Transcript HEALTH ECONOMICS & POLICY

Medical Care Systems
Worldwide
Henderson 5th Edition
International Comparisons

Slide 1:
– US has higher incomes (Swiss, Canada close) but others 30% less
– US spends a lot more by a wide margin
– US MDs per person and hospital beds per person mid-range
– LOS at bottom (w/ France)
– Only Japan has more equipment person generally
– US has more transplants, stents, CABGS than others

Slide 2:
– Real per capita spending rose fastest in US in 1980s, slowed in
1990s but still faster, then rose to about average rate in 2000s.

Slides 3, 4 & 5:
– Life expectancy and infant deaths relatively high in US. Lifestyle?
– Better survival rates for cancers but middle range rate for heart
attacks in US.
Key Statistics
2008
Canada France
Germany
Population (millions)
33.1
61.8
82.1
GDP per capita1
39,288
33,134
35,436
Health Expenditures
Health care spending per 4,079
3,696
3,737
capita
Health care spending 10.4
11.2
10.5
(percent of GDP)
Medical Services
Number of physicians 2.2
3.4
3.6
(per 1,000)
Acute care beds (per 2.77
3.5
5.7
1,000)
Average length of stay 7.57
5.2
7.6
acute care (days)
Medical Technology2
CT Scanners
12.77
10.37
16.37
MRI Units3
6.77
5.77
8.27
Lithotripters
0.6
1.5
3.9
Patients
undergoing 6.6
4.9
8.17
dialysis
Heart Treatment4
Transplants
0.5
0.6
0.5
7
Angioplasty and stenting
118.1
189.1
567.6
7
CABG
68.9
31.3
124.2
AMI deaths
41.55
18.47
44.26
Source: OECD Health Data 2010, OECD, Paris, 2010.
Japan
127.7
34,132
Switzerland
7.6
43,131
United
Kingdom
60.5
36,128
United
States
304.5
47,193
2,7297
4,627
3,129
7,538
8.17
10.7
8.7
16.0
2.1
3.8
2.6
2.4
8.1
3.3
2.7
2.77
18.8
7.7
7.1
5.5
97.3
43.1
7.16
21.5
32.0
14.47
4.9
-
7.4
5.6
4.2
34.37
25.97
3.25
12.27
0.0
15.67
0.4
140.6
34.7
-
0.2
92.9
44.7
37.67
0.7
436.86
84.56
37.95
Health Care Spending
Annual Compound Growth Rates
Decade of the 1980s
Canada
Nominal health care spending
9.64
Nominal per capita health care
8.47
spending
Real health care spending1
4.68
Real per capita health care
3.57
spending1
Decade of the 1990s
Nominal health care spending
3.89
Nominal per capita health care
2.89
spending
Real health care spending1
2.55
Real per capita health care
1.57
spending1
2000–2008
Nominal health care spending
7.20
Nominal per capita health care
6.20
spending
Real health care spending1
4.38
Real per capita health care
3.40
1
spending
Source: OECD Health Data 2010, Paris: OECD.
France
Germany
Japan2
Switzerland
9.64
9.06
4.19
4.11
4.73
4.19
3.59
2.72
1.63
1.54
3.82
3.48
7.17
6.59
United
Kingdom
8.91
8.78
United
States
9.78
8.90
2.94
2.42
2.99
2.47
3.13
2.97
5.69
4.84
6.87
4.12
3.83
3.57
5.13
4.38
6.80
6.58
5.76
4.59
2.31
1.97
4.95
2.24
3.52
3.26
3.07
2.43
3.82
3.61
3.76
2.61
5.17
4.45
2.73
2.75
1.13
1.04
3.89
3.08
7.80
7.43
7.09
6.07
2.94
2.24
1.54
1.56
2.34
2.25
2.65
1.85
4.98
4.63
4.42
3.43
Health Outcomes
2007
Life Expectancy at Birth1
Life Expectancy at Age 801
Infant
Perinatal
Mortality
Mortality
Rate2
Rate2
Country
Males
Females
Males
Females
Canada
8.33
10.13
78.3
83.0
5.1
6.4
4
4
France
8.3
10.5
77.4
84.4
3.8
11.24
Germany
8.2
9.3
77.4
82.7
3.9
5.5
Japan
8.5
11.4
79.2
86.0
2.6
3.0
Switzerland
8.4
10.3
79.5
84.4
3.9
6.6
United Kingdom 77.6
8.1
9.4
81.8
4.8
7.7
4
United States
7.9
9.3
75.3
80.4
6.7
6.63
Source: OECD Health Data 2010, Paris: Organization for Economic Cooperation and Development, 2010.
Mortality Ratios - Cancer
Type of Cancer
Country
Canada
France
Germany
Japan
Switzerland
United Kingdom
United States
All Developed
Countries
Colon/Rectal
*
38.2
44.6
43.7
35.1
35.8
44.6
34.1
44.3
Breast
Cervical
Prostate
All Sites
Except
Skin*
25.0
23.4
27.1
25.4
24.2
27.9
18.8
26.7
32.5
31.6
35.2
23.3
20.5
37.3
29.9
38.8
21.2
30.7
26.1
45.2
27.9
34.3
12.7
24.0
47.8
56.1
50.9
59.0
45.5
56.7
37.5
54.0
* Male only
Source: J. Ferlay et al., GLOBOCAN 2002: Cancer Incidence, Mortality, and Prevalence Worldwide, Version 1.0, IARC
Cancer Base No. 5, Lyon: IARC Press, 2001.
AMI Outcomes
Table 14.5 Mortality Ratios for Acute Myocardial Infarction
Country
France
Germany
Japan
United Kingdom
United States
Incidence
(per million)
1,968
3,832
520
1,660
1,920
Mortality
(per million)
431
891
365
1,017
685
Source: McKinsey & Company (2008).
Mortality Ratio
(%)
21.9
23.3
70.2
61.3
35.7
Canada

Single-payer concept
– Each province is provided with Federal matching
funds like Medicaid (currently 30% of total)
– Everyone has access to hospital and medical
services
– No deductibles or copayments.
– Patients have free choice of physicians and
hospitals.
– Private health insurance is not permitted for these
basic hospital and medical services.
– Hi-Technology funding region-wide limiting
excess investment.

Canada limits costs by limiting fees and expenditures
– Each province sets its own overall health budget
and negotiates total budgets with each hospital,
which they cannot exceed
– The province also negotiates with the medical
association uniform fees with all physicians, who
are paid fee-for-service and who must accept the
province’s fee as payment in full for their service.
– In some provinces, physicians’ incomes are also
subject to controls; once physicians’ revenues
exceed a certain level, further billings are paid at
25 percent of their fee schedule.

Consequences of System?
– Free care leads to excess demand. With spending and fee
limits, lots of waiting time (see slide).
– Investment in technology is stifled because government
must plan and fund it
 Tech in US occurs if it saves money or improves quality
(& demand)
– Hospital care is
 Excessively long (no incentive for hospitals to provide
outpatient care)
 Not oriented to providing new services (no extra funds
for new staff, equipment, etc.)
– Wealthier Canadians (10% of population) purchase travel
insurance that covers them outside of Canada (i.e., US)
– Canadian Supreme Court has ruled ban on private insurance
unconstitutional due to long waits in Quebec province.
Exhibit 32.5 Canadian Hospital Waiting Lists: Total Expected Waiting Time from
Referral by General Practitioner to Treatment, by Specialty, 2009
France

Single-payer concept
– (83% covered by Natl HI plan) & rest by special plans for
students, govt, agriculture and freelancer workers)
– Financed by payroll and income taxes that total
nearly 20% of income)
– Substantial copays for all but the poor
25% for MDs, 20% for hospitals, 30% for lab tests and
dental and 35-65% for covered drugs
 91% purchase supplementary insurance to pay copays
which costs 2.5% of income
– In practice, MDs fees tightly regulated and fee-for-service
 MDs average just 2x what average worker makes


Hospitals:
– Most (72%) beds are in public hospitals
operating under global budgets
– Private for-profit clinics (22%) offer shortstay care like elective surgeries and
maternity for per-diem reimbursement

Consequences
– MD incomes very low
– Few waits but access to new tech very
limited (see slide #2 above)
Germany

92% of population has coverage from 1 of 1100 “sickness funds”
organized by province
– All individuals must have insurance either thru sickness
funds or private insurance. Latter mostly civil servants who
receive better insurance paid by their employers.
– 10% buy supplementary coverage for sickness fund
insurance
– Premiums paid by payroll deduction averaging 15% of
worker’s pay (half from employer)
– Low-wage and unemployed get subsidies, retirees pay out
of their pension checks.
– Copays are low for MDs, hospitals, drugs and preventive
screening
– Dental copays are high (50-100%)


Cost-control mechanisms
– Hospital MDs on salary, non-hospital MDs fee-for-service, can’t be
both.
– Volume penalties for nonhospital MDs – once quarterly budget
limits for office visits, lab tests, referrals, etc. are reached fees are
cut proportional to keep spending within target. Penalties are
global as well as individual.
– Hospitals receive DRGs for treatment and capital spending funded
by state.
Consequences:
– Cost control has been effective so far in limiting spending increases
– Hospital admit rates and LOS are much higher than in US, no
incentive to cut (see slide #1)
– Primary care MD income is low (only 2.7 times average worker)
and they never know what they’re going to be paid due to volume
penalties
– Technology investment is low (state controlled) : see slide #2
– System lacks incentive to rationally contain costs & improve
quality.
Swiss System

Individual mandate
– Generous coverage in basic plan
– 40% purchase supplementary policies
– Pay community rated (by age/sex) premiums
within canton
– Subsidies after 8-10% of income – 45% get
subsidies
– Approx 20% of premiums subsidized
– Choice of 6 deductibles - $240 to $1,200 and then
10% copay
– Premium savings of 40% for high deductible plan
($2,388 for low plan)


Private Non-Profit Managed Care Insurers (90)
– Plans that suffer adverse selection (by age-sex)
draw subsidies from insurer fund
– Plans are either staff model HMO or Primary Care
Gatekeeper models
– Insurers compete for enrollees
Provider Payments
– MDs paid fee-for-service rates negotiated between canton
medical association and insurer group
– Hospitals paid DRGs, with 50% from insurers/50% from
canton. Govt funds 80% of capital investment.
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
Public-private spending breakdown similar to US
(40/60)
High spending levels, second to US
Lessons

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

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It is difficult to achieve universal coverage. Even with
mandatory participation, most systems leave 1-2 percent of the
population uncovered.
Uncontrolled health care spending growth is a universal
problem.
Near universal access to high-quality medical care is possible
without strict reliance on a single-payer system or a pure public
sector approach.
Price-conscious behavior, with the use of deductibles and
copays, can be encouraged with little impact on health.
Free access to health care with no out-of-pocket requirements
diminishes personal responsibility, leaving no demand-side
constraints often resulting in limited availability of technology
and waiting lists for services.
Lessons

People who cannot afford to purchase health
insurance on their own can still have access to
essential services within a system of subsidized
premiums.