Medical Care Systems Worldwide Henderson 5 th Edition

1. Medical Care Systems WorldwideHenderson 5th Edition

2. International Comparisons • Slide 1: • US has higher incomes (Swiss, Canada close) but others 30% less • US spends a lot more by a wide margin • US MDs per person and hospital beds per person mid-range • LOS at bottom (w/ France) • Only Japan has more equipment person generally • US has more transplants, stents, CABGS than others • Slide 2: • Real per capita spending rose fastest in US in 1980s, slowed in 1990s but still faster, then rose to about average rate in 2000s. • Slides 3, 4 & 5: • Life expectancy and infant deaths relatively high in US. Lifestyle? • Better survival rates for cancers but middle range rate for heart attacks in US.

3. Key Statistics

4. Health Care SpendingAnnual Compound Growth Rates

5. Health Outcomes

6. Mortality Ratios - Cancer

7. AMI Outcomes

8. Canada • Single-payer concept • Each province is provided with Federal matching funds like Medicaid (currently 30% of total) • Everyone has access to hospital and medical services • No deductibles or copayments. • Patients have free choice of physicians and hospitals. • Private health insurance is not permitted for these basic hospital and medical services. • Hi-Technology funding region-wide limiting excess investment.

9. Canada limits costs by limiting fees and expenditures • Each province sets its own overall health budget and negotiates total budgets with each hospital, which they cannot exceed • The province also negotiates with the medical association uniform fees with all physicians, who are paid fee-for-service and who must accept the province’s fee as payment in full for their service. • In some provinces, physicians’ incomes are also subject to controls; once physicians’ revenues exceed a certain level, further billings are paid at 25 percent of their fee schedule.

10. Consequences of System? • Free care leads to excess demand. With spending and fee limits, lots of waiting time (see slide). • Investment in technology is stifled because government must plan and fund it • Tech in US occurs if it saves money or improves quality (& demand) • Hospital care is • Excessively long (no incentive for hospitals to provide outpatient care) • Not oriented to providing new services (no extra funds for new staff, equipment, etc.) • Wealthier Canadians (10% of population) purchase travel insurance that covers them outside of Canada (i.e., US) • Canadian Supreme Court has ruled ban on private insurance unconstitutional due to long waits in Quebec province.

11. Exhibit 32.5 Canadian Hospital Waiting Lists: Total Expected Waiting Time from Referral by General Practitioner to Treatment, by Specialty, 2009

12. France • Single-payer concept • (83% covered by Natl HI plan) & rest by special plans for students, govt, agriculture and freelancer workers) • Financed by payroll and income taxes that total nearly 20% of income) • Substantial copays for all but the poor • 25% for MDs, 20% for hospitals, 30% for lab tests and dental and 35-65% for covered drugs • 91% purchase supplementary insurance to pay copays which costs 2.5% of income • In practice, MDs fees tightly regulated and fee-for-service • MDs average just 2x what average worker makes

13. Hospitals: • Most (72%) beds are in public hospitals operating under global budgets • Private for-profit clinics (22%) offer short-stay care like elective surgeries and maternity for per-diem reimbursement • Consequences • MD incomes very low • Few waits but access to new tech very limited (see slide #2 above)

14. Germany • 92% of population has coverage from 1 of 1100 “sickness funds” organized by province • All individuals must have insurance either thru sickness funds or private insurance. Latter mostly civil servants who receive better insurance paid by their employers. • 10% buy supplementary coverage for sickness fund insurance • Premiums paid by payroll deduction averaging 15% of worker’s pay (half from employer) • Low-wage and unemployed get subsidies, retirees pay out of their pension checks. • Copays are low for MDs, hospitals, drugs and preventive screening • Dental copays are high (50-100%)

15. Cost-control mechanisms • Hospital MDs on salary, non-hospital MDs fee-for-service, can’t be both. • Volume penalties for nonhospital MDs – once quarterly budget limits for office visits, lab tests, referrals, etc. are reached fees are cut proportional to keep spending within target. Penalties are global as well as individual. • Hospitals receive DRGs for treatment and capital spending funded by state. • Consequences: • Cost control has been effective so far in limiting spending increases • Hospital admit rates and LOS are much higher than in US, no incentive to cut (see slide #1) • Primary care MD income is low (only 2.7 times average worker) and they never know what they’re going to be paid due to volume penalties • Technology investment is low (state controlled) : see slide #2 • System lacks incentive to rationally contain costs & improve quality.

16. Swiss System • Individual mandate • Generous coverage in basic plan • 40% purchase supplementary policies • Pay community rated (by age/sex) premiums within canton • Subsidies after 8-10% of income – 45% get subsidies • Approx 20% of premiums subsidized • Choice of 6 deductibles - $240 to $1,200 and then 10% copay • Premium savings of 40% for high deductible plan ($2,388 for low plan)

17. Private Non-Profit Managed Care Insurers (90) • Plans that suffer adverse selection (by age-sex) draw subsidies from insurer fund • Plans are either staff model HMO or Primary Care Gatekeeper models • Insurers compete for enrollees • Provider Payments • MDs paid fee-for-service rates negotiated between canton medical association and insurer group • Hospitals paid DRGs, with 50% from insurers/50% from canton. Govt funds 80% of capital investment. • Public-private spending breakdown similar to US (40/60) • High spending levels, second to US

18. Lessons • It is difficult to achieve universal coverage. Even with mandatory participation, most systems leave 1-2 percent of the population uncovered. • Uncontrolled health care spending growth is a universal problem. • Near universal access to high-quality medical care is possible without strict reliance on a single-payer system or a pure public sector approach. • Price-conscious behavior, with the use of deductibles and copays, can be encouraged with little impact on health. • Free access to health care with no out-of-pocket requirements diminishes personal responsibility, leaving no demand-side constraints often resulting in limited availability of technology and waiting lists for services.

19. Lessons • People who cannot afford to purchase health insurance on their own can still have access to essential services within a system of subsidized premiums.