Possibilities for National Health Care Reform and How To Fund Them

1
Possibilities for National Health Care Reform and
How To Fund Them
2
Outline of Presentation

• 1. Health Care Spending and Costs
• 2. Health Care Outcomes
• 3. Some Characteristics of U.S. Health Care
• 4. Possibilities for Health Care Reform
• 5. Cost of Some Recent Reform Proposals and
• Their Funding Sources
  

3
Health Care Spending and Costs
4
Health Care Spending per Capita in 2004Adjusted
for Differences in Cost of Living
a
a
a
a2003
J. Cylus and G. F. Anderson, Multinational
Comparisons of Health Systems Data, 2006 (New
York The Commonwealth Fund, Apr. 2007).
5
Percentage of Gross Domestic Product Spent on
Health Care in 2004
a
a
a
b
b
b
b
b
c
a2003 b2004 c2004 number for US from C. Smith et
al., National Health Spending in 2004 Recent
Slowdown Led by Prescription Drug Spending,
Health Affairs, Jan./Feb. 2006 25(1)18696.
J. Cylus and G. F. Anderson, Multinational
Comparisons of Health Systems Data, 2006 (New
York The Commonwealth Fund, Apr. 2007).
6
Change in U.S. Health Care Spending

• !970s 12.6 (avg. increase
  per year)
• 1980s 11.3 (avg. increase
  per year)
• 1990-1995 8.1 (avg. increase per
  year)
• 1996 5.2
• 1997 5.3
• 1998 5.8
• 1999 6.2
• 2000 7.0
• 2001 8.6
• 2002 9.1
• 2003 8.1
• 2004 7.2
• 2005 6.9

7
Administrative Costs as a Percentage of all
Health Care Spending (2004)

• U.S. 7.6
• France 7.5
• Germany 5.6
• Netherlands 4.4
• Canada 4.1
• Australia 3.0
• Japan 2.3

8
Health Care Outcomes
9
Healthy Life Expectancy at Age 60, 2002
Developed by the World Health Organization,
healthy life expectancy is based on life
expectancy adjusted for time spent in poor health
due to disease and/or injury
Years
Data The World Health Report 2003 (WHO 2003,
Annex Table 4).
Source Commonwealth Fund National Scorecard on
U.S. Health System Performance, 2006
10
Infant Mortality Rate, 2002
Infant deaths per 1,000 live births
International variation
2001. Data International estimatesOECD Health
Data 2005 State estimatesNational Vital
Statistics System, Linked Birth and Infant Death
Data (AHRQ 2005a).
Source Commonwealth Fund National Scorecard on
U.S. Health System Performance, 2006
10
11
Prevalence of Chronic Conditions, 2004
Percent of adults with at least one of six
chronic conditions
Hypertension, heart disease, diabetes,
arthritis, lung problems, and depression 2004
Commonwealth Fund International Health Policy
Survey
12
Some Characteristics of US Health Care
13
Cost-Related Access Problems, Sicker Adults, 2005
2005 Commonwealth Fund International Health
Policy Survey of Sicker Adults
14
Went to ER for Condition That Could Have Been
Treatedby Regular Doctor, Among Sicker Adults,
2005
Percent of adults who went to ER in past two
years for condition that could have been
treated by regular doctor if available
Data Analysis of 2005 Commonwealth Fund
International Health Policy Survey of Sicker
Adults Schoen et al. 2005a.
Source Commonwealth Fund National Scorecard on
U.S. Health System Performance, 2006
14
15
Waited More than Four Weeksto See a Specialist
Doctor, Sicker Adults, 2005
Base Saw or needed to see a specialist
Percent
2005 Commonwealth Fund International Health
Policy Survey of Sicker Adults
16
Waiting Time for Elective or Non-Emergency
Surgery, Sicker Adults, 2005
Base Needed non-emergency or elective surgery
Percent experienced wait time of 4 month or more
2005 Commonwealth Fund International Health
Policy Survey of Sicker Adults
17
Average Length of Stay for Acute Care in 2004
a
a
a
a2003
J. Cylus and G. F. Anderson, Multinational
Comparisons of Health Systems Data, 2006 (New
York The Commonwealth Fund, Apr. 2007).
18
Primary Care Practices with Advanced Information
Capacity (2006)

• Percent Reporting 7 or more of 14 Advanced
  Information Practices
• N.Z. 87
• U.K. 83
• AUS 72
• NETH 59
• GER 32
• U.S. 19
• CAN 8

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Some Possibilities for Health Care Reform

• 1. National Health Insurance
• 2. Employer Mandates
• 3. Medical Savings Account
• 4. Managed Competition

20
National Health Insurance

• Govt. pays all health care costs (single-payer)
• Private alternatives are usually not permitted
• Health care providers bargain with government for
  fees
• Global budgets are used
• Health care delivery is still private
• Advantages reduces administrative costs, all
  people are insured, health care costs are not a
  barrier to treatment
• Disadvantages little incentive for individuals
  to control use of health care, government is
  monopoly insurer, problem of queuing for
  treatment

21
Employer Mandates

• Common form of this is play or pay
• Pay or play employers either provide health
  insurance or pay a payroll tax to fund
  govt.-provided health insurance
• Problems
• 1. unemployed are not insured
• 2. payroll tax will cause unemployment (studies
  7 payroll tax leads to job loss of 700,000-3.1M
  workers)
• 3. if govt.-provided health insurance is cheaper
  than employer-provided insurance, many firms will
  be motivated to move to govt. health insurance
  (study half of U.S. population would move to
  govt. health insurance

22
Medical Savings Accounts (MSAs)

• Market-based approach
• This approach argues that to control costs,
  consumers must be spending their own money
• Consumers pay out-of-pocket for low-cost, routine
  health care
• Individuals also buy high-deductible health
  insurance for high-cost health problems
• How are routine care and high-deductibles paid
  for? with MSAs
• Advantage individuals are in control of their
  medical spending and so will choose least-cost
  alternatives
• Problems Will people make well-informed health
  decisions? What about the chronically ill? What
  about those who still cant afford health
  insurance?

23
Managed Competition

• Concept behind Clinton Plan of the 1990s
• Employers would have to offer employees multiple
  competing health plans
• Employers would make a contribution based on 80
  percent of the average employment-based plan
  cost
• Employee would have to pay any remaining amount
  above the employer contribution
• The employee contribution would make them more
  price conscious and encourage cost control
• Problems Employment reduction from employer
  mandates, govt. must define a standard health
  plan, concept relied on managed care, Clinton
  plan was much more complicated than this basic
  description

24

• Cost of Some Recent Reform Proposals and
  Their Sources of Funding

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Cost Of Recent Reform Proposals

• Reform Proposal Cost of
  Proposal
• Natl. Health Insurance 19B saving to 61B
  new
• 
  spending per year
• Americare 155B per
  year
• Hillary Clinton Plan 110B per year
• John Edwards 90-120B per
  year
• Barack Obama 50-60B per
  year
• 
  
• President Bushs 70.4B per year
  (but
• Plan
  (is projected to decline)
• Note Total U.S. health care spending is
  currently 2.2T

26
Funding of Reform Proposals

• Reform Proposal Source
  of Funding
• Natl. Health Insur. various tax
  increase options
• Americare increase in
  payroll taxes
• Clinton Plan income tax
  increase on highest
• 
  incomes, employer mandates
• John Edwards income tax
  increase on highest
• 
  incomes, employer mandates
• Barack Obama income tax
  increase on highest
• 
  incomes, employer mandates
• 
  
• President Bushs lost taxes
  would be financed as
• Plan
  part of budget deficit
• 
  
• Notes on tax revenues

27
One Last Issue How Do We Encourage Healthy
Living?

• Will more preventive medicine help?
• One study showed adults only receive half of
  recommended preventive services
• Obesity two-thirds of Americans are overweight
• A study shows that obese people incurred 1,000
  more in medical costs than normal weight people
• Smoking Rates are dropping but 20 percent of the
  adult population still smokes
• 75B per year in health care costs directly
  related to smoking
• How do we encourage more exercise?
• Almost 40 percent of adults engage in no physical
  exercise