Organization of Health Care Delivery: Costs and Consequences. Or, the Impact of American Exceptionalism In Health Care

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Diane McBride
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1 Organization of Health Care Delivery: Costs and Consequences Or, the Impact of American Exceptionalism In Health Care

2 Understand and be able to explain: Note sources of HC inflation Compare and contrast price indexes (including changes over time) for selected health care goods and services the concept of health care spending burden how health care spending changed between 1965 and 1981 for businesses, households, and gov t Recall the % of national health care expenditures accounted for by the primary sources of payment Compare spending in the U.S. vs. other countries 2

3 To Review We saw MDs gain power, control of the market for treatment, (and income) as they gained the ability to actually provide REAL care We saw the invention of personal health care insurance (versus public/government insurance) and its addition to employment as an inducement to gain employees And we saw such employer insurance granted tax-free status Finally, governmental social insurance was introduced(medicare/medicaid) Insuring patients are well insulated from the decisions about, and costs of, using health care. So- what happens next? 3

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5 Up the roller-coaster we go! 5

6 Health Care Expenditures Health Care Inflation > Economy Inflation 1929: NHE 3.5% of GDP 2000: NHE 16% of GDP 2009: NHE 17.6% of GDP Centers for Medicaid and Medicare Services: 6

7 And it s not like the whole economy is keeping pace HCE as % GDP HCE as % GDP 7

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9 Increase NOT due to population $3,500.0 $3,000.0 $2,500.0 $2,000.0 $1,500.0 $2,303.9 $2,414.1$2,505.8 $2,167.2 $2,034.8 $1,905.7 $1,778.3 $1,638.1 $1,494.6 $1,378.0 $2,919.1 $2,604.1 $2,705.3$2,817.3 $1,000.0 $724.3 $500.0 $0.0 $ $27.4 $74.9 Health Expenditures (B) U.S. Population (M)

10 Sure, people live healthier, longer lives, but that also means longer care 10

11 Health Care Inflation HC inflation can be broken down by the sources of increases Found four major factors: Population General Inflation Excess Health Care Inflation Increased Utilization /intensity of health care services 11 Heffler, et al. Trends: Health Spending Projections Through 2013: growth is projected to slow in 2003 after six consecutive years of acceleration. Health Affairs [serial online]. 11 Feb 2004: 79-93

12 These 4 factors are consistent! Years Inflation Excess Med Inf Pop. Growth Intensity 12

13 4 Factors Things we can t do much about: Population Increases General Inflation However, we can/should be able to do something about: Health care inflation (ours is much higher than other countries) Health care utilization (who s paying for all that use?) 13

14 CPI of Various Items Medical care has increased at a greater rate than other items (and CPI!) Bureau of Labor Statistics,

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18 The Burden Has income or revenue kept in pace with health care expenditures? If so, not a big issue If not, then the burden of HC costs increases- greater % of revenue/income May force a choice between meeting other needs and getting the health care needed/ desired 18

19 Burden on Payors: Health Care Spending as a % of Business salaries/wages Business after-tax profits Household income Federal gov t revenues State and local gov t revenues Household income: burden not changed much at all Increased A LOT for businesses and gov t AND, both of these want reforms! Spending a lot of money 19

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23 Private Health Insurance Health spending per privately insured American increased 7.4% in 2003 Premiums per enrollee increased 10.4% in rd consecutive year of double-digit growth 12% growth in premiums in 2004 Health insurance is increasingly difficult to afford Increased patient cost sharing Employers shifting costs to employees Premiums also growing at a higher rate Some suggestion premiums are increasing at a greater rate than costs Benefit structures may change to encourage patients to use efficient providers or choose more effective therapies Strunk, Ginsburg. Tracking Health Care Costs: Trends Turn Downward in Center for Studying Health Change June:

24 Private Health Insurance 24 Heffler, et al. Trends: Health Spending Projections Through 2013: growth is projected to slow in 2003 after six consecutive years of acceleration. Health Affairs [serial online]. 11 Feb 2004: 79-93

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26 Millman Index = cost of premiums for family of 4 26

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28 PERCENTAGE OF PERSONAL HEALTH CARE PAYMENTS Direct/out-of-pocket payments Third-party payments, total Private insurance Government Other Direct out of pocket has steadily dropped Government biggest payor by far 28

29 A word about Medicare & ACA Medicare Part D Will see increased government spending over previous years Perhaps similar to what happened in the 60 s when Medicare and Medicaid began Affordable Care Act Similar impact, although less than anticipated. Market failure in some areas as private insurers pull out. Next Phase? God only knows. 29 Heffler, et al. Trends: Health Spending Projections Through 2013: growth is projected to slow in 2003 after six consecutive years of acceleration. Health Affairs [serial online]. 11 Feb 2004: 79-93

GDP vs. Health Spending, 1991-2001 U.S. has highest health spending as % of GDP vs.

Health Care Spending In An International Context: Why is U.S. spending so high, and can we afford it.

30 GDP vs. Health Spending, U.S. has highest health spending as % of GDP vs. other industrialized countries 30 Reinhardt, et al. U.S. Health Care Spending In An International Context: Why is U.S. spending so high, and can we afford it.? Costs &Competition. May/June 2004:

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33 Health Spending in U.S. vs. Other Countries United States: 70 s and 80 s: the average annual growth of health spending exceeded the growth of total GDP by 2.5%-3% 1990s, the % growth remained somewhat constant Was projected that from , would return to exceeding GDP by 2%, leading to 18.4% of GDP in thank God we had a recession! 33 Reinhardt, et al. U.S. Health Care Spending In An International Context: Why is U.S. spending so high, and can we afford it.? Costs &Competition. May/June 2004:

34 Health Spending in U.S. vs. Other Countries The US spends a higher % of GDP than any other nation in the world! The US spends a higher per capita than any other nation in the world! Yet, we still have issues with access to care and how is the quality??? 34 Reinhardt, et al. U.S. Health Care Spending In An International Context: Why is U.S. spending so high, and can we afford it.? Costs &Competition. May/June 2004:

35 Male Life Expectancy, 2009 WHO Statistical Informational System The U.S. certainly isn t at the top in life expectancy 35

36 Life expectancy versus per capita expenditures 36

37 Life expectancy versus life expectancy, specific nations 37

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39 Infant Mortality Rate (per 1,000) WHO Statistical Informational System We are far from having the lowest rate! 39

40 Perinatal Mortality by country 40

41 Net impact on government spending? 41

42 U.S. Health Status vs. Other Countries Other countries spend lots less Could we spend less without sacrificing the level of care? Could we spend the same and still improve our care? 42

43 Cost to you? 43

44 Parting Things to Think About How much should we spend on health care??? We are approaching 20% of GDP Other countries spend less Are we getting our money s worth? (life expectancy, infant mortality) Could we spend that money on something else? Education? Sanitation? Food? College? Infrastructure? (roads, railways) Job training, alternative energy development? 44

45 QUESTIONS? 45

Health Care Resources: Costs. Peterson-Kaiser Health System Tracker

Health Care Resources: Costs. Peterson-Kaiser Health System Tracker Health Care Resources: Costs Why is cost an ethical question? We live in a world of limited resources Stewardship: What I/we do reflects our moral commitments Living with Limits Social Justice: How we