NATIONAL HEALTH EXPENDITURES

1. NATIONAL HEALTH EXPENDITURES

2. HEALTH CARE SPENDING IN THE UNITED STATES IS PROJECTED TO REACH $2.9 TRILLION IN 2009, • 4 TRILLION IN 2015, UP FROM $1.3 TRILLION IN 2000. • CURRENT SPENDING ABOUT 2 TRILLION DOLLARS.

4. Source of Dollars for National Health Spending

5. Dollars spent by percentage

6. Where the money goes - percentage

7. Where the money goes by dollars

10. Comparison of NHE/GDP

11. Percentage of National Health Spending

12. International Comparison • 2005 – US spent 16% of GDP on Health • Germany spent 10.7% of GDP on Health • Canada spent 9.7 % of GDP on Health

13. AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT (GDP), HEALTH CARE SPENDING IS EXPECTED TO REACH 17 PERCENT IN 2011, UP FROM 13.2 PERCENT IN 2000. IT IS EXPECTED TO REACH 20 % IN 2020

14. IT IS PROJECTED THAT FOR THE ENTIRE 2001-2009 PERIOD, HEALTH SPENDING IS EXPECTED TO GROW AT AN AVERAGE ANNUAL RATE OF 7.3 PERCENT.

15. THE GROWTH IN PRESCRIPTION DRUG SPENDING IS EXPECTED TO DECELERATE FROM 17.3 PERCENT IN 2000 TO 10.1 PERCENT IN 2011. PRESCRIPTION DRUGS WILL STILL REMAIN THE FASTEST GROWING HEALTH SECTOR.

16. NURSING HOME SPENDING IS PROJECTED TO ACCELERATE MORE RAPIDLY THAN PREVIOUSLY ANTICIPATED.

17. Insurance Premiums for employer-based Health Insurance rose 7.7% in 2006. • Small employers – 8.8% • Business with less than 24 employees – 10.5%

18. Since 2000 employment based premiums have increased by 87% • In contrast, inflation over the same period accumulated at 18% • Health Insurance Premiums are the fastest growing component for employers and may overtake profits by 2008.

19. The average employee contribution to company based health insurance has increased 143% since 2000. • Average out-of-pocket costs for co-payments and deductibles have increased by 115% since 2000.

20. MEDICAL INFLATION WILL INCREASE.

21. COMMERCIAL MANAGED CARE WILL SEE SLOWER MEMBERSHIP GROWTH AND FEWER MEDICAL CONTROLS WHICH WILL CONTRIBUTE TO HIGHER HEALTH CARE COSTS.

22. GOVERNMENT SPENDING ON HEALTH CARE WILL SLOW SUBSTANTIALLY DUE TO THE BALANCED BUDGET ACT OF 1997 (BBA). (THE BBA INCLUDES SIGNIFICANT REDUCTIONS IN PAYMENTS FOR HOSPITAL INPATIENT SERVICES, HOME HEALTH, OUTPATIENT AND SKILLED NURSING SPENDING.

23. GOVERNMENT SPENDING WILL ACCELERATE AS AGING BABY BOOMERS DEMAND MORE GOVERNMENT SUPPORT FOR THEIR CARE.

24. AN EXAMPLE…. • GENERAL MOTORS HEALTH PLAN FOR THEIR RETIREES AND THE UNITED AUTO WORKERS.

25. IMPLICATIONS FOR THE FUTURE

26. THE PRIVATE SECTOR’S ABILITY TO HOLD DOWN HEALTH CARE COSTS THROUGH MANAGED CARE HAS REACHED A LIMIT.

27. COST SAVINGS FROM MANAGED CARE RESULTED PRIMARILY FROM LOWER PAYMENTS TO PROVIDERS, NOT BY IMPROVING HEALTH STATUS AND REDUCING UTILIZATION.

28. FINANCIAL STRUGGLES EXPERIENCED BY HMOS WILL RESULT IN HIGH COSTS FOR HEALTH CARE COVERAGE.

29. CONTAINING DRUG COSTS WILL BE ONE OF THE GREATEST CHALLENGES THE HEALTH CARE SYSTEM WILL FACE.

30. PRESCRIPTION DRUG COSTS WILL CONTINUE TO ESCALATE, FUELED BY DIRECT MARKETING TO CONSUMERS AND NEW DRUGS TO IMPROVE LIFESTYLE AND ADDRESS CHRONIC CONDITIONS OF AN AGING POPULATION.

31. THE NEW MEDICARE PRESCRIPTION PLAN HAS BEEN INTRODUCED TO THE PUBLIC WITH MIXED REVIEWS. THE COST FIGURES PROVIDED ARE SUSPECT. A LARGE QUESTION REMAINS ABOUT SENIORS UNDERSTANDING THE NEW SYSTEM AND LEARNING HOW TO USE IT.

32. RISING HEALTH CARE COSTS REDUCE THE AFFORDABILITY OF HEALTH CARE COVERAGE FOR ALL CONSUMERS.

33. EMPLOYERS WILL SHIFT MORE OF THE COST OF HEALTH CARE TO EMPLOYEES SINCE EMPLOYEES ABILITY TO NEGOTIATE LOWER PRICES WITH MANAGED CARE COMPANIES WILL BE LIMITED IN LIGHT OF THE FINANCIAL LOSSES INCURRED BY THE PLANS.

34. SOME EMPLOYERS WILL DECIDE NOT TO OFFER COVERAGE. THE END RESULT WILL BE MORE UNINSURED CITIZENS.

35. IMPACT OF RISING HEALTH CARE COSTS • PRIMARY REASON PEOPLE DO NOT HAVE HEALTH INSURANCE. • 23% OF THE INSURED REPORT THAT LIFESTYLES HAVE BEEN DRAMATICALLY CHANGED DUE TO MEDICAL BILLS.

36. ONE IN FOUR AMERICANS HAVE HAD DIFFICULTY IN PAYING FOR MEDICAL CARE • 50 % OF ALL BANCRUPTCY FILINGS PARTIALLY RESULTANT FROM MEDICAL EXPENSES

37. IF ONE MEMBER OF A FAMILY IS UNINSURED AND HAS MEDICAL BILLS, IT CAN EFFECT THE ECONOMIC STABILITY OF THE WHOLE FAMILY

38. Final note: • Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste, and fraud.

39. End of Presentation for 6th Period Lecture for October 1st • QUESTIONS? • DISCUSSION?

40. MEDICARE IN DETAIL

41. MEDICARE IS A FEDERAL HEALTH INSURANCE PROGRAM WHICH PROVIDES MEDICAL COVERAGE FOR PEOPLE 65 AND OLDER, FOR CERTAIN DISABLED PEOPLE, AND SOME PEOPLE WITH END-STATE RENAL DISEASE.

42. THE PROGRAM BEGAN IN JULY OF 1966 AND WAS ESTABLISHED BY CONGRESS THROUGH TITLE XVIII OF THE FEDERAL SOCIAL SECURITY ACT.

43. MEDICARE IS MANAGED BY THE CENTERS FOR MEDICARE AND MEDICAID SUPPORT(FORMERLY KNOWN AS HCFA), WHICH IS A BRANCH OF THE HEALTH AND HUMAN SERVICES (HHS) OF THE U.S. FEDERAL GOVERNMENT.

44. HOW BIG IS THE MEDICARE PROGRAM?

45. IN 2005…MEDICARE • PROCESSED MORE THAN 900 MILLION CLAIMS

46. PAID OUT MORE THAN $330 BILLION IN BENEFITS • HAD 42.5 MILLION BENEFICIARIES RECEIVING BENEFITS

47. WHAT IS MEDICARE PART A?

48. PART A OF THE MEDICARE PROGRAM IS HOSPITAL INSURANCE. THIS PROGRAM IS FINANCED BY:

49. TAXES PAID BY EMPLOYERS AND EMPLOYEES THROUGH THE FICA MECHANISM. • SELF-EMPLOYED INDIVIDUAL CONTRIBUTIONS.

50. RAILROAD WORKERS, THEIR EMPLOYERS THROUGH THE RRA. • ORGANIZATIONS WHICH ADMINISTER MEDICARE PART A ARE CALLED “FISCAL INTERMEDIARIES”