Objectives Review Economic Trends and Consumer Satisfaction

Objectives • Review Economic Trends and Consumer Satisfaction • Review the components of Health Care • Compare Health Insurance Plans

Table 1.2 National Health Expenditures Per Capita, 1986-2010 National health spending per capita is projected to increase rapidly over the next decade. Actual Projected Calendar Year Source: CMS, Office of the Actuary, National Health Statistics Group.

Table 1.3 Personal Health Care Expenditures by Source of Funds: Selected Years 1960-2000 Over the last several decades, the public sector share of health spending has increased, while the share from out-of-pocket spending has declined. Dollars in Billions $63.1 $214.5 $23.3 $1,130.4 $609.3 17.2% 22.5% 27.1% 39.7% 5.0% 5.0% 55.2% 4.3% 2.8% 34.6% 33.4% 28.3% 22.3% 2.0% 7.3% 11.9% 10.0% 21.4% 15.7% 19.2% 16.9% 17.6% 11.5% 21.4% 16.8% 11.5% 11.4% 8.0% Other Public Medicare Total Medicaid, SCHIP expansion and SCHIP Out-of-Pocket Other Private Private Health Insurance Total Public Total Private Source: CMS, Office of the Actuary, National Health Statistics Group.

Table 1.4 Sources of Health Insurance Coverage for the Under 65 Population, 1980-2000 Over the last two decades, private coverage has declined, public coverage has stayed about the same, and the uninsured have grown. Any Private 74% ESI 69% Uninsured 16% Any Government 14% 9% Medicaid Notes: ESI - Employer Sponsored Insurance. Any Private includes ESI and individually purchased insurance. Any government includes Medicare for the disabled population. Source: Tabulations of the March Current Population Survey files by Actuarial Research Corporation, incorporating their historical adjustments.

Table 1.5 Distribution of Personal Health Care Expenditures by Type of Service, 1960-2000 The share of health spending on home health and nursing homes has grown. Physician share has stayed about the same while the hospital share grew and then declined. 47.3% 41.7% 39.3% 36.5% 25.9% 25.3% 22.9% 21.9% 22.5% Service 15.8% 16.4% 15.2% 11.4% 10.8% 8.6% 8.2% 8.2% 6.6% 5.6% 3.6% 2.9% 2.1% 1.1% Percent 0.2% Source: CMS, Office of the Actuary, National Health Statistics Group.

Table 1.8 Concentration of Health Spending, 1980-1996 Health spending remains highly concentrated on a small percentage of people. The top1% of people account for more than a quarter of all health spending. Percent of People Note: Data for 1980 are from the National Medical Care Utilization and Expenditure Survey (NMCUES); for 1987, from the 1987 National Medical Expenditure Survey (NMES); and for 1996, from the 1996 National Medical Expenditure Panel Survey (MEPS). Source: Berk, Mark and Alan Monheit, “The Concentration of Health Care Expenditures, Revisited,” Health Affairs March/April 2001.

Table 1.12 Number of People Employed in Health Care, 1985-2001 Number of people employed in health is growing. Health Services Employment as a % of Non-Farm Private Sector Employment 7.8% 8.6% 9.1% 9.4% 9.5% 9.5% 9.4% 9.5% 9.4% 9.3% 9.2% 9.1% 9.3% Note: Not seasonally adjusted. Source: Bureau of Labor Statistics, data extracted from web site at data.bls.gov/labjava/outside.jsp?survey=ee. Trends and Indicators in the Changing Health Care Marketplace, 2002 – Chartbook.

Table 1.13 Health Care Employment by Occupation, 1983-2000 Health care employment growth exceeded that of the general economy. Percent Change 1990-02 32.0% -75.4% 28.7% 14.8% 7.5% 39.4% 61.9% 56.5% 48.6% 23.8% 16.9% 21.6% 26.6% -15.2% 30.4% 5.0% 24.6% 95.3% 332.2% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8% Total Employment Source: Dept. of Labor, Bureau of Labor Statistics. Current Population Survey.

Table 1.16 HMO Enrollment by Ownership Status, 1981-2000 The proportion of HMO enrollees in for-profit plans grew over the past decade. Total Enrollment (in millions) 10.27 18.89 32.49 42.07 72.23 78.78 80.81 79.66 Note: HMO enrollment includes enrollees in both traditional HMOs and point-of-service (POS) plans through: group/commercial plans, Medicare, Medicaid, the Federal Employees Health Benefits Program, direct pay plans, supplemental Medicare plans, and unidentified HMO products. Source: Trends & Indicators in the Changing Health Care Marketplace, 2002 -- Chartbook.

Table 1.17 Concentration of Managed Care Enrollment, 1988-2000 Two-thirds of managed care enrollees are enrolled in the nation’s 10 largestmanaged care firms. Note: The largest national managed care firms include Blue Cross and Blue Shield plans, Aetna US Healthcare, Kaiser Permanente, United Health, and PacifiCare. HMO enrollment includes enrollees in both traditional HMOs and point of service plans. Source: Trends & Indicators in the Changing Health Care Marketplace, 2002 – Chartbook.

Table 1.18 Managed Care Enrollment by Type of Plan, 1984-2000 Mixed model HMO plans have shown rapid growth. 80.1 63.3 38.8 31.4 15.1 Mixed IPA Network Group Staff NA 19.5% 23.3% 43.6% 13.6% NA 43.0% 18.0% 25.4% 13.6% 17.3% 41.7% 10.0% 24.8% 6.2% 36.4% 43.4% 5.3% 13.7% 1.2% 40.0% 41.9% 8.9% 8.8% 0.4% Source: Trends & Indicators in the Changing Health Care Marketplace, 2002 – Chartbook.

Table 1.21 Out-of-Pocket Spending for Health Care as a Percent of Income by Age and Income Level, 2000 Those over 65 and those with incomes under $20,000 spend a higher percentage of their income on health than other groups. By Age Group By Income Level Age Group Income Level Source: Dept. of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey.

Table 1.22 Growth in the Overall Consumer Price Index (CPI) and Medical-Specific Consumer Price Index (MCPI), 1993-2001 Medical prices have risen faster than overall consumer prices. Source: Dept. of Labor, the Bureau of Labor Statistics.

Almost 45 million Americans were uninsured in 2003 (44.7 million under the age of 65)—growing by 1.4 million from the previous year and a total of over 5 million since 2000. Both adults and children experienced significant decreases in the share with job-based coverage. The proportion of children with employer-sponsored insurance dropped from 62% in 2000 to 57% by 2003. The 2001 recession, brief as it was, triggered a sharp downtick in job-based coverage and it continued to affect health insurance coverage even in 2003, as employment was slow to recover, job opportunities shifted, and family incomes declined. “Health Insurance Coverage in America – Chartbook 2003” Kaiaser

Recent Findings on Public Attitudes Towards Patient’s Rights and Managed Care Kaiser Foundation 2001

Rank the following organizations, from highest to lowest, according the statement: “I have a favorable opinion of” • Airlines • Banks • Doctors • Health Insurance Companies • HMOs • Hospitals • Oil Companies • Pharmaceutical companies • Tobacco companies

In general, do you think managed care health plans are doing a good job or a bad job in serving health care consumers?

In the past few years have you or someone you know: • Needed more information about how the health plan operates in order to choose among different plans? • Had difficulty getting a health plan to pay for an emergency room bill? • Had difficulty getting permission from a health plan or regular doctor to see a medical specialist? • Wanted to file an appeal to an independent reviewer when a health plan denied coverage for a particular medical treatment? • Had difficulty getting permission from a health plan or regular doctor to see a gynecologist? • Wanted to sue a health plan for malpractice?

Do you think this issue is very important for the President and the Congress to deal with? • Making prescription drugs more affordable for people age 65 and over • Making Medicare more financially sound for future generations • Helping families with the cost of caring for an elderly or disabled family member who needed long-term care • Protecting patient’s rights in HMOs and managed care plans • Increasing the number of Americans covered by health insurance Which one of these would you say is the most important issue?

Primary Care • Preventive and Treatment measures • Often provided by a physician or nurse practitioner

Secondary Care • Services available both in community hospitals and physicians’ offices • Surgeries • Specialists, e.g.. Cardiologists, GI, Derm

Tertiary Care • Highly specialized care • Often at large medical centers • Transplants • Open-heart surgery • Neonatal wards • Chemo- & Radiotherapy

Consumers • US Population • Minors, Aged, Disabled, Others • Employed, Not-employed, working poor • Family • Caregivers • Representatives of Consumers • Activists • Associations - AARP

Providers of Care • Physicians • Nurses, PAs, Others (SW, Pharm, RDs, PTs) • Diagnostic and Laboratory Technicians • Associations / Trade Organizations

Institutions that Provide Care • Hospitals, Medical Centers • Specialty Clinics • Rehab • Drug / Substance Abuse • Long-term care facilities • Associations • American Hospital Association

Government : Federal, State, Local • Regulatory Role • Political Process - set regulations, respond to electorate • Reimbursement • Medicare, Medicaid (States) • Public Health System

Insurance Groups • Blues • Associations / Trade Organizations

Support Industries • Pharmaceutical Companies and Distributors • Medical Devices • Medical Equipment

Employers • Economists • Judiciary; Legal Support • Information / Technology Industry • WebMD; • Higher Education

Concept Checks: Define • HMO • PPO • Conventional Fee for Service • Point of Service (POS) How do they differ? Be prepared to describe the strengths and weaknesses of each.

Health Insurance Plans • Fee-for-Service • Health Maintenance Organizations (HMO) • Individual Practice Association (IPA) Model HMO • Preferred Provider Organizations (PPO) • Medicare • Medicaid • Disability Insurance • Hospital Indemnity Insurance • Long Term Care

Fee-for-Service • Client may visit any physician, use any hospital • Pay a premium each month • Deductible; after deductible provide a copay • Patient may need to submit bill • Limited services • Preventive Care • Experimental; Home Health Care; Long-term care; PT;

Health Maintenance Organization (HMO) • Pay a premium each month • Receive ‘complete’ care • ‘Primary Care Doctor’ you must select • Some preventive services covered, such as well baby check ups, immunizations • Care must be provided by HMO’s practice group • Cannot self-refer to a specialist • No claim forms to fill out / ● Small copay

Preferred Provider Organizations (PPO) • Combination of a fee-for-service and HMO • Limits choice of doctors / hospitals • Has arrangements with doctors, hospitals, and other providers of care who have agreed to accept lower fees from the insurer for their services. • Copay • More expensive outside the network

Checkup on Health Insurance Choices Which Type Is Right for You? For each group, choose the statement 1 or 2 that best describes how you feel: • Having complete freedom to choose doctors and hospitals is the most important thing to me in a health plan, even if it costs more. • Holding down my costs is the most important thing to me, even if it means limiting some of my choices. • I travel a lot or have children that live away from me and we may need to see doctors in other parts of the country. • I do not travel a lot and almost all care for my family will be needed in our local area.

Which Type Is Right for You? For each group, choose the statement 1 or 2 that best describes how you feel: • I don't mind a health insurance plan that includes filling out forms or keeping receipts and sending them in for payment. • I prefer not to fill out forms or keep receipts. I want most of my care covered without a lot of paperwork. • In addition to my premiums, I am willing to pay for the cost of routine and preventive care, such as office visits, checkups, and shots. I also like knowing that I can get an appointment for these services when I want one.

Which Type Is Right for You? For each group, choose the statement 1 or 2 that best describes how you feel: • I want a health plan that includes routine and preventive care. I don't mind if I have to wait for these services to be scheduled for an available appointment with my doctor. • If I need to see a specialist, I probably will ask my doctor for a recommendation, but I want to decide whom to go to and when. I don't want to have to see my primary care doctor each time before I can see a specialist. • I don't mind if my primary care doctor must refer me to specialists. If my doctor doesn't think I need special services, that is fine with me.

Which Type Is Right for You? If your answers are mostly 1: You want to make your own health care choices, even if it costs you more and takes more paperwork. Fee-for-service may be the best plan for you. If your answers are mostly 2: You are willing to give up some choices to hold down your medical costs. You also want help in managing your care. Consider a health maintenance organization. If your answers are some 1's and some 2's: You might want to look for a plan such as a preferred provider organization that combines some of the features of fee-for-service and a health maintenance organization.

Which Type Is Right for You? The differences among fee-for-service plans, HMOs, and PPOs are not as clear-cut as they once were. • Fee-for-service plans have adopted some activities used by HMOs and PPOs to control the use of medical services. • And HMOs and PPOs are offering more freedom to choose doctors, the way fee-for-service plans do.

Concept Checks: Define • What are the distinctions between Medicare and Medicaid? • Where would you find information on the inclusion of nutrition services under Medicare and/or Medicaid?

Medicare • Center for Medicare and Medicaid Services (CMS) (formerly HCFA) • Largest health insurance program • 40 million Americans • Eligibility • 65 years of age or older • Some disable persons < 65 • End-Stage Renal Disease with dialysis or transplant

Medicare • Part A • Hospital Insurance • Funded by SS • Part B • Supplemental Medical Insurance • Doctor appointments • Other services and supplies • Funded by General Revenues and Premiums

Medicaid • Title XIX of the Social Security Act - law in 1965 • Administered by the States

Objectives Review Economic Trends and Consumer Satisfaction