Assignment Review Lecture 4

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Assignment ReviewLecture 4

• Private Sector Financing Health Care in the US

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Whos footing the bill for PHI?

• 1987 2000 2002 2003
• Tot PHI premiums(B) 147.9 450.6 549.5
  600.6
• Employer contrib
• - Private 84.4 251.3 297.2
  320.6
• - Federal 4.9 14.3 17.7 19.7
• - State/Local 16.7 58.6
  77.1 86.2
• Employee contrib
• - Private 23.3 79.2 98.4 109.1
• - Federal 2.4
  5.3 6.6 7.3
• - State/ Local 3.8 13.2
  18.0 20.1
• Individual Policy 12.5 28.7
  34.5 37.6
• Num. Enrollees (M) 181.4 197.6
  195.6 194.5
• Per Enrollee est. () 815 2,280
  2,810 3,088

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Sources of Payment for Private Health Insurance
Coverage, 1987-2000
Individual Policy Premiums6
Individual Policy Premiums9
Employee Contribution to PHI 19
Employee Contribution to PHI 22
Employer Contribution to PHI72
Employer Contribution to PHI72
1987
2000
Source CMS, Office of the Actuary, National
Health Statistics Group.
Employees share of health insurance premiums has
grown.
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Premium change 1985 - 2005
Source mconline www.mcareol.com
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Premiums cover growing health services 1980 -
1997
Note Coverage for selected services offered by
medium/ large businesses. Not available.
Source Dept. of Labor, Bureau of Labor
Statistics.
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Recent trends in PHI premiums

• MC tackled early 90s double digit growth growth
  returned in late 90s, recently abated.
• Total premiums more than doubled, number of
  enrollees grew less than 6 in past 10 years.
• Growth 5.9 1991 1998 8.3 1999 2003.
• Share paid by employer (2003 vs 1987)
• Private Dropped 3.8 currently pay 74.6
• Federal Increased 6.0 currently pay 72.9
• State/Local Trimmed 0.4 to 81.1
• Possible root causes enrollee decline structural
  shift from manufacturing employee premium share
  increase.

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Household out-of-pocket trends

• Out-of-pocket (OOP) spending does not include PHI
  premiums, Medicare payroll taxes, or Medicare SMI
  premiums.
• 1987 2003, OOP grew at a rate much less than
  total spending or PHI premiums
• 108.9B (1987) to 230.5B (2003)
• OOP dropped, as a percent of household HSS
  spending, from 58 (1987) to 45 (2003) fairly
  constant since 2000.
• US OOP of HC spending in middle of OECD
  industrialized nations (e.g. US 15
  Switzerland 33, Source OECD)

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Table 4.1 National Health Spending From
Out-of-Pocket and Private Health Insurance,
1980-2005 Over the last 25 years, the share of
national health spending from out-of-pocket
sources has declined, while that from private
health insurance has increased.
Projected Source CMS, Office of the Actuary,
National Health Statistics Group.
www.cms.hhs.gov/charts/healthcaresystem/chapter4.p
pt1
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Managed Care Where we are

• MC enrollment 2004
• HMO 69M
• PPO 109M
• MC penetration 2004
• Medicare 12.5
• Medicaid 60.3
• Comml 91.2
• Total (incl. uninsured) 60.3 Source
  MCOnline.

Source mcareol.com
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HMOs have declined

• Consumer backlash peaked in 2000 premature
  obituaries for MC?
• HMO penetration varies widely among MSAs and
  among private insurance/ Medicare/ Medicaid
• Provider appetite dulled recognition that
  provider underwriting more complex than was
  anticipated.

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HMO Enrollment Trend1985 2004 (M)
Source mconline www.mcareol.com
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MC Some signs of revival

• During 2002/ 2003 utilization management
  techniques tentatively re-implemented
• Companies found prior authorization process
  discourages not medically necessary services
  even though the requests are rarely denied.
• No trend back to primary care gatekeeping.
• Notification not pre-authorization
• Source CTS Tracking Survey 2004

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More emphasis on the case

• Use of HEDIS data and predictive simulations
• Move toward targeted case management rather than
  disease management multiple health conditions
• Experimenting with tiered networks and P4P

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Direction in question

• Surveys indicate consumers are unwilling to pay
  more for fewer constraints but consumers still
  dislike MC constraints.
• MC role in consumer-driven HC not yet known some
  plans experimenting.
• Someone will manage costs insurers/ TPA
  government consumer.

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Percentage of Firms Offering Retiree Health
Benefits, 1988-2001
A declining share of large firms offers retiree
health benefits.
All Small Firms(3-199 Workers)
All Large Firms(200 Workers)
Source Kaiser/HRET Survey of Employer-Sponsored
Health Benefits 2000, 2001 KPMG Survey of
Employer-Sponsored Health Benefits 1988, 1991,
1993, 1995.
Section III.B.2. Page 4
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Change in Retiree Benefits at Large Firms
2000-2002
Large firms that offer retiree benefits are
scaling back those benefits.
Source Kaiser/HRET Survey of Employer-Sponsored
Health Benefits 2002.
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The future of US private sector in HC

• Problem definition -- cut costs vs. add value? Or
  both?
• Consumer-driven HC -- HSAs
• Leapfrog -- Change the value equation CPOE,
  intensivists, EB hospital referral.
• Can employer groups affect cost/ quality of
  medicine through acquisition by quality
  principles?
• Mandates individual/ employer/ both?