and the person you met at the
networking event will coincide, and this could work im-
mensely to your advantage if you network properly.
THE INTERVIEW
Come mentally and physically prepared for the interview.
Dress appropriately and make sure your appearance is suit-
able and presentable. Be sure to highlight your strengths
with specific examples. Most interviews are behavior based,
meaning the interviewer will ask you to recount a specific
episode in your life and how that episode highlights your
strengths. Make sure that you can do this in a confident and
articulate manner. Practice in front of your roommate or
parent. Your interviewer will know if you have come pre-
pared to the interview. If you do come prepared, you send a
signal to the firm that you are serious about the recruitment
process.
Some deadlines to be aware of as you find yourself in the
middle of the recruitment process are:
A person will typically have three days to sign up for
an interview. The official start time to sign up is
around February 6th for most firms. The deadline
for setting up an interview is usually around Febru-
ary 9th
The actual interview will take place a couple days
after the actual interview sign ups are over. Al-
though the dates differ for each firm, February 11th-
16th are around the times most interviews will take
place.

BREAKING INTO
CONSULTING
By Robert Chang
Staff Writer
I n the modern corporate world
where billions of dollars can ride
on a single decision, one of high-
est demanded commodities is sound
advice. The career path of a consultant
requires both extensive technical knowl-
edge and effective business strategy to
succeed. Consulting, according to Tom
Rodenhauser’s Inside Accounting com-
prises 30% of all U.S. business school
graduates who are also hired for one of
the 50 largest consulting firms. This puts
Consulting above the investment bank-
ing and hi-tech industries as the most
desirable careers.
Consulting like management combines
business strategy with a limitless option
of technical fields. There are; organiza-
tional development consultants who
help restructure a company for maxi-
mum efficiency, legal consultants that
act as business minded lawyers, guiding
companies through litigation, financial
consultants that advise companies on
managing financial systems and restruc-
turing finances during changes in or-
ganization., etc. For any specific func-
tion or problem type of a large corpora-
tion, there is a field of consulting to ad-
dress it. This diversity gives a prospec-
tive consultant many career options to
explore.
Also, the popularity of consulting, once
again linking to flexibility, is the diversity
of projects. Contracts between team of
consultants and the client’s company
can last anywhere from months to
years. After finishing the project, a con-
sultant will then be transferred to an-
other project in another location, possi-
bly across the nation or on the other
side of the world. This new project will
most likely involve an entirely new
team, new project managers, and a
completely different project goal. These
Bruin Business Review - Consulting 11
radical changes may take some out
of their comfort zone, but to others
they bring an opportunity to break
from the repetitive ‘nine to five’
attitude that plagues the work lives
of many Americans. Of course for those
who would rather stay local, many con-
sulting fields that focus more on the WHAT DOES IT
analytical aspect and require little agent
-client relations are available; although TAKE?
these positions tend to pay less.
When you apply to a firm as a consult-
Associate and principal consultants will ant the company’s consideration of you
be required to go meet clients. While will hinge on two very important quali-
the team leader will get most of the ties, technical knowledge and strategic
face time with clients, analysts for the analytical capability. Technical knowl-
team will be expected to work together edge is being able to process data from
in the same office. The employees who a specific field. This knowledge is cumu-
work for a consulting firm who do not lated throughout your education and
leave their home offices are usually not cannot be learned on the job, only re-
true consultants. While they can analyze fined. Strategic analytical capability, or
financial operations and look for prob- more specifically business strategy, in-
lems, larger firms will only use them to volves using the data produced by tech-
handle data for the consulting firm itself nical knowledge and turning it into a
and not those of clients. In consulting, valuable business plan or decision.
the desire to stay home is not easy for
firms to fulfill. A team will work more For example, say a drug company needs
efficiently if meetings can be held to-
gether in an office instead of phone
conferences and email. Having all con-
sultants assembled in one building cre-
ates a more cooperative environment.
Clients will want the team’s full effort
and firms will want their teams together
to ensure proper team building strate-
gies.
Another major roadblock in the consult-
ing industry is lack of an MBA. Most
UCLA graduates should enter the com-
panies as a low level analyst for a few
years and then go on to get their MBAs,
or get MBA progress along with their
early career. Regardless of your path, an
MBA is necessary. Consulting firms will
not use BAs on their project teams be-
cause the client, represented by mostly
MBAs, will not want to pay for the ad-
vice of someone with a lower education
level.

to determine whether to research a drug. With limited testing of
the drug, the company will need to determine how valuable the
drug potentially will be and how much it will cost to develop. The
company is presented with three uncertainties, the cost of re-
search, whether the drug will past regulatory standards, and
whether the drug will be commercially marketable. The company
has the potential to lose huge amounts of resources if the drug is
not profitable and will gladly pay a consulting firm to look at the
decision. The consulting team will look at the data drawn from
early trials of the drug, the potential risks that would prevent FDA
approval, and the marketable qualities compared to similar drugs
on the market, such as cost and side effects. The consulting team
will have to complete a risk-benefits analysis and present their
findings to the company.
While problems like these are something that can be studied at
business school much of it is inherent in your personal decision
making ability and professional experience. The ‘thinking’ and the
‘doing’ are both integral parts to a team of consultants.
Finding the balance between these two aspects is key to being a
successful consultant. A simple analyst will never move up very
far in the company because poor business strategy or inter per-
sonal skills make the company reluctant to take him out and show
him to clients. Those that have all the skills of a good business-
man combined with technical knowledge are the stars of the
company, both solving problems and building strong consultant-
client relationships.
This is why despite more years of education, PHD’s are often re-
ceive starting salaries lower than MBA’s. MBA’s are on such high
demand from all sectors of the economy, consulting firms are
willing to pay more money in order to secure their interest. It’s
simple supply and demand.
Bruin Business Review - Consulting 12
GETTING A JOB
Summer Jobs / Internships
These are the internship offers as listed on Bruin-
View. This list is not all enclusive but a list of
upcoming oppurtunities
Deloitte Consulting is offering two summer intern-
ship programs, the deadlines for both are
February16th
ZS Associates is offering three internships for the
year, the deadlines for these programs are April 6th
Accenture is offering a summer job for, the deadline
to apply is Febraury 21st
Mercer is offering a summer job, the deadline is Feb-
ruary 28th. They are also offering two summer in-
ternships, the deadline for these is March 5th
FULL TIME JOBS
Valvoulis, Weiner & McNulty, LLC is offering the Ana-
lyst position to bruins in Los Angeles. The deadline to
apply is February 18th.
Compass Lexecon is offering a job as an Analyst in
Century City. The deadline to apply is February 19th.
Oliver Wyman is offering a Junior Analyst position in
either Boston or Chicago. the deadline to apply is
February 20th
Washington Occupational Health Associate Inc is
offering a spot as Project Manager in their Washing-
ton DC office. The deadline is February 27th.
Desmond, Marcello & Amster is offering a position
as Financial Analyst in their Los Angeles offices, the
deadline is Mar 5th
LRN Corporation is offering an position as Analyst at
their offices in Westwood, deadline to apply is Mar
6th
Lists are not all inclusive, for more information go to
Bruin View’s website.
THE HEALTH CARE ISSUE
Overview 13
An Overview of the Healthcare Industry
Recent Legislation 15
Obama’s Healthcare Bill
Pharmaceuticals 16
Companies and Healthcare Reform
International Healthcare 17
Coverage, Prescriptions, and Financing
History of Healthcare Bills 19
Costs of Healthcare 20
What Obama Healthcare Costs You

By Jane Kim
Staff Writer
A ccording to the Bureau of Labor
Statistics, the health-care industry
is one of the fastest growing businesses
in the United States. Accounting for
14.3 million wage and salary workers, it
includes employees in hospitals, private
offices of specialized doctors, nursing
care facilities and ambulatory health-
care services. In addition to medical
assistance, the healthcare industry also
comprises of pharmaceuticals and bio-
technology, providing patients with
newer and improved methods of treat-
ment and care.
Much of the health-care industry is pri-
vately owned; more than half of health-
care establishments are private offices
of physicians and dentists, as well as
other specialized care providers. Public
health-care facilities, on the other hand,
account for only 1 percent of all health-
care institutions, though they employ
about 35 percent of all workers in the
industry, illustrating the variation in size
and proportion of the health-care indus-
try. For example, while a private doc-
tor’s office employs only a handful of
workers, a hospital employs thousands.
In addition to a wide range in number
and share of workers, there is also a
wide assortment of jobs within the
Bruin Business Review - Healthcare Issue 14
AN OVERVIEW OF
THE HEALTH CARE
health-care indus-
try, including doc-
tors, registered
INDUSTRY
nurses, veterinarians, physic
cal therapists, biomedical equipment
technicians, etc. Some fields in the
health-care industry include nursing,
biotechnology, and pharmaceuticals.
Work hours also vary depending on the
job description, and whether the job is
full time or part time. Almost 20 percent
of workers in health-care work part time
and many hold more than one job.
Within the health-care industry, the
pharmaceuticals and biotechnology
industry is one of the fastest- growing
fields. The pharmaceuticals and biotech-
nology industry is responsible for devel-
oping and promoting medications and
treatments. Even during a recession this
particular industry continues to flourish
as demands for prescription drugs and
(MCOs). Most prevalent examples of
medication increase due to the rise in
population. Consequently, from 2004 to MCOs are health maintenance organiza-
2014, the number of wage and salary tions (HMOs) and preferred provider
workers in this industry is expected to organizations (PPOs). While both reduce
increase about 26 percent, compared to health-care costs for citizens due to lim-
a 14 percent increase for all health-care ited out-of-pocket costs, HMOs and
industries combined. However, the dis- PPOs differ in coverage. Based on a
covery of newer and better drugs poses fixed monthly cost, HMOs can only be
used within the network—hospitals and
several problems: it takes a long time
for new medications to be introduced other medical coverage that participate
into the market and costs for research in HMO. By signing contracts with spe-
and development are high, thus reflect- cific providers, HMOs offer cheaper
ing the increase in costs for patients.
With new developments and improve-
ments in health-care and the growing “With new develop-
number of private healthcare establish-
ments, rising costs have become an ments… in health-
overwhelming issue for the average
American citizen. Most patients receive
care…, rising costs be-
assistance in the form of health insur- come an overwhelm-
ance—private or public.
ing issue for the aver-
Private health insurance is coverage age American.”
through an employer, mainly provided
through managed care organizations

health-care. This is beneficial to provid-
ers and holders since HMOs provide the
former with a greater number of pa-
tients, thereby increasing profits, while
allowing for more affordable health-
care for the latter. PPOs are similar to
HMOs but have a broader coverage as
holders are covered within or out of the
PPO network. However, PPO holders are
encouraged to use providers within the
network due to higher costs when pro-
viders are out of the network. Due to
greater flexibility in medical services,
PPO holders generally have higher out-
of-pocket expenses than do those of
HMOs.
“…the pharmaceutical
and biotechnology in-
dustry continues to
flourish as demands…
increase due to the rise
in population”
In contrast to private health insurance,
public health insurance is subsidized by
the government. This type of insurance
provides lower-cost of health-care ser-
vices for specific groups of people, in-
cluding the elderly, disabled, military
veterans, and the poor. Of the many
types of government-funded health-
care programs, Medicaid and Medicare
are most common. Federally funded,
Bruin Business Review - Healthcare Issue 15
Medicare is health insurance for citizens providing access to those who are de-
and long-term residents who are 65 nied health insurance and also on pro-
years of age or older and the disabled. moting self-service for patients so that
Medicare is separated into two parts: they have easier access to scheduling
Part A and Part B. Part A covers for stays appointments, researching costs, and
in hospitals and nursing- care facilities- paying electronically. This particular
like convalescent homes. Part B, which solution also aims to maximize revenue
is optional, covers medical procedures and makes the billing and collection
such as x-rays, blood tests, and other process more efficient by accelerating
forms of medical treatments. Medicaid, the collection of revenue through meth-
funded by both state and federal gov- ods such as automatic secondary billing,
ernments, is another type of public electronic claim processing, and direct
health insurance offered to low-income entry of Medicare claims.
individuals and families. Though qualifi-
cation depends heavily on one’s in-
come, Medicaid eligibility requirements
and coverage differs in every state. For
example, in California, dental insurance
within Medicaid is no longer available to
those who are older than 21 years.
Meanwhile, Tennessee limits the num-
ber of prescription drugs available to
each Medicaid patient.
The Bureau of Labor Statistics predicts
Though health insurances have exten- that the health-care industry will create
sively relieved the financial burden of 3.2 million more wage and salary jobs,
medical bills for many American citi- largely due to the retirement of baby
zens, many health-care companies are boomers of the 1950s and 1960s. Fur-
now finding alternative solutions to re- thermore, with the recent national de-
duce costs. Health-care information and bate on universal healthcare coverage in
technology solutions offer to help those the U.S., the health-care industry will
without health-care insurance by lower- continue to be examined closely.
ing costs while maintaining good qual-
ity. Some solutions include revenue cy-
cle management, enterprise revenue
management, pharmacy and nursing
solutions, etc. For example, revenue
cycle management primarily focuses on

RECENT HEALTH CARE
LEGISLATION
By Stephen Moock
Staff Writer
I t has been almost six months since
President Obama’s original August
2009 deadline for finalizing a health
care bill. It quickly became evident to
Congress that if health care is going to
be successfully reformed, it would take
time and careful deliberation on many
aspects of the bill.
The source of funding for the bill will be
the most difficult piece to take on.
Congress has included in the bill a tax
on what are sometimes called
“Cadillac” health care plans. Originally,
the tax would be placed on premiere
plans costing more than $23,000 for
families and $8,400 for individuals, gen-
erating $150 billion over the next ten
years. However, new legislation would
raise the price limit to plans costing
$24,000 and $8,900 for families and
individuals, respectively. The small
change in the price limit of subject high
-cost plans would drop the projected
tax revenue to $60 billion over ten
years. This move can be argued as inef-
ficient because the seemingly small
change in the price limit of taxable
plans translates to a large decrease in
projected revenue from the tax.
Providers of high-cost insurance plans
will have to pay a steep 40-percent tax.
Bruin Business Review - Healthcare Issue
This proposal is angering many labor
unions because union members have
typically sacrificed higher salaries for
superior health benefits, which come
with a steep price tag. Consequently,
union members are at a disadvantage
compared to non-union members who
will not be subject to the tax. Workers,
as well as government employees, cur-
rently in collective bargaining agree-
ments will not be affected by the tax
until 2018, while the tax
will take effect for every-
one else in 2013. The 40
-percent tax on insurers
will decrease their will-
ingness to offer such
high-cost plans, as well
as compromise the qual-
ity of benefits offered
with these plans. It is
also likely that insurance
companies will increase
the prices on their lower
-cost plans to offset the
proposed tax on the more expensive
plans.
While the Senate strongly favors taxing
health care providers, the House of
Representatives favors an alternative
method that taxes high-income indi-
viduals. In the House, individuals and
couples with incomes higher than
$500,000 and $1 million, respectively,
would be forced to pay an additional
5.4-percent income tax. According to a
CNN / Opinion Research Corporation
poll, 61 percent of people polled fa-
vored the House proposal, compared to
29 percent who supported the Senate‘s
plan.
In addition, also in question is the
amount of financial responsibility for
the bill pharmaceutical companies
would bear. The original contract be-
tween Congress and drug companies
would generate $80 billion in tax dollars
16
“Insurance providers
of these high-cost
plans will have to
pay a steep 40-
percent tax.”
over ten years. Drug companies would
also be required to discount medica-
tions by 50 percent for Medicare bene-
ficiaries. Now, Congress is asking for an
extra $10 billion from the pharmaceuti-
cal industry, a bold move that makes
Congress look like a financial scavenger,
looking for money from wherever pos-
sible.
Senators are saying that because an
additional 30 million Americans would
be receiving health care insurance, the
extra $10 billion expense incurred by
pharmaceutical companies would be
offset by the massive increase in mar-
ket size. However, companies are still
hesitant because restrictions on insur-
ers would make for unpredictable fu-
ture drug sales.
Another measure under consideration
is whether to allow generic drugs to be
sold alongside brand name drugs. As
the bill stands, brand name pharmaceu-
tical companies would have twelve
years of closed sales before generic
companies would be allowed to com-
pete. This would allow the big-name
drug companies to see maximum profit
on their sales without having to worry
about being undersold by manufactur-
ers of generic varieties. Subsequently,
the profits of brand name drug compa-
nies would largely be used to promote
research and development of new
drugs.
 Bruin Business Review - Healthcare Issue 17

Pharmaceutical
And Healthcare Reform
By Andrew Edwards Staff Writer
way to partially offset new costs. Drug companies are hoping
The Pharmaceutical Research and Manufacturers of Amer- the health overhaul will increase their market due to the fact
ica recently announced it would relinquish its support for that more Americans will be insured and can therefore afford
the health-care legislation if Congress were to reduce the prescription drugs.
proposed twelve-year monopoly on new biological drugs.
During this twelve-year period, drug companies are al-
lowed to be the exclusive seller of the new biological drugs “The current support of the pharma-
they create. By charging high prices for new drugs, compa-
nies can use this period of monopoly to recover expenses ceutical industry is a sharp contrast to
incurred during the research and development of new
drugs. The pharmaceutical industry’s trade group includes
the mid-1990s when drug company
the chief executives of the leading pharmaceutical compa- executives led the opposition to
nies on its board, including Pfizer, Merck, and Bristol-
Myers. President Clinton’s health-care plan.”

The drug industry was the first to back reform and its sup- The pharmaceutical industry backed reform early on in the
port has helped move legislation through Congress. The hope that they would be able to influence the intent of the
current support of the pharmaceutical industry is a sharp legislation. The industry trade group believes that twelve-
contrast to the mid-1990s, when drug company executives year protection for new biological medicines is necessary to
opposed President Clinton’s health-care plan. An important promote future drug innovations. They argue that without
reason for their support is that, unlike the Clinton legisla- proper patent protection firms would not be willing to spend
tion, the currently proposed legislation does not include vast sums on research necessary for creating new drugs. The
provisions that allow importation of brand-name medi- industry trade group, which has long cooperated with pro-
cines or that provide a public option for government-run posed legislation and made some initial concessions, has an-
insurance. Drug companies have promised $80 billion in nounced that it can no longer support the bill if it includes a
rebates over ten years to assist with the cost of insuring reduction of data protection on biological drugs.
more Americans. A portion of this money will be used to
discount brand-name drugs for seniors not covered by
Medicare. The gap in Medicare prescription drug coverage
is referred to as the “doughnut hole.” The Medicare
doughnut hole is the medical treatment that Medicare
beneficiaries are financially responsible to cover. This oc-
curs when their costs exceed the prescription drug cover-
age level and are less than the catastrophic coverage level.
Recently, there has been pressure in the House and Senate
to fully cover the doughnut hole, thereby pressuring drug
makers to increase their overhaul concessions.
The other major purpose of the contribution is to help off-
set the cost of providing subsidies to the uninsured. Pro-
posed health reform increases government costs and con-
tributions from pharmaceutical companies are seen as a
 Bruin Business Review - Healthcare Issue 18

INTERNATIONAL
HEALTHCARE
By Eric Park
Staff Writer

According to New York Time’s research, the national average healthcare spending per person in 2008 was $7,681: an increase
of 3.5% from 2007. Medicare is a U.S. government funded program that provides health insurance for citizens over the age of
65. Medicare spending increased to 8.6% in 2008 to $469 billion. The U.S. had an average healthcare spending per person of
$6,402 in 2005 while Japan had an average of $2,358 per person according to statistics provided by National Public Radio.
There are further existing discrepancies between the two countries as Japan provided healthcare for 100% of its population
during 2005 while the U.S. provided healthcare for only 82% of its under 65 population and 100% for those over the age of 65.
Because of the existing problems with the U.S. healthcare system, there have been many reform bills proposed in the past
months. Many critics of the current healthcare system argue that U.S. healthcare falls behind that of its international counter-
parts.

2005 Statistics Japan United States

(As reported by NPR)
Health Spending As Part of GDP 8% 15.3%
Average annual per-person
$2,358 $6,402
spending
Population (In Millions) 127.7 302
Life Expectancy at Birth 82.1 78.1
82% of people under 65; 100%
100% all citizen and legal resi-
Coverage of people 65 or over.
dents

One major proposed U.S. healthcare reforms is providing healthcare for

over 300 million U.S. citizens. In contrast, Canada and other countries
such as Britain and Japan had an established system of universal health-
care for several decades.

There are also numerous proposed reforms in regards to the extent of

healthcare provided to U.S. citizens. U.S. law currently mandates under
the Emergency Medical Treatment and Active Labor Act that under emer-
gency conditions, healthcare must be provided for all individuals. How-
ever, the individual is responsible for any healthcare service costs provided
by the hospital that provided the services: Emergency medical care such
as E.M.T. ambulance service and hospital stays can reach several thou-
sands of dollars in the U.S. This contrasts with Canadian policy, as the
costs associated with emergency room treatment for Canadian residents
are paid not by individuals but by the Canadian government.

Britain is another country where the government pays for cost of emergency
room health services for its legal citizens.

The differences in healthcare also reach the spectrum of patient and doctor appointments. According to research by the
Commonwealth Fund, 60% of Dutch citizens and 42% of French citizens were able to successfully schedule same day ap-
pointments with their primary care doctors. The U.S. figure for the rate of successful same day appointments was only 26%.
These are only a few of healthcare coverage discrepancies that exist between the U.S. and those of their international coun-
terparts. However, the U.S. is the only country that lacks universal healthcare for its citizens.

The U.S. government currently regulates payments to doctors
and hospitals from government programs but insurance compa-
nies set fees and there are no price controls on medical ser-
vices. The government of Switzerland contrasts that of the U.S.
because the government directly negotiates rates with doctor
organizations while the government sets rates for hospital
medical services. The Japanese government takes a similar
stance to Switzerland on issues of hospital and doctor fees. The
government negotiates doctor fees with doctors’ unions. Pri-
vate companies mostly run Japanese hospitals but the govern-
ment still sets the rates for medical services. In Germany,
medical specialists and hospital-based doctors are given salaries
depending on their portions of the annual hospital budget.
According to NPR, the average German primary care doctor
makes a salary of approximately $123,000 before taxes. NPR
stated that this is about 1/3 less than the average salaries for
U.S. primary care doctors. Hospital and doctor fees have been a
major point of contention for those in favor of healthcare re-
" Emergency medical care such as
E.M.T. ambulance service and hos-
pital stays can reach several thou-
sands of dollars in the U.S."
According to National Public Radio, U.S. prescription drug cov-
erage is granted to 84% of those with insurance. However,
most of these plans require co-payments where the govern-
ment subsidizes a percentage of the cost of prescription drugs
and the individual paying the remaining costs on the medicine.
However, there are no existing government regulations on
prices or availability of prescription drugs here in the U.S. Ger-
many has a similar system but full coverage is granted to citi-
zens and co-payments are lesser than those in the U.S. A fed-
eral panel in Germany controls prices on prescription drugs and
a committee is designated to vote on new treatments. In Ja-
pan, the co-payment rate is set at a flat rate of 30% but the
government controls and sets the prices of prescription drugs
at relatively low cost rates.
The current U.S. healthcare system has a system complex of
financing as employees and employers share the cost of health
insurance while public programs such as Medicare and Medi-
caid are financed through a portion of income taxes. Co-
payments and deductibles also exist for various healthcare
services and prescription medicines through private insurance
companies. Many of the members of lower socioeconomic
classes in the U.S. cannot afford health care because of the
high costs of deductibles, co-payments, and insurance.
Bruin Business Review - Healthcare Issue 19
In Japan, employees and employers each pay 4% of their
salary to a community based insurance plan. The govern-
ment also provides assistance to the lower socioeconomic
classes. Japan also has a system in which co-payments are
fixed at a rate of 30% and 20% for hospitalizations. There is
also a cap of pocket costs for citizens depending on factors
such as income. However, when this ceiling is passed, citi-
zens are reimbursed from insurance funds.
France’s healthcare system is financed through collection
of employee and employer funds. Employers pay a rate of
13.1% of their employees’ salaries into the national health
insurance program. Employees will contribute 0.75% of
their salaries into the national health insurance program.
The rest of the funding for France’s health insurance comes
from collection of income taxes. Through this type of fi-
nancing, France is able to provide health insurance for re-
tirees, the unemployed, disabled, and the poor. In France,
individuals also have the option to buy supplemental insur-
ance from private companies. Many employers also pay
for this type of supplemental insurance.
As the healthcare reform bill is debated throughout the con-
gress and house, there will be a heavy focus on the financ-
ing of universal healthcare in the U.S. CNN reported that
medicals bills were responsible for more than 60% of U.S.
bankruptcies in 2007. The debates will touch on a variety
of issues including changes in taxation of different socioeco-
nomic classes of citizens and the extent to which the federal
government will bear the financial burden of this new sys-
tem. Other issues to resolve include creating ceilings on
doctors’ salaries and reforming medical fee pricing. Reduc-
tions in doctor salaries and medical fees could lead to reduc-
tions in costs and a reduction on the current U.S. healthcare
system.
Healthcare is a complex issue in the U.S. and across the
world. Many countries including Japan will have to face
their own healthcare reforms as costs and the population
of senior citizens rise in many industrialized countries. If
Universal healthcare passed it would be a historical event
for the U.S. and its citizens. However, there are many ex-
isting issues that the U.S. government must resolve and
continue to analyze as they study the successes and fail-
ures other countries systems in the world occur.

American Health Care:
A History of Broken Bills
By Christopher Young
Staff Writer
Healthcare reform has once again surged as the hot button
topic in American politics. The America’s Affordable Health
Choices Act has generated an inordinate amount of contro-
versy. With all the arguments being made for and against
healthcare reform, the history of American healthcare reform
provides perspective on how the state of health care arrived
at the current situation. Since Theodore Roosevelt, nearly
every president has attempted to address healthcare reform
in one way to another. Yet, every time healthcare became a
pertinent issue, business rises up against. From “Hillarycare”
to Lyndon Johnson’s Medicare system, the history of Ameri-
can healthcare reform is littered with very few successes and
an overwhelming number of failed bills, due in large part to
the forces of the medical industry and the insurance industry.
TEDDY AND FRANKLIN, HEALTH CARE
IN THE PUBLIC EYE
American healthcare reform has a history which stretches all
the way to the turn of the 20th century. In 1912, Teddy Roose-
velt was seeking another term as president but the Republi-
can Party nominated instead William Howard Taft. Instead,
Teddy Roosevelt created his own Bull Moose Party. In this
period of time, America’s political scene was in turmoil. The
Republican Party became the party of protectionism and of
big business. However, they were also the party of trust bust-
Bruin Business Review - Healthcare Issue 20
ing. Unlike the Republicans today, they controlled the inter-
ests of the urban individuals and had a much more industrial
voter base. The Democrats at this time were also very differ-
ent. They absorbed many members of the defunct Populist
Party and adopted many of the Populist’s pro-agriculture
stances. Roosevelt’s Bull Moose Party represented a third
path. Primarily comprised of Republicans, Bull Moosers were
seen as anti-business and embraced a very populist rhetoric.
One of the Bull Moose Party’s main goals was to create a
form of government sanctioned healthcare for the country as
a whole. Due to the intervention of big businesses he had
alienated during his first two terms as well as the large advan-
tage in infrastructure the Democrats and Republicans had,
Roosevelt lost the election to Woodrow Wilson but his ideas
would be reintroduced on mainstream politics in his fifth
cousin, Franklin Delano Roosevelt.
Franklin Roosevelt inherited a country which was locked
tightly in the Great Depression. To combat the growing eco-
nomic instability, Roosevelt enacted the New Deal in 1933.
The New Deal was a collection of programs designed to pro-
vide support for American citizens and occurred in two
phases. Part of the Second New Deal (1934-1936) was the
legislation that eventually spawned the Social Security pro-
gram Americans have today. When the bill was first intro-
duced in 1935, it had all the provisions establishing the Social
Security Administration but also included clauses establishing
federally provided healthcare. The American Medical Associa-
tion (AMA) was not pleased with Roosevelt’s bill and began
lobbying against it tooth and nail. The AMA did not want the
government interfering in medicine at all. Even with congress
being exceptionally receptive to progressive ideas, healthcare
reform was still a dangerous political issue. Threatened with
the entire Social Security bill being shot down, Roosevelt de-
cided to cut out the health care measures and so the Social
Security Act of 1935 was born. Social Security was to be pro-
vided by a payroll tax on workers’ wages. Because it did not
tax businesses, the bill had very little effect on businesses.
Also, many contemporary politicians believed that it would
encourage elderly people to retire. At first, the bill only cov-
ered white male laborers but it would soon be expanded to
minorities and women. As time went on, controversy over
Social Security increased. The largest contemporary argument
against Social Security is the eventual bankrupting of the So-
cial Security Administration to the growing number of pen-
sioners due to increasing lifespans. Currently, the United
States spends 12.6% of its GDP on Social Security.

THE GREAT SOCIETY,
MEDICARE AND MEDICAID
After Roosevelt’s death in 1945, his successor Harry Truman
pushed health care but never got a bill to vote in congress.
His ideas would inspire further Democratic efforts to reform
healthcare. In 1952, Dwight Eisenhower was elected to the
presidency. He was a firm opponent of American healthcare
but provided a ‘reinsurance plan’ which would support pri-
vate insurance companies with federal subsidies. The bill was
met with little support in congress and was voted down twice.
After Eisenhower, John F. Kennedy and Lyndon B. Johnson
entered office. Kennedy’s New Frontier plan included the
intellectual predecessor to Medicare but he could not get it
passed in congress. After Kennedy’s assassination, Lyndon
Johnson unveiled his Great Society program, a series of pro-
gressive social reforms. One of the main focuses of the Great
Society was an evolution of the Kennedy plan, Medicare and
Medicaid. Johnson was presented with a rare political oppor-
tunity. Democrats outnumbered Republicans 2 to 1 in the
House and nearly held that ratio in the Senate. However,
even with these legislative advantages, healthcare reform
faced many hurdles.
The American Medical Association and businesses once again
interfered with the legislative process, introducing an alter-
nate implementation. This plan was met with great resistance
and was largely ignored. This left two more plans for the im-
plementation of Medicare, the Presidential Medicare plan
and the suggestions of a Republican representative from Wis-
consin, John W. Byrnes. Byrnes created a plan which would
enable federal medical insurance for the elderly to include
physician’s services while simultaneously lowering taxes. The
Johnson administration found some of Byrnes’ ideas to be
very convincing and adopted them into their own plan. How-
ever, with all the services being provided, taxes would have to
go up. They submitted the bill to congress. Even with this bill
in congress, the bill underwent over 500 amendments before
the Social Security Act of 1965 was passed. The bill amended
the Social Security Act of 1935 and established Medicare and
Bruin Business Review - Healthcare Issue 21
Medicaid. This was the first real victory for universal health-
care. Medicare provided public health insurance for individu-
als over 65 and Medicaid allowed states to provide insurance
to individuals receiving healthcare. Medicare was to be par-
tially funded by a payroll tax on workers. The remainder of
Medicare would be funded by a matching contribution from
the employer with no exceptions. Medicare costs have been
steadily increasing since its passage in 1960. In the fiscal year
of 2007, Medicare costs reached $440b or 16% of all federal
spending. Nonetheless, the passage of Medicare was a major
step in generating support for a universal system which al-
most happened with the very next president, Richard Nixon.
NIXON’S NEAR MISS AND
HILLARYCARE
Richard Milhous Nixon introduced the Comprehensive Health
Insurance Act in 1974, the first bill to introduce a form of uni-
versal healthcare. The bill was comprised of two parts. The
first mandated that all employers must purchase insurance
for their employees. The second part would provide Medicaid
like service to Americans who would pay for it. Much like the
Obama healthcare plan, the Comprehensive Health Insurance
Act would have effectively created a system where the fed-
eral government would directly compete with private insur-
ance companies. Americans were expecting to see congress
pass a universal health plan. However, scandal ruined the
bill’s chances at going through congress. Watergate and the
shaming of Nixon blacklisted any bills which had his name on
it including the Comprehensive Health Insurance Act.
The next real attempt at healthcare reform came in 1993 un-
der Bill Clinton’s presidency. A task force chaired by Hillary
Rodham Clinton created a 1300 page bill which was Known
amongst its detractors as “Hillarycare”, the bill stipulated that
all Americans must be covered by health insurance whether
government provided or privately provided. The Clinton ad-
ministration took a very hard stance on the bill.

presented to congress. Known amongst
its detractors as “Hillarycare”, the bill
stipulated that all Americans must be
covered by health insurance whether
government provided or privately pro-
vided. The bill also mandated that all
employers needed to provide insurance
to their employees. The Clinton admini-
stration took a very hard stance on the
bill. The bill faced staggering opposition
from medical organizations, including
the AMA, and business owners. Al-
though many businesses had health
plans, their coverage is rather limited. In
order to abide by the new legislation,
most businesses would have to expand
their coverage by millions of dollars.
Health providers and insurers were
against the bill because they felt they
could not compete with the federal gov-
ernment. Also, medical professionals
were against the bill because they be-
lieved that healthcare reform would
actually increase cost of care and thus
limit them to providing subpar care. The
bill died despite being pushed in a heav-
ily Democratic congress.
Senate Majority Leader George Mitchell
proposed a compromise bill but there
was not enough Democratic faith in
healthcare reform to push the new bill
through. In response to this failure,
Hillary Clinton along with Democratic
Senator Ted Kennedy and Republican
Senator Orrin Hatch created the State
Children’s Health Insurance Plan in
1997. SCHIP allowed federal and state
governments to work together in order
to provide insurance to qualifying chil-
dren. The bill was funded by increased
cigarette taxes and allowed for block
grants given to states specifically for
medical insurance for children. The to-
bacco industry was largely unaffected
by this first tax with their revenues not
decreasing much, however, with the
resigning of this bill in 2009 by the
Obama industry, SCHIP faces a new hur-
dle.
The Obama administration expanded
the tax to all tobacco products as well as
increasing them. Again, the tobacco
industry is projected to stay largely un-
affected. However, stores which primar-
ily run on tobacco sales such as corner
stores are now facing a crisis to stay
Bruin Business Review - Healthcare Issue
open. After the passage of SCHIP, the
next change in health care came with
George W. Bush in 2003. George W.
Bush expanded Medicare to cover drug
prescriptions which was viewed as a
major victory for healthcare reform
from an admitted opponent of health-
care reform.
AMERICA’S AFFORDABLE
HEALTH CHOICES ACT
One of Barack Obama’s first acts in of-
fice was to propose a health care bill.
Although many viewed this as an ex-
tremely risky political move so early in
his presidency, Obama believed that his
victory over John McCain gave him a
political mandate to reform healthcare.
The result was the America’s Affordable
Health Choices Act of 2009. In order for
the act to become law, both houses of
congress must pass a version of the bill
which would then be unified by a joint
committee. Then the new bill will once
again be voted on and sent to the presi-
dent. There are currently two senate
versions of the bill which have not yet
passed a vote. The bill in its current
house form is very similar to Nixon’s
Comprehensive Health Insurance Act
and uses many of the same ideas.
In November, it was passed in the
House of Representatives, 215-200 with
the only Republican vote coming from
Representative Anh ‘Joseph’ Cao of Lou-
isiana. Elements of the bill include a tax
on married individuals with a joint ad-
justed gross income of $350,000 as well
as businesses who fail to provide the
required level of healthcare coverage.
The bill also prohibits cancellation of
plans unless there is evidence of fraud.
The bill also creates a slew of commit-
tees as well as expanding Medicaid cov-
22
erage and payments to physicians. The
current draft of the bill would essen-
tially set up the government as a com-
petitor to private insurance firms. One
of the criticisms of the Health choices
act is that the public option would drive
private insurance firms out of business.
This was the case in other industrialized
nations where the government offered
a public option such as in the United
Kingdom.
Instead of only a public option, private
companies found they could not com-
pete with the resources of the federal
government and are now marginalized
to a limited portion of the market. The
costs of the bill would also be immense.
Congressional Budget Office, a non-
partisan organization, estimated that
the healthcare reform bill in its current
state will increase the federal deficit by
$216 billion from 2010 – 2019. How-
ever, many critics of the bill indicate
that this only represents the monetary
cost and that the cost may be higher
due to the costs of medical care increas-
ing in response to the passage of the
bill.
The history of healthcare in America is a
history of failure and opposition. Ever
since 1912, healthcare reform has been
in the political sphere but very few re-
sults have come from the discourse. Yet,
even with most of the failed attempts at
reform, many of the ideas existing in the
Affordable Health Choices Act can be
traced to previous health bills. The cur-
rent bill represents a natural evolution
of previous congressional bills. The fu-
ture of this bill is still clearly in doubt,
but the bill itself represents a continuing
political battle which started in the mind
of a president in 1912.
 Bruin Business Review - Healthcare Issue 23

How Obama tors are paid less, the “quality over

quantity” issue arises. According to the
Wall Street Journal, “Medicare on aver-

Health Care Costs age pays doctors 20% to 30% less than
those in private insurance plans.” As
patients switch into the cheaper govern-

Affects You
By Steven Laird
Staff Writer
As health-care costs rise to new highs
and make up an increasingly larger per-
centage of the country’s GDP (17 per-
cent), how to fix the current system and
how these changes will affect people
like you and me comes into question.
Throughout the decades, the steady rise
in the cost of health care has been at-
tributed to new technology, an aging
America, and inefficiencies in the cur-
rent system. While technology, one can
argue, is something that can likewise
make health care more efficient, people
often fail to see another reason behind
rising costs. As Americans increasingly
sue one another, doctors have been
forced to employ costly measures to
ensure their own protection against
possible lawsuits. As a result, they order
many costly tests such as magnetic reso-
nance imaging (MRIs) or computerized
axial tomography (CAT) scans to be ab-
solutely sure of their results. One MRI
scan can range from $1,750 to $2,200 in
hospitals, while outpatient facilities can
provide it for a mere $700 to $1,000.
Thus, while Americans want to ensure
their health, they are faced with the
problem of the unreasonable costs to
maintain it.
health-care reform legislation may not
help as much as Americans would like.
The $1.05 trillion House health-care
reform plan will be funded through ma-
jor cuts to the existing Medicare pro-
gram, which would save $472.8 billion
according to the Congressional Budget
Office. Furthermore, the bill will also be
funded by a 5.4-percent surtax on high-
income individuals, which is expected to
generate an additional $460.5 billion.
Lastly, the House expects to raise $135
billion through increases in employer
contributions, taxes on medical devices,
and penalties for those who fail to com-
ply.
As a result, this new “public option” is
expected to reach 131 million Ameri-
cans, which is seemingly promising.
However, as programs are cut and doc-
ment-run plan, doctors are expected to
earn 15 percent to 20 percent less be-
cause doctors will be pressed by both
higher practice costs and lower reve-
nues. Moreover, government insurance
programs will introduce new bureau-
cratic red tape, such as expensive docu-
mentation, electronic tools require-
ments, and staffing regulations, making
it difficult for private practices to com-
pete. In addition, Medicare provides
charge-based incentives that reward
doctors for delivering more care. All of
these factors will only compel doctors
to increase their volume of patients,
which means appointments will be
shorter and harder to secure. As doctors
are increasingly consolidated into con-
glomerates, corners will be cut and pa-
tients may not be given the quality care
they deserve as the government em-
ploys cost capitation systems that dic-
tate a fixed amount of money per pa-
tient.
The 60 percent of self-employed doc-

With the economic recession causing

people to struggle to get by, how do we
expect the 46 million Americans without
health care insurance to afford it? To
deal with the issue of insurance compa-
nies charging high premiums to high-risk
individuals, President Obama’s new
health-care reform will mandate all peo-
ple to buy the government’s single-
payer health insurance. While this is one
way to solve the adverse selection issue,
where insurance companies price out
healthy people, the details of the House

doctors, including surgeons and derma-
tologists who see many patients, will
bear the majority of the burden. On
average, it currently takes about 18
days to get an appointment with an
internist, and with the proposed Medi-
care cuts, the wait could be even longer.
As people are forced to wait longer and
endure diminished care, it is possible
Bruin Business Review - Healthcare Issue
that many of the same problems of ris-
ing costs will occur.
While these cuts would be expected to
be detrimental, there is a great amount
of good that could potentially result
from this system. Insurance regulation
can reduce administrative costs greatly,
as insurers are forced to price their
plans fairly instead of pricing out
healthy people. In addition, President
Obama has pledged to “force insurers to
pay out a reasonable share of their pre-
miums for patient care instead of keep-
ing exorbitant amounts for profits and
administration.”
Other modes of saving come from the
economies of scale the government will
have. The government will be able to
create new systems of patient data that
may reduce administrative costs in the
long run. Subsequently, it will be able to
negotiate lower prices to medical pro-
viders and suppliers with political clout.
One way of looking at this system is that
the government will have the power to
24
coerce doctors and medical suppliers to
redistribute their wealth to those with-
out health insurance. Whether this is
good or bad will ultimately depend on
the values of individual Americans.
One major concern of this new system
lies in enforcement. What do we do
with those who refuse to sign up for the
new plan? Can the government really
impose penalties on the millions of ille-
gal immigrants or the impoverished?
Similar to Social Security, this new sys-
tem will be funded by tax payers who
are already struggling due to the eco-
nomic recession. Although the new plan
has some possible benefits and is a sign
of action on this issue, it also raises seri-
ous questions.
On a more relevant issue to UCLA stu-
dents, is the fate of insurance plans
such as SHIP. It is possible that such a
plan will be eradicated as the federal
government will run the plans instead of
the State. Along with changes in insur-
ance plans, jobs may continue to be-
come even more elusive as employers
will be more hesitant to make hefty
employer contributions and will hire
fewer workers. Beside the jobs issue,
today’s generation will also have to deal
with paying the debt being incurred by
the current administration. Thus, the
health care issue is immediately rele-
vant not only for the ill and the elderly,
but to the many college students striv-
ing to forge their path in this world.