how to talk to business about health care reform november 3. 2007
TRANSCRIPT
How To Talk To Business About Health Care Reform
November 3. 2007
Major Concepts
We have no system coordinating access, cost containment or financing of services and care
Most health care costs are fixed Few using it at any one time but all of
us want it be there We are already paying the whole bill
which is more than enough to assure us all coverage for comprehensive care
The American health care system is neither healthy,
caring, nor a system…
Walter Cronkite
The Basics Rising health care costs are the root
of most of the problems in health care Most costs are fixed whether health
care is used or not Other countries cover everyone, have
more services, higher quality and live longer yet spend far less than we do
We are already paying the whole bill You can’t hold down costs without a
system!
Source: Centers for Medicare & Medicaid Services
ProjectedActual
$3,604 $3,910 $4,257$4,729
$5,485$6,280
$7,129$8,090
$9,173
$10,339
$11,660
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Per capitaexpenditures
National Health Spending:Per Person
Source: Centers for Medicare & Medicaid Services
ProjectedActual
PercentageGDP
5.2
7.2
9.1
12.813.8
15.416.0 16.5
20.0
1960 1970 1980 1990 2000 2002 2004 2006 2015
National Health Spending
as a share of Gross Domestic Product
$1,500
$1,309
$1,040
$449 $419
$207$97
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
GM Ford Chrysler BMW Mercedes Toyota (US) Toyota(Japan)
$/Car
Source: Modern Healthcare 10/24/05: 14
Japan Has a $1400 competitive advantage on every car they sell
Where is the money going?
Physician21%
Dental/O ther Professional
10%
Nursing home/home health
8%
Drugs/Medical Supplies
13%
Insurance Administration
7%
Investment7%
Govt.Health Activities3%
Hospital
$1.9 trillion
Source: Centers for Medicare&Medicaid Services 30%
U.S. Health Expenditures 2004
Physician21%
Dental/O ther Professional
10%
Nursing home/home health
8%
Drugs/Medical Supplies
13%
Insurance Administration
7%
Investment7%
Govt.Health Activities3%
Hospital
Source: Centers for Medicare&Medicaid Services
70% spent on services &infrastructure
30%
U.S. Health Expenditures 2004
As of 2004, the U.S. had:
13.5 million health care jobs
7,228 hospitals with a total of 955,768 staffed beds
210,939 physician’s offices
70,589 nursing homes
19,006 home care agencies
121,172 dentist’s offices
Source: National Center for Health Statistics
Health Care Infrastructure: Enough to serve all Americans
0
10
20
30
40
50
60
70
80
10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Source:Agency for Healthcare Research and QualityMEPS, 1999
Percentof health CareExpenditures
1% 1% 2% 4% 6%
13%
73%
0% 0% 0%
20% use 86% of the care
Most of the money is spent on a few people in any one year
Important Question:
• Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?
The cost of the infrastructure is there whether or not it is used (nurse, hospital)
Trying to save money by keeping patients out of the hospital is like trying to save money on schools by keeping kids home for the day
It is much more cost effective to invest in only what we need.
The Implications of Fixed costs
How do we PAY
for health care?
We have no state or national healthcare policy
We finance health care services on a wing and a prayer (no dedicated funds)
Financing of health care amounts to a shell game… no payer wants to pay the fixed costs of health care
When that fails we ask the public to step in (risk shift)
Health Care Financing
0
10
20
30
40
50
60
70
80
10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Source:Agency for Healthcare Research and QualityMEPS, 1999
Percentof health CareExpenditures
1% 1% 2% 4% 6%
13%
73%
0% 0% 0%
If you were in an insurance company CEO, who would you
want to insure?
0
10
20
30
40
50
60
70
80
10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Source:Agency for Healthcare Research and QualityMEPS, 1999
Percentof health CareExpenditures
1% 1% 2% 4% 6%
13%
73%
0% 0% 0%
20% use 86% of the care
Most of the money is spent on a few people in any one year
0
10
20
30
40
50
60
70
80
10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Source:Agency for Healthcare Research and QualityMEPS, 1999
Percentof health CareExpenditures
1% 1% 2% 4% 6%
13%
73%
0% 0% 0%
80% uses less than $1000 of care per year
If you were in an insurance company CEO, who would you
want to insure?
0%
500%
1000%
1500%
2000%
2500%
3000%
1970 1975 1980 1985 1990 1995 2000
Physicians Administrators
Administration is the Fastest Growing job in Health Care
Source: Bureau of Labor Statistics and NCHS
69%
31%Clinical Care
Administrative Costs
Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004
($2000 per person)
One-Third of Health Spending is Consumed by
Administration
Health Insurance Costs Keep Rising
Fewer Firms Are Offering Insurance…
47 MillionUninsured
THE COST OF CARE CREATES HEALTH PROBLEMS AS WELL AS
FINANCIAL PROBLEMS
In nearly 3 in 10 (29%) households, someone skips a medical treatment, cuts pills, or does not fill a prescription because of cost
Nearly 1 out of 4 (23%) Americans have problems paying medical bills
More than 1 in 5 (21%) Americans had an overdue medical bill at the time of a 2004 survey
1 million people experience medical bankruptcy each year
Health Care Costs Survey, USA Today/Kaiser Family Foundation/Harvard School of Public Health, August 2005; D. Himmelstein et al, Health Affairs, 2005
Source: Care Without Coverage;Institute of Medicine,2002
More than six times the number of soldiers killed in Iraq
Equal to a 747 jet crash every week
More than 6 times the number who died on September 11th
18,314 Die Every Year Due to Lack of Health Insurance
Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150
60%20%
20%
Taxpayers
Private employers
Individuals
{Medicare, Medicaid.Public employees,tax subsidies}
Most of Healthcare is already publicly financed
Lower wages
Private employers
pay for health insurance Higher prices
for goods
Out of pocket
Individual health insuranceTaxes for
Medicare and Medicaid
Property taxes
Health insurance for public employees
INDIVIDUAL
HOUSEHOLDS
In the End Individual Households Pay for All of Health Care
Do we really have the best health care in the world?
$5,711
$2,998 $3,005 $3,048 $2,876$2,249
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
U.S. Canada Germany France Australia Japan
OECD, 2006. Data for Japan is an estimate
$ Per person
We spend twice as much on health care as other nations
do
US Health Costs Rise Faster than Other Countries’ Costs
Source: Health United States 2005, Natl. Center for Health Statistics
0
2
4
6
8
10
12
14
16
18
1960 1970 1980 1990 1995 2000 2004
Hea
lth
Co
sts
as
Per
cen
t o
f G
NP US
Canada
France
Germany
Japan
UK
We pay higher taxes
$3,205
$3,155
$3,096
$2,694
$2,664
$2,413
$5,711U.S.
Germany
Sweden
France
Japan
Canada
UK
$ Per Capita
OECD, 2006 & Health Affairs 2002; 21(4): 99
$803
$624
$519$472
$403
$239
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
U.S. Australia Italy Canada Germany France
$/per capita
Source: OECD 2006Data are for 2004 or for most recent year availableFigures adjusted for purchasing power parity
Out of Pocket Costs are Higher
We are one of the Youngest Populations in the Industrialized
World
12.8
16.0 16.3
18.6 19.0
12.4
0
5
10
15
20
U.S. Canada U.K. France Germany Japan
OECD, 2006 (2003 Data)
Fewer Americans Smoke Compared with Other Nations
17.0
24.2 24.326.0
30.0
17.5
0
5
10
15
20
25
30
35
Canada U.S. Italy Germany U.K. Japan
% p
op
ula
tio
n s
mo
kin
g d
aily
OECD, 2006 (2003 Data)
We Drink Less Alcohol
7.4
10.211.2
14.0
8.47.6
0
2
4
6
8
10
12
14
16
Japan Canada U.S. Germany U.K. France
Lit
ers/
cap
ita
(15+
)
OECD, 2006 (2003 Data)
But… We Don’t Live as Long
78.5 78.679.4 79.7 79.9
81.8
77.5
70
75
80
85
U.S. U.K. Germany France Italy Canada Japan
OECD, 2006 (2003 Data)
6.9
5.34.7
4.1 4.1 3.9
3.1
0
1
2
3
4
5
6
7
U.S. Canada Australia Italy Germany France Sweden
OECD, 2006Data are for 2004 or more recent year available
More Babies Diein the U.S. in the first year of
life
Australia Canada England N.Z. U.S.
Breast Cancer 2nd 4th worst 3rd bestColorectal Cancer 2nd 3rd worst best 4thCervical Cancer best 3rd worst 4th 2ndChildhood Leukemia worst best 3rd 4th 2ndKidney Transplant 2nd best 3rd 3rd worstLiver Transplant 2nd best worst * 3rdNon-Hodgkin’s Lymphoma
best 4th worst 2nd 3rd
AMI, ages 20-84 best worst NA 2nd NAStroke, ages 20-84 2nd best NA worst NA
Source: Health Affairs Vol 23:#3 , 2004
Our Quality is Not the Best in the world Survival Rates for 5 Countries
Continuity of Care
52%57%
65% 65%
45%
0%
20%
40%
60%
80%
100%
U.S. NewZealand
Canada Australia U.K.
% w
ith
sam
e d
oct
or
> 5
yea
rs
Commonwealth Fund Survey, 1998
How hard is it to get care?
21
15 15 15
28
0
5
10
15
20
25
30
U.S. Canada New Zealand Australia U.K.
% f
ind
ing
it
dif
ficu
lt t
o g
et c
are
Commonwealth Fund Survey, 1998
We Do an Average Number of Bone Marrow
Transplantsper million people
4045
6871
61
0
10
20
30
40
50
60
70
80
U.K. Germany U.S. France Italy
OECD, 2006 (2003 Data)
We Do More Heart Transplants
per million people
3
5 5 5 5
7
0
1
2
3
4
5
6
7
8
9
10
U.K. France Germany Sweden Italy US
OECD, 2006 (2003 Data)
2931
34 35 3538
0
5
10
15
20
25
30
35
40
U.K. Australia U.S. Sweden Canada France
OECD, 2004
Transplants/million population
We are Average in Number of Renal
Transplants (2001/2002)
2.84.7 6
8.6 9.1 11
35.3
0
5
10
15
20
25
30
35
40
France Canada Germany U.S. Denmark Italy Japan
Source: OECD, 2005Note: data are for 2004 ,or most recent year available
MRIs/ million population
We are Average in the Number of
MRI Units
Procedures per 100,000 population
Source: OECD 2006Data are for 2004 or most recent year available
106125 126 133
146
182
0
20
40
60
80
100
120
140
160
180
200
Canada U.S. N.Z. Italy Australia U.K. Sweden
197
We Do Fewer Hip Replacements
Availability of expensive technology
Rising drug costs
Have similar demographics
Similar levels of service
Why are their costs so much lower?
Other Industrialized Countries
Administrative simplicityNegotiated pricesMore primary care and
preventionHealth planningGlobal budgets They have a system
Why costs are so much lower in other countries
Everyone included
Clear accountabilityPublic StewardshipBudget Process
Public Financing
Fundamental Features of a True Health Care System
Healthcare is regarded as a public good with investment in needed services for the whole population
The costs of these shared services are spread across the whole population
Pools money and pays for health care directly
Investment Model
Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing
Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care
Everyone has access to privately delivered, publicly financed health care services
Public can buy health insurance for services not covered by public plan.
Single Payer Health Care Systems
MedicareMedicare
MedicaidMedicaid
Payroll TaxPayroll Tax
Income TaxIncome Tax
Single-Payer Single-Payer Health Care Health Care
FundFund
$$$$$$
Financing Single-Payer
Negotiated formulary with physicians, global budget for hospitals, Negotiated formulary with physicians, global budget for hospitals, increased primary and preventive care, reduction in unnecessary increased primary and preventive care, reduction in unnecessary high-tech interventions, bulk purchasing of drugs and medical high-tech interventions, bulk purchasing of drugs and medical supplies = supplies =
long term cost control.long term cost control.
US National Health Insurance Act
A National Health Program
Universal - covers everyone Comprehensive - all needed care, no
co-pays Single, public payer No investor-owned HMOs, hospitals,
etc. Improved health planning Public accountability for quality and
cost, but minimal bureaucracy
SOME IMPLICATIONS OF MEDICARE FOR ALL
The same coverage for everyone: No means testing; coverage would not depend on
income, employment or age Medicaid would no be longer needed Hundreds of billions of dollars in
administrative costs would be saved Costs would be controlled through capital
planning and quality reviews conducted through the single insurer
NHI will save $5000 per capita by 2024
Per Capita Health Expenditures
0
5000
10000
15000
20000
25000
Dolla
rs
current system single payerSource: Lewin Group 2002 and Dean Baker, Center
$12114 vs 10405
$8828 vs 8059
$16623 vs 13434
$21411 vs 16480
How Might It Be Paid For?One Example:
Revenue Sources for Single Payer Program
Employer Payroll Tax (8.17%)
33%
Federal Government
(existing)34%
Other8%
State and Local Govt (existing)
10%
Employee Payroll Tax (3.78%)
15%
Note: Payroll tax on incomes above $7,000 and below $200,000 only. Source: Health Care for All Californians Act: Cost and Economic Impacts Analysis, The Lewis Group, January 19, 2005
“Would you prefer the current system or Universal Health
Insurance…”
62%
32%
6%
Washington Post/ABC News Poll, 10/20/03
Obstacles
Profit Politics Paranoia Perception
Universal healthcare system
Pros and cons of a true health care system
PROS• Everyone Covered• Better benefits• Effective Cost
Containment• Fairer financing• Stability of financing of
services• Coverage not linked to
employment
CONS• Problems are aired in
public
• Some will pay more than they are now
• Cost containment measures may cut availability of some services
Deborah Richter, MDDeborah Richter, MD802-371-7764PO Box 1467
Montpelier, VT 05601 www.vthca.org
Additional Slides
Hospital Coverage for All : Why ?
Hospital care accounts for 1/3 of total health spending
Hospital administrative costs account for the largest share of administrative costs
It is the biggest worry people have when they lack insurance
We are already paying the whole bill
Why is this politically feasible?
• It does something for everyone• It cuts premiums for everyone• It is easy to explain• People realize we are already
paying the whole bill anyway
““If done right, health care in America could be dramatically better If done right, health care in America could be dramatically better with true single-payer coverage.”with true single-payer coverage.”
--Ben Brewer, WSJ, April 18, 2006Ben Brewer, WSJ, April 18, 2006
““[single-payer] is an idea that's so easy to slam politically yet so [single-payer] is an idea that's so easy to slam politically yet so sensible for business that only Republicans can sell it! …it may take a sensible for business that only Republicans can sell it! …it may take a Republican President to bless the socialization of health spending we Republican President to bless the socialization of health spending we need.”need.”
-Matt Miller, Fortune, April 18, 2006-Matt Miller, Fortune, April 18, 2006
““Think, as a small business, how you could benefit from a single-payer Think, as a small business, how you could benefit from a single-payer system: you wouldn’t lose potential employees to larger firms that system: you wouldn’t lose potential employees to larger firms that offer more attractive health benefits; health insurance costs would offer more attractive health benefits; health insurance costs would cease to be a line item in your budget. A serious illness befalling you cease to be a line item in your budget. A serious illness befalling you or an employee wouldn’t be a company-wide financial crisis. You might or an employee wouldn’t be a company-wide financial crisis. You might even save money.”even save money.”
-Joseph Antony, CNBC / MSN Money, Winter 2003-Joseph Antony, CNBC / MSN Money, Winter 2003
CNBC / MSN MoneyCNBC / MSN Money
Half of Americans Live Where Population Is Too Low for Competition
Source: NEJM 1993;328:148
A town’s only hospital will not compete with itself
Variation in Medicare Spending:Some Regions Already Spend at Canadian Level
Institute of Medicine, WSJ - June 15, 2006
How do we know this will work?
• Every single other industrialized country in the world has some form of NHI– EVERY ONE
• Not a single one has gone to that system, found it to be worse, and switched back– NONE
Why have incremental reforms proven so ineffective in practice?
Billing and Insurance Costs Account For More Than 20% of
All Health Care Costs
BIR = Billing- and insurance-related costs; profit and marketing costs not includedSource: James G. Kahn et al, The Cost of Health Insurance Administration in California: Estimates for Insurers, Physicians, and Hospitals, Health Affairs, 2005
Private Insurers’ High Overhead
16.3%
19.9%
26.5%
3.1%
0%
10%
20%
30%
Medicare Non-Profit Blues CommercialCarriers
Investor-OwnedBlues
International Journal of Health Services 2005; 35(1): 64-90
Economies of Scale Saves Money
Savings Under Single Payer (2005)
178.2
50.5
0
20
40
60
80
100
120
140
160
180
200
Administrative Savings Bulk Buying Savings
$ b
illi
on
s
Source: Lewin Group 2002 and Dean Baker, Center for Economic and Policy Research,
THE MAJORITY OF AMERICANS HAVE PRIVATE INSURANCE …
Total Population
Private health insurance - Employer-provided
- Individual
Public health insurance
• Medicare
• Medicaid
Uninsured
Million % 288 100.0%
174 60.5 % 160 55.6% 14 4.9% 72 25.0% 41 14.2% 31 10.8% 42 14.6%
Source: National Center for Health Statistics, 2003
THE MAJORITY OF AMERICANS HAVE PRIVATE INSURANCE …
Source: National Center for Health Statistics, 2003
Private Insurance
60%Medicare 14%
Medicaid 11%
Uninsured 15%
…BUT IT PAYS MUCH LESS THAN HALF THE COST
2004Personal Health ExpendituresPrivate Funds
• Private health insurance - Self-funded plans - Insurance company plans• Out-of-pockets payments• Other private fundsPublic Funds*• Medicare• Medicaid• Other public expenditures
$ Billion %$ 1,753 100%$ 965 54%
$ 658 37% $340 19% $318 18%$ 236 13%$ 70 4%$ 789 46%$ 309 18%$ 293 17%$ 187 11%
* Does not include tax subsidy for private insurance. See Woolhandler & Himmelstein, HealthAffairs 2002Source: Centers for Medicare and Medicaid Services, 2006
v2 ways to save money financing care- we could make it easy and
just get rid of the sick peopleOr …just pay for the care that the
majority of us need right now