The American Health Care System

1. The American Health Care System Tom Schlesinger, Ph.D. Executive Consultant Gundersen Lutheran

2. How the current system came about

3. Medicine in early 20th Century Physician Patient

4. Medicine in the 1930s-1970sThird Party Payment Physician Problems Overconsumption Payer has no impact on supply and demand Payer Patient

5. “Provider” Payer Patient Medicine in the 1980s-1990sManaged Care Payers attempt to control costs by regulating the supply of health care.

6. Medicine in the 1980s-1990sManaged Care • Lower costs through: • Controlling supply Pre-authorizations • Provider incentives • Lower fees through exclusive agreements with providers • But patients have little ‘skin in the game.’

7. Decline of Managed Care 1990s • Restricted freedom of choice • Unpopular with many doctors and patients • Managed care loosened restrictions • End of ‘exclusive’ networks, pre-auths. • But with fewer restrictions, we also saw the return of higher prices

8. ?

9. Access Quality How else can we as a society try and control costs while improving quality? Cost

10. ACCESS

11. ACCESS Developing countries Developed countries

12. ACCESS U.S. only developed country w/o near universal coverage* US has over 15% uninsured - 45.7 million people Equal to populations of New York, Ohio, Pennsylvania

14. The New Legislation

15. Backdrop: The Appropriate Role of Government CONSERVATIVE LIBERAL Individual Responsibility Liberty/ Minimal government Free Market Emphasis on Equity/Fairness Role of Government to correct market failures

16. ACCESSNew Legislation Public option Individual mandate Subsidies for poor/small businesses Expansion of Medicaid Coverage Insurance Exchange Improve individual/sm business market Standard Packages

17. QUALITY

18. QUALITY • Among the 29 industrialized nations, the United States ranks: Infant mortality – ? Life Expectancy – ? 24th 19th

19. Why Do We Score Low on this rough indicators? U.S. health status varies based on race, income

20. QUALITY But in terms of: • Spread of advanced technology We rank near the top

21. Cost

22. Cost

23. But there are really cost problems 2 • We spend so much more than other developed countries • Health care costs continue to rise much more quickly than everything else

24. #1 More $ than other CountriesAs a % of GDP NPR

25. #2 Our Rate of Increase

26. Other important expenditures are being squeezed out.

27. What Drives the Rate of Increase? • Widespread use of expensive tests and treatments, much of it of marginal value • Rising prevalence of chronic disease, some estimates put it at 75% of health care costs - Much of this due to lifestyle choices

28. Where are the costs? The top-spending 5% of patients account for almost 50% of all costs!

29. The Politics of Healthcare

30. Not Government Take-over

31. Reform – Cost / No Bold Ideas • Prevention/wellness • HIT • Tax on Cadillac (Maserati) plans • Comparative effectiveness research • Pay for Performance • Accountable Care Organizations

32. How to Limit Cost Increases? • Efforts to increase access will ultimately fail unless we can address underlying cost problems? • Will Americans accept limits on how much health care they can receive?

33. Left Unsaid… • How will we control rising utilization of high technology? • Ration care?? • Set global budgets? Regulatory • Pass along more cost to pts? Market • Reduce marginal treatments?

34. Discussion • Much of the political debate centers around the nature of health insurance • Should it be a ‘market good’ purchased privately? • Or is it closer to a right of citizenship like K-12 education, and guaranteed by the government?

35. Under Republican Leadership the health care reforms were: Public Reporting (Measurement) Pay for Performance Consumerism