Healthcare in AmericaHealthcare in America

David HanigDavid Hanig

February 18, 2003February 18, 2003

Of all the forms of Of all the forms of inequality, injustice in inequality, injustice in health care is the most health care is the most

shocking and inhumane.”shocking and inhumane.”

-Martin Luther King, Jr.-Martin Luther King, Jr.

D. Hanig02/18/2003

A RoadmapA Roadmap

Over the next hour, we will:Over the next hour, we will:

Describe the state of healthcare todayDescribe the state of healthcare today

Try to explain how we got hereTry to explain how we got here

Hint at where we are headedHint at where we are headed

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Total U.S. Health Care Expenditures as a Percentage Total U.S. Health Care Expenditures as a Percentage of Gross Domestic Product, 1960-95of Gross Domestic Product, 1960-95

Healthcare costs growingHealthcare costs growing

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No Sector is SparedNo Sector is Spared

0

100

200

300

400

500

600

700

800

900

1980 1988 1990 1993 1994 1995 1996 1997 1998 1999 2000 2001

Private

Federal

State and Local

National Per Capita Health Expenditures 1980-2001National Per Capita Health Expenditures 1980-2001

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The Rising Cost of

Medical

The Rising Cost of

Medical

In WA State, Healthcare Increasing In WA State, Healthcare Increasing Faster than Other AreasFaster than Other Areas

SOURCE: Legislative Evaluation and Program Committee (LEAP), ProShare calculation from DSHS Budget Division. Medical costs include the Washington State Health Care Authority and DSHS Medical Assistance payments.

55%from 1989-91

Health Care

Rest of Budget

Rest of Budget

Rest of Budget

Rest of Budget

Rest of Budget

109%from 1989-91

151%from 1989-91

198%from 1989-91

275%from 1989-91

327%from 1989-91

31% 31% 44% 44%

58% 58% 76% 76%

89% 89%

1991-93 1993-95 1995-97 1997-99 1999-01 2001-03

Health Care

Health Care

Health Care

Health Care

Health Care

The Rest

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Agency Medical 23%

All Other77%

DSHS Budget 1987-89DSHS Budget 1987-89$4.5 Billion$4.5 Billion

Medical – “Pac Man” of DSHS?Medical – “Pac Man” of DSHS?

Agency Medical41%

All Other59%

2001-03 Biennium2001-03 Biennium$14.1 Billion$14.1 Billion**

2001-03 Biennium2001-03 Biennium$14.1 Billion$14.1 Billion**

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Nationally, most coverage is employer-based,Nationally, most coverage is employer-based,

Employment-based60%

Uninsured8%

Public22%

Individual6%

Mix4%

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Combined Medical Assistance and Basic Health Enrollment for Children and Adults as % of Population

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

1994 1995 1996 1997 1998 1999 2000 2001

Children 0-18

Adults

But, public coverage is gaining steadily;But, public coverage is gaining steadily;

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And uninsured are growing fasterAnd uninsured are growing faster

WA State SurveyWA State SurveyUninsured in 2000Uninsured in 2000 8.4%8.4%

Uninsured 2002Uninsured 2002 10.7%10.7%

Note: U.S. Census Bureau shows much Note: U.S. Census Bureau shows much higher levels of uninsuredhigher levels of uninsured

More Stats about Uninsured:More Stats about Uninsured:Age 19-24Age 19-24 19.5%19.5%

Households below $35,000Households below $35,000 19.5%19.5%

HispanicsHispanics 22.8%22.8%

Native AmericansNative Americans 24.4%24.4%

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How did we get here?How did we get here?

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Beginnings - Beginnings - Poor Law of 1601 Poor Law of 1601 Primary focusPrimary focus – – DeservingDeserving or or UndeservingUndeserving??

Provide care for “Provide care for “the lame, old, impotent, blind, the lame, old, impotent, blind, and such other among them being poor and and such other among them being poor and not able to worknot able to work.” .”

Society should help those in need through “Society should help those in need through “no no fault of their ownfault of their own”. As for others:”. As for others:

Able-bodied poor – put to work in poorhousesAble-bodied poor – put to work in poorhouses

Able, but unwilling – provide nothingAble, but unwilling – provide nothing

These ideas continue unbroken to our timeThese ideas continue unbroken to our time

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The U.S. Built on Poor LawsThe U.S. Built on Poor Laws

Early Republic initiated some programs – Early Republic initiated some programs – notably Public Health Service, which notably Public Health Service, which started as insurance for indigent sailorsstarted as insurance for indigent sailors

After Civil War, Veterans services. Grew After Civil War, Veterans services. Grew substantially after WWI. (Is VA obstacle substantially after WWI. (Is VA obstacle to universal coverage?)to universal coverage?)

These programs conformed to strict These programs conformed to strict notions of deserving v. undeserving.notions of deserving v. undeserving.

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2020thth Century Attempts Century Attempts

Several attempts for healthcare coverage Several attempts for healthcare coverage through 1946, including one major effort through 1946, including one major effort under Roosevelt in 1930sunder Roosevelt in 1930s

At the end of World War II, Truman At the end of World War II, Truman promoted comprehensive, prepaid promoted comprehensive, prepaid medical insurance planmedical insurance plan

AMA and business opposed it as AMA and business opposed it as “socialized medicine” and it was defeated.“socialized medicine” and it was defeated.

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Finding the “Deserving”Finding the “Deserving” Post-Truman, focus shifted from Post-Truman, focus shifted from universaluniversal

coverage to covering the “coverage to covering the “deservingdeserving””

1965 – Passage of Medicare & Medicaid1965 – Passage of Medicare & Medicaid

ElderlyElderly (could not get private insurance coverage) (could not get private insurance coverage)

DisabledDisabled

Poor ChildrenPoor Children (in need through no fault of their own) (in need through no fault of their own)

Redux Elizabethan Poor Laws – Redux Elizabethan Poor Laws – ““the lame, old, the lame, old, impotent, blind, and such other among them impotent, blind, and such other among them being poor and not able to workbeing poor and not able to work.”.”

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Focus on deserving leads to:Focus on deserving leads to:Byzantine screening rules. Example:Byzantine screening rules. Example:

Aliens who were in U.S. Aliens who were in U.S. beforebefore August 22, 1996 August 22, 1996 can get Medicaid; BUTcan get Medicaid; BUT

Aliens who entered U.S. Aliens who entered U.S. after after August 21, 1996 August 21, 1996 can’t get Medicaid for 5 years, EXCEPT:can’t get Medicaid for 5 years, EXCEPT:

Those in U.S. militaryThose in U.S. militaryVeterans of the Philippines military Veterans of the Philippines military beforebefore July 1, July 1, 19461946Hmong or Highland Lao veteran; orHmong or Highland Lao veteran; orSpouse or child of aboveSpouse or child of above

And this is just one of literally tens of And this is just one of literally tens of thousands of similar regsthousands of similar regs!!

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Result: Costly, bureaucratic systemResult: Costly, bureaucratic system

Costs millions to determine who is eligible Costs millions to determine who is eligible and who is notand who is not

5,000 FTEs in WA State just for eligibility – 5,000 FTEs in WA State just for eligibility – and that is not nearly enough!and that is not nearly enough!

Confusing rules pose barriers to entitled Confusing rules pose barriers to entitled and require expensive outreach effortsand require expensive outreach efforts

““A system designed by Kafka and executed A system designed by Kafka and executed by the Marx Brothers!”by the Marx Brothers!”

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Other Ills - Other Ills - to shift or not to shiftto shift or not to shift

Administrative costs highest in the world Administrative costs highest in the world ~25% of healthcare dollars~25% of healthcare dollars

Cost-shifting primary driver – find Cost-shifting primary driver – find someone else to pay the billsomeone else to pay the bill

Average primary care provider has +3.0 Average primary care provider has +3.0 FTEs just to handle billing and admin.FTEs just to handle billing and admin.

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Meanwhile, outside the U.S. . . . Meanwhile, outside the U.S. . . .

In 1900s, other industrializing nations In 1900s, other industrializing nations established health insurance for workers established health insurance for workers and dependentsand dependents

Later extended coverageLater extended coverage

Post-WW2 devastation prompted Post-WW2 devastation prompted universaluniversal social programs – moving away social programs – moving away from deserving v. undeservingfrom deserving v. undeserving

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Result – Uncontrolled Expenditures in U.S.Result – Uncontrolled Expenditures in U.S.

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Compare & ContrastCompare & Contrast Countries with Countries with

universal, public- universal, public- financed coverage:financed coverage:

Better control of rising Better control of rising costs by bargaining costs by bargaining with physicians, with physicians, hospitals, and hospitals, and corporationscorporations

Tried to maintain Tried to maintain social equity in access social equity in access to facilities and to facilities and treatments.treatments.

The U.S.:The U.S.:

Government subsidized Government subsidized employers, private employers, private hospitals, physicians, hospitals, physicians, and pharmaceuticalsand pharmaceuticals

Skyrocketing costs;Skyrocketing costs;

Shrinking access;Shrinking access;

Growing social inequityGrowing social inequity

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What’s next?What’s next?

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““It is now more than half a century since the It is now more than half a century since the first European country passed from debate first European country passed from debate on the advisability of social health insurance on the advisability of social health insurance – to actual legislation.”– to actual legislation.”

““There are now 22 countries, including all There are now 22 countries, including all the industrialized countries of the world the industrialized countries of the world except the United States, that have except the United States, that have compulsory health insurance . . ..”compulsory health insurance . . ..”

““The time is ripe for action."The time is ripe for action."

Dr. Barbara ArmstrongDr. Barbara ArmstrongTestimony to CongressTestimony to Congress

July 5, July 5, 19351935..

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Current Federal InitiativesCurrent Federal Initiatives

Block grant Medicaid and shift long-term Block grant Medicaid and shift long-term responsibility to statesresponsibility to states

Use of tax incentives to expand coverageUse of tax incentives to expand coverage

Medicare Rx coverageMedicare Rx coverage

Safety net for poorSafety net for poor

Will these steps help or hinder?Will these steps help or hinder?

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Our Future (according to Feds)Our Future (according to Feds)

Slower Medicare and private personal Slower Medicare and private personal health spending growthhealth spending growth

Higher Medicaid spending growth due to:Higher Medicaid spending growth due to:

Weak labor marketsWeak labor markets

Continued private health premium inflationContinued private health premium inflation

Private health insurance enrollment peaked Private health insurance enrollment peaked in 2000 during hot job market. Enrollment in 2000 during hot job market. Enrollment has since declinedhas since declined

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More Health Care InflationMore Health Care Inflation

Pharmaceutical products – few controlsPharmaceutical products – few controls

Labor market: nurses, techs, pharmacistsLabor market: nurses, techs, pharmacists

Hospital consolidation and market powerHospital consolidation and market power

New, innovative drugs, devices, New, innovative drugs, devices, proceduresprocedures

Elderly & those with disabilities living longerElderly & those with disabilities living longer

ResultResult: 2001-2012, healthcare share of : 2001-2012, healthcare share of GDP will increase from 14.1% to 17.7%GDP will increase from 14.1% to 17.7%

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Result – Uncontrolled Expenditures in U.S.Result – Uncontrolled Expenditures in U.S.

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Future (continued)Future (continued) Percent of people with private insurance will Percent of people with private insurance will

declinedecline

Shift to service jobs without coverageShift to service jobs without coverage

Slowing real per capita income growthSlowing real per capita income growth

Employers and insurers to shift more costs to Employers and insurers to shift more costs to employeesemployees

#1 Cause of bankruptcy – healthcare costs#1 Cause of bankruptcy – healthcare costs

ResultResult: Increase in uninsured AND : Increase in uninsured AND increase in increase in underunderinsuranceinsurance

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Long-Term ProspectsLong-Term Prospects

As costs escalate, coverage declines and As costs escalate, coverage declines and more people have no or catastrophic more people have no or catastrophic coverage, pressure will growcoverage, pressure will grow

But, groups getting some of the $1.5 But, groups getting some of the $1.5 trillion will resist systemic changestrillion will resist systemic changes

We tend to look for incremental solutionsWe tend to look for incremental solutions

Is Government the solution?Is Government the solution?

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Only one other time in our history did we Only one other time in our history did we move away from our focus on helping move away from our focus on helping only the deserving to supporting all. only the deserving to supporting all. During the Great Depression, when over During the Great Depression, when over 1/3 of people were unemployed and 1/3 of people were unemployed and nearly all Americans were suffering, we nearly all Americans were suffering, we recognized our connectedness to others recognized our connectedness to others and enacted programs to benefit all.and enacted programs to benefit all.

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““This seeking for a greater measure This seeking for a greater measure of welfare and happiness does not of welfare and happiness does not indicate a change in values. It is indicate a change in values. It is rather a return to values lost in the rather a return to values lost in the course of our economic course of our economic development and expansion . . ."development and expansion . . ."

Franklin D. Roosevelt: Message to Congress Franklin D. Roosevelt: Message to Congress regarding passage of Social Security Actregarding passage of Social Security Act

June 8, 1934June 8, 1934..

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CitationsCitations

1.1. Health Spending Projections For 2002–2012 Stephen Health Spending Projections For 2002–2012 Stephen Heffler, Sheila Smith, Sean Keehan, M. Kent Clemens, Heffler, Sheila Smith, Sean Keehan, M. Kent Clemens, Greg Won, and Mark Zezza in Health Affairs: 7 Greg Won, and Mark Zezza in Health Affairs: 7 February 2003. February 2003. http://www.healthaffairs.org/WebExclusives/Heffler_Web_Excl_020703.htmhttp://www.healthaffairs.org/WebExclusives/Heffler_Web_Excl_020703.htm

2.2. Scope of the Health Care Cost Challenge. Scope of the Health Care Cost Challenge. National Health Policy Audioconference, July 30, 2002. National Health Policy Audioconference, July 30, 2002. Professor James C. Robinson, University of California, Professor James C. Robinson, University of California, Berkeley. Berkeley. www.ehcca.com/presentations/healthpolicyaudio20020730/robinson.pdfwww.ehcca.com/presentations/healthpolicyaudio20020730/robinson.pdf

3.3. The Development of the American Health Care The Development of the American Health Care System. Lecture for Social Analysis 54, by Theda System. Lecture for Social Analysis 54, by Theda Skocpol. Skocpol. http://cg.harvard.edu/~sa54/lectures/PDF/lecture_4-15-02.pdfhttp://cg.harvard.edu/~sa54/lectures/PDF/lecture_4-15-02.pdf

D. Hanig02/18/2003

Health Policy Analysis Program University of Health Policy Analysis Program University of Washington School of Public Health and Community Washington School of Public Health and Community Medicine Medicine http://depts.washington.edu/hpap/http://depts.washington.edu/hpap/

http://cms.hhs.gov/about/history/milestonhttp://cms.hhs.gov/about/history/milestones.aspes.asp

http://www.fvcc.edu/academics/dept_paghttp://www.fvcc.edu/academics/dept_pages/human.services/poorlaws.htmes/human.services/poorlaws.htm

CitationsCitations