Docstoc

Middlebury forum

Document Sample
Middlebury forum Powered By Docstoc
					Paying for Health Care 2005
     A Perfect Storm
  A Practical Solution?
          EPIC FORUM
 Faculty House, Madison Room
       November 29, 2005

    Richard N. Pierson Jr.
    The Perfect Storm:
•   Escalating numbers of Uninsured
•   Escalating costs of Medical Care
•   The Insurance Industry faces:
       •   increased costs,
       •   restricted coverage, lead to,
•   The Insurance Death Spiral
•   System Failures, Economic results:
       •   Personal bankruptcies, medical basis
       •   Closure of factories (GM, Ford)
       •   Medicaid reductions: (MS, TN, PA, MA)
    Getting the attention of….
•   Welfare agencies?
•   Justice activists?
•   AARP?
•   Medical Societies? Hospital Associations?
•   Community Chests?
•   Business owners?
•   The general Public!
•   Lobbyists?
•   Legislators?
COST SHIFTING: NO END IN SIGHT
    The “Insurance Death Spiral”
                Get Care
 More uninsured
More underinsured          Bills not paid

Higher premiums
                            Fixed costs of
                             healthcare
   Cost shift              services not met
                Deficit!
      Number of Uninsured Americans
(Millions)
 45

 40

 35

 30

 25
                            Source: U.S. Census Bureau
 20

             1980   1985   1990      1995        2000
    Who are the Uninsured?
•    80% are in working families, BUT:
        Insurance is not offered (Walmart ...), or
        Employee refuses, or
        Preexisting conditions, or…..
Resulting in
•    Delay in services
        Uninsured suffer more, die younger
•    Patient Pays 35% OOP, 65% from “Charity”(!)
•    Total Cost: (estimated) $65 to 135 billion annually
    SOLUTIONS require that
              (Institute of Medicine 2004)
1. Health Care must be Universal
2.    “     “     “     “ Continuous
3. Affordable, to individuals and families
4. Sustainable for Society
     Must control HealthCare Inflation
     Encourage effective services, Public Health
5. Enhance Societal Health and Well-Being
        How We Got Here ?
                A Short History
•   Health Care was Not-for-Profit
       •   Blue Cross 1935
       •   Kaiser Permanente, WW II
       •   Military Medicine: DOD, VA, Fed. Employees
       •   MediCare / MediCaid 1965
•   For Profit : The American Way !
       • The Great Conversion: 1990-2005
       Let many flowers bloom!
          – 520+ Insurers compete, by denying care
          – Incentives to providers: increase care!
          – Return on Investment! Profits increase
    The Costs of Health Care
•   The few sick are very expensive
       • End-of-life care
       •   Radically Improving, Expensive, Technology
       •   Overheads and Profits increase
           – Hospitals 40% - Physicians 14%
           –   Pharmaceuticals 17% - Insurance 31%


•   Utilization: Over? Under? Mis? Who decides?
•   Incentives for prevention?
       • Public Health vs Profit Health?
       • Or, The Common Good.
           –   Schools, roads, fire, Police…
      You’re not paying for
       Joe Smith’s care.
You’re paying for a nurse, plus ….
•   Neonatal intensive care unit
•   Trauma unit
•   Emergency department
•   Surgical unit
                                   These are
                                   Fixed and
•   Primary care                   shared
•   Specialty care                 services
    Implications of Fixed costs

• It is much more cost effective to invest in only
what we need.

•  Trying to save money by keeping patients out
of the hospital is like trying to save money on
schools by keeping kids home for the day

• Once a facility or service is up and running,
we pay for it - whether it is used or not (Your
Hospital Expansion)
Health care services: How
much does our population
          need?
    Certain amount of
Disease in any population

•   7% have diabetes

•   25% have high blood pressure

•   5% have heart disease

Services available are determined by
       group needs over time
       Health care at any one time

      Who uses it?                      Who supports it?


                                                                Sick
   Sick                                                         12%
    14%
                 Sickest               Healthy
 Healthy             73%                    76%            Sickest
    13%                                                         12%




Source: Agency for Healthcare Research and Quality MEPS, 1999
All of Us will likely Be Among
      The Sickest At One
Or Many Points in Our Lives



                                     Sick
  Sick
           Sickest        Healthy
                                    Sickest
 Healthy




         User                Supporter
      When you’re really sick,
    health care is very expensive
      Cost
                                                  Healthy
     Per year
                                                 $1,000

                    Sickest               Sick
                                        $6,900
                   $38,000



Source: Agency for Healthcare Research and Quality.   MEPS, 1999
        Health Care Spending - 2002
    6,000




                           Dollars per Capita




       0


                           Source: OECD, 2004
Note: Figures adjusted for purchasing power. Data for Australia, Japan -2001
         Renal Transplants
           No. per million population


40




0




     Source: OECD, 2004.   Data for 2001, 2002
          CT Scanners
100




      No. per million population

                                      92.8



 0




      Source: OECD, 2004. Data for 2002
  20
            Physician Visits
                 Per Capita




   0




Source: OECD, 2002.   Data for 2000 or most recent year
      How do

      we
finance health care ?
Health Care Financing Today

 •   Fragmented - No health policy
     guaranteeing coverage to all.

 •   Complicated - needing a
     massive, expensive,
     bureaucracy to manage.
      Deficit: What to do

      • Close down
      • Cut staff
• Shift the deficit   to the private
   insured !!!!
     Private Insurer’s High Overhead


27




0




     Source: Schramm. Blue Cross Conversion. Abel Foundation. CMS.
      Insurance Overhead - 2002
400




                      Dollars per Capita




 0


                         Source: OECD, 2004
      Note: Figures adjusted for purchasing power. Data for Australia-2001
GROWTH SINCE 1970
      HC Administrative Costs

                                        Administrative
                                          Costs
   Clinical                       31%
    Care
                     69%



New England Journal of Medicine 8/03
Who’s paying the Health Care bill?

         Individuals
                           20%
                                             taxpayers
                                      60%         {Medicare, Medicaid.
       Private 20%                                Public employees,
                                                  tax subsidies}
       employers

                   We all pay
          But we don’t all have coverage
Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150
         Summary so far
• Most of the health care dollar is spent on
  services that we pay for, used or not

• Financing is piecemeal and unpredictable

• We have no effective way to control costs

• We all pay the bill: higher premiums
•                      higher taxes
• If we don’t act this will only get worse
What
 to
Do?
Continue what we have now?
• Payment for care is based on the
 individual in the here and now

• Piecemeal financing, from many
 sources

• No guaranteed coverage for everyone
• No mechanism for containing overall
 costs
“The American Way”


Should health care be
   regarded as a
   consumable?
HEALTHCARE
A PUBLIC GOOD?
       Public Good

     Something we all need

But cannot provide for ourselves
 (E.g. : roads, schools, police and fire
               protection)
NHP: an Investment Model
• Assumes healthcare is a public
 good. Invests in the needed
 services for the whole population
• Pays for people who are sick now
• Pools money, pays for health care
 directly
Single Payer Healthcare systems
         there are several models
•   Sweden, Norway, Denmark, Canada ,Finland,
    Iceland, Australia, Taiwan, and …. have single
    payer financing

•   Single publicly financed risk pool that pays for
    health care directly

•   Everyone has access to privately delivered,
    publicly financed health care services

•   Public can buy extra health insurance for
    services not covered by public plan.
Fundamental Features of
  Universal Systems
    •   Everyone Included
    •   Public Financing
    •   Public Stewardship
    •   Global Budget

    •   Public Accountability
    What would a national health
        program look like?
• Everyone receives a health care card
• Free choice of doctor and hospital
•   Doctors and hospitals remain independent, non-
    profit. Negotiate fees and budgets with NHP
•   Local regional agencies allocate expensive
    technology (Certificate of Need)
•   Progressive taxes go to Health Care Trust Fund

•   Public agency processes and pays bills
  The Market doesn’t always work
• Treats health care as a commodity by making a
  goal selling more heart bypasses, drugs, etc.

• Puts money into treatment, not prevention (flu
  vaccine, immunizations, diabesity, hypertension)

• Provides insurance incentives to avoid
  covering the sick (risk selection), delayed care

“Market” and quality health care are often at odds.
    Questions we need to ask:

•   How much health care services does
    our population need?
•   How much do we already have?

•   How much will it cost?
•   How can we get more for our money?
•   How are we going to pay for it?
              Change in Spending in a Single Payer Program
                Change in Spending in a
         Increased Utilization by the Uninsured (3.2%)


                 Single Payer Program
     Increased Utilization by the Poorly-Insured (2.4%)
                                    Additions
                                        Home Health (0.8%)

                      Elimination of Cost Sharing (5.1%)

                                                                        Emphasis on Primary Care (-1.8%)

                                                                        Reduced Fraud (-0.4%)

      Savings                                                           Bulk Purchase of Drugs and Equipment (-2.8%)

                                                                        Hospital Administrative Savings (-1.9%)

                                                                        Physician Office Savings (-3.6%)

                                                                        Insurer Administrative Savings (-5.3%)

                                                                        NET SAVINGS (-4.3%)


-6               -4                        -2                       0                         2                        4        6
                                                            Percent Change
              Source: Health Care for All Californians Act: Cost and Economic Impacts Analysis, Lewin Group, January 19, 2005
       FOUR Reform Strategies
           Which one to Choose?
                             IOM 2004
(in order of increasing costs)
1. Major Public Program Expansion
       New tax credit, Medicare from 55

2. Employer and Individual Mandate
3. Individual Mandate + Tax Credit
       (“Moral Hazard”; individual responsibility)

4. Single Payer
    WHY IS NATIONAL HEALTH
INSURANCE POSSIBLE IN THE U.S.?
 • Market forces do not address fundamental
   problems of cost, choice, access and quality.

 • Everyone will be affected: the uninsured,
   the underinsured, and the rest of us, (we are
   already paying the bill!)
 • Employers want to be relieved of the
   burden of rising health care costs.
The Institute of Medicine says:
 • Between the heath care we have and could
  have, lies not just a gap but a chasm

 • The American health care delivery system
  is in need of a fundamental change

 • The challenge is the enormity of the
  change required
Physicians for a national health
    program (PNHP) say:
• We’ve tried and failed with incremental
 reforms for 100 years (Common Sense:
 “You cannot cross a chasm in two
 jumps”)

• The time has come for single-payer
 National Health Insurance - an improved
 Medicare-for-All.
    SOME RELATED ISSUES
Malpractice Insurance
     •    Is not directly addressed; however accounts for
             <3% of healthcare costs
     •    BUT, Matters intensely to hospitals and physicians

     •    NHI removes costs of subsequent care and
            defensive medicine, leaving “pain and suffering”

Medical Errors
      •    A separate costly, painful fact of complex care.
      •    Must be addressed through professional
            organizations
        Single-Payer WILL fix
•   Overhead costs of approvals-paperwork
                         (large administrative staffs)

•   Profits by competing “ROI” industries
             Specialty hospitals, Insurance companies

•   PHARMA budgets
      • Direct-to-consumer advertising
      (Canadian prices identify large profit-margins)
    Single-Payer WILL NOT fix
•   Unregulated competition: hospitals, doctors,
        healthcare companies
•   Fraudulent billing
•   Unregulated facility growth: specialty hospitals
•   (Certificate of Need is required.)

•   National Recessions (Canada, UK, Japan)
WHO WILL be in CONTROL?
•   National Commissions, Regional offices

•   *States (Provinces): different needs, resources

•   IOM, AMA, specialty societies, JCAHO,
    Nurses, Social Workers, Pharmacists,
    IHI, NBME, FSMB, elected governments.

• Citizen involvement: the Oregon experiment
               PATHWAY 1
                to a better system

• Recover non-profit model, institutional providers
•   Recruit leaders:
    • Public: Church, Service, Chambers….
    • Professional: Societies and organizations
    • Business: Many
    • Academic: Economists, Sociologists, Medical
    • Foundations: Many
           PATHWAY 2
  Change the laws for insuring Healthcare

• Federal Legislation - A contested scene
• State Legislation   - ME, VT, NJ, OR, MA,
   (23 states have considered legislation)


   Enter the Political Process!
              PATHWAY 3
          Identify The Opposition
The “Medical-Industrial Complex” is a powerful force
     •   Health Insurance Industries are for-profit
     •   Managed care companies are for profit
     •   Pharmaceutical Industries are most profitable
     •   Some Medical Professional Societies
            Con: AMA, Surgical societies
            Pro: APHA, AAFP, APedA, APsychA, ACP
I NEED TO HEAR FROM YOU

• What do YOUR constituents need to
 hear?
• Whom have we offended?
     • Necessarily
     • Unnecessarily

• Where will we find allies?
         THANK YOU
        Right Wing Think Tanks
                           2003 budgets, million dollars
•   Heritage Foundation                     31.5
•   American Enterprise Institute           17.5
•   Cato Institute                          15.6
•   Manhattan Institute                     10.7
•   Hudson Institute                         9.3
•   Fraser Institute                         6.1
•   National Center for Policy Analysis       4.5
•   Discovery Institute                       4.2
•   Pacific Research Institute                4.1
•   Association of American Physicians       0.25

				
DOCUMENT INFO