Transcript Document 7160730
The U.S. National Health Care System
PH 150 November 2004 1
Outline
(1) Overview of U.S. system compared to other developed countries (2) Private insurance (3) Current policy issues 2
Overview
• Characteristics of U.S. System: – Big – Patchwork of insurance coverage – Relies on marketplace 3
Total Health Care Expenditures, 2001
Australia Canada France Germany Japan Netherlands Sweden Switzerland United Kingdom United States Per Capita Expenditures in U.S. Dollars
$2350 2,792 2,561 2,808 1,984 2,626 2,270 3,248 1,992 4,887
Ratio of Expenditures to the United States’ Level
2.08
1.91
2.04
1.74
2.46
1.86
2.15
1.50
2.45
1.00
Percentage of Gross Domestic Product Spent on Health
8.9% 9.7
9.5
10.7
7.6
8.9
8.7
10.9
7.6
13.9
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RELATIONSHIP BETWEEN NATIONAL WEALTH AND HEALTH EXPENDITURES
Source: Huber, M. 1999. “Health Expenditure Trends in OECD Countries, 1970-1997.”
Health Care Financing Review
21(2): 99-117.
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Australia Canada France Germany Japan Netherlands Sweden Switzerland United Kingdom United States
Utilization of Select Services
Acute Care Bed Days per Capita*
1.0
1.0
1.1
1.9
NA 0.8
0.8
1.3
0.9
0.7
Physician Visits per Capita**
6.4
6.4
6.5
6.5
16.0
5.9
2.8
11.0
5.4
5.8
Coronary Artery Bypass Operations per 100,000+
83 65 35 38 NA 60 54 60 41 203
Coronary Angioplasty Operations per 100,000++
103 81 73 166 NA NA NA 65 51 388 6
Self-Reporting Waiting Times, 1998 Australia Canada United Kingdom United States
Waiting times for non emergency surgery for themselves or a family member: None Less than one month 1-3.9 months 4 months or more 5 46 32 17 16 28 43 12 7 23 36 33 10 60 28 1 Source: Donelan, K., et al. 1999. “The Cost of Health System Change: Public Discontent in Five Nations.”
Health Affairs
206-216.
Life Expectancy and Infant Mortality Rates, 1998 * Australia Canada France Germany Japan Netherlands Sweden Switzerland United Kingdom United States
* Data for Canada are for 1997.
Life Expectancy at Birth (years)
78.7
78.6
78.4
77.5
80.6
78.0
79.4
79.5
77.3
76.7
Infant Deaths per 1,000 Live Births
5.0
5.5
4.6
4.7
3.6
5.2
3.5
4.6
5.8
7.2
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Patchwork of Coverage
• Medicare: over 65 or disabled • Medicaid: some (about ½) of poor • Employer-sponsored private insurance (if offered, if you are eligible, & if you by it) • Individual private insurance • Military or veterans coverage • Indian health services • Uninsured (safety net providers) 9
Eligibility for Health Care Benefits Under Public Programs * (percentage of population)
Australia Canada France Germany Japan Netherlands Sweden Switzerland United Kingdom United States Percentage of Population Covered
100 100 99.5
92.2
100 74.2
100 100 100 45.0
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Private Insurance
(1) Development (2) Current statistics (3) Issues in private insurance - underwriting - adverse selection - moral hazard 11
Development of Private Insurance
• Story begins around 1930 in U.S., although earlier in countries such as Germany • First example: 21-day hospital benefit for $6/year (Baylor University, Dallas, 1929) – Hospitals then banded together to give choice of facility; gave them $$ even if beds in Great Depression even when beds were empty, which led to the formation of “Blue Cross” 12
Development (continued)
• A.M.A. was worried that insurance could lead to “socialized medicine,” so “Blue Shield” plans didn’t form till 1940s – 10 tenets of coverage (MDs have complete control over care, free choice of MD, etc.) • WWII stimulated development; with labor shortage and wage controls, health insurance became attractive fringe benefit, and courts later ruled it not taxable income 13
Development (concluded)
• Medicare & Medicaid in mid-1960s – Compromise between liberals who wanted social insurance, and providers who didn’t want excess government interference • Compromise: 3-pronged approach put together by Congressman Wilbur Mills: – Part A of Medicare, hospital insurance, is like social insurance, financed from payroll taxes – Part B, physician coverage, voluntary and partly paid by beneficiaries and partly from general revenues – but with generous reimbursement rules – Medicaid was not made an entitlement program, but a rather welfare-like program for poor people.
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Statistics: The Uninsured
Percentage of population under age 65: total population: age 18-24: 17% (39 million people) 29% Black: Hispanic: Below poverty: 100-149% FPL: 150-199% FPL: 21% 34% 35% 37% 27% 15
Issues in Private Insurance
• Medical underwriting • Adverse selection • Moral hazard 16
Medical Underwriting
• The methods used by insurance companies to decide whether or not to insure an individual or group, and how much to charge in premiums (done by actuaries) • In U.S., private insurance is “experience rated” (in contrast to “community rating”) – the more you or your group will cost, the more it will be charged. As a result, many find it hard to get affordable coverage 17
Adverse Selection
• When an insurer gets sicker people than anticipated (when it set premiums); the opposite is “favorable selection” • Adverse selection is a big problem for insurance markets, as insurers are reluctant to enter risky markets for fear that they will get lots of sick people, raising premiums and making coverage unaffordable • Up till now, FFS has experienced adverse selection, and HMOs, favorable selection 18
Moral Hazard
• When possession of insurance makes it more likely that you will file a claim (as well as more expensive claims) • In medical care, this is a “downward sloping” demand curve • Various ways to deal with it. On demand side, higher copayments. On supply side, utilization review, practice guidelines, limiting supply of medical resources available 19
Current Policy Issues
(1) Access/equity About 40 million uninsured Getting access to care in HMOs (2) Rising costs Higher premiums, higher cost sharing (3) Quality Does competition improve or deter quality?
Especially pharmaceuticals Movement away from tightly managed care Do HMOs provide as good quality of care?
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Legislation
• California Bill SB-2 • Tax credits to reduce number of uninsured • Medicare reform 21
Medicare Beneficiaries’ Out-of-Pocket Drug Spending Under New Medicare Rx Benefit, 2006 Catastrophic Coverage 5% Medicare Pays 95% Beneficiary Out-of-Pocket Spending $5,100 (equivalent to $3,600 in out-of-pocket spending) No Coverage $2850 Gap $2,250 Partial Coverage up to Limit Deductible 25% Medicare Pays 75% $250 New Medicare Legislation + ~$420 in annual premiums
Note: Benefit levels are indexed to growth in per capita expenditures for covered Part D drugs. As a result, the Part D deductible is projected to increase from $250 in 2006 to $445 in 2013; the catastrophic threshold is projected to increase from $5,100 in 2006 to $9,066 in 2013.
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