why is u.s. healthcare spending so high? · vermont all-payer accountable care organization model...
TRANSCRIPT
+
Why is U.S. healthcare spending so high?What we can and can’t learn from international comparisons
Ashish K. Jha, MD, MPHJanuary 10, 2019
@ashishkjha
+Agenda
We spend a lot on healthcare
Why do we spend so much more than others?
Tradeoffs: what does our higher spending give us?
What about quality and outcomes?
How do we think about value in the international context?
States as laboratories of innovation
+ US healthcare spending
+
17.8
9.7
11.3 11.911
10.5
12.4
10.810.3
10.9
9.6
0
2
4
6
8
10
12
14
16
18
20
US UK DE SE FR NL CH DK CN JP AU
Spen
din
g o
n h
ealt
h a
s a
% o
f GD
PTotal healthcare spending, 2016
+ Why?
+ Why so much more?
+JAMA March 13, 2018
+
Our approach:
Compared US to 10 other very high income countries
Data source: mostly OECD, some CMWF
Data verified by national statistics offices and/or experts
Comparing healthcare spending
+ Why so much more?
+
Total Spending = Quantity X Price
+ Hypothesis #1
+ “Our culture of overuse”
+
Total Spending = Quantity X Price
+ Overutilization #1
“We are quick to go to the doctor”
+ Doctor visits
12.7
10
8.27.7 7.6
6.6 6.4
5
4.34 3.9
2.9
0
2
4
6
8
10
12
14
JA DE NL CN AU Mean FR UK DN US CH SE
Ph
ysic
ian
vis
its
per
cap
ita
in a
giv
en y
ear
+ Overutilization #2
Not enough prevention and primary care leads to too many hospitalizations
+ Hospital discharges
255
173 172166 163
153 149
128 125119
111
84
0
50
100
150
200
250
300
DE AU DN CH FR SE Mean UK US NL JA CN
Dis
char
ges
per
1,0
00 p
opu
lati
on
We spend far fewer days in the hospital
+ Overutilization #3
We use too many tests and procedures*
+ MRI examinations
131
118112
105
82 82
70
5653 52
41
0
20
40
60
80
100
120
140
DE US JA FR DN Mean CH CN UK NL AU
Exa
min
atio
ns
per
1,0
00 p
opu
lati
on
+ Total knee replacement
226
190180 176
168 166 163
145 141
124118
0
50
100
150
200
250
US DE AU CH DN CN Mean FR UK SE NL
Rep
lace
men
t per
100
,000
pop
ula
tion
+ Total hip replacement292
283
237 236 234
216207 204
183171
136
90
0
50
100
150
200
250
300
CH DE DN FR SE NL Mean US UK AU CN JA
Rep
lace
men
t per
100
,000
pop
ula
tion
+ Coronary angioplasty
393
248 248 237217
205193 190
172157
128
0
50
100
150
200
250
300
350
400
450
DE US NL FR Mean SE JA DK AU CN UK
Proc
edur
es p
er 1
00,0
00 p
opul
atio
n
+ Hypothesis #1 Update
Higher US costs not primarily about providing more care
We have fewer hospitalizations, doctor visits
Tests and Procedures a mixed bag: We do a lot more MRIs, TKRs, and PTCAs We do fewer hip replacements
Bottom line: We’re above average on some things We’re below average on other things On average, we are pretty average
+ Hypothesis #2
+ Specialist driven
Not enough primary care
+
54%
48% 48% 47%45% 45% 45%
43% 43% 43%
33%
22%
0%
10%
20%
30%
40%
50%
60%
FR CH CN NL UK DE AU US Mean JA SE DK
Primary care as % of MDs
+ Hypothesis #2 Update
It’s (surprisingly) not about PC vs. specialty mix
+ OK – so what is it?
+ Why so much more?
+ Hypothesis #3
+ Administrative waste
+ Governance, administrative spending
8%
5%
4% 4%
3% 3% 3%
2% 2% 2%
1% 1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
US DE NL CH Mean CN AU UK SE DN FR JA
Per
cen
tage
of h
ealt
hca
re s
pen
din
g
+ Hypothesis #3 Update
U.S. administrative spending is higher than other countries
Higher even than countries that have largely private systems
But that’s only part of the story…..
+
Total Spending = Quantity X Price
+ Hypothesis #4
+ Prices of what?
+ Pharmaceuticals!
+
$1,443
$939
$837$779 $749
$697 $675 $667$613
$566 $560
$466
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
US CH JA UK Mean FR DN DE CN SE AU NL
Tota
l P
har
mac
euti
cal
Spen
din
g (U
SD p
er c
apit
a)Total Spending (USD Per Capita)
+
$86
$41$35
$32$29
$26$20
$9
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
US DE Mean CN JA UK FR AU
Cre
stor
Pri
ce (U
SD)
Crestor Price
+
$2,505
$1,749
$1,436$1,243 $1,164 $1,158
$982 $980
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
US DE Mean AU CN UK FR JA
Hu
mir
aP
rice
(USD
)Humira Price
+ Pharma makes up about 15% of all HC spending
+ So that can’t be the whole story
+
$218K
$154K$146K
$134K $133K$124K
$111K $109K $108K
$86K
$0
$50,000
$100,000
$150,000
$200,000
$250,000
US DE CN UK Mean JA FR NL AU SE
Generalist Physician Salaries
+
$316K
$202K$191K $188K $182K $181K
$171K$153K
$140K$124K
$98K
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
US AU NL CN Mean DE UK FR DN JA SE
Specialist Physician Salaries
+
$74K
$65K $64K
$58K$55K
$53K$51K
$49K
$44K$42K
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
US NL AU DN CN DE Mean UK JA FR
Nurse Salaries
+ Salaries are complicated
+ Physician salaries
Debt
Length of training
Opportunity cost in the U.S.
+ What about other stuff?
+
$844
$483
$383
$233
$85
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
US New Zealand Switzerland South Africa Spain
CT Scan Abdomen
International Federation of Health Plans 2015
+
$15,930
$6,199 $6,040
$3,814
$2,003 $1,786
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
US New Zealand Switzerland Australia Spain South Africa
Appendectomy
International Federation of Health Plans 2015
+
$28,184
$20,132
$16,508 $15,941
$7,795$6,687
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
US Switzerland New Zealand Australia South Africa Spain
Knee Replacement
International Federation of Health Plans 2015
+
$78,318
$34,224 $32,480$28,888
$18,501$14,579
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
US Switzerland New Zealand Australia South Africa Spain
Bypass Surgery
International Federation of Health Plans 2015
+ High prices have tradeoffs
+
111
26
18 1612 11
0
20
40
60
80
100
120
US CH JA UK DE FR
New
Che
mic
al E
ntiti
esPharmaceutical Innovation
+ Other benefits of higher prices
High-quality doctors and nurses
Faster access to diagnostics and procedures
Nicer amenities and facilities
+ What about health outcomes?
+ Life expectancy
83.9
8382.5 82.4 82.3
81.7 81.7 81.6
81 80.8 80.7
78.8
76
77
78
79
80
81
82
83
84
85
JA CH AU FR SE Mean CN NL UK DK DE US
Life
exp
ecta
ncy,
mea
n, y
ears
+ Life expectancy
83.983
82.5 82.4 82.3 82 81.9 81.7 81.681 80.8 80.8 80.7
70
72
74
76
78
80
82
84
JA CH AU FR SE 1 2 CN NL UK DK 3 DE
Life
exp
ecta
ncy,
mea
n, y
ears
+Neonatal mortality
4
3.2 3.1 3
2.7 2.6 2.6 2.52.3 2.3
1.7
0.9
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
US CN CH DK UK Mean FR NL DE AU SE JA
Dea
ths
per
1,0
00 li
ve b
irth
s
+ Neonatal mortality given LBW
2.091.96
1.771.7
1.63 1.611.49
0
0.5
1
1.5
2
2.5
DK NL UK Mean CD US DE
Dea
ths
per
1,0
00 li
ve b
irth
s
+ Breast cancer screening
84%81% 79%
76% 75%72% 71%
67%
55%52%
47%41%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
DK US NL UK SE CN DE Mean AU FR CH JA
% o
f wom
en a
ge
50-6
9
+ 30-day stroke mortality
109.6 9.3 9.2
7.9 7.9
6.96.4
4.2
0
2
4
6
8
10
12
CN SE AU UK Mean FR CH DE US
30-d
ay m
orta
lity
per
1,0
00 p
atie
nts
+ Summary
High cost healthcare systemDriven primarily by administrative costs, prices
Health outcomes for the population are worseBut if you were to get sick, good system to do it
+ National reforms: ACA and Beyond
+
Total Spending = Quantity X Price
+ Based on belief that we do too much
“Value-based” payments for hospitals (VBP, HRRP, etc.) and docs Largely hasn’t done much
Accountability and changing the “episode” of payment (ACOs, BP) Bit more reason for optimism (savings of 2-4%)Unclear about its scalability/growth
+ Where is the action going to be?
+ States!
+What does state-based reform look like?
Maryland’s All-Payer ModelHospitals operate on a global budgetHospital revenue for all payers set in the beginning of the yearCreated target for per capita hospital revenue growth
Massachusetts Health Policy CommissionCreated target for healthcare spending growth Encourages movement away from FFS model and toward
alternative payment models (ACOs, Medicaid APM)
+What does state-based reform look like?
Vermont All-Payer Accountable Care Organization Model Agreement Goal is to attribute 70% of all VT insured residents to an ACO
Has set an all-payer growth target and a Medicare growth target
Arkansas Health Care Payment Reform Improvement Initiative Two strategies:
1) Increase number of patients in patient-centered medical homes
2) Episode-based payments for those with multiple encounters with health system
Oregon’s Alternative Payment and Advanced Care Model Shift Medicaid reimbursement for Community Health Centers to PMPM
Better integrate behavioral health services and increase focus on social determinants
+What are states doing?
40 states were pursuing value-based payment models in 2019 15 of those states have multi-payer initiatives
17 states have adopted or are considering adoption of ACOs
12 states have adopted or are considering adoption of episodes of care programs
CMS’s State Innovation Models initiatives
Most states participating in the “Money Follows the Person” program for Medicaid patients to reduce nursing facility stays
+States tiptoeing into price regulation
California policy on out-of-network provider charges (max 125% of Medicare)
RI policy: Hospital rate and ACO budget growth caps (commercial) Considering a cost growth target
Vermont with an all-payer growth target
West Virginia has a partial rate-setting system for privately insured patients
Pennsylvania is piloting an all-payer global budget for rural hospitals
+What can we learn from states?
States are laboratories of innovation
This is even more true in the era of divided government
What works for one state may not work for others
We can create a uniquely American solutionStates will be leading the way
+ Thank you!
+
32%31%
30%
28% 28%27% 27%
26%
24%
21%
19%
0%
5%
10%
15%
20%
25%
30%
35%
NL AU FR CH DN DE JA Mean UK SE US
% O
f Hea
lth
Exp
end
itu
re A
ttri
bu
tab
le to
In
pat
ien
t Car
e% Spending on Inpatient Care
+
42%
39%
36%34%
33%31% 31%
30%
27%
23% 23%22%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
US AU CN DN CH SE Mean UK JA DE FR NL
% O
f Hea
lth
Exp
end
itu
re A
ttri
bu
tab
le to
Ou
tpat
ien
t Car
e% Spending on Outpatient Care
+ Per capita spending for Ages 65+
$22,483
$18,801
$13,570 $13,174$12,513 $12,183
$10,427$9,774
$0
$5,000
$10,000
$15,000
$20,000
$25,000
US CH AU NL DE CA UK JP
+
4.3 4.2 4.1
3.6 3.5 3.53.3
3.1
2.6 2.62.4
2.1
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
CH SE DE DN NL AU Mean FR US CN JA UK
# P
hysi
cian
s p
er 1
,000
pop
ula
tion
Physicians per 1,000 population