U'S' Health Care: Lessons from a Mixed System

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U.S. Health CareLessons from a Mixed System

• Michael Hash
• Health Policy Alternatives, Inc.
• August 2, 2005

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Overview

• Origins of U.S. health delivery system
• Stakeholders and their roles
• Descriptive data
• Current issues and challenges
• Future Directions

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Like Topsy It Just Grew

• Pluralism individual responsibility
• Highly fragmented
• Opposition to central planning/control
• Tax policy supports workplace nexus
• Public programs safety net

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Private Sector Role

• Employment individual coverage
• State federal regulation of insurance
• Mix of nonprofit/investor-owned providers
• Market-negotiated charges for services
• Cost sharing growing

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Public Sector Role

• Medicare for all gt65 some disabled
• Medicaid for low-income populations
• Wide variability
• Covers less than 50 of those in poverty
• Childless adults often not eligible
• Military dependents / retirees
• Veterans health system
• Public hospitals/clinics

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The Policy Environment

• Ideological/political divide
• Chill of deficits
• Competing priorities

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Key Descriptive Data
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The US Exceeds Other Industrialized Nations in
Total Health Spending as a Percentage of GDP
Percentage of GDP, 2002
Source Organization for Economic Cooperation and
Development (OECD) Health Data 2004. Note Data
for Japan are from 2001.
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Real Health Care Spending Growth per Capita,
1992-2002
Percent
Source G. Anderson, et. al., Health Spending in
the U.S. and the Rest of the Industrialized
World, Health Affairs, Vol. 24, No. 4,
July/August 2005, p. 905.
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U.S. Per Capita Health Care Spending And Per
Capita GDP, 1991-2003
Percent Growth
8.5
Health Care Spending
2.9
GDP Growth
Data for January through June 2003, compared
with corresponding months in 2002.
Source B. Strunk and P. Ginsburg, Tracking
Health Care Costs Trends Stabilize But Remain
High in 2002, Health Affairs (Web Exclusive June
11, 2003) B. Strunk and P. Ginsburg, Tracking
Health Care Costs Trends Slow in First Half of
2003, Center for Studying Health System Change,
December 2003.
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Private Insurance Public Program
Administrative Costs as a Percent of Benefit
Payments, 2002
Percent
Source K. Levit et al., Health Spending Rebound
Continues in 2002, Health Affairs
(January/February 2004) 147159.
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Out-of-Pocket Costs to Patients Are a Major
Expense, 1970-2002
Dollars (billions)
Source K. Levit et al., Health Spending Rebound
Continues in 2002, Health Affairs
(January/February 2004) 147159.
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Use of Sophisticated Technologies, 1999-2000
Source Gerard F. Anderson, et.al., Its The
Prices, Stupid Why the U.S. is So Different From
Other Countries, Health Affairs, Vol. 22, No.
3, May/June 2003.
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In 2003, 18 of Non-Elderly Population Was
Uninsured

• Uninsured
• U.S. 45 million

Source Paul Fronstin, Sources of Health
Insurance Characteristics of the Uninsured
Analysis of the March 2004 Current Population
Survey, EBRI Issue Brief, Dec. 2004. Note
Percentages may not add to 100 due to rounding.
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Changes in Insurance Coverage 2000-2003
Loss of Employer Coverage
Gain in Medicaid
Growth in Uninsured
Change -4.8 Million 5.8 Million
5.1 Million
Source Urban Institute estimates, 2004 for the
Kaiser Family Foundation.
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Premium Increases by Firm Size, 1989-2004
3-199 Workers
Source Kaiser Family Foundation /HRET Survey
Health of Employer-Sponsored Health Benefits,
EBRI Issue Brief No. 276, December 2004.
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Federal Budget Outlook2006-2015
10 Year total -3.5 trillion
Social Security surplus 2.6 T
Source Congressional Budget Office, January 2005.
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Major Entitlement Programs As a Share of the
Budget
Source CBO, January 2005.
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Federal Health Program Cost Projections,
2004-2015
2015 Over 1 Trillion
Federal funds only
SourceCBO March 2005
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Where Medicaid Go
67.7 b
46.1 b
16 b
24.5 b
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Source Urban Institute estimates, 2001. Kaiser
Commission on Medicaid and the Uninsured, 2003.
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Current Issues and Challenges
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What Can Be Done?

• Tax Credits
• Expand public programs
• Pooling (expand access to existing pools)
• Health Savings Accounts
• Nothing!

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Cost Containment

• Price regulation
• Market-based prices
• Managed care
• Consumer-driven health plans

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Quality Improvement

• Measurement
• Goal setting
• Reporting
• Patient safety
• Pay for Performance

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Prescription DrugsCosts Management

• Importation
• Government price negotiation
• Medicare drug benefit implementation
• Cost management tools
• Formularies
• Prior authorization
• DUR
• Preferred drugs/tiered co-pays
• Therapeutic substitution

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Future Policy Directions

• Defined contribution consumer cost shift
• Public subsidies for private insurance
• State flexibility in Medicaid
• Privatization in Medicare

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