us health care: the future - george mason university care the f… · us health care: the future...
TRANSCRIPT
US Health Care:The FutureWeek Two:
Controlling Costs
Bill ScanlonFor
Osher Lifelong Learning Institute April 2012
• Context– How Big is the Cost Problem?
• What Drives Costs?
• ACA Changes to Medicare
• Reducing the Federal Deficit: Health Care Options
April 23, 2012 US Health Care: The Future OLLI Week Two
PER CAPITA HEALTH CARE SPENDING PER CAPITA HEALTH CARE SPENDING AND GDP IN SELECTED COUNTRIES AND GDP IN SELECTED COUNTRIES
2002-2003 2002-2003
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0 10,000 20,000 30,000 40,000 50,000per Capita GDP ($US PPP)
per C
apita
Exp
on
Hea
lth
($U
S PP
P)
April 23, 2012US HEALTH CARE: THE FUTURE OLLI WEEK TWO
The figure for Japan is 2002 estimate; the figures for Australia, Austria, China, Hungary, Ireland, Israel, Poland, Sweden and United Kingdom are of 2002; the figures for Canada, France, Iceland, Norway and Switzerland are 2003 estimates. The rest are of 2003.
Source: OECD Health Data 2005 and WHO.
U.S.
Canada Norway
Japan
Switzerland
Germany
Israel
KoreaChina
U.K.
Australia
$1,794
Source: OECD
International Comparison of Spending on Health, 1980–2009
0
1000
2000
3000
4000
5000
6000
7000
8000
1980 1985 1990 1995 2000 2005
United StatesNorwaySwitzerlandCanadaNetherlandsGermanyFranceDenmarkAustraliaSwedenUnited KingdomNew Zealand
Average spending on healthper capita ($US PPP)
0
2
4
6
8
10
12
14
16
1980 1985 1990 1995 2000 2005
United StatesFranceSwitzerlandGermanyCanadaNetherlandsNew ZealandDenmarkSwedenUnited KingdomNorwayAustralia
Total expenditures on healthas percent of GDP
SOURCE: OECD Health Data 2011 (June 2011).
7
Health Spending as a Share of the Economy
April 23, 2012 US Health Care: The Future OLLI Week Two
100%
20%
CBO Projection
2008 2082
50 %
Source: CBO
Health Spending as Share of Economy
April 23, 2012 US Health Care: The Future OLLI Week Two
100%
20%
Historical Trend
CBO Projection
2008 2082
50 %
Source: CBO and Author Computations
April 23, 2012 US Health Care: The Future OLLI Week Two
Declines in Worker Compensation Mostly due to Health Care and Payroll Taxes (Medicare)
April 23, 2012 US Health Care: The Future OLLI Week Two
Spending on Health Services and Insurance Administration
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Public Admin.
Insurance
Other
LTC
Drugs
Physicians
Hospitals
April 23, 2012 US Health Care: The Future OLLI Week Two
2010--$2.3 trillion2020--$4.2 trillion
Source:CMS Actuary
April 23, 2012 US Health Care: The Future OLLI Week Two
It’s The Prices, Stupid: Why The United States Is So Different From Other Countries
Higher health spending but lower use of health services adds up to much higher prices in the United States than in any other OECD country.
by Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, and Varduhi Petrosyan, Health Affairs, Vol. 22. No 3, 2003.
HOSPITAL DISCHARGES PER CAPITAHOSPITAL DISCHARGES PER CAPITAIN SELECTED COUNTRIES 2005IN SELECTED COUNTRIES 2005
163158
201
245
12188
106
268
0
50
100
150
200
250
300
US UK Germany Australia France Japan Canada OECD Av.
Dis
char
ges
per 1
00,0
00 P
op
April 23, 2012US HEALTH CARE: THE FUTURE OLLI WEEK TWO
Source: OECD HEALTH DATA 2007
Source: OECD
DOCTOR VISITS PER CAPITA DOCTOR VISITS PER CAPITA IN SELECTED COUNTRIES 2005IN SELECTED COUNTRIES 2005
6.86.16.6
13.8
7
3.8
0.02.04.06.08.0
10.012.014.016.0
US
German
yJa
pan
France
Australi
a
OECD Av.Num
ber o
f Con
sulta
tions
per
Cap
ita
April 23, 2012US HEALTH CARE: THE FUTURE OLLI WEEK TWO
Source: OECD HEALTH DATA 2007Source: OECD
WHAT ABOUT EXPENSIVE MEDICAL WHAT ABOUT EXPENSIVE MEDICAL TECHNOLOGY AND PROCEDURES?TECHNOLOGY AND PROCEDURES?
April 23, 2012 US Health Care: The Future OLLI Week Two
High Cost of Advancing Technology
“Traditional” Technology Standard Technology circa 2000
Current Technology
X-Ray Machine$175,000
Open Surgery Instrument Set
$10,000
Cardiac Balloon Catheter$500
Scalpel$20
CT Scanner$1 million
Laparoscopic Surgery Set
$15,000
Stent$2,300
Electro cautery$12,000
CT Functional Imaging w/PET
$2.3 million
Surgery Robot~$2 million
Treated Stent$5,000
Harmonic (ultrasonic) Scalpel$30,000
Source: K. Kasper, Presentation to National Health Policy Forum
MRIMRISS IN SELECTED COUNTRIES IN SELECTED COUNTRIES 20052005
(UNITS PER MILLION PERSONS)
9.8
40.1
4.15.47.16.0
26.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
US Australia Germany UK France OECDAv.
Japan
April 23, 2012US HEALTH CARE: THE FUTURE OLLI WEEK TWO
Sources: OECD HEALTH DATA 2007
Source:OECD
CORONARY REVASCULARIZATION PROCEDURES, IN CORONARY REVASCULARIZATION PROCEDURES, IN SELECTED COUNTRIESSELECTED COUNTRIES
2004 2004
April 23, 2012US HEALTH CARE: THE FUTURE OLLI WEEK TWOSource: OECD HEALTH DATA 2007
Ang
iopl
asty
Byp
ass
Blue = BypassWhite = Stents
Source: OECD
Drug Prices in Selected Countries1999
April 23, 2012 US Health Care: The Future OLLI Week Two
Generics
Source: Congressional Research Service
Physician Fees in Selected Countries 2008
April 23, 2012 US Health Care: The Future OLLI Week Two
Ger
man
yU
K
Ger
man
yU
K
$30
Source: Laygeson and Glied, Health Affairs, 2011.
Health Care Spending Growth
• Primary driver differs between private insurance and Medicare
• Private insurance--Prices more important– Insurers have less ability to set prices– Privately insured population is healthier
• Medicare—Use of services more important– Program is a price setter– Beneficiaries are less healthy
April 23, 2012 US Health Care: The Future OLLI Week Two
How Much Hospital Charges Exceed Costs
April 23, 2012 US Health Care: The Future OLLI Week Two
Source: Maryland Rate Review Commission
“Premium Pricing” ExampleNorthern California
Sutter HealthOther Local Providers
Office Visit $349 $222
Normal Delivery $5,890 $2,052
MRI Knee Scan $1,271 $696
Colonoscopy $3,200 $2,800
Immunization $85 $16
Ear Wax Removal $175 $104
April 23, 2012 US Health Care: The Future OLLI Week Two
Source: Business Week Aug. 30, 2010
April 23, 2012 US Health Care: The Future OLLI Week Two
April 23, 2012 US Health Care: The Future OLLI Week Two
ACA Medicare Changes to Reduce Costs
CBO Budget Options to Reduce Excess Medicare Spending*
2015-2019
0 100000 200000 300000 400000
Medical Home
Bundle Ambulatory Care
Accountable Care Orgs.
Readmission Penalty
Health Plans
Individual Services
Excess SpendingExcess Spending
Fee Reductions
Delivery Reform
April 23, 2012 US Health Care: The Future OLLI Week Two
*Excess Spending is Growth More than GDP growth + 1 percent point
ACA Changes to Projected Medicare Spending
Total Change $424.B
Reduce Price Increases for
(Hospitals, Skilled Nursing Facilities, Home Health Agencies)
$146 B
Modify Medicare Advantage Plan Payments $118 B
Reduce Medicare Payments to Compensate for Hospital’s Uninsured Caret
$25 B
Prescription Drug—Close Doughnut Hole $18 B
Lower Part B Premiums Not estimated
Lower Cost Sharing Not estimated
April 23, 2012 US Health Care: The Future OLLI Week Two
Projected Medicare SpendingPre and Post ACA
and with only Population Growth
April 23, 2012 US Health Care: The Future OLLI Week Two
Billions 1000
500
2010 2019
Increase Due toPopulation
Author Calculations using CMS Actuary Data
Are the Changes Sustainable?Hospitals
While such payment update reductions would provide a strong incentive for providers to maximize efficiency, it is doubtful that many could improve their own productivity to the degree achieved by the economy at large. Over time, a sustained reduction in payment updates, …would cause Medicare payment rates to grow more slowly than, …the providers’ costs of furnishing services to beneficiaries.
CMS Office of the Actuary, January 8, 2010.
April 23, 2012 US Health Care: The Future OLLI Week Two
Hospital Spending
Tracks Available Funds
Higher Private Revenues
Managed CareConstrained Revenue
Post Managed Care
April 23, 2012 US Health Care: The Future OLLI Week Two By MedPAC
April 23, 2012 US Health Care: The Future OLLI Week Two
Making Game-Changing Investments
• AMCs uniquely willing to invest in state-of-the-art technology.
• E.g., proton therapy required $140M investment - new infrastructure
April 23, 2012 US Health Care: The Future OLLI Week Two
Deficit Reduction Proposals for Medicare
2011-12
House Budget 2011 and 2012 Convert to Premium SupportRaise Eligibility Age
Senate “Gang of Six” Senate Finance Comm. To figure out
National Commission on Fiscal Responsibility (Bowles-Simpson)
Consider Premium Support if growth is too highRestrict Medi-Gap policies
Bipartisan Policy Center (Domenici-Rivlin) Convert to Premium Support
Ryan-Wyden Convert to Premium Support
President’s Plan Change some premiums, cost sharing.Penalize new Medi-Gap policiesIPAB to figure out the rest
April 23, 2012 US Health Care: The Future OLLI Week Two
Restrict Medi-Gap First Dollar Coverage
$1984
$731
Source: Kaiser Family Foundation www.kff.org
Premium Support Experience will depend on Allowed Growth
Allowed Growth Rate
House Budget Committee—2011 Consumer Price Index
Bipartisan Policy Center GDP + 1
Ryan-Wyden GDP + 1
House Budget Committee--2012 GDP + 0.5
April 23, 2012 US Health Care: The Future OLLI Week Two
Questions??