Transcript American Health Care: Why So Costly? Karen Davis President, The Commonwealth Fund June 11, 2003 Hearing on Health Care Access and Affordability: Cost Containment Strategies Senate Appropriations.

American Health Care:
Why So Costly?
Karen Davis
President, The Commonwealth Fund
June 11, 2003
Hearing on Health Care Access and Affordability: Cost
Containment Strategies
Senate Appropriations Committee
Labor, Health, and Human Services, Education and Related
Agencies Subcommittee
Growth in Per Enrollee Private Health
Insurance Premiums and Benefits,
1985 - 2012
Percent
18
Premiums per enrollee
15
Benefits per enrollee
12
9
6
3
0
1985
1990
1995
2000
2005
2010
Projected
Source: Heffler et al., “Health Spending Projections for 2002-2012,” Health Affairs
(Web Exclusive February 7, 2003)
1
National Health Expenditures
Average Annual Percentage Growth,
Selected Calendar Years 1960-2012
15%
2
12.9%
11.0%
10.6%
8.5%
10%
7.4%
8.7%
5.4%
7.2% 6.9%
5%
0%
1960-
1970-
1980-
1990-
1993-
1999-
2000-
2003-
1970
1980
1990
1993
1999
2000
2001
2008
2012
Projected
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs
(January/February 2003): 154–164 and Heffler et al., “Health Spending
Projections for 2002–2012,” Health Affairs (February 7, 2003).
2008-
Real National Health Expenditures
Average Annual Percentage Growth,
Selected Calendar Years 1960-2001
3
15%
10%
7.7%
5.5%
6.4%
5.5%
5%
3.6%
5.2%
6.2%
4.6% 4.1%
0%
1960-
1970-
1980-
1990-
1993-
1999-
2000-
2003-
1970
1980
1990
1993
1999
2000
2001
2008
2012
Projected
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs
(January/February 2003): 154–164 and Heffler et al., “Health Spending
Projections for 2002–2012,” Health Affairs (February 7, 2003).
2008-
4
National Health Expenditures Percentage
Growth by Service, 2000 - 2001
20%
15.7%
11.2%
10%
8.7%
8.3%
8.6%
5.2%
0%
Total
Hospital Care
Physician and
Nursing home
Prescription
Program
clinical services
and home health
drugs
administration
care
and net cost of
private health
insurance
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs
(January/February 2003): 154–164
Shares of Overall Health Care
Spending Growth, 1999-2001
5
100%
30%
50%
34%
34%
28%
27%
21%
22%
14%
14%
27%
5%
7%
31%
32%
37%
37%
1999
2000
2001
2002
Physician services
Prescription drugs
Hospital inpatient
Hospital outpatient
0%
Source: Bradley Strunk and Paul Ginsburg, “ Tracking Health Care Costs: Trends
Stabilize but Remain High in 2002.” Health Affairs (Web Exclusive, June 11, 2003.)
Annual Percentage Change in Medical
Price Index and Quantity of Service Use
Per Capita, 1989-2001
Percent
8
6
Medical price index
4
Quantity of service
use per person
2
0
1989
1991
1993
1995
1997
1999
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs
(January/February 2003): 154–164
2001
6
Decomposition of Hospital Spending
Trends, Annual Percentage Change,
1994-2002
Spending on hospital
services
Hospital prices
Quantity*
1994
1.8%
4.0%
-2.2%
1995
.8
3.7
-2.8
1996
.5
1.8
-1.2
1997
1.3
1.7
-0.4
1998
3.4
1.9
1.5
1999
5.8
2.5
3.2
2000
7.1
3.3
3.6
2001
12.0
3.6
8.0
2002**
11.2
4.1
6.8
*Calculated as the residual of the hospital spending and hospital price trends
** Data through June 2002, compared with corresponding months in 2001
Source: Bradley Strunk, Paul Ginsburg and Jon Gabel, “ Tracking Health Care
Costs: Growth Accelerates Again in 2001.” Health Affairs (Web Exclusive,
September 25, 2002.)
7
8
Physicians’ Net Income from Practice
of Medicine, 1999, and Percent Change,
1995-1999
Average
reported net
income
Percent change in income,
adjusted for inflation
1999
1995-97
1997-99
1995-99
All patient care
physicians
$187,000
-3.8%*
-1.2%*
-5.0%*
Primary care
physicians
$138,000
-5.4*
-1.1
-6.4
Specialists
$219,000
-3.5*#
-0.6
-4.0*#
*Rate of change is statistically significant at p<.05.
#Rate of change for specialists in significantly different from change for
primary care physicians at p<.05.
Source: Marice C. Reed and Paul B. Ginsburg, Behind the Times:
Physician Income, 1995-99. Center for Studying Health System Change,
Data Bulletin No. 24, March 2003.
Percentage Growth in Medicare Per Capita
Use of Physician Services, by Selected Type
of Service, 2001-2002
20%
14.6%
10.8%
10%
10.1%
9.9%
Endoscopy -
Knee
Pacemaker
colonoscopy
replacement
insertion
8.9%
6.5%
4.4%
2.3%
0%
Office visits
Consultations
Emergency
Echography-
room visits
heart
MRI - brain
Source: Medicare Payment Advisory Commission, Report to the Congress:
Medicare Payment Policy. March 2003
9
Growth in Ambulatory Surgery Procedures
Provided to Medicare Beneficiaries,
1997, 1999, 2001
Number of procedures
3000
1500
0
1997
1999
Source: Medicare Payment Advisory Commission, Report to the Congress:
Medicare Payment Policy. March 2003
2001
10
11
Factors Accounting for Growth in Prescription Drug Spending per Capita, 1980-2011
Other
Average Annual Percent Change
18
16
14
12
10
8
6
4
2
0
Drug Utilization (Number of Prescriptions)
Drug Prices (Consumer Price Index - Drugs)
16.1
6.5
10.7
0.8
0.9
9.2
4.2
9
2.2
2.8
1980-1993
1993-1997
13.3
5.1
10.0
2.7
5
3.3
2.4
4.6
4.9
4.9
1997-2000
2000-2003
2003-2011
Calendar Years
Note: Data for 2000-2011 are projections.
”Other” includes quality and intensity of services, and age-gender effects.
Source: Centers for Medicare and Medicaid Services, The CMS Chart Series. 2003
Net Cost of Private Health Insurance
and Government Program
Administration,
(in billions) 1970–2012
Billions
250
$222.6
$110.9
125
$53.3
0
$2.8
1970
$12.1
1980
1993
2002*
*Projected
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs
(January/February 2003): 154–164 and Heffler et al., “Health Spending
Projections for 2002–2012,” Health Affairs (February 7, 2003).
2012*
12
Private Insurance Administrative Costs as a 13
Percent of Private Insurance Outlays and Public
Program Administration as a Percent of Public
Outlays, 2001
15%
11.9%
10%
4.6%
5%
0%
Private insurance administration
Public administration
Source: Calculated from Centers for Medicare and Medicaid, “National Health
Expenditures, by Source of Funds and Type of Expenditure.” Available at
http://www.cms.hhs.gov/statistics/nhe/historical/t3.asp
National Health Expenditures
by Source of Funds, 2001
Total National Health Expenditures = $1.4 trillion
Other private
Out-of-pocket
$76 billion
5%
$206 billion
14%
Medicare
$242 billion
17%
Medicaid
16%
Private Health
Insurance
$496 billion
35%
13%
$224 billion
Other public
$180 billion
Source: Levit et al., “Trends in U.S. Health Care Spending, 2001,” Health Affairs
(January/February 2003): 154–164
14
Percentage Change in Private Health
Insurance and Medicaid Enrollment,
1985-2012
Percent
18
Medicaid enrollment
15
12
Private insurance enrollment
9
6
3
0
-3
1985
1990
1995
2000
2005
2010
-6
Projected
Source: Heffler et al., “Health Spending Projections for 2002-2012,” Health Affairs
(Web Exclusive February 7, 2003)
15
Cumulative Growth in Per Enrollee Payments
for Comparable Services, Medicare and
Private Insurers, 1970-2000*
Growth index
2000
16
Private health
insurers
Medicare
1000
0
70 972 974 976 978 980 982 984 986 988 990 992 994 996 998 000
9
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
*Includes hospital care, physician and clinical services, durable medical equipment, and
other professional services.
Source: Christina Boccuti and Marilyn Moon, “Comparing Medicare and Private Insurers:
Growth Rates in Spending Over Three Decades.” Health Affairs (March/April 2003)
Spending Growth:
FEHBP, All Employers, and Medicare
(15%)
16%
All employer (12.7%)
premiums
FEHBP per
participant
spending
12%
8%
(4.1%)
4%
0%
-2%
Medicare per
capita spending
1996
1997
1998
1999
2000
2001
2002
2003
(est.)
Note: Employer premium increases reflect coverage for a family of four.
Source: Mark Merlis, The Federal Employees Health Benefits Program:
Program Design, Recent Performance, and Implications for Medicare Reform
Briefing for The Henry J. Kaiser Family Foundation, May 30, 2003.
17
18
Per Capita National Health Expenditures
in Selected Countries, 2000
$5,000
$4,631
$2,748 $2,535
$2,500
$2,420
$1,983 $1,763
$0
US
GER
CAN
DEN
OECD
Median
Source: Anderson, et al. “It’s the Prices, Stupid: Why The United States is So
Difference from Other Countries.” Health Affairs (May/June 2003): 89-105
UK
Average Annual Growth Rate of Real Health
Care Spending per Capita Between 1990
and 2000 in Selected Countries
Percent
4.0
3.9
3.7
3.2
3.1
3.1
3.0
2.9
2.3
2.1
1.8
2.0
1.0
0.0
Japan
a
United
United
Kingdom
States
Australia
OECD
New
Median
Zealand
France
Germany a
1992–2000
Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.
The Commonwealth Fund, October 2002.
Canada
19
20
Distribution of Public and Private Health Care
Spending in Selected Countries, 2000
Private Spending
Public Spending
Percent
100
80
19
22
23
24
25
26
28
28
56
60
40
81
78
77
76
75
74
72
72
44
20
0
United
New
Kingdom
Zealand
Japan
France
Germany
OECD
Australia
Canada
Median
Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.
The Commonwealth Fund, October 2002.
United
States
21
Per Capita Out-of-Pocket Health Care
Spending in Selected Countries, 2000
$800
$707
$700
$600
$500
$405
$399
$400
$335
$328
$290
$300
$249
$240
$171
$200
$100
$0
United
States
a
Canada
a
Australia
b
OECD
Median
Japan
a
Germany
New
France
Zealand
1999, b 1998, c 1996
Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.
The Commonwealth Fund, October 2002.
United
Kingdom
c
22
Per Capita Annual Number of Physician
Visits, Selected Countries
16
16.0
12
8
6.5
6.5
6.4
6.4
b
Australia
Canada
5.9
5.8
5.4
4
0
a
Japan
France
a
Germany
a
c
OECD
Median
a
United
b
States
United
a
1996, b 2000, c 1999, d 1998
Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.
The Commonwealth Fund, October 2002.
Kingdom
d
23
Per Capita Acute Care Hospital Days
Selected Countries, 2000
2
1.9
1.0
1
1.0
1.0
0.9
0.7
0
GER *
DEN
CAN
OECD
UK *
Median
*1999
Source: Anderson, et al. “It’s the Prices, Stupid: Why The United States is So
Difference from Other Countries.” Health Affairs (May/June 2003): 89-105
US
24
Per Capita Spending on
Pharmaceuticals, 2000
$600
$556
$473
$385
$400
$375
$313
$262
$253
$252
OECD
United
c
Australia
$210
$200
$0
United
States
a
France
Canada
Germany
Japan
a
Median
Kingdom b
1999, b 1997, c 1998
Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.
The Commonwealth Fund, October 2002.
New
Zealand
b
400
Coronary Angioplasty Procedures per
100,000 Population in Selected
Countries
25
388
166
200
103
81
66
51
0
United
States
Germany b
Australia
a
Canada
a
New Zealand a
England
a
1999, b 1997, c 2000
Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.
The Commonwealth Fund, October 2002.
a
c
Age-Standardized Mortality Rates for
Acute Myocardial Infarction per 100,000
Population in 1999 in Selected Countries
80
75
26
75
65
70
63
63
61
60
60
50
40
29
30
25
20
10
0
United
Kingdom
a
New
a
Zealand
Australia
Canada
b
OECD
Median
Germany
United
a
States
Francea
1998, b 1997
Source: Anderson, et al., Multinational Comparisons of Health Systems Data, 2002.
The Commonwealth Fund, October 2002.
Japan
27
Percent of Sicker Adults Reporting Medical
Errors Causing Serious Problems, 2002
Percent
20
18
15
14
13
9
10
0
US
CAN
NZ
AUS
UK
Source: Commonwealth Fund 2002 International Health Policy Survey of Sick Adults
28
Percent of Sicker Adults Reporting Being
Sent for Duplicate Tests by Different Health
Professionals, 2002
Percent
24
22
20
17
13
13
AUS
UK
12
0
US
CAN
NZ
Source: Commonwealth Fund 2002 International Health Policy Survey of Sick Adults
Acknowledgments
• Barbara Cooper, Senior Program Officer,
co-author
• Steve Schoenbaum, Senior Vice
President
• Cathy Schoen, Vice President for Health
Policy, Research, and Evaluation
• Chris Hollander, Senior Editor
• Katie Tenney, research and production
assistance
www.cmwf.org