The Cure: How Capitalism Can Save American Health Care Dr. David Gratzer

1
Presented by Aisha Price Hicklen MANA
5334 October 31, 2007
2
The Cure

• Dr. David Gratzer, Canadian-born physician
• Senior fellow at the Manhattan Institute for
  Policy Research
• Blames Americas current health care crisis on
  its reliance on outdated economic factors
• IRS tax ruling 1943- biggest event to shape
  American health insurance
• Tax exemption gave rise to 3rd party payers
  employer-based health coverage

3
America the Beautiful

• Rapid progression of modern medicine began in
  1941 with penicillin
• Now the leader in medical technology, surgery,
  drug interventions and diagnostic measures
• Live longer healthier lives, but at what cost???

4
The Cure

• Dick Cheneys Heart
• 4 heart attacks (the first at age 37)
• Quadruple bypass in 1988
• Angioplasty in 2000
• Pacemaker implanted 2001
• Cost between 20-25,000
• 50 times the average cost of health care in 1950
• Example of the extreme rise of costs in America

5
Employer-based Coverage

• Over-insured Americans
• Accustomed to paying little to no out-of-pocket
  expenses for basic medical care
• No incentive to make educated, cost-cutting
  choices which further drives up costs
• Health care in America shopping with someone
  elses credit card

6
Health Savings Accounts (HSAs)

• Consumer-driven give patients choice
• Low-cost, high deductible coverage for
  catastrophic events
• Tax-free savings account to cover basic
  out-of-pocket medical expenses
• Roll over funds each year
• Create financial incentive to be more responsible
  and cut costs
• Example John Mackey, founder/CEO of Whole Foods
• Deposit 300-1800/year into employee accounts

7
Health Savings Accounts (HSAs)

• Gratzers Steps Towards Building a Healthcare
  Market
• Make HSAs popular to create more choice
• Use politicians to promote consumer-driven health
  care local governments to provide option to
  employees
• Free HSAs
• Raise annual contribution amount
• Allow flexibility in deductibles within plans
  among consumers
• Government deregulation to provide more choice
  and promote competition
• gt 100,000 pages of Medicare regulations state
  regulations malpractice law insurance
  regulations certificates of need public health
  reporting requirements etc.

8
The Uninsured in America

• Myth of the 46 million
• Many Americans uninsured by choice
• 16 earn gt75,000 annually
• 1/3 earn at least 50,000 annually
• 1 in 4 lack coverage because of high costs
  associated with state regulations
• Health care costs about 1,587/year compared to
  2,484/year expense of the insured
• Bottom Line Medical attention is readily
  available for those who need it.

9
The Uninsured in AmericaAlternatives to
Healthcare

• Make Health Insurance Affordable
• HSAs
• Increase annual contribution
• Tool for long-term savings
• Interstate Insurance Option
• Freedom to choose low-regulation state to
  purchase coverage
• ? choice? competition among carriers

• Tax Reform
• Necessary to reduce premiums by 30
• Block Funding to States by Federal Government
• States given freedom to design own coverage
  options for uninsured

10
Medicaid Concerns

• Loosened Eligibility Requirements
• Fraud abuse
• TennCare ( covers 1.3 million of states 5.8
  million population)
• ? prescription costs
• Slow Reform efforts due to aggressive litigation
• Cut Physician Reimbursement to Control Costs
• States use of creative accounting

11
Medicaid Reform

• Make private insurance more attractive
• Reserve Medicaid for the needy
• Provide HSAs interstate insurance options
• Block Grant Funding to States by Federal
  Government
• Leave Medicaid regulations to the state
• Inspires accountability and innovation
• Provide Financial Incentives for Recipients to
  Cut Costs
• Example Gov. Mark Sanford of S. Carolina
  proposes health dollars

12
Medicare Concerns

• Inadequate
• Elderly potentially pay large out of pocket
  expenses
• Inefficient
• Many over insured for the services covered (but
  not necessarily services needed)
• Inequitable
• Geographic variations in spending
• Insolvent
• 1 problem will consume 25 of federal income
  tax revenues by 2030
• Unfunded liability over next 75 years is 68.3
  trillion

13
Medicare Reform

• Choice, Competition Light (Federal) Regulation
• Federal Employee Health Benefits Program (FEHBP)
• Measuring stick for reform
• Choice of over 240 plans (HMOs, PPOs, HSAs,
  fee-for-service)
• Federal governments role limited to paying the
  bill

• Benefits of an FEHBP-like program
• Contain costs without controlling price
• Combine a fragmented system (Part A, B, C, D)
• Modest increases in retirement age (over the
  years)
• Flexible Premiums

14
Prescription Drug Concerns

• High costs associated with consumers not directly
  paying for drugs
• Overregulated FDA
• Limited follow up process on drugs post approval

15
Prescription Drug Reform

• Reform FDA approval process
• 1. Create an independent office designed to
  monitor negligent employee actions
• 2. Outsource non-government analyzers
• Free up FDA time money
• Create a competitive market for non-government
  analyzers
• 3. Implement post-approval surveillance to
  improve drug safety
• Gather information from physicians at point of
  care and from real world settings (drug
  companies, insurance agencies, etc.)
• Win-win-win for patients, drug companies the FDA

16
National Health Care

• Canadian-style health care
• Complete government funded
• No co-payments
• No deductibles
• No insurance forms to complete
• Hospitals and physicians government funded
• Low administrative costs
• Most medical visits, diagnostic tests, surgical
  procedures are covered if deemed medically
  necessary
• So Whats the Problem????

17
O Canada

• The Problem
• Extremely long waits for care
• Overcrowded hospitals and ERs
• Increasing demand
• As result of no fees for services
• Many cost cutting measures
• Intentional shortages of clinics, physicians,
  restricted access to specialists capped
  physician income hospital bed closures denial
  of critical services

• The Cure
• Trend towards private health care clinics
  diagnostic facilities
• Travel abroad (to America) for medical care
• Americans are leaders in medical innovation and
  technology

18
The Cure Capitalism

• Decentralize decision making
• Price control by increasing choice
• Increase competition
• Among insurance agencies, physicians,
  prescription drug analyzers
• Budget caps
• block grants for Medicaid and Medicare