Where is U.S. Health Care Headed? (and Do We Want to Go There?)

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Where is U.S. Health Care Headed? (and Do We
Want to Go There?)

• Jonathan Oberlander
• Department of Social Medicine
• UNC-Chapel Hill

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Health Reform is Back

• Rising Tide of Uninsured Unleashes Serious
  Ripple effects
• Problem of Lost Health Benefits Reaches into
  Middle Class
• Cutbacks Imperil Health Coverage for States
  Poor
• Soaring Health Costs Spur Calls for Reform
• GM Announces Plan to Cut Health Care Costs

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Cycle of U.S. Health Reform

• Discover Crisis in Health System
• Identify and Debate Solutions
• Do Nothing or Not Much (rediscover virtues of
  federalism and markets)
• Ignore Issue
• Discover Crisis in Health System

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Roadmap

• Health Insurance The Uninsured
• Health Care Costs
• Health Reform
• Where Is Health Reform Headed?

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• I. Health Insurance Coverage and the Uninsured

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Source KCMU and Urban Institute
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Objects of Compassion in U.S. Health Policy

• Low-income pregnant women and children (Medicaid
  and SCHIP)
• The elderly (Medicare)
• Persons with disabilities (Medicare and Medicaid)
• End Stage Renal Disease patients (Medicare)

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Another Object of Compassion (though they dont
know it)

• Employer-sponsored insurance is subsidized
• by federal tax preferences that in 2004 cost
• the government 188 billion in foregone
• revenues (tax expenditures)

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• The Uninsured

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Uninsured Rates in the ACC

• Florida 18
• North Carolina 17
• Georgia 16
• Maryland 14
• South Carolina 13
• Virginia 12

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Source KCMU and Urban Institute
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Source KCMU and Urban Institute
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Source 2003 CPS
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Source KCMU and Urban Institute
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Source Kaiser/HRET Survey of Employer-Sponsored
Health Benefits 2004
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Insurers Declare Some UntouchableRaleigh News
Observer, 2.27.05

• In the world of individual health insurance, it
  doesnt take much to become undesirable. For
  Dennis OConnor, 61, of Chapel Hill, all it took
  was a few small skin cancers. For his wife,
  Alicia, 54, it was migraine headaches. Those
  health conditions got the retired couple a quote
  of 36,000 a year when they applied for a Blue
  Cross and Blue Shield of North Carolina plan in
  October 2003. They declined it. Now the
  OConnors are uninsured.....

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The High Price of Confusion and Fragmentation

• In 2002, out of 10 million uninsured children,
  6.2 million were actually eligible for Medicaid
  or SCHIP but
• not enrolled

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Perceptions of the Uninsured

• I am a nurse anesthetist at a level I trauma
  center in Chattanooga, Tenn., where we treat all
  patients, insured or not. No one is turned away.
  Each of our patients gets the same high-quality
  care.For Jane Bryant Quinn to tell me how
  poorly our system treats the uninsured is
  insulting and ignorant. Newsweek letter to the
  editor, November 22, 2004.

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Reality, As Measured by Per Capita Spending on
Medical Care, 2001

• Insured 2484
• Uninsured 1253

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Source Kaiser 2003 Health Insurance Survey
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When Health Insurance is Not a SafeguardNew York
Times, October 23, 2005

• Until the fourth trip to the hospital in
  1998, Zachery Dorsett's parents thought their son
  was an average child who was having trouble
  getting over a passing illness. He was 7 months
  old, and it was his second case of pneumonia But
  Zachery, who was eventually found to have an
  immune system disorder, kept getting sick, and
  the expense of his treatment - fees for tests,
  hospitalizations, medicine - kept mounting,
  eventually costing the family 12,000 to 20,000
  a year Earlier this year, the Dorsetts stopped
  making mortgage payments on their ranch house, in
  a subdivision outside Indianapolis, because they
  could not afford them. In March, they filed for
  bankruptcy.

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Ratio of the Probability of Diagnosis of Late
vs. Early Stage Cancer, Uninsured/Privately
Insured
Equally likely to have late-stage cancer
Source KCMU and Urban Institute
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• II. Health care costs

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Source Centers for Medicare and Medicaid
Services
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Source KFF/HRET Survey of Employer-Sponsored
Health Benefits
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9,950
3,695
Source Kaiser/HRET Survey of Employer-Sponsored
Health Benefits 2004
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The Good News Medical Progress.

• Cardiovascular Disease
• Depression
• Low birth-weight infants

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The Bad News Employer-based system is
unraveling.
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The Future Up, Up and Away(Forecasts of NHE as
Share of GDP)
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• III. Health Care Reform

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Private Sector Strategies to Control Costs
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In order to control costs, we have deployed
numerous acronyms. The U.S has in fact developed
an ABHS acronym-based health system.Innovation
or Evasion?

• HMO PPO MSA
• HSA IPA POS
• HRA IDS PSO

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The Next Magic Bullet Consumer-Driven Health Care

• Meet the new acronym Bye-bye HMO, Hello HSA
• Meet the new (well, recycled) theory consumer
  cost-consciousness
• Meet the new (well, time tested) result make
  sick people pay more for medical care

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Promise of HSAs

• Control costs by reducing excess demand and
  unnecessary care
• Make people responsible for their health care
  behavior
• Portability move away from employer-based system

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Potential Problems with HSAs

• Consumer-driven carepay more if youre really
  sick or poor
• Concentration of health care costs
• Supply side/middle class backlash

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High Deductibles on the Rise
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Other Magic Bullets/Acronymsfor Controlling Costs

• Electronic Medical Records (EMR)
• Pay for performance (P4P)

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Public Sector Strategies to Expand Coverage
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Federal Government Response 1997-2005
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Federal Government Response 2006

• The plan
• HSAs tax credits/subsidiesmore insurance
• The result(?)
• HSAs tax credits/subsidiesmore uninsured
• The Bush plan will lead to 600,000 more
  uninsured
• according to estimates by economist Jonathan
  Gruber

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State Government Responses

• Moving Backward Tennessee, Oregon, Missouri
• Moving Forward Maine, Massachusetts
• Moving into the Unknown Florida

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Conclusions On a Road to Nowhere?

• Problems of the uninsured and health care
  spending are getting worse
• Current public and private strategies arent
  likely to do much to fix these problems
• Employer-based system is fraying and businesses
  and states are buckling under high health care
  costs, which means things will continue to worsen
  and
• Health care reform will soon reappear on the
  agenda.
• But dont count out the status quo.
• And if this depresses you and you need a good
  laugh, theres always..

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