Growing%20Unaffordability%20of%20Health%20Care:%20Incremental%20vs.%20Real%20Health%20Care%20Reform

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Growing Unaffordability of Health Care
Incremental vs. Real Health Care Reform

• John P. Geyman, MD
• Professor Emeritus- Family Medicine
• University of Washington, Seattle

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Major Problems ofHealth Care System

• Increased Costs
• Decreased Access
• Variable Quality
• Increased Fragmentation
• Increased Administrative Burden
• Technological Imperative
• Medicolegal Liability
• System Out of Control

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Drivers of Health Care Costs

• 1.Technological advances
• 2. Aging of population
• 3.Increase in chronic disease
• 4.Inefficiency and redundancy of private insurers
• 5.Profiteering by investor-owned companies,
  facilities and providers
• 6.Consumer demand
• 7.Defensive medicine

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HEALTH CARE COSTS IN U.S.
16.5 of GDP 2.3 trillion per year
Increased cost-shifting to individuals/families
Incremental reforms ineffective
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Escalating Costs of Care

• Double digit increases in health insurance
  premiums
• Average family premium now over 15,000 per year
• 31 of total health costs are administrative
• HMO rates up by 11.7 in 2007 vs CPI increase of
  2-3

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GROWING UNAFFORDABILITYOF HEALTH CARE

• Medical divide at about 50,000 annual income
• Median household debt over 100,000
• Median family income 41,000 a year
• Health insurance premiums to consume one-third
  of average household income by 2010

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CHANGE IN REAL FAMILY INCOME1979-2004
SOURCE Bureau of the Census
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Three Alternatives For Health Care Reform
1. Employer mandate 2. Individual mandate
(Consumer-driven health care) 3. Single-payer
system
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Problems With Employer-Based Approach
1. Only 59 percent of employers provide
coverage 2. Trend toward part-time work force 3.
Defined contributions vs. benefits 4. Increasing
cost-sharing and unaffordability 5. Job lock
problem 6. Competitive disadvantage in global
markets 7. A failed track record (eg., Hawaii)
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Consumer Choice(Individual Mandate)
Increasingly popular pro-market solution
Shifts responsibility for coverage from employers
to consumers Assumes a free market in health
care Assumes adequate information and options
for consumers Current examples privatizing
of Medicare health savings accounts
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Problems With Option 2
Less service for more cost Serves for-profit
insurance industry Coverage by risk selection
Limited choice for consumers Bad plans can
drive out the good ones Is still the most
politically popular and likely
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Why Incremental "Reforms Keep Failing
1. Favorable risk selection by insurers 2. High
administrative costs and profiteering 3. No
mechanisms to contain costs 4. Fragmentation of
risk pools 5. Decreasing access to necessary
care 6. Lack of accountability for value and
quality
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"In America, the over reliance on market logic
and marketing institutions is ruining the health
care system. Market enthusiasts fail to tabulate
all the costs of relying on market forces to
allocate healthcare-the fragmentation,
opportunism, asset rearranging, overhead,
underinvestment in public health, and the assault
on norms of service and altruism. They assume
either a degree of self-regulation that the
health markets cannot generate, or farsighted
public supervision that contradicts the rest of
their world view. Health care now consumes fully
one-seventh of our entire national income. There
is no realm of our mixed economy where markets
yield more perverse results.
Robert Kuttner - Everything for Sale The Virtues
and Limits of Markets
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Incremental Change and U.S. Health Care
By John Jonik
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Option 3 Single Payer System

• Socialized insurance, not socialized medicine
• Universal coverage through National Health
  Program
• Eliminates private health insurance industry
• Hospitals and nursing homes with global budgets
• Physicians reimbursed by fee-for-service
• Blend of federal and state government roles

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Fundamental Features of a Universal Healthcare
System
Everyone included Public financing Public
stewardship Global budget Public
accountability Private delivery system
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What Would a NHP Look Like?

• Everyone receives a health care card assuring
  payment for all necessary care
• Free choice of physician and hospital
• Physicians and hospitals remain independent and
  non-profit, negotiate fees and budgets with NHP
• Local planning boards allocate expensive
  technology
• Progressive taxes go to Health Care Trust Fund
• Public agency processes and pays bills

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Advantages of National Health Program
Assured access for all Americans Cost savings
(200 billion/year) Administrative simplicity
Decreased overhead (Medicare 3 vs private
insurance 15-26) Distributes risk and
responsibility to finance care Improves access,
costs, and quality of care
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Growing Support for NHI
Physicians (egs., PNHP, ACP, AMWA,
APHA) 2008 59 national study 2006 64
Minnesota 2002 62 Massachussetts 1999 57
of Deans, faculty, residents, and medical
students Nurses (eg., CNA) Labor (egs.,
AFL-CIO and Working America) Mayors of 25 Cities
(egs., Austin, Baltimore, Boston, Chicago,
Detroit, San Francisco, Louisville) Public
average 60-65 over many years
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How Physicians Win with NHI
More time for patient care Less overhead
Less bureaucracy More clinical autonomy All
paying patients Increased reimbursement
(primary care and shortage specialties)
Increased practice satisfaction Restored
professionalism
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Problems with Option 3

• Political acceptance
• Lobbying by special interest stakeholders
• Disinformation by media coverage
• Philosophic concerns about big government
• Denial of ineffectiveness of market-based system

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Why Private Health Insurance is Obsolete ?
Inefficiencies vs public-financing ? Fragments
risk pools by medical underwriting ? Increasing
epidemic of underinsurance ? Excessive
administrative and overhead costs ?
Profiteering?shareholders trump patients ?
Pricing itself out of the market ?
Unsustainable and resists regulation
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Annual Health Insurance Premiums And Household
Income, 1996-2025
SOURCE Reprinted with permission from Graham
Center One-Pager. Who will have health insurance
in 2025? Am Fam Physician 72(10)1989, 2005
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Basic Building Blocks For Health Care Reform
1. Single-payer national health insurance
(NHI) 2. Evidenced-based coverage process 3.
Reimbursement reform 4. Strengthening of primary
care 5. Quality improvement 6. Transition from
for-profit to not-for-profit system 7. Rebuild
the capacity of government 8. Malpractice
liability reform
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Alternative Scenarios for 2020
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Alternative Scenarios for 2020
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Principle of Social Justice
The medical profession must promote justice in
the health care system, including the fair
distribution of health care resources. Physicians
should work actively to eliminate discrimination
in health care, whether based on race,
gender,socioeconomic status, ethnicity, religion,
or any other social category. SOURCE Project of
the ABIM Foundation. ACP.-ASIM Foundation and
EuropeanFederation of Internal Medicine. Medical
professionalism in the new millenniumA physician
charter. Ann Intern Med 136(3)244, 2002.
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The evidence is conclusive that our people do
not yet receive all the benefits they could from
modern medicine. For the rich and near-rich
there is no real problem since they can command
the very best science has to offer. - - - Among
the majority of the population, however, there
are great islands of untreated or partially
treated cases - - - Although it is a principle of
far-reaching and, perhaps, of revolutionary
significance, I think there are few who would
deny that our ultimate objective should be to
make these benefits available in full measure to
all of the people. Ray Lyman Wilbur,
M.D. Chairman of the Committee on the Costs of
Medical Care, 1932 Report First Dean of Stanford
Medical School and President of Stanford
University (1916-1943)