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VIEWS: 4 PAGES: 88

									Health Care: Caring for Californians in st Century the 21

Polling Questions

What is your most serious health care concern?
1. Health insurance becoming too expensive 2. Paying expensive medical bills not covered by insurance 3. Loss of health insurance for children 4. Inability to get required health care when ill due to excessive cost 5. Substantial cutbacks of benefits under current health plan

What solution is vital to California’s rising health care costs?
1. Cutting down California government health care spending 2. Raising federal funding for California health care services 3. Reducing the coverage of employer-based health insurance 4. Teaching customers to spend more wisely on health care services 5. Increasing California’s medical workforce

What do you think is the proper percent of health insurance premium the average California employee should pay?
1. 0 percent of both single and family coverage 2. 0 percent of single coverage, 5 percent of family coverage 3. 10 percent of single coverage, 20 percent of family coverage 4. 15 percent of single coverage, 30 percent of family coverage 5. 30 percent of single coverage, 50 percent of family coverage

Audience Questions

Overuse of medical services increases the cost of health care. Would it be prudent to rebate the insured with a check of a few hundred dollars every quarter or six months for not using health care services?

Business and economic leaders agree that we need to separate health care from employment and that the only solution is a system of nationalized health care. What should this system look like and what will it take to get there?

Why does the State of California not set up a pool-buying insurance group for its self-employed citizens so that the costs of insurance will drop?

To reduce health care costs, isn’t it necessary to improve health care prevention?

Health Care Expenditures vs. GDP
Relative Growth, United States, 1980-2011
Index 1980 = 100

1200 1000 800 600 400 200 0

Health Care Consumption Expenditures GDP

1996 1998 2000 2002 2004 2006 2008 2010 1995 1997 1999 2001 2003 2005 2007 2009 2011

United States Health Care Expenditures
As Percent of GDP, 1980-2002
Percent Share

15 14 13 12 11 10 9 8 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Personal Health Care Expenditures
Per Insurance Covered Population, 1990-2001
US$ Thousands Percent Change, Year Ago

5.5 5.0 4.5
California - L U.S. - L Growth Rate (CA) - R Growth Rate (US) - R

10 8 6

4.0 4 3.5 3.0 2.5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

2 0

U.S. Health Care Expenditures
Where They Come From, Relative Growth, 1980-2002
Index 1980 = 100

800 700 600 500 400 300 200 100 80 81

Insurance (Private) Federal (Public) State and Local (Public) Out-of-Pocket (Private)

83 82 84

85 86

87 88

89 90

91 92

93 94

95 96

97 98

99 00

01 02

U.S. Health Care Spending
Where They Go, Relative Growth, 1980-2002
Index 1980 = 100

1400 1200 1000 800 600 400 200 0 80 81

Presciption Drugs Physician & Clinical Services Nursing Home Care Hospital Care Med. Research & Facilities Construction

83 82 84

85 86

87 88

89 90

91 92

93 94

95 96

97 98

99 00

01 02

U.S. Health Care Dollars
Where They Come From, 2001
Other Public 13% Out-of-pocket (Private) 14% Insurance (Private) 35% Medicare (Public) 17% Other Private 5%

Medicaid (Public) 16%

California Health Care Dollars
Where They Go, 2000
Home Health Care 2% Other Personal Health Care 2% Medical Durables 1% Physician & Other Professional Services 40%

Nursing Home Care 5% Dental Services 7% Prescription Drugs 10%

Hospital Services 33%

U.S. State Health Care Expenditures
Ranked by Percent of the Gross State Product, 2000

Top Ten 2nd Tier 3rd Tier Bottom Tier

Medicaid Expenditures Exceeded Budgets
Top 10 States Exceeded Most by 2003 Budgeted Amounts
US$ Millions

1000
Fiscal 2002 Fiscal 2003

800 600 400 200 0

CA

TN

TX*

IL

GA

MO*

WI

NV

NY

NH

* TX & MO’s Medicaid expenditures did not exceed in 2002

Government Expenditures on Health Care
As Percent of Total Expenditures, 1991-2000
Percent

8.6 8.4 8.2 8.0 7.8 7.6 7.4 7.2

California U.S.

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
* Health care expenditures include hospitals & health expenses

California Government Expenditures
Health Care Expenditures, 1991-2000
US$ Billions

10 9 8 7 6 5 4 3

Hospitals Expenditures Health Expenditures

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Government Health Insurance: Medicare
As Percent of Population, 1987-2002
Percent

14
California U.S.

13

12

11

10

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Government Health Insurance: Medicaid
As Percent of Population, 1987-2002
Percent

18 16 14 12 10 8 6

California U.S.

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Persons Without Health Insurance
The 10 Least Coverage States By % Not Covered, 2000
Percent

24 22 20 18 16 14 12 Texas Oklahoma Montana Florida Idaho New Mexico Alaska Louisiana California Arizona U.S. Avg.

Persons Without Health Insurance
As Percent of Population, 1987-2002
Percent

24 22 20 18 16 14 12

California U.S.

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Health Plans Enrollments
By Plan Type of Covered Workers, 2002
Percent

60 50 40 30 20 10 0 HMO PPO POS

California U.S.

Other Plans

HMOs Enrollment
As Percent of Covered Workers, 2000-2002
Percent

60 55 50 45 40 35 30 25

California U.S.

1999

2000

2001

2002

U.S. Expenditures on Health Insurance
Premiums between Employers & Employees, 1981-2001
US$ Billions

250 200 150 100 50 0 81

Total (Employer + Employee) Employer Employee

82 83

84 85

86 87

88 89

90 91

92 93

94 95

96 97

98 99

00 01

U.S. Expenditures on Health Insurance
Percent Share between Employers & Employees, 1981-2001
Percent

100 80 60 40 20 0 81

Employers' Costs Employees' Costs

82 83

84 85

86 87

88 89

90 91

92 93

94 95

96 97

98 99

00 01

CA Expenditures on Health Insurance
By Firm Size, % Share of Employers & Employees, 2002
Percent Share

100 80 60 40 20 0

Employers' Costs Employees' Costs

All Firm Sizes

3 - 19

20 - 49

50 -199

200+

* Single Health Care Plans

CA Annual Health Insurance Contribution
Single Plan Health Insurance Premium, 2001-2002
US$ Thousands

3.0 2.5 2.0 1.5 1.0 0.5 0.0

Employees Employers

2001

2002

CA Health Insurance Premium Increases
By Firm Size, 2001- 2002
Percent Growth

15.5 15.0 14.5 14.0 13.5 13.0 12.5 12.0 All Firm Sizes 3 - 19 20 - 49 50 -199 200+

Employer-Based Health Insurance
As Percent of Population, 1987-2002
Percent

64 62 60 58 56 54 52 50
California U.S.

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Workers Compensation Costs
Per Covered Employee, 1992-2002
US$

1100 1000 900 800 700 600 500 400
92

California United States

93

94

95

96

97

98

99

00

01

02

*Note: 2002 is an Estimate.

Firms Offering Health Benefits
As Percent of All Firms, 1999-2002
Percent

70
California U.S.

65 60 55 50 45

1999

2000

2001

2002

Employers Offering Health Insurance
By Employment Size, 2002
Percent

100
California U.S.

90 80 70 60 50

All Firms

3-9

10 - 49

50 - 199

200 - 999

1,000+

Firms Offering Retiree Health Benefits
As Percent of Firms, CA & US, 1999-2002
Percent

50 40 30 20 10 0

1999 2000 2001 2002

US Small Firms* CA Small Firms*

US Large Firms** CA Large Firms**

* Small Firms: 3-199 Employees ** Large Firms: 200+ Employees

Employers’ Average Cost Per Workers
As Percent of Costs, United States, 2002
Wages & Salaries 72%

Other Benefits 0.1%

Supplemental Pay 3% Retirement & Savings 3% Health Insurance 7%

Legally Required Benefits 8%

Paid Leave 7%

Avg. Monthly Health Insurance Premiums
Single Plans by Provider Type, 2002
US Dollars

320 300 280 260 240 220 200 180

California U.S.

All Plan Types

HMO

PPO

POS

California HMO’s Co-payments per visit
As Percent of California HMO Enrollees, 2001-2002
Percent

60 50 40 30 20 10 0 Nothing

2001 2002

$2

$5

$10

$15

$20

Other

California Average Drug Co-payments
2000-2002
US$

22 20 18 16 14 12 10 8 6

2000 2001 2002

Generic Drugs

Preferred Drugs

Non-Preferred Drugs

Hospital Expenses per Inpatient Day
2001

Least Expensive 2nd Tier 3rd Tier Most Expensive

CA’s Health Insurance Act of 2003
Population Covered by the Senate Bill-2, 2003
Firm Size Senate Bill 2 Family Coverge 200 + Begin Jan 1, 2006 Worker-Only Coverage 50 - 199 Begins Jan 1, 2007 Worker-Only Coverage Begins Jan 1, 2007 20 - 49 If Subsidies provided Total Covered at Full Implementation Employees Dependents 307,000 180,000 211,000 698,000 372,000 N/A N/A 372,000 Total 679,000 180,000 211,000 1,070,000

CA’s Employer-Provided Health Care
Estimated 2003 Costs By Firm Size, 2003
US$ Billions

10
Employer's Costs Worker's Costs

8 6 4 2 0

0 - 19

20 - 249

250+

Total

Health Care Industry Concentration
Top 10 States & CA, By Employment L.Q., 2002
Location Quotient

1.4 1.3 1.2 1.1 1.0 0.9 0.8 PA RI MA NJ CT ND ME WV VT NY CA*

* California is Ranked 39th

Milken Institute’s Top 10 Health Poles
Total Health Care Employment, 2001
Rank 1 2 3 4 5 6 7 8 9 10 Metroplitan Area Boston MA-NH New York NY Philadelphia PA-NJ Chicago IL Los Angeles-Long Beach CA Washington DC-MD-VA-WV Detroit MI Nassau-Suffolk NY Newark NJ Minneapolis-St.Paul MN-WI Health Pole Index 100.00 99.85 97.53 92.20 55.15 48.18 44.09 40.66 39.49 36.29

California’s Health Care Employment
Relative Growth, Health Care vs. Total, 1980-2002
Index 1980 = 100

180 160 140 120 100 80 80

Health Care Employment Total Employment

81 82

83 84

85 86

87 88

89 90

91 92

93 94

95 96

97 98

99 00

01 02

CA’s Metros’ Health Care Industry
As Percent of Total Employment & Output, 2002
Percent

10.0 9.0 8.0 7.0 6.0 5.0 4.0

Employment Output

Orange County San Francisco California Los Angeles San Diego San Jose Rest of U.S.

CA’s Metros’ Health Care Industry
Health Care Employment Growth, 1980-2002
Percent

70 60 50 40 30 20 10 0

1980-1990 1990-2000 2000-2002

Orange County San Francisco California Los Angeles San Diego San Jose Rest of U.S.

CA’s Metros’ Health Care Industry
Output Per Employment, 2002
US$ Thousands

110 100 90 80 70 60 50 San Jose Orange County Rest of CA San Francisco San Diego Los Angeles California

California’s Health Care Industry
Output Per Employment by Industry, 2002
US$ Thousands

250 200 150 100 50 0

Health Insurance Hospitals Med. Instruments Drugs Research & Testing Health Services* Total
* Health Services Except Hospitals

Drug Industry
Ranked by Employment Concentration, 2002
Rank 1 2 3 4 5 6 7 8 9 10 11 State New Jersey Delaware Indiana Connecticut Pennsyvania Utah North Carolina llinois Massachusette Michigan California Location % of State Quotient Total Emp. 4.77 1.20 4.70 1.18 2.63 0.66 2.31 0.58 2.00 0.50 1.57 0.40 1.55 0.39 1.52 0.38 1.25 0.31 1.23 0.31 1.18 0.30 Emp. (Ths.) 48.2 4.9 19.2 9.7 28.4 4.2 15.1 22.6 10.3 14.0 43.5

CA Metros’ Drug Industry Profile
Employment – Concentration, Size & Growth, 2002
6

Location Quotient (U.S. Average = 1.0)

Ventura

5 4
Orange County San Jose San Francisco

3 2 1 0
San Diego

Oakland Riverside

Los Angeles

-1 50 100 150 200 250 300

Relative Growth 1997-2002 (U.S. Average = 100)

Medical Instruments & Supplies Industry
Ranked by Employment Concentration, 2002
Rank 1 2 3 4 5 6 7 8 9 10 State Minnesota Utah Connecticut Massachusette New Jersey Indiana Nebraska California Colorado Pennsynvania Location % of State Quotient Total Emp. 3.68 0.81 3.65 0.81 2.21 0.49 1.79 0.40 1.76 0.39 1.72 0.38 1.68 0.37 1.61 0.35 1.35 0.30 1.32 0.29 Emp. (Ths.) 21.6 8.6 8.2 13.0 15.6 11.1 3.4 52.0 6.5 16.5

CA’s Med. Instruments & Supplies Profile
Employment – Concentration, Size & Growth, 2002
6
San Jose

Location Quotient (U.S. Average = 1.0)

5 4 3
Riverside

Orange County

2
Ventura San Diego

1
San Francisco

0
Los Angeles Oakland

-1 20 30 40 50 60 70 80 90 100 110 120 130

Relative Growth 1997-2002 (U.S. Average = 100)

CA’s Med. Serv. & Health Insurance Profile
Employment – Concentration, Size & Growth, 2002
4.5
Orange County

Location Quotient (U.S. Average = 1.0)

4.0 3.5 3.0 2.5
San Francisco Ventura

2.0 1.5 1.0
Oakland Los Angeles

0.5 0.0 -0.5 -1.0 40 60 80 100 120 140 160 180 200 220 240
Riverside San Jose San Diego

Relative Growth 1997-2002 (U.S. Average = 100)

Research & Testing Services Industry
Ranked by Employment Concentration, 2002
Rank 1 2 3 4 5 6 7 8 9 10 State Washington D.C. Idaho New Mexico Maryland New Jersey Massachusette Washington Colorado California New York Location % of State Quotient Total Emp. 5.26 2.76 3.77 1.98 2.74 1.44 2.02 1.06 1.96 1.03 1.81 0.95 1.60 0.84 1.26 0.66 1.24 0.65 1.22 0.64 Emp. (Ths.) 18.0 11.2 11.0 26.0 41.3 31.3 22.3 14.5 95.5 55.0

CA’s Research & Testing Services Profile
Employment – Concentration, Size & Growth, 2002
6
San Jose

Location Quotient (U.S. Average = 1.0)

5

4

3
San Francisco San Diego

2

Orange County Ventura Los Angeles Oakland Riverside

1

0 50 60 70 80 90 100 110 120

Relative Growth 1997-2002 (U.S. Average = 100)

Drivers of Rising Costs to Providers
• Clinical technology improvements • Rising core inflation • Increased utilization (inpatient and outpatient) • Labor costs • Capital requirements: Facilities Technology Information systems

Total National Spending on Hospital Care
1997 & 2001
Total National Spending on Hospital Care (in billions) 1997 vs. 2001
$451.2 $367.6

Share of Growth in Spending on Hospital Care 1997 to 2001

$83.6 Billion
Increasing Costs to Provide Care 44.6%*

More Services Provided 55.4%

1997

2001
*Net of increases in efficiency. Source: PricewaterhouseCoopers calculations, February 2003.

Actuary, National Health Statistics Group, National Health Accounts. Source: Centers for Medicare and Medicaid Services (CMS)

Drivers Behind the Increasing Costs of Goods and Services
Share of Growth in Spending on Hospital Care, 1997 to 2001
Wages
Rising labor costs due to workforce shortage 38.8% Rising expenses for devices, drugs, liability insurance 24.1%

31.9%

Increasing Costs to Provide Care 44.6%

Benefits
6.9%
3.4%

Pharmaceuticals Other supplies and services Other
• Increased efficiencies • Declining margins • Unmeasured growth factors

20.7%

-18.3%

Consumer Out-of-Pocket Spending Has Shrunk Over Time
Out-of-Pocket Spending as a Share of Total Health Spending
Percent of All Health Spending

40 34% 30 24% 21% 20 17% 15% 15% 15% 15%

10

0

1970

1980

1988

1993

1997

1998

1999

2000

Trick or Treat, It Is Halloween!

Thaine H. Allison, Jr. HealthEconomist2003@Yahoo.com

Health Care Costs Are Out of Control!

We Afford What We Want!

One 16 Oz Mocha Coffee X 2=1 Quart X 4= 1 Gallon X $3.35=$26.80/Gallon of Coffee

“Would you like a bypass with that?….
Saturday Evening Post May/June 2003

Health Services to Live or Live for Health Services?

Not Too Long Ago We Thought We Had The Answer

The American Healthcare System
Multi-Tiered Approach

Unnecessary Care Deluxe Care Acceptable Care Poor Care No Care

Circular Paradigm of Interventions
Physicians Patients Employers Insurers

Researchers Hospitals Government

Suppliers

Trends (i)
• Restructuring • Closures • Mergers

Trends (ii)
• Contracting For Services by Multiple Insurers • High Occupancy in County Hospitals/Clinics • Rapid Growth of HMOs

Trends (iii)
• Rapid Growth of Outpatient Services • Expansion of Pharmaceutical Services • Inclusion of Alternative Therapeutic Techniques and Models

Trends (iv)
• Increasing Costs/Expenditures/Prices – Patients – Workers – Employers – All Levels of Government • Hospital and Other Providers Declining Margins

Trends (v)
• Access has Become More Difficult – For the Poor – For Those With Insurance • Managed Care Plans Have Curbed Employees Choices of Hospitals and Specialists • Fewer Trauma Centers In An Emergency

How Do We Slay The Dragon ?

Options
• Continue What We Are Currently Doing • Modify the Current System • Adopt a New System

Option 1: Continue What We Are Currently Doing
• Many of us Have Multiple Health Insurance Coverage
– – – – – – Health Insurance Self or Employer Based Car Insurance Workers Compensation Home Owners Policy Government Program ESRD as an Example Supplemental Insurance

Option 1: Continued
• Inefficient • Fraud and Abuse as High as Ten Percent • High Advertising and Member Enrollment Expense • Poorly Managed • Dependent Upon Stock Market Income

Option 1: Continued
• Continued Friction Between Labor and Management • Continued Budget Deficits for Government • Poor Continuity of Care • Gives us What We are Familiar With

Option 2: Modify the Current System
• Requires Change and Managing the Issues • Increase Out of Pocket • Increase Barriers to Patients and Providers

Option 2 Continued
• Change Incentives to Patients
– Increased Co-Payment – Reduced Access – Annual Change in Providers

Option 2 Continued
• Change Incentives to Providers
– Reassign Risk From Payors to Providers – Restrict Access to Drugs, Tests, Specialists – Reduce Prices Paid and Income

Option 3: Adopt a New System
• Uniquely American Plan • Single or All Payor Plan • Universal Coverage

Affordability Crisis “Wish List”
• Government needs to pay its fair share. • We must create efficient and transparent marketplace so consumers have incentive and information needed to make educated health care decisions. • We must reduce the costs of health care administration across the board.


								
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