610 likes | 719 Views
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
E N D
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
Paying for the Boomer’s Healthcare: SHOW ME THE MONEY! 4th Annual Health Policy Forum St. Louis, Missouri October 19, 2006 Signature Healthcare Foundation
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ PAY ME NOW$ $ $ $$ $ $$ $ $ $OR PAY ME LATER $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ ISSUES IN$ $ $ $ $ $ $ $ $ HEALTH CARE SPENDING$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Boomer John Rother Director Policy & Strategy
Boomer John Rother Director Policy & Strategy
Changing Demographics Age 65+ population 4% of nation 1906
Changing Demographics Age 65+ population has tripled (12%) TODAY
Changing Demographics Age 65+ population will double again 2030
Boomer People over 65 1900- 1 in 25 2006- 1 in 8 2030- 1 in 5 We are here 2006 50+ 65+ 85+
As a result of size and longevity, MORE boomers will draw entitlements LONGER
Will these changes have a profound, “unsustainable” impact on the federal budget by pushing a rapid growth in federal spending for health and retirement benefits for older Americans?
How do we measure entitlement spending? Standard measure to gauge size and growth of entitlement spending is its ratio in any year to the Gross Domestic Product (GDP)
How do we define “unsustainable”? For any path of spending and revenues to be sustainable, the resulting debt must eventually grow no faster than the economy. Congressional Budget Office, The Long-Term Budgetary pressures and Policy Options, March 1997
What are the categories of entitlements? The top 10 . . .
The Categories of Entitlements Projected Veterans Family Support Earned Income Tax Credit
2005 Entitlement Spending Family Support Food Stamps Unemployment Compensation Veterans Benefits SSI Earned Income Tax Credit Federal Retirement – civilian and military Medicaid Medicare Social Security
2005 Tax Expenditures The hidden health entitlement 15% Employer-provided Health Insurance
What are the drivers of entitlement spending? Demography misses much of the story.
No entitlement growth in 25 yrs Projected
. . . With one exception, Medicare Projected
Does aging explain the rapid growth in federal health spending? Interestingly, it does not . . .
Per person Medicare expenditures do not rise with age Mean Expenditures Per Person for Acute and Long-Term Care From Age 65 Until Death by Age at Death Medicare
Costs for total Medicare program Projections Billions Source: CMS, National Health Accounts Overall Medicare Costs
Costs for total Medicare program Costs for National Health Expenditures Projections Billions Source: CMS, National Health Accounts Overall Medicare Costs compared to Overall Health Costs
Is the rise in national health spending due to health entitlements? No . . .
Medicare spending increased less than private sector ✔ ✔ ✔ ✔ ✔
What’s driving up health costs?? Healthcare by service sectors . . .
If costs rose equally in every sector, the distribution of increases by sector of total National Health Expenditures 1995 to 2004 would look like this:
Health cost increases in 10 years (1995-04) due to 4 major sectors: 27% Administration & Net Cost of Private Ins 9% Hospital Care Source: Calculations by PPI AARP using Centers for Medicare & Medicaid Services, Office of the Actuary, CY 1960-2004 National Health Expenditure Data Physician & Clinical Services 15% Rx Drugs 21%
What’s driving up health costs?? Economic, demographic, and technological factors . . .
Analysis of Cost Growth 2000-04 Intensity, Volume, Technological Change & other residual factors Population Growth Source: National Health Expenditures Accounts: Definitions, Sources, and Methods used in the NHEA 2004, CMS Medical Inflation above general inflation General Inflation
What’s driving up health costs?? Intensity and volume . . .
End-of-Life Variation in Care . . . . Ratio to Minneapolis . Geography & the Debate Over Medicare Reform, Health Affairs 13 Feb 2003 Wennberg, Fisher, Skinner
What’s driving up health costs?? Crucial to get control of the management of chronic care . . .
Chronic Care Management Key to a Large Segment of Cost A back-of-the-envelope representation . . . 100% 30% of costs for 1% of people 80 60 % Health Care Dollars Spent 10% of costs for 70% of people 40 20 0% 20% 40% 60% 80% 100% Percent of Population
Highest healthcare costs comewith multiple conditions, not age Average healthcare expenditures for non-institutionalized population, by age and severity of chronic conditions, disability, and functional limitations Source: Partnership for Solutions, Johns Hopkins University analysis of Medical Expenditure Panel Survey 1996, unpublished data, August 2001. with functional limits
What about more beneficiary cost-sharing?? • First, that does nothing to contain costs. • Second, in terms of Medicare, the patients are already bearing about as large a burden as possible.
Average Medicare out-of-pocketcosts take 23% of income Average Out-of-Pocket Health Care Spending 2004 Under 135% Poverty People in “Fair” or “Poor” health Women 85+ only ALL 65+ Source: AARP Public Policy Institute projections using Medicare Benefits Model, v5.306. Figures for non-institutionalized Medicare beneficiaries only. “Out-of-Pocket” includes payments for Medicare cost-sharing, Part B & private insurance premiums, physician balance billing, and goods & services not covered by Medicare. It excludes cost of home care and long-term nursing home care.
Are we sure expenditures are used wisely? Looking at one of the four big cost growth areas – prescription drugs . . . Pharmaceutical prices are rising at more than double the rate of inflation
Average Manufacturers’ Price Increases far outpacing Inflation 40% Years refer to change from previous year. Source: AARP Public Policy Institute Average Percent Change Inflation 17%
Distribution of Gross Revenues for U.S. Drug Companies by Expense Type Marketing, Advertising, & Administrative Costs Taxes & Other Costs $6 Net Profit Research & Development Cost of Production Source: Compiled by the PRIME Institute, University of Minnesota from data found in DHHS, CMS, Jan 2003, and from Bloomberg, analysts models, & corporate annual reports. Presented by AARP Rx Watchdog Forum February 2005
What about physician services? Looking at the Medicare spending for physician payments 2000-2005 . . .
Costs for physician FFS up an average of almost 10% per year 2000-2005 Source 2006 Annual Report of the Board of Trustees of the Medicare Trust Funds Medicare Spending (dollars in billions) NOTE: Dollars do not include beneficiary co-pays
And what happens if we continue, business as usual? With healthcare growth unchecked (and small Social Security fixes ignored), here is the picture: