US Health System

Healthcare in theUnited States

Presented by: Philip Geanacopoulos 2012.11.30

What We Will Cover Today

1. Big Picture Orientation

2. What Makes the US System Different

3. What is Health Insurance in the US

4. Diabetes and Associated Costs

5. Who Pays, Who Wins and Who Loses

6. What’s the Problem

7. Some Positives








7. Some Positives

Some Statistics About the US Government For 2012:

US Tax Revenue $2.469 trillion

Federal Budget $3.796 trillion

New Debt -$1.327 trillion

Total US Government Debt-$14.7 trillion

1 trillion dollars = $1,000,000,000,000 万亿

Let’s Pretend It’s a Household Budget

Annual Family Income $24,690

Money the Family Spent $37,796

New Debt on Credit Card -$13,270

Outstanding Balance on CC -$147,210

Where Does All That Money Go

Medicare/Medicaid $755 billion

Social Security $778 billon

Defense $700 billion

Health, Education, Transport $646 billion

Debt Interest $227 billion

Other $545 billion

Total $3.7 trillion

Definition

GDP – Gross Domestic Product• The total monetary value of all the finished

goods and services produced within a country in a specific time period, typically one year

GDP – Top 5 Economies

2003200420052006200720082009201020112012$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

USAChinaJapanGer-manyFrance

$15.31 trillion

$2.85 trillion

$8.23 trillion

$3.61 trillion

$5.82trillion

Source: World Bank (2012); GDP in trillions

US Healthcare System Spending

Total National Health Spending Continues to Increase

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

0.5

1

1.5

2

2.5

3

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

1.1 1.2 1.31.4

1.51.6

1.81.9

2.02.2

2.32.4

2.52.6

$4,169 $4,367 $4,601

$4,878 $5,241

$5,687 $6,114

$6,488 $6,868

$7,251 $7,628

$7,911 $8,149

$8,402 National Health Expenditures (tril-lions)

% GDP 13.7% 13.7% 13.8% 13.8% 14.5% 15.4% 15.9% 16.0% 16.1% 16.2% 16.4% 16.8% 17.9% 17.9%

U.S. Spends More than Expected Based on Its Wealth

$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

Spain, Italy, France, Finland, United Kingdom, Belgium, Germany, Iceland, Sweden, Denmark, Canada, Austria, Ireland, Netherlands

Per Capita Income, 2011

Per

Capit

a H

ealt

h S

pen

din

g,

201

1

United States

Switzerland

NorwayLuxembourg

Chile, Mexico, Poland, Estonia, Hungary, Slovak Republic, Czech Republic, Korea, Israel, Slovenia, New Zealand

Per Capita Spending on Healthcare

Hospital Care; $2,637

Doctor & Clinical Services, $1,670

Dentists & Other Health Professionals; $560

Home Healthcare, $1,107

Rx, DME & Other Medical Products;

$1,106

Administration; $570

Public Health; $267

Investment; $483

84% of spending ($7,080) is for personal health care services

What Does $8,402 Per Person Buy?

16% of spending ($1,320) is not related to personal health care services

U.S. Health Spending is a Dramatic Outlier Internationally

MexicoKorea

EstoniaHungary

PolandLuxembourg

IsraelCzech Republic

ChileSlovak Republic

FinlandSlovenia

IrelandItaly

SpainNorwayIceland

United KingdomSweden

New ZealandBelgiumAustriaCanada

SwitzerlandDenmarkGermany

FranceNetherlands

United States

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0

17.9

Most developed countries spent ~9.5 to 12% of GDP on health care in 2009

% GDP, 2010

U.S. Pays More for Hospital ServicesComposite Index, 29 Inpatient Services

KoreaSlovenia

IsraelPortugalFinlandCanadaSwedenFrance

AustraliaItaly

United States

0 20 40 60 80 100 120 140 160 180

575962

8598

113114

121123

140164

Comparative Price Levels, Hospital Services, 2009

OECD – Organization for Economic Co-operation and Development

U.S. hospital prices 64% higher than OECD average

U.S. Pays More for Hospital Services Select Countries & Services

Normal Delivery Appendectomy Heart Surgery Hip Replacement Hernia Repair$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$2,591

$21,218

$4,451

$7,962

$34,358

$17,406

$8,917

$4,558

$11,162

$3,093

AustraliaCanadaFranceSwedenUnited States

(US$, 2009)

U.S. Physicians Earn More

Particularly Specialists

Primary Care Physicians Orthopedic Surgeons$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

92,844

187,609

125,104

208,634

95,585

154,380 131,809

202,771

159,532

324,138

186,582

442,450 Australia Canada France Germany UK US

U.S. Pays Physicians More for the Same Services

Especially Private Payers and Specialty Care

Primary Care - Office Visit Fees

Public Payers Private Payers$0

$20

$40

$60

$80

$100

$120

$140

34

45

59

32 34

46

104

66

129

60

133

Australia Canada France

Germany UK US

Specialty Care – Hip Replacement

Public Payers Private Payers$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1,046

1,943

652

674

1,3401251

1,181

2,160

1,634

3,996

Australia Canada France

Germany UK US






5. Who Pays, Who Wins and Loses


7. Some Positives

What Makes the US System Difference

• All major developed countries except for the United States offer national health care programs.

• These programs provide universal access through health care delivery systems that are managed by the respective governments and provide a defined set of healthcare services to all citizens.


• No Central Governing Agency• Technology-Driven and Focuses on Short-

Term Treatment• High on Cost, Unequal in Access, and

Average in Outcomes• Imperfect Market Conditions• Government as Subsidiary to the Private

Sector• Market Justice vs. Social Justice• Multiple Players and Balance of Power• Quest for Integration and Accountability


• The US invests in research and innovations in new medical technology.

• The US accounts for three quarters of the world’s biotechnology revenues and 82% of the world R&D spending in biotechnology.

• Growth in science and technology helps create demand for new services.

$1.9 million da Vinci Surgical System

Seeing a Doctor

HIPAA

Health Insurance Portability and Accountability Act:

• A US law designed to provide privacy standards to protect patients' medical records and other health information provided to health plans, doctors, hospitals and other health care providers.

• These standards provide patients with access to their medical records and more control over how their personal health information is used and disclosed.






5. Who Pays, Who Wins and Loses


7. Some Positives

Definitions

Health Insurance• A contract between an insurance provider and

an individual and used for insuring against the risk of incurring medical expenses

Uninsured• A person without health insurance

Private Self-Purchase• A person who pays out of their own pocket for

health services

Definitions

Medicaid• A health program for low income people and families

paid by the federal government and respective states

Medicare• A national social insurance program administered by

the federal government that guarantees access to health insurance for Americans ages 65 and older; and younger people with disabilities as well as people with end stage renal diseases

- Total government spending for both programs in 2011 was $755 billion

Definitions

Employer Based Health Insurance• A health program where employers pay the

cost of health insurance for their employees• Employees share some of the expenses

through payments including premiums, co-payments and deductibles

Private Health Insurance Plan• Health coverage for an individual and usually

more expensive than Employer Based Health Insurance

Who is Able to Access Healthcare

People Who:1. Have health insurance through an employer

2. Are covered under a government program

3. Can afford to buy health insurance out-of-pocket

4. Are able to pay for services privately

Health Insurance in the US

Uninsured

Medicaid

Medicare

Military

Employer -Based

Private Health In-surance

49%

16%

18%

13%

8%

Total = 307.9 million




3. What is Health Insurance




7. Some Positives

Diabetes Costs

• According to the American Diabetes Association, 25.8 million Americans are currently diagnosed with diabetes (8.3 percent of the population) and seven million are currently undiagnosed.

• 7th leading cause of death in the US

• 79 million American have pre-diabetes

• 60% of cases, diabetes is associated with obesity

• From a health insurance standpoint, the need for expensive and often lifelong care make diabetes an overwhelming cost driver

Diabetes Costs

• Total annual health care costs for a person with diabetes was more than $11,744 in 2007 according to the American Diabetes Association.

• Diabetics have medical expenditures more than twice as high as those who do not have diabetes.

• Insurance companies are beginning to resist paying for what they view a lifestyle management issue rather than acute medical care.

• Estimated to kill 4.8 million Americans in 2012

Expected Medical Costs for Diabetes

The most common expenses for diabetics are prescription medications including insulin, medical supplies and equipment.

• Insulin syringes• Insulin• Blood glucose test meters and test strips• Injectable medication• Doctor visits

Diabetes Medications

• A 500-millgram dose of metformin （二甲双胍） costs on average $18 a month, found in stores like Wal-Mart and Target.

• Actos, a newer drug with a different method of action, costs on average $241 for a month’s supply of the 30-milligram pills.

Diabetes Supplies

• Blood glucose monitors range from $10 to $80, depending on the model.

• Test strips average $0.60 to $0.80 each

• Costs not covered by insurance add up to hundreds of dollars a year in out-of-pocket expenses.

Insurance Coverage for Diabetes Patients

• These medications and supplies are not covered all by insurance so this leaves a significant cost to the individual diabetic and their family.

• Even the insurance plans that cover diabetic prescriptions and supplies may still have significant deductibles, co-payments and other requirements that make the insurance coverage insignificant relative to the overall out of pocket costs.

Medicare & Diabetes Related Medical Expenses

• Medicare covers supplies for people with diabetes, whether or not they use insulin.

What’s included?• Glucose testing monitors• Blood glucose test strips• Lancet devices and lancets• Glucose control solutions• Therapeutic shoes• Self-management training• Nutrition counseling• Eye exams

Medicare Payments

• Medicare will pay 75% of all drug costs after a $250 deductible is paid, up to $2,250. Medicare will pay 0% of drug costs between $2,250 and $5,100 Beyond this amount, Medicare will again pay.

• This equals $3,600 out-of-pocket expense for diabetes patients.








7. Some Positives

Who Pays?

• Insurance Companies – Employer Based or Purchased Privately

• The Government• Medicaid• Medicare• Military

• Paying Out of Pocket

Payment – Insurance Companies

• The cost of health insurance will depend on your age, how healthy you are, where you live, your income and your job status.

• There is a fee that must be paid monthly to the insurance company called a premium – Average monthly premium for an American family is $530.

• For those who are employed typically have their health insurance paid for by their employer or a large percentage.

• If you are self-employed you must pay for your own insurance and the price of the premium will depend on what health insurance plan you choose.

Payment – US Government

• Helps to pay for insurance for the elderly and those below the poverty line through Medicare and Medicaid.

• Medicare provides health insurance to people who are at least 65 years old.

• Medicaid is a health program for those with low incomes and resources. It is jointly funded by the states and federal government.

• The poverty rate in 2010 was 15.1 percent—up from 14.3 percent in 2009.

Payment – Out of Pocket

• Two options: to buy health insurance or to hope they do not need to use the healthcare system.

• Many choose not to pay for insurance and cannot afford health care at regular clinics.

• The average expense for a physician's office visit was $155.

• As a result, the emergency room of the hospital is abused because it cannot turn people away due to lack of insurance or ability to pay.

Emergency Room Care

• US law requires all hospitals to accept all patients, regardless of the ability to pay, for Emergency Room care.

• ERs are typically at or over capacity• Long wait times• ERs charge very high rates for services• “Safety-net” for uninsured

Who Wins?

Profits

• The top executives at the five largest for-profit health insurance companies in the United States combined to receive nearly $200 million in total compensation for 2010.

• According to a report by Health Care for America Now, America's five biggest for-profit health insurance companies ended 2010 with a combined profit of $12.2 billion.

• There were more than two dozen pharmaceutical companies that made over a billion dollars in profits each during 2010.

Who Loses?

Nearly 50 million, or 16.4%of Americans are uninsured

By ethnicity, the rate of those who lack insurance is

15.4% White 20.8% Black

18.1% Asian 30.7% Hispanic

Source: US Census Bureau

Who’s uninsured?

Uninsured and Death

• Lack of health insurance is associated with as many as 44,789 deaths per year in the United States.

• People without health insurance had a 40 percent higher risk of death than those with private health insurance, a result of being unable to obtain necessary medical care.

Why Are People Uninsured

1. Unemployment2. Lack of a requirement for employers to

provide insurance3. Lack of a requirement for employees to

purchase health insurance when it is offered

4. Lack of eligibility for government-funded programs.








7. Some Positives

What’s the Problem?

US System Has:

• Duplication• Overlap• Inadequacy• Inconsistency• Complexity• Inefficiency• Financial manipulation• Fragmentation• Waste

$3 Out of Every $10 is Waste

Source: Economist Intelligence Unit

Un-nec-es-sary Ser-

vices $210 billion

Ineffi-ciently De-liv-

ered Ser-

vices $130 billion

Prices That Are Too High

$105 billion

Ex-cess Ad-

minis-tra-tion

Costs $190 billion

Missed

Pre-ven-tion Op-por-tuni-ties $55

billion

Fraud$75 billion

Healthcare Prices

• So what would happen if shopping were like U.S. health care? "Product prices would not be posted, and the price charged would vary widely within the same store, depending on the source of payment.”

Fraud

Relatively Few People Account for Most Personal Health

Spending

10 20 30 40 50 60 70 80 90 1000

10

20

30

40

50

60

70

80

90

100

0.0 0.1 0.4 1.3 2.95.6

10.4

18.8

34.8

50.5

78.2

100.0

Total Personal Health Care Spending= $1.259 Trillion

Cum

ulat

ive

Per

cent

of

Tot

al S

pend

ing

Percent of Population by Health Care Spend-ing

$1,223 Bil-lion

Top 5% of spenders account for almost half of spending ($623 billion)

15.4

95

99

$36 Billion

Top 1% of spenders account for >20% of spending ($275 billion)

Annual Costs of Chronic Disease

Heart Disease & Stroke $448 billon

Smoking & Tobacco Use $193 billion

Diabetes $174 billion

Obesity $117 billion

Cancer $89 billion

Arthritis $81 billion

Pregnancy Complications $1 billion

Total $1.1 trillion

WHO Health Care Rankings

1. France

18. England

25. Germany

30. Canada

36. Costa Rica

37. United States

38. Slovenia

Life Expectancy








7. Some Positives

Some Positives in the US Healthcare System

• The U.S. has one of the best medical research systems in the world. Researchers from institutions such as Harvard Medical School, the Mayo Clinic and the Cleveland Clinic are world-renowned for the advances they are making in medicine, largely because of the current free-market system.

• For those who have jobs with great benefits or those who can afford it, some American insurance plans are some of the best in the world.

Some Positives in the US Healthcare System

• The Medicaid program gives Americans who are poor a chance to receive some health care for free.

• The United States takes care of it's elderly population by provided them with a limited plan of healthcare through Medicare and pay for doctor visits and hospital stay.

• The State Children's Health Insurance Program (SCHIP) administered by the Centers for Medicare and Medicaid Services, makes funds available to states that have in place federally approved programs providing health insurance coverage to uninsured children.

Free Health Clinic

What Does the Future Look Like

• From 2011 to 2015, the commercial health insurance system will convert from coverage that focuses primarily on covering unexpected medical bills to the management and control of existing and ongoing medical problems like obesity and diabetes.

• Insurance coverage is beginning to shift from drug-based therapy to treatment focused on behavioral change.

• The healthcare system is changing, with a greater focus of value, reducing errors and giving more quality and cost-effective care.

Date post:	14-Dec-2014
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US Health System

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