american health care: why so costly? karen davis president, the commonwealth fund june 11, 2003...
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American Health Care: Why So Costly?
Karen DavisPresident, The Commonwealth Fund
June 11, 2003Hearing on Health Care Access and Affordability: Cost
Containment StrategiesSenate Appropriations Committee
Labor, Health, and Human Services, Education and Related Agencies Subcommittee
0
3
6
9
12
15
18
1985 1990 1995 2000 2005 2010
Growth in Per Enrollee Private Health Insurance Premiums and Benefits, 1985
- 2012
1
Source: Heffler et al., “Health Spending Projections for 2002-2012,” Health Affairs (Web Exclusive February 7, 2003)
Percent
Projected
Premiums per enrollee
Benefits per enrollee
National Health Expenditures Average Annual Percentage Growth, Selected
Calendar Years 1960-2012
10.6%
12.9%11.0%
8.5%
5.4%7.4%
8.7%7.2% 6.9%
0%
5%
10%
15%
1960-
1970
1970-
1980
1980-
1990
1990-
1993
1993-
1999
1999-
2000
2000-
2001
2003-
2008
2008-
2012
2
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs (January/February 2003): 154–164 and Heffler et al., “Health Spending Projections for 2002–2012,” Health Affairs (February 7, 2003).
Projected
Real National Health Expenditures Average Annual Percentage Growth, Selected Calendar Years 1960-2001
7.7%
5.5%6.4%
5.5%3.6%
5.2%6.2%
4.6% 4.1%
0%
5%
10%
15%
1960-
1970
1970-
1980
1980-
1990
1990-
1993
1993-
1999
1999-
2000
2000-
2001
2003-
2008
2008-
2012
3
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs (January/February 2003): 154–164 and Heffler et al., “Health Spending Projections for 2002–2012,” Health Affairs (February 7, 2003).
Projected
National Health Expenditures Percentage Growth by Service, 2000 - 2001
8.7% 8.3% 8.6%
5.2%
15.7%
11.2%
0%
10%
20%
Total Hospital Care Physic ian and
c linical services
Nursing home
and home health
care
Presc ription
drugs
Program
administration
and net cost of
private health
insurance
4
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs (January/February 2003): 154–164
Shares of Overall Health Care Spending Growth, 1999-2001
31% 32% 37% 37%
5% 7%
14% 14%
34% 27%
21% 22%
30% 34% 28% 27%
0%
50%
100%
1999 2000 2001 2002
Physic ian services
Prescription drugs
Hospital inpatient
Hospital outpatient
5
Source: Bradley Strunk and Paul Ginsburg, “ Tracking Health Care Costs: Trends Stabilize but Remain High in 2002.” Health Affairs (Web Exclusive, June 11, 2003.)
0
2
4
6
8
1989 1991 1993 1995 1997 1999 2001
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs (January/February 2003): 154–164
Annual Percentage Change in Medical Price Index and Quantity of Service Use Per
Capita, 1989-2001Percent
6
Medical price index
Quantity of service use per person
Decomposition of Hospital Spending Trends, Annual Percentage Change,
1994-2002
7
*Calculated as the residual of the hospital spending and hospital price trends** Data through June 2002, compared with corresponding months in 2001Source: Bradley Strunk, Paul Ginsburg and Jon Gabel, “ Tracking Health Care Costs: Growth Accelerates Again in 2001.” Health Affairs (Web Exclusive, September 25, 2002.)
Spending on hospital services
Hospital prices Quantity*
1994 1.8% 4.0% -2.2%
1995 .8 3.7 -2.8
1996 .5 1.8 -1.2
1997 1.3 1.7 -0.4
1998 3.4 1.9 1.5
1999 5.8 2.5 3.2
2000 7.1 3.3 3.6
2001 12.0 3.6 8.0
2002** 11.2 4.1 6.8
Physicians’ Net Income from Practice of Medicine, 1999, and Percent Change, 1995-
1999
8
Average reported net
income
Percent change in income, adjusted for inflation
1999 1995-97 1997-99 1995-99
All patient care physicians
$187,000 -3.8%* -1.2%* -5.0%*
Primary care physicians
$138,000 -5.4* -1.1 -6.4
Specialists $219,000 -3.5*# -0.6 -4.0*#
*Rate of change is statistically significant at p<.05.#Rate of change for specialists in significantly different from change for primary care physicians at p<.05.Source: Marice C. Reed and Paul B. Ginsburg, Behind the Times: Physician Income, 1995-99. Center for Studying Health System Change, Data Bulletin No. 24, March 2003.
Percentage Growth in Medicare Per Capita Use of Physician Services, by Selected Type of Service,
2001-2002
2.3%
4.4%
6.5%
10.8%
14.6%
10.1% 9.9%8.9%
0%
10%
20%
Office vis its Consultations Emergency
room vis its
Echography-
heart
MRI - brain Endoscopy -
colonoscopy
K nee
replacement
Pacemaker
insertion
9
Source: Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy. March 2003
Growth in Ambulatory Surgery Procedures Provided to Medicare Beneficiaries,
1997, 1999, 2001
0
1500
3000
1997 1999 2001
10
Source: Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy. March 2003
Number of procedures
Factors Accounting for Growth in Prescrip-tion Drug Spending per Capita, 1980-2011
Note: Data for 2000-2011 are projections.”Other” includes quality and intensity of services, and age-gender effects.Source: Centers for Medicare and Medicaid Services, The CMS Chart Series. 2003
9
2.84.6 4.9 4.9
2.2
5 3.3 2.44.2
6.55.1
2.70.90.8
02468
1012141618
1980-1993 1993-1997 1997-2000 2000-2003 2003-2011
Calendar Years
Other
Drug Utilization (Number of Prescriptions)
Drug Prices (Consumer Price Index - Drugs)Average Annual Percent Change
10.79.2
16.1
13.3
10.0
11
$2.8 $12.1
$222.6
$110.9
$53.3
0
125
250
1970 1980 1993 2002* 2012*
*ProjectedSource: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs (January/February 2003): 154–164 and Heffler et al., “Health Spending Projections for 2002–2012,” Health Affairs (February 7, 2003).
Net Cost of Private Health Insurance and Government Program Administration,
(in billions) 1970–2012Billions
12
Private Insurance Administrative Costs as a Percent of Private Insurance Outlays and Public Program
Administration as a Percent of Public Outlays, 2001
11.9%
4.6%
0%
5%
10%
15%
Private insurance administration Public administration
13
Source: Calculated from Centers for Medicare and Medicaid, “National Health Expenditures, by Source of Funds and Type of Expenditure.” Available at http://www.cms.hhs.gov/statistics/nhe/historical/t3.asp
National Health Expenditures by Source of Funds, 2001
Medicare
$242 billion
Private Health
Insurance
$496 billion
Out-of-pocket
$206 billion
Medicaid
$224 billion
Other public
$180 billion
Other private
$76 billion
14
Total National Health Expenditures = $1.4 trillion
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs (January/February 2003): 154–164
5%17%
16%
13%35%
14%
Percentage Change in Private Health Insurance and Medicaid Enrollment,
1985-2012
-6
-3
0
3
6
9
12
15
18
1985 1990 1995 2000 2005 2010
15
Source: Heffler et al., “Health Spending Projections for 2002-2012,” Health Affairs (Web Exclusive February 7, 2003)
Percent
Projected
Medicaid enrollment
Private insurance enrollment
0
1000
2000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Private healthinsurers
Medicare
Cumulative Growth in Per Enrollee Payments for Comparable Services, Medicare and Private
Insurers, 1970-2000*Growth index
*Includes hospital care, physician and clinical services, durable medical equipment, and other professional services.Source: Christina Boccuti and Marilyn Moon, “Comparing Medicare and Private Insurers: Growth Rates in Spending Over Three Decades.” Health Affairs (March/April 2003)
16
1996 1997 1998 1999 2000 2001 2002 2003
(est.)
16%
12%
8%
4%
FEHBP per participantspending
Medicare per capita spending
All employer premiums
Spending Growth: FEHBP, All Employers, and Medicare
-2%
0%
Note: Employer premium increases reflect coverage for a family of four.Source: Mark Merlis, The Federal Employees Health Benefits Program:Program Design, Recent Performance, and Implications for Medicare ReformBriefing for The Henry J. Kaiser Family Foundation, May 30, 2003.
(12.7%)
(15%)
(4.1%)
17
Per Capita National Health Expenditures in Selected Countries, 2000
$4,631
$2,748 $2,535 $2,420$1,983 $1,763
$0
$2,500
$5,000
US GER CAN DEN OECD
Median
UK
18
Source: Anderson, et al. “It’s the Prices, Stupid: Why The United States is So Difference from Other Countries.” Health Affairs (May/June 2003): 89-105
Average Annual Growth Rate of Real Health Care Spending per Capita Between 1990 and
2000 in Selected Countries
3.9 3.7
3.2 3.1 3.12.9
2.32.1
1.8
0.0
1.0
2.0
3.0
4.0
J apan United
K ingdom
United
States
Australia OECD
Median
New
Zealand
France Germany Canadaa
a 1992–2000Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.The Commonwealth Fund, October 2002.
Percent
19
Distribution of Public and Private Health Care Spending in Selected Countries, 2000
81 78 77 76 75 74 72 72
44
19 22 23 24 25 26 28 28
56
0
20
40
60
80
100
United
Kingdom
New
Zealand
J apan France Germany OECD
Median
Australia Canada United
States
Private SpendingPublic SpendingPercent
Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.The Commonwealth Fund, October 2002.
20
$405 $399
$335 $328$290
$249 $240
$171
$707
$0
$100
$200
$300
$400
$500
$600
$700
$800
United
States
Canada Australia OECD
Median
J apan Germany New
Zealand
France United
K ingdom
Per Capita Out-of-Pocket Health Care Spending in Selected Countries, 2000
c
ba a
a 1999, b 1998, c 1996Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.The Commonwealth Fund, October 2002.
21
16.0
6.5 6.5 6.4 6.4 5.9 5.8 5.4
0
4
8
12
16
J apan France Germany Australia Canada OECD
Median
United
States
United
K ingdom
Per Capita Annual Number of Physician Visits, Selected Countries
aa
d
c
a
a b
b
a 1996, b 2000, c 1999, d 1998Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.The Commonwealth Fund, October 2002.
22
Per Capita Acute Care Hospital Days Selected Countries, 2000
1.9
1.0 1.0 1.0 0.90.7
0
1
2
GER DEN CAN OECD
Median
UK US
23
*1999Source: Anderson, et al. “It’s the Prices, Stupid: Why The United States is So Difference from Other Countries.” Health Affairs (May/June 2003): 89-105
* *
Per Capita Spending on Pharmaceuticals, 2000
$556
$473
$385 $375
$262 $253 $252$210
$313
$0
$200
$400
$600
United
States
France Canada Germany J apan OECD
Median
United
K ingdom
Australia New
Zealand
a c
bb
a 1999, b 1997, c 1998Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.The Commonwealth Fund, October 2002.
24
388
166
10381 66 51
0
200
400
United
States
Germany Australia Canada New Zealand England
Coronary Angioplasty Procedures per 100,000 Population in Selected Countries
a
b a a a c
a 1999, b 1997, c 2000Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.The Commonwealth Fund, October 2002.
25
Age-Standardized Mortality Rates for Acute Myocardial Infarction per 100,000 Population
in 1999 in Selected Countries75 75
65 63 63 61 60
2925
0
10
20
30
40
50
60
70
80
United
K ingdom
New
Zealand
Australia Canada OECD
Median
Germany United
States
France J apana
ba
a
a 1998, b 1997Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.The Commonwealth Fund, October 2002.
26
Percent of Sicker Adults Reporting Medical Errors Causing Serious Problems, 2002
18
1514
13
9
0
10
20
US CAN NZ AUS UK
Source: Commonwealth Fund 2002 International Health Policy Survey of Sick Adults
Percent
27
Percent of Sicker Adults Reporting Being Sent for Duplicate Tests by Different Health
Professionals, 2002
2220
17
13 13
0
12
24
US CAN NZ AUS UK
Source: Commonwealth Fund 2002 International Health Policy Survey of Sick Adults
Percent
28
Acknowledgments• Barbara Cooper, Senior Program Officer, co-
author• Steve Schoenbaum, Senior Vice President • Cathy Schoen, Vice President for Health Policy,
Research, and Evaluation• Chris Hollander, Senior Editor • Katie Tenney, research and production
assistance
www.cmwf.org