Transcript Growing Unaffordability of Health Care: Incremental vs

Growing Unaffordability of
Health Care: Incremental vs.
Real Health Care Reform
John P. Geyman, MD
Professor Emeritus- Family Medicine
University of Washington, Seattle
Major Problems of
Health Care System
• Increased Costs
• Decreased Access
• Variable Quality
• Increased Fragmentation
• Increased Administrative Burden
• Technological Imperative
• Medicolegal Liability
• System Out of Control
Drivers of Health Care Costs
•
1.Technological advances
•
2. Aging of population
•
3.Increase in chronic disease
•
4.Inefficiency and redundancy of private insurers
•
5.Profiteering by investor-owned companies, facilities and providers
•
6.Consumer demand
•
7.Defensive medicine
HEALTH CARE COSTS IN U.S.
• 16.5% of GDP
• $2.3 trillion per year
• Increased cost-shifting to individuals/families
• Incremental “reforms” ineffective
Escalating Costs of Care
• Double digit increases in health insurance
premiums
• Average family premium now over $15,000
per year
• 31% of total health costs are administrative
• HMO rates up by 11.7% in 2007 vs CPI
increase of 2-3%
GROWING UNAFFORDABILITY
OF HEALTH CARE
• “Medical divide” at about $50,000 annual income
• Median household debt over $100,000
• Median family income $41,000 a year
• Health insurance premiums to consume one-third of average
household income by 2010
CHANGE IN REAL FAMILY INCOME
1979-2004
SOURCE: Bureau of the Census
Three Alternatives For
Health Care Reform
1. Employer mandate
2. Individual mandate (Consumer-driven health care)
3. Single-payer system
Problems With
Employer-Based Approach
1. Only 59 percent of employers provide coverage
2. Trend toward part-time work force
3. Defined contributions vs. benefits
4. Increasing cost-sharing and unaffordability
5. Job lock problem
6. Competitive disadvantage in global markets
7. A failed track record (eg., Hawaii)
Consumer Choice
(“Individual Mandate”)
• Increasingly popular pro-market “solution”
• Shifts responsibility for coverage from employers to
consumers
• Assumes a free market in health care
• Assumes adequate information and options for
consumers
• Current examples:
privatizing of Medicare
health savings accounts
Problems With Option 2
• Less service for more cost
• Serves for-profit insurance industry
• Coverage by risk selection
• Limited choice for consumers
• “Bad plans can drive out the good ones”
• Is still the most politically popular and likely
Why Incremental
"Reforms” Keep Failing
1. Favorable risk selection by insurers
2. High administrative costs and profiteering
3. No mechanisms to contain costs
4. Fragmentation of risk pools
5. Decreasing access to necessary care
6. Lack of accountability for value and quality
"In America, the over reliance on market logic and marketing
institutions is ruining the health care system. Market
enthusiasts fail to tabulate all the costs of relying on market
forces to allocate healthcare-the fragmentation, opportunism,
asset rearranging, overhead, underinvestment in public
health, and the assault on norms of service and altruism.
They assume either a degree of self-regulation that the health
markets cannot generate, or farsighted public supervision that
contradicts the rest of their world view. Health care now
consumes fully one-seventh of our entire national income.
There is no realm of our mixed economy where markets yield
more perverse results.”
Robert Kuttner - Everything for Sale: The Virtues and
Limits of Markets
Incremental Change and U.S. Health Care
By John Jonik
Option 3: Single Payer System
• Socialized insurance, not socialized medicine
• Universal coverage through National Health
Program
• Eliminates private health insurance industry
• Hospitals and nursing homes with global budgets
• Physicians reimbursed by fee-for-service
• Blend of federal and state government roles
Fundamental Features of a
Universal Healthcare System
• Everyone included
• Public financing
• Public stewardship
• Global budget
• Public accountability
• Private delivery system
What Would a NHP Look Like?
• Everyone receives a health care card assuring
payment for all necessary care
• Free choice of physician and hospital
• Physicians and hospitals remain independent
and non-profit, negotiate fees and budgets with
NHP
• Local planning boards allocate expensive
technology
• Progressive taxes go to Health Care Trust Fund
• Public agency processes and pays bills
Advantages of National
Health Program
• Assured access for all Americans
• Cost savings ($200 billion/year)
• Administrative simplicity
• Decreased overhead (Medicare 3% vs private
insurance 15%-26%)
• Distributes risk and responsibility to finance care
• Improves access, costs, and quality of care
Growing Support for NHI
Physicians (egs., PNHP, ACP, AMWA, APHA)
2008:
2006:
2002:
1999:
59% national study
64% Minnesota
62% Massachussetts
57% of Deans, faculty, residents, and medical
students
Nurses (eg., CNA)
Labor (egs., AFL-CIO and Working America)
Mayors of 25 Cities (egs., Austin, Baltimore, Boston,
Chicago, Detroit, San Francisco, Louisville)
Public: average 60-65% over many years
How Physicians Win with NHI
• More time for patient care
• Less overhead
• Less bureaucracy
• More clinical autonomy
• All paying patients
• Increased reimbursement (primary care and
shortage specialties)
• Increased practice satisfaction
• Restored professionalism
Problems with Option 3
•
•
•
•
•
Political acceptance
Lobbying by special interest stakeholders
Disinformation by media coverage
Philosophic concerns about “big government”
Denial of ineffectiveness of market-based
system
Why Private Health
Insurance is Obsolete
･ Inefficiencies vs public-financing
･ Fragments risk pools by medical underwriting
･ Increasing epidemic of underinsurance
･ Excessive administrative and overhead costs
･ Profiteeringﾑshareholders trump patients
･ Pricing itself out of the market
･ Unsustainable and resists regulation
Annual Health Insurance Premiums And
Household Income, 1996-2025
SOURCE: Reprinted with permission from Graham Center One-Pager. Who will
have health insurance in 2025? Am Fam Physician 72(10):1989, 2005
Basic Building Blocks
For Health Care Reform
1. Single-payer national health insurance (NHI)
2. Evidenced-based coverage process
3. Reimbursement reform
4. Strengthening of primary care
5. Quality improvement
6. Transition from for-profit to not-for-profit system
7. Rebuild the capacity of government
8. Malpractice liability reform
Alternative Scenarios for 2020
Alternative Scenarios for 2020
Principle of Social Justice
The medical profession must promote justice in
the health care system, including the fair
distribution of health care resources. Physicians
should work actively to eliminate discrimination in
health care, whether based on race,
gender,socioeconomic status, ethnicity, religion,
or any other social category.
SOURCE: Project of the ABIM Foundation. ACP.-ASIM Foundation and
EuropeanFederation of Internal Medicine. Medical professionalism in the new
millennium:A physician charter. Ann Intern Med 136(3):244, 2002.
“The evidence is conclusive that our people do not yet receive all
the benefits they could from modern medicine. For the rich and
near-rich there is no real problem since they can command the
very best science has to offer. - - - Among the majority of the
population, however, there are great islands of untreated or
partially treated cases - - - Although it is a principle of far-reaching
and, perhaps, of revolutionary significance, I think there are few
who would deny that our ultimate objective should be to make
these benefits available in full measure to all of the people.”
Ray Lyman Wilbur, M.D.
Chairman of the Committee on the Costs of Medical Care, 1932 Report
First Dean of Stanford Medical School and President of Stanford University (1916-1943)