Why is Medical Care So Expensive ?
Neil A Kurtzman MD Neil A Kurtzman MD Sandra Sabatini PhD MDSandra Sabatini PhD MD
Feynman’s RulesFeynman’s Rules
Richard Feynman 1918-88Richard Feynman 1918-88 The universe in not only stranger than you think, The universe in not only stranger than you think,
it's stranger than you can imagineit's stranger than you can imagine Anyone who says he understands quantum Anyone who says he understands quantum
mechanics, doesn’t understand quantum mechanics, doesn’t understand quantum mechanicsmechanics
Medicine is a surrogate for the entire economy
Absence of medical insurance is Absence of medical insurance is not absence of medical carenot absence of medical care
Possible Causes of Increased Medical Care
TechnologyTechnology PharmaceuticalsPharmaceuticals Doctor’s feesDoctor’s fees Insurance companiesInsurance companies Hospital feesHospital fees GovernmentGovernment Defensive medicineDefensive medicine No competitionNo competition
InsuranceInsurance
The equitable transfer of the risk of loss, from The equitable transfer of the risk of loss, from one entity to another in exchange for payment. one entity to another in exchange for payment. It is a form of risk management primarily It is a form of risk management primarily used to hedge against the risk of a contingent, used to hedge against the risk of a contingent, uncertain loss. uncertain loss.
Cost ComparisonsCost Comparisons
CPICPI
ToasterToaster
24”TV/26”HDTV24”TV/26”HDTV
Phonograph/iPod Phonograph/iPod ClassicClassic
19581958 NOWNOW ChanChangege
2929 233233 8x8x
6.5 hr6.5 hr 1.35 1.35 hrhr
4.8x 4.8x decredecreasease
136 136 hrhr
6 h6 h 22.6 X 22.6 X decredecreasease
43 h43 h 10 h10 h 4 X 4 X decredecreasease
Comparison CostsComparison Costs
Car ( Ford )Car ( Ford )
Gallon of gasGallon of gas
Loaf of breadLoaf of bread
Consumer Price Consumer Price IndexIndex
19581958 NOWNOW
IncreaIncreasese
$1960 $1960 - - 39003900
$30,3$30,30000
10.310.3
24 24 centscents
$3.25$3.25 13.513.5
19 19 centscents
$2.50$2.50 13.213.2
2929 233233 88
Cost ComparisonsCost Comparisons
Median Wage $/yrMedian Wage $/yr
House, median $House, median $
Medical Insurance $/yrMedical Insurance $/yr
College, total costs/yrCollege, total costs/yr
19581958
NOWNOW IncreaIncreasese
$4650$4650
$52,0$52,00000
11.211.2
$30,0$30,00000
$202 $202 KK
6.7 6.7
$134$134 $8900$8900
6767
$2725$2725
$58,1$58,13535
21.121.1
Total Health Expenditures
United States of AmericaUnited States of America SwitzerlandSwitzerland CanadaCanada United KingdomUnited Kingdom JapanJapan
United States of America
320 million population; heterogeneous with most of 320 million population; heterogeneous with most of the population urban; highly concentrated on each the population urban; highly concentrated on each coast and Texascoast and Texas
Private, government, employee-based insurance Private, government, employee-based insurance began during WWIIbegan during WWII
Unfunded mandatesUnfunded mandates Unfunded liabilities of Medicare = $38.6T or Unfunded liabilities of Medicare = $38.6T or
$328,404/person! ($328,404/person! (WSJ June 24, 2013)WSJ June 24, 2013)
Switzerland
~ 8 million population, relatively homogeneous, land ~ 8 million population, relatively homogeneous, land locked; long-livedlocked; long-lived
Compulsory basic insurance (not risk based); $84 - Compulsory basic insurance (not risk based); $84 - 8% of income up to ~ $1500; this may be 8% of income up to ~ $1500; this may be supplemented with private (risk based) which supplemented with private (risk based) which enhances room type, dental, additional Rx, etcenhances room type, dental, additional Rx, etc
Health care cost ~ 11.5% GDP and rising; just Health care cost ~ 11.5% GDP and rising; just recommended abolishing mammography as one effort recommended abolishing mammography as one effort to control costs to control costs (NEJM, 22May 2014)(NEJM, 22May 2014)
Canada 25 – 30 million people, relatively homogeneous ~ 90% live within 200 miles of the USA border Canada Health Act -must have public
insurance; does not address delivery Some private clinics allowed; cannot operate at
profit; 2006 BC provincial gov’t shut one down Provinces use wait-time strategies(ie,
rationing); those with $$ come to USA
Japan
~ 120 million population; completely ~ 120 million population; completely homogeneoushomogeneous
Long-lived; use MD and health services more Long-lived; use MD and health services more than in other countries; 33% hospital stays > than in other countries; 33% hospital stays > 30 days; 8.2 MDs/1000 (cf USA)30 days; 8.2 MDs/1000 (cf USA)
High prevalence of HTN, diabetes and High prevalence of HTN, diabetes and smokingsmoking
70% govt & 30% patient responsibility; 8.5% 70% govt & 30% patient responsibility; 8.5% of GDP; all hospitals non-profit & run by MDsof GDP; all hospitals non-profit & run by MDs
United Kingdom
60 – 70 million population60 – 70 million population NHS began after WWII; went 65 years without NHS began after WWII; went 65 years without
building a new hospitalbuilding a new hospital 90% population covered by NHS90% population covered by NHS
10% population buy private insurance10% population buy private insurance
**Salaries of NHS physicians 2x that of private**Salaries of NHS physicians 2x that of private
**Rationing of services --- age, time of appointment, **Rationing of services --- age, time of appointment, type of service offered, etctype of service offered, etc
N I C E National Institute for Health & Care Excellence Est 1999, United Kingdom for the NHS Provide evidenced-based guidance (clinical
guidelines, tech appraisal, Dx review, etc) Develop quality standards/outcomes Provide information services for managers, MDs,
commissioners, local govt QALY = quality-adj life yr (eg an intervention is cost
effective if <20k pounds; if >30k there MUST be “strong reasons”) (NICE Guidelines Manual, p 54)
I P A B
Independent Payment Advisory BoardIndependent Payment Advisory Board 15 member US govt agency created in 2010; 15 member US govt agency created in 2010;
members appointed; confirmed by Senatemembers appointed; confirmed by Senate Has the explicit task of achieving savings in Has the explicit task of achieving savings in
Medicare without affecting coverage or qualityMedicare without affecting coverage or quality Can change Medicare program; Congress can Can change Medicare program; Congress can
overrule only by supermajority voteoverrule only by supermajority vote
Mass Medical Society – 2013 Report
The Greater the Government Involvement the Lower the
Productivity and the Higher the Cost
Medical Care Spending,2011
Public Health 3 % Infrastructure, research 6 % Administrative 7 %* Rx, durable medical 13 % Professional services 30 % Inpt/nursing home/etc 42 % Total $2.7 trillion
_______________________________CMS data in JAMA 310: p 1950, Nov 2013
Professional Personnel
In 2011---
Total = 21,587,800MDs = 830,700RNs = 2,725,000DDS = 96,000 US Dept Labor - 2013
USA Insurance Status 2012(% Population)
Private 54 %Medicare 11 %Medicaid 13 %Military 4 %Uninsured 15 %______________________________________(data from US Census, JAMA 310:1952, 2013)
Actual Causes of Increased Medical Care
Inappropriate use of the Insurance Model Medicare Third party payers separate the patient from
costs Lack of price competition Technology without competition Unrealistic expectations by the public The idea that medical care is a right Unreformed tort law
$164 Billion in 2015 Budget (6.7 million pts)
It will be of little avail to the people that their It will be of little avail to the people that their laws are made by men of their own choice, if laws are made by men of their own choice, if the laws be so voluminous that they cannot be the laws be so voluminous that they cannot be read, or so incoherent that they cannot be read, or so incoherent that they cannot be understood.understood.
James MadisonJames Madison
The Federalist #62The Federalist #62
Mancur Olson (1932-98)Mancur Olson (1932-98) Great systems can only be reformed after they Great systems can only be reformed after they
collapsecollapse Passionate minorities prevail in a democracyPassionate minorities prevail in a democracy Benefits persist irrespective of their societal Benefits persist irrespective of their societal
valuevalue If you like your benefits, you will keep your If you like your benefits, you will keep your
benefitsbenefits
You have heard of too big You have heard of too big to failto fail
Medicine is too big to fix! Medicine is too big to fix!
Thomas B Edsall:
Joseph Pulitzer II and Edith Pulitzer Moore Professorship in Public Affairs Journalism at Columbia University
New York Times Nov 19, 2013
A man A man cannotcannot know more than a tiny part of the know more than a tiny part of the whole of society…all a man’s mind can whole of society…all a man’s mind can effectively comprehend are the facts of the effectively comprehend are the facts of the narrow circle of which he is the center…nobody narrow circle of which he is the center…nobody can know who knows best…The fundamental can know who knows best…The fundamental assumption…is the unlimited variety of human assumption…is the unlimited variety of human gifts and skills and the consequent ignorance of gifts and skills and the consequent ignorance of any single individual of most of what is known to any single individual of most of what is known to all the other members of society taken together.all the other members of society taken together.
Frederich HayekFrederich Hayek
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