Anna M. Rappaport, F.S.A. 18 February 2003 Lessons Learned — US Health Care Experience...

Anna M. Rappaport, F.S.A.18 February 2003

Lessons Learned — US Health Care ExperiencePerspectives from an Actuary

Mercer Human Resource Consulting 2

Focus: US Healthcare System andThe Role We Play


EnvironmentEnvironment

Observations Observations

Lessons LearnedLessons Learned

Agenda

What Next? What Next?


EnvironmentUS sources of coverage

Private Employer plans

finance most health care for employed

Government About 45% of care is

government financed–Medicare: Americans

over age 65–Medicaid: Poor - low

assets and income–Military and some

veterans–Government employees

Insurance & HMOs Risk transfer Administration

Some individual coverage, but expensive and hard to get if in poor health

Over 40 million uninsured Americans


EnvironmentHow US health care is financed

Private Common to both Medicare Range: fully

insured to self insured

Fee for service replaced by negotiated arrangements; e.g., fee schedules, discounts

Traditional plans; Physicians paid based on schedules, fixed payment to hospitals based on diagnosis

Medicare + choice = risk contract

Fee for service = traditional method of payment

Some providers take risk

– HMOs paid on capitation basis - $/per month/per person covered

– Physician groups, hospital systems also can be capitated


More new technologies

More new technologies

Most savings maximized

Most savings maximized

ConsolidationConsolidation

Aging workforceAging workforce

Medical errorsMedical errorsMany providers

unprofitable, unstable

Many providers unprofitable,

unstable

Employee contributions

decrease

Employee contributions

decrease

EnvironmentForces driving health care in the US

Prescription drug costs

Prescription drug costs


EnvironmentPrevention vs. cure

Methods of Payment

Types ofPractitioners

Decision Making and Information

TreatmentSettings

CareGuidelines


EnvironmentCanada, UK health systems

Mercer Human Resource Consulting

Government provided coverage for all Resource strains on both systems Wait for care can be considerable

Private supplemental benefits are provided in addition to government system (supplemental benefits are growing)

Discussions with users shows

– Diversity of opinion

– Some feel systems are great, others feel they are not doing well


EnvironmentSociety of Actuaries: troubled health care project - why?

HCPENSION

PAY


Source: Table 1333, 2001 Statistical Abstract of the United States

9%

14%

7%

10%

7%8%

6%7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

U.S. Canada Japan U.K.

1980

1998

EnvironmentHealth care as a percentage of GDP


EnvironmentHealth care as a percentage of GDP

Source: Table 3.6, Hospital Authority Statistical Report 2000-2001, Hong Kong Special Administrative Region

0%

2%

4%

6%

8%

10%

12%

14%

16%

1994 1995 1996 1997 1998

U.S.

Canada

Japan

U.K.

H.K.


Agenda






ObservationsSome key facts about the money

Mercer Human Resource Consulting

Hospital care = biggest expenditure (34%) Increases in costs “compound” Health care costs have increased much more rapidly than

the cost of living Typical employee benefits insulate employees from costs

Money drives treatment patterns Most expensive is not best

Fewer than 10% of the covered population account for a large proportion of the claims

Claims increase with rising age Traditionally, very high claims in last year of life


10%

35%

50%

5%

53%

25%

19%

3%

% of Employees % of Claims

$20,000/person

$150/person

ObservationsLarge claims significantly drive cost


NOTE: (1) Assumes level enrollment over five years

Expected cost impact based on $100 million annual health care spending

If trend were

reduced from 15%

to 11%

– the cumulative five

year difference

would equal $83m

or $17m per year

If trend were

reduced from 15%

to 7%

– the cumulative five

year difference

would be $157m

or $31m per year

$201

$141

$100

$115

$132

$152

$175$169

$123

$111

$152

$137

$115

$107

$123

$132

$100

$120

$140

$160

$180

$200

$220

2003 2004 2005 2006 2007 2008

Illu

stra

tive

Hea

lth C

are

Tre

nd (

in m

illio

ns)

@ 15.0% @ 11.0% @ 7.0%

ObservationsCost trends drive projections


Some experts recognize need for better integration of chronic care and for integrated management

“Reimbursement for clinical care in our state and country is designed for an acute care model and chronic care is very much an after thought. There needs to be a shift in the paradigm of care we offer to the frail elderly.”

…. from a geriatric physician

ObservationsAging and health care


0.00

0.50

1.00

1.50

2.00

2.50

3.00

20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+

Age

Re

lati

ve

Co

st

by

Ag

e

Male Female

Average employer cost = 1.0

Relative Costs by Age and Gender

Health care benefit trends Aging and health benefit costs


ObservationsAging and health care issues

CHRONIC CARE

ACUTE CARE

WOMEN ALONE

LONG-TERMCARE

COSTOF AGING

INTEGRATION

SUCCESSMEASURES

CARESETTINGS

END-OF-LIFECARE


Often looks at treatments in isolation; e.g., December 2002 study on blood pressure drugs

Much research is financed by providers, drug companies; e.g., conflict of interest

Largely focuses on conventional Western medicine

Small samples produce inconsistent findings; e.g., new study on use of hormones for mid-life women

Rarely considers economic and other non-medical issues

ObservationsResearch is not adequate


ObservationsAlternative medicine

Definition: What is it?

Alternatives: What are they? What is best?

Public acceptance: High but limited data and payment by insurance plans

Research: A woeful lack

Holistic health centers: Very limited in the US


– Managed care based on controls, contracting, defined provider networks

– Managed care sometimes used capitation

– Managed care did not work

ObservationsA changing paradigm

FEE FOR SERVICE MANAGED CARE

MANAGED CARE CONSUMER DIRECTED

– Give the consumer more power

– Give the consumer an economic stake in the result

– Restructure payments and delivery to fit

– Will it work?


New Ideas: More Consumer Influence Consumerism is a continuum

True Defined Contribution(Vouchers)

New Tiered Network Models, High-Performance

Network Delivery System

Models

Tiered CopaysHospital, MD,

RX

Consumerist Benefit Designs

Consumer Directed Health

Plan

Increasing Consumerism


Agenda






Lessons Learned Actuaries could play a bigger role

Situation Actuaries have

largely been involved with insurance and benefits

System not working well - U.S. society searching out solutions

Opportunities Many opportunities

for cost-benefit analysis

Align interests of all parties

Barriers Unclear what

“successful” treatment is

Data is not user-friendly


Lessons Learned Preventive care can have biggest payoff

Opportunities Pre-natal care-very

big payoff Public health,

sanitation have very big payoff

Individuals can influence their health

Barriers But, insurance and

benefits focus on paying for acute care


Lessons LearnedWhat is paid for drives behavior

Consumer BehaviorExamples:

During 1960s and 1970s, design of benefits and insurance drove care into hospital

During 1990s surgery moved out of hospital

Provider BehaviorExample:

Providers learn how to “game” the system (reconfiguration of diagnoses)

Fraud is also an issue


Lessons LearnedAccepted practices can change radically

Hypertension study - older cheaper treatment is just as good, often better than new much more expensive drugs

Hormone study - drugs routinely used actually increase risk

TWO RECENT EXAMPLES

LONGER TERM

50 years ago - US women stayed in hospital one week + for childbirth

Today - often go home same day


Agenda






Focus: US Healthcare System andThe Role We Play


What Next?How much care should we deliver?

????Who makes

the decision?

Will everyone be covered by the same system?

How much care is family

expected to provide?

Guidelines


Guidelines for medical practice/payment

Medically necessary

In patient/out patient

Diagnostictests

Electivesurgery

Transplants Hipreplacements

Generic drugformularies

Variable drug reimbursement

Life styledrugs

Maternitystays

End-of-lifecare

What Next?How much care should we deliver?

Cosmetic Surgery

Coronaryby-passes


What Next?How much will it cost?

Providers Nurse Nurse practitioner Contracted providers Specific hospitals

Payment Methods Unlimited fee-for-service Fee schedules Bundled fee schedules Capitation

Who decides on provider and payment method? Who controls quality? Who sets the price?


What Next?How much will it cost?

Issue in many countries:The role of Government Employer Individual

Do the sicker people pay more or does

everyone pay?

Is participation in the system mandated?

What is the share of theindividual in cost andhow is it paid? Premium Co-payment Payment for uncovered

items


Agenda






Appendix


Basic Concepts

Prevention vs. cure Better to keep well: greater payoff for preventive

and early care Maternity care: prenatal care = healthier babies =

lower costs Some systems focus resources heavily on

sickest patients

Methods of payment Fee-for-service: pay for specific services offered Capitation: pay fee for covered person per month Salaried providers: in public system, may pay salary with

no direct link to units of care or numbers of patients


Basic Concepts

Types of practitioners Accreditation and licensing requirements Physicians, nurses, physical therapists, etc. Specialists vs. generalists(Challenge to manage care in face of specialization)

Decision makers and decision input Roles: patient, physician, guideline setters Information sources Second opinions


Basic Concepts

Treatment settings and system organizations Health maintenance organizations

(HMO): prepaid total care Preferred provider organization

(PPO): contracted network Care guidelines

–Specified by medical community–Definition of what financing program pays for–Specified by managed care organization

In-hospital vs. outpatient care Pharmaceuticals Group practice vs. individual practice

Date post:	27-Dec-2015
Category:	Documents
Upload:	lynette-lambert
View:	219 times
Download:	2 times

Anna M. Rappaport, F.S.A. 18 February 2003 Lessons Learned — US Health Care Experience...

Documents