Critical Condition: How Health Care in America Became Big Business

1
Critical Condition How Health Care in America
Became Big Business Bad Medicine

• Donald L. Barlett James B. Steele

2
Failure of a Market-Driven System

• Failure to control costs.
• Failure to provide equitable access to care
• Distortions in the provision of care.
• Lack of incentives for needed medical/
  pharmaceutical research.

3
Health Care Spending 2004

• USA National health Expenditures 1.87 Trillion
• USA 6,280 per capita
• OECD median 2,193 per capita
• 53 more than any other OECD country
• 140 above the OECD median

4
Health Care Spending 2003

• USA spent 16.0 GDP
• Only Switzerland and Germany spent more than 10
• Annual Growth in spending 1992-2003
• USA 3.3
• OECD 3.4
• In every OECD the growth of health care spending
  outpaced inflation.

5
Uninsured

• 2001 41.2 million
• 2004 45.0 million
• 15.2 population

6
Health Status 2003Male Life Expectancy

• 1. Japan 85.3 years
• 2. Spain 83.7 years
• 3. Switzerland 83.0 years
• 23. USA 79.9 years

7
Health Status 2003Male Life Expectancy

• 1. Japan 78.4 years
• 2. Switzerland 77.8 years
• 3 Spain 77.2 years
• 22. USA 74.5 years

8
Reasons for Rising Health Care Costs

• Aging
• Technology
• Waste/Inefficiency
• The Legal System
• New Diseases
• Fraud
• Rising Prices

9
Efforts to Slow Rising Costs in the USA

• Increased cost sharing
• Consumer choice
• Disease management
• Evidence-based practice
• Information Technology
• Tort Reform

10
Supply of Health Resources

• Number of RNs
• USA 7.9/1,000 pop
• OECD 8.9/1,000
• Number of Physicians
• USA 2.4/1,000 pop
• OECD 3.1/1,000
• Number of Hospital Beds per capita
• USA 2.9/1,000 pop
• OECD 3.7/1,000

11
Supply of Health Resources

• Number of CT Scanners
• USA 12.8/million pop
• OECD 13.3/million
• Number of MRI Units
• USA 1.4/million pop
• OECD 1.0/million

12
Malpractice Claims and Payments 2001
Country Claims/1,000 pop Av. Payment or settlement
USA 0.18 265,103
Canada 0.04 309,417
UK 0.12 411,171
Australia 0.12 97,014
13
Annual Growth of Malpractice Payments1996-2001

• USA 5
• UK 10
• Canada 20
• Australia 28

14
Most Important Reasons for Higher USA Spending

• Higher incomes
• Higher medical care prices for pharmaceuticals,
  hospital stays, physician visits, etc.

15
Reform Proposals

• Universal coverage
• Single-payer system
• Administration
• U.S. Council on Health Care (USCHC).
• Quasi-governmental organization like the Federal
  Reserve System.
• Set policy for health care.
• Control federal spending for basic and
  catastrophic medical coverage.

16
Reform Proposals

• Funding Two taxes
• Tax on gross receipts of businesses.
• Flat tax on individual income (like the Medicare
  tax).
• USCHC Regions
• Take into account regional differences
• Individual could supplement basic government
  supported coverage with private insurance.

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Curing the Problems

• Guarantee basic levels of care for everyone.
• Establish flexible co-pays for basic care.
• Pay all costs of catastrophic illness.
• Restore freedom of choice.
• Redirect health care spending to disease
  prevention.
• Curtail out-of-control prescription drug costs.

18
Curing the Problems

• Provide drug information to consumers.
• Concentrate health care spending on
  cost-effective areas.
• Control costs by reducing variation in health
  care spending.
• Correct unrealistically low provider
  reimbursement rate.
• Stop the trend toward over-diagnosis and over
  treatment.

19
Advantages

• Reduce medical errors.
• Reduction in malpractice claims and malpractice
  insurance premiums
• Reduction in defensive medicine.
• Provide information on best practices.
• Negotiate drug prices.

20
Health Spending Driving Forces

• Prices
• Technology
• Ageing
• Waste and inefficiency
• The legal system
• New diseases
• Corporate consolidation
• Profligate providers and consumers

21
Efforts to Slow Rising Costs

• Increased cost sharing
• Consumer choice
• Disease management
• Evidence-based practice
• Information technology
• Tort reform

22
If insurers and Employers require members to pay
more out-of-pocket for health care, how much do
you think each of the following will happen?
(Harris Poll September, 2003)