Critical Condition: How Health Care in America Became Big

Business & Bad Medicine

Donald L. Barlett & James B. Steele

Failure of a Market-Driven System

• Failure to control costs.

• Failure to provide equitable access to care

• Distortions in the provision of care.

• Lack of incentives for needed medical/ pharmaceutical research.

Health Care Spending 2004

• USA National health Expenditures $1.87 Trillion

• USA $6,280 per capita

• OECD median $2,193 per capita

• 53% more than any other OECD country

• 140% above the OECD median

Health Care Spending 2003

• USA spent 16.0% GDP

• Only Switzerland and Germany spent more than 10%

• Annual Growth in spending 1992-2003– USA 3.3%– OECD 3.4%

In every OECD the growth of health care spending outpaced inflation.

Uninsured

• 2001 41.2 million

• 2004 45.0 million

15.2% population

Health Status 2003Male Life Expectancy

• 1. Japan 85.3 years

• 2. Spain 83.7 years

• 3. Switzerland 83.0 years

• 23. USA 79.9 years

Health Status 2003Male Life Expectancy

• 1. Japan 78.4 years

• 2. Switzerland 77.8 years

• 3 Spain 77.2 years

• 22. USA 74.5 years

Reasons for Rising Health Care Costs

• Aging

• Technology

• Waste/Inefficiency

• The Legal System

• New Diseases

• Fraud

• Rising Prices

Efforts to Slow Rising Costs in the USA

• Increased cost sharing

• Consumer choice

• Disease management

• Evidence-based practice

• Information Technology

• Tort Reform

Supply of Health Resources

• Number of RNs– USA 7.9/1,000 pop– OECD 8.9/1,000

• Number of Physicians– USA 2.4/1,000 pop– OECD 3.1/1,000

• Number of Hospital Beds per capita– USA 2.9/1,000 pop– OECD 3.7/1,000

Supply of Health Resources

• Number of CT Scanners– USA 12.8/million pop– OECD 13.3/million

• Number of MRI Units– USA 1.4/million pop– OECD 1.0/million

Malpractice Claims and Payments 2001

Country Claims/1,000 pop

Av. Payment or settlement

USA 0.18 $265,103

Canada 0.04 $309,417

UK 0.12 $411,171

Australia 0.12 $ 97,014

Annual Growth of Malpractice Payments1996-2001

• USA 5%

• UK 10%

• Canada 20%

• Australia 28%

Most Important Reasons for Higher USA Spending

• Higher incomes

• Higher medical care prices for pharmaceuticals, hospital stays, physician visits, etc.

Reform Proposals

• Universal coverage• Single-payer system• Administration

o U.S. Council on Health Care (USCHC).o Quasi-governmental organization like the Federal

Reserve System.o Set policy for health care.o Control federal spending for basic and catastrophic

medical coverage.

Reform Proposals

• Funding: Two taxeso Tax on gross receipts of businesses.o Flat tax on individual income (like the Medicare tax).

• USCHC Regionso Take into account regional differences

• Individual could supplement basic government supported coverage with private insurance.

Curing the Problems

• Guarantee basic levels of care for everyone.

• Establish flexible co-pays for basic care.• Pay all costs of catastrophic illness.• Restore freedom of choice.• Redirect health care spending to disease

prevention.• Curtail out-of-control prescription drug

costs.

Curing the Problems

• Provide drug information to consumers.• Concentrate health care spending on cost-

effective areas.• Control costs by reducing variation in

health care spending.• Correct unrealistically low provider

reimbursement rate.• Stop the trend toward over-diagnosis and

over treatment.

Advantages

• Reduce medical errors.

• Reduction in malpractice claims and malpractice insurance premiums

• Reduction in defensive medicine.

• Provide information on best practices.

• Negotiate drug prices.

Health Spending : Driving Forces

• Prices• Technology• Ageing• Waste and inefficiency• The legal system• New diseases• Corporate consolidation• Profligate providers and consumers

Efforts to Slow Rising Costs

• Increased cost sharing

• Consumer choice

• Disease management

• Evidence-based practice

• Information technology

• Tort reform

65%

64%

63%

54%

49%

36%

35%

0% 20% 40% 60% 80% 100%

Increase use of Generic Drugs

Cause people to go without care

Cause preople to go without prescription drugs

Harm the health of the public

Reduce the use of expensive prescription drugs

Reduce unnecessary care

Influence people to make better decisions about theirhealth

A Lot

If insurers and Employers require members to pay more out-of-pocket for health care, how much do you think each of the following will happen? (Harris Poll September, 2003)