Ana Malinow, MDAssociate Professor Pediatrics, BCM
Co-founder, Health Care for All Texas
September 22, 2009
Rising health care costs are the root of most of the problems in health care
Most costs are fixed whether health care is used or not
Other countries cover everyone, have more services, higher quality and live longer yet spend far less than we do
We are already paying the whole bill You can’t hold down costs without a
system!
Average Health Insurance Premiums and Worker Contributions for Family Coverage, 1999-2009
$4,247
$9,860
$1,543$3,515
1999 2009
Employer Contribution
Worker ContributionNote: The average worker contribution and the average employer contribution may not add to the average total premium due to rounding.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.
$5,791 128% Worker
Contribution Increase
131% Premium Increase
$13,375
Cumulative Changes in Health Insurance Premiums, Inflation, and Workers’ Earnings, 1999-2009
131%
38%
28%
0%
20%
40%
60%
80%
100%
120%
140%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Health Insurance Premiums
Workers' Earnings
Overall Inflation
Note: Due to a change in methods, the cumulative changes in the average family premium are somewhat different from those reported in previous versions of the Kaiser/HRET Survey of Employer-Sponsored Health Benefits. See the Survey Design and Methods Section for more information, available at http://www.kff.org/insurance/7936/index.cfm.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2009 (April to April).
65% 68% 68% 66% 65% 63%59% 60% 59% 62%
99% 99% 99% 98% 98% 99% 98% 98% 99% 99%
56% 57% 58% 58%55% 52%
47% 48% 45%49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
All Small Firms (3-199 Workers)
All Large Firms (200 or More Workers)
3-9 Workers
Percentage of All Firms Offering Health Benefits, 1999-2008*
*Tests found no statistical differences from estimate for the previous year shown (p<.05).
Note: Estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and those that answered just one question about whether they offer health benefits.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008.
Total Annual Household Income and Federal Poverty Level
Texas U.S.
Total Median Annual Household Income www.kff.org
$44,861 $49,901
100% FPL family of 4, 2007Dept of US Health and Human Services
$22,050 $22,050
200% FPL family of 4, 2007
$44,100 $44,100
Minimum Wage $7.25/hr
or $8.00/hr $15,080 $15,080
Ave*. Annual ES HI Premiums for Family of 4, 2009
$13,375 $13,375
*Does not include out-of-pocket costs; group market only
Getting Public Insurance in Texas
Take a family with a 2-mo old, 4 y/o & parents who make $40,792/year (185% FPL) and no employer-sponsored health insurance:
The 2 month-old qualifies for Medicaid
The 4 year-old qualifies for S-CHIP
Parents make over the limit to qualify for public health insurance.
The limit?$6,000 / year
Public Health InsurancePublic Health Insurance
Public Health Insurance is financed through federal and state taxes
TX pays
40% Medicaid bill and 30% S-CHIP bill
TaxesState
Pays % Fed
Pays %
Medicaid 40 60
CHIP 30 70
Medicare 0 100
VA 0 100
FEHBP 0 100Source: www.kff.org State Facts
Distribution of Total Population by FPLTexas
%
Mass
%
U.S.
%
<100%FPL 22 16 17
100-199% 21 15 19
Low Income
43 31 36
200%+ 57 71 64
www.statehealthfacts.org Nonelderly Population and Poverty Rate: Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on the Census Bureau's March 2007 and 2008 Current Population Survey (CPS: Annual Social and Economic Supplements). Data are for states (2006-2007) and U.S. (2007).
Number of Uninsured Americans 1976 - 2006
44,840 Adult Excess Deaths AnnuallyDue to Uninsurance in U.S.
17-64 years
State Total % Uninsured
2005
Excess Deaths
Texas 29.7 4,675
Sourxe: AP Wilper, et al. American Journal of Public Health, Dec 2009, Vol 99, No. 12
0%
500%
1000%
1500%
2000%
2500%
3000%
1970 1975 1980 1985 1990 1995 2000
Physicians Administrators
Administration is the Fastest Growing job in
Health Care
Source: Bureau of Labor Statistics and NCHS
69%
31%Clinical Care
Administrative Costs
Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004
$775 Billion
One-Third of Health Spending is Consumed by Administration
Total: $2.5 Trillion
Distribution of National Health Expenditures, by Type of Service, 2007
Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2007; file nhe2007.zip).
Physician/ Clinical Services 21.4%
Hospital Care 31.1%
Other Personal Health Care
12.7%
Nursing Home Care, 5.9%
Prescription Drugs10.1%
Home Health Care, 2.6%
Other Health Spending 16.2%
74% Fixed Costs
The cost of the infrastructure is there whether or not it is used (nurse, hospital)
84% of hospital costs are fixed Cost containment for utilization won’t work
if most costs are in infrastructure Trying to save money by keeping patients
out of the hospital is like trying to save money on schools by keeping kids home for the day
It is much more cost effective to invest in only what we need.
The Implications of Fixed costs
Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?
$803
$624
$519$472
$403
$239
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
U.S. Australia Italy Canada Germany France
$/per capita
Source: OECD 2006Data are for 2004 or for most recent year available Figures adjusted for purchasing power parity
Out of Pocket Costs are Higher
Administrative Costs US vs Canada
U.S. (%) Canada (%)
31 17
Source: Woolhandler et al. New England Journal of Medicine 349 (8): 768 August 21, 2003
Fewer Americans Smoke Compared with Other Nations
17.0
24.2 24.326.0
30.0
17.5
0
5
10
15
20
25
30
35
Canada U.S. Italy Germany U.K. Japan
% p
op
ula
tio
n s
mo
kin
g d
aily
OECD, 2006 (2003 Data)
We Drink Less Alcohol
7.4
10.211.2
14.0
8.47.6
0
2
4
6
8
10
12
14
16
Japan Canada U.S. Germany U.K. France
Lit
ers/
cap
ita
(15+
)
OECD, 2006 (2003 Data)
But… We Don’t Live as Long
78.5 78.679.4 79.7 79.9
81.8
77.5
70
75
80
85
U.S. U.K. Germany France Italy Canada Japan
OECD, 2006 (2003 Data)
6.9
5.34.7
4.1 4.1 3.9
3.1
0
1
2
3
4
5
6
7
U.S. Canada Australia Italy Germany France Sweden
OECD, 2006Data are for 2004 or more recent year available
More Babies Diein the U.S. in the First Year
of Life
We Do an Average Number of Bone
Marrow Transplantsper million people
4045
6871
61
0
10
20
30
40
50
60
70
80
U.K. Germany U.S. France Italy
OECD, 2006 (2003 Data)
2931
34 35 3538
0
5
10
15
20
25
30
35
40
U.K. Australia U.S. Sweden Canada France
OECD, 2004
Transplants/million population
We are Average in Number of Renal
Transplants (2001/2002)
2.84.7 6
8.6 9.1 11
35.3
0
5
10
15
20
25
30
35
40
France Canada Germany U.S. Denmark Italy Japan
Source: OECD, 2005Note: data are for 2004 ,or most recent year available
MRIs/ million population
We are Average in the Number of MRI Units
Procedures per 100,000 population
Source: OECD 2006Data are for 2004 or most recent year available
106125 126 133
146
182
0
20
40
60
80
100
120
140
160
180
200
Canada U.S. N.Z. Italy Australia U.K. Sweden
197
We Do Fewer Hip Replacements
Australia Canada England N.Z. U.S.
Breast Cancer 2nd 4th worst 3rd bestColorectal Cancer 2nd 3rd worst best 4thCervical Cancer best 3rd worst 4th 2ndChildhood Leukemia worst best 3rd 4th 2ndKidney Transplant 2nd best 3rd 3rd worstLiver Transplant 2nd best worst * 3rdNon-Hodgkin’s Lymphoma
best 4th worst 2nd 3rd
AMI, ages 20-84 best worst NA 2nd NAStroke, ages 20-84 2nd best NA worst NA
Source: Health Affairs Vol 23:#3 , 2004
Our Quality is Not the Best in the World Survival Rates for 5 Countries
(2007=$7,421/p/y www.cms.hhs.gov)
US Health Costs Rise Faster than Other Countries’ Costs
Source: Health United States 2005, Natl. Center for Health Statistics
0
2
4
6
8
10
12
14
16
18
1960 1970 1980 1990 1995 2000 2004
Hea
lth
Co
sts
as
Per
cen
t o
f G
NP US
Canada
France
Germany
Japan
UK
Availability of expensive technology
Rising drug costs
Have similar demographics
Similar levels of service
Why are their costs so much lower?
Other Industrialized Countries
Administrative simplicityNegotiated pricesMore primary care and
preventionHealth planningGlobal budgets They have a system
Why Costs Are So Much Lower in Other Countries
$1,500
$1,309
$1,040
$449 $419
$207$97
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
GM Ford Chrysler BMW Mercedes Toyota (US) Toyota(Japan)
$/Car
Source: Modern Healthcare 10/24/05: 14
Japan Has a $1400 Competitive Advantage on Every Car They Sell
Everyone Included
Clear AccountabilityPublic StewardshipBudget Process
Public Financing
Fundamental Features of a True Health Care
System
Lower wages
Private employers
pay for health insurance Higher prices
for goods
Out of pocket
Individual health insuranceTaxes for
Medicare and Medicaid
Property taxes
Health insurance for public employees
INDIVIDUAL
HOUSEHOLDS
In the End Individual Households Pay for All of Health Care
How Much is the U.S. Health Care System Costing You NOW?
What Americans Pay Into the U.S. Health Care System Today
Household Income Level
$25,000 $50,000 $75,000
Share and Amount of Income Going to Health Care via Taxes Alone without Insurance
9.0%($2,425)
9.8%($5,300)
10.7%($8,633)
Share and Amount of Total Wage Packet Going to Health Care for Household with Insurance (not including out of pocket costs)
Individual 22.0%($6,904)
16.8%($9,779)
15.4%($13,112)
Family 37.2%($14,531)
26.4%($17,406)
22.3%($20,749)
Source: Dollars & Sense, May/June 2008 OOP = co-pays, deductibles, co-insurance, uncovered expenses
Share of total wage packet going to HC= (amount of total tax burden going to health + annual health insurance premium) (annual salary + payroll tax [FICA and Medicare] + annual health insurance premium)
Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150
60%20%
20%
Taxpayers
Private Employe
rs{Deferre
d Wages}
Individuals
{Medicare, Medicaid,Public employees,tax subsidies}
60% of our Health Care is Financed through Taxes100% Financed by Us!
$2.5 Trillion
$1,500 B
69%
31%Clinical Care
Administrative Costs
Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004
$775 Billion
One-Third of Health Spending is Consumed by Administration
Total: $2.5 Trillion
Clinical Care$387 B + $1.75 T =$2.14 Trillion
85%
Enough to pay for all uninsured and underinsured!
Healthcare is regarded as a public good with investment in needed services for the whole population
The costs of these shared services are spread across the whole population (when you are not using them, someone else is—that’s what keeps them operational)
Pools money and pays for health care directly
Investment Model
Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing
Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care
Everyone has access to privately delivered, publicly financed health care services
Public can buy health insurance for services not covered by public plan.
Single Payer Health Care Systems
National Health InsuranceNational Health Insurance
• Everybody in, nobody out• Portable• Uniform, comprehensive benefits• Prevention oriented• Choice of physician• Ends insurance industry influence• Reduced administrative waste• Cost savings• Common sense budgeting• Public oversight
Source: http://thomas.loc.gov/cgi-bin/thomas
Single-PayerSingle-Payer
MedicareMedicare
MedicaidMedicaid
Payroll TaxPayroll Tax
Income TaxIncome Tax
Single-Payer Single-Payer Health Care Health Care
FundFund
$$$$$$
Financing Single-Payer
Negotiated formulary with physicians, global budget for hospitals, Negotiated formulary with physicians, global budget for hospitals, increased primary and preventive care, reduction in unnecessary increased primary and preventive care, reduction in unnecessary high-tech interventions, bulk purchasing of drugs and medical high-tech interventions, bulk purchasing of drugs and medical supplies = supplies =
long term cost control.long term cost control.
US National Health Insurance Act
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