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A Perfect Storm - - A Modest Proposal

Paying for Health Care 2007. A Perfect Storm - - A Modest Proposal. Richard N. Pierson Jr. MD. Part I. The Perfect Storm. Escalation of Healthcare Costs: Un- & under-insured patients Costs of medical care The Insurance Death Spiral Health System Failures

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A Perfect Storm - - A Modest Proposal

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  1. Paying for Health Care 2007 A Perfect Storm- -A Modest Proposal Richard N. Pierson Jr.MD

  2. Part I The Perfect Storm • Escalation of Healthcare Costs: • Un- & under-insured patients • Costs of medical care • The Insurance Death Spiral • Health System Failures • Bankruptcies, 50% are “medical” • Factory closures: GM, Ford • Medicaid reductions (Bush ’06)

  3. COST SHIFTING: NO END IN SIGHTThe “Insurance Death Spiral” Get Care More Un, Under-insured Bills not paid Higher premiums Fixed costs not met Cost shift Deficit!

  4. Number of Uninsured Americans ( Millions ) 45 40 35 30 25 Source: U.S. Census Bureau 20 1980 1985 1990 1995 2000

  5. Who are the Uninsured? • Most are in working families (80%) However … • Some not offered Insurance (Walmart ...), • Some not covered (preexisting conditions) • Some won’t participate(“young and healthy”) Consequences • Delay in seeking services Uninsured suffer more, die younger • Patient Pays 35% OOP, 65% from “Charity”(!)

  6. Solutions require:HealthCare must be • Universal • Continuous • Affordable, to individuals and families • Sustainablefor Society • Must control HealthCare Inflation • Encourage effective services, Public Health • Enhance Societal Health and Well Being Institute of Medicine 2004

  7. How We Got Here • Health Care wasNot-for-Profit • Blue Cross 1935 • Kaiser Permanente, WW II • Military Medicine: DOD, VA, Fed. Employees • MediCare / MediCaid 1965 • For Profit (from 1990):The American Way ! • The Great Conversion: 1990-2006 • “Competition begets efficiency” ….. • 520+ Insurers compete …..

  8. The costs of health carein America Distribution Hospitals 40% Physicians 14%Pharmaceuticals 17% Insurance/Admin31% The very sick are very expensive • Radically Improving, Expensive, Technology • End-of-life care costs • Insurance profits & Overheads • Utilization: Who decides? • Over? Under? Mis?

  9. Private insurer’s high overhead Investor-owned Blues Commercial Carriers Non-profit Blues Medicare 26.5% 19.9% 16.3% 3.1% Source: Schramm. Blue Cross Conversion. Abel Foundation. CMS.

  10. Insurance overhead - 2002 US Dollars per Capita Germany 364 Australia Netherlands Canada France 155 116 73 73 52 Source: OECD, 2004 Note: Figures adjusted for purchasing power. Data for Australia-2001

  11. Growth Since 1970 Administrators Physicians Source: Bureau of Labor Statistics; NCHS; and analysis of CPS

  12. Who’s paying for HealthCare? Individuals 20% taxpayers 60% {Medicare, Medicaid. Public employees, tax subsidies} 20% Private employers We all pay… …but we don’t all have coverage Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150

  13. Should HealthCare be regarded as a consumable? “The American Way”

  14. …but cannot provide for ourselves “Public Good” Things we all need… Roads - Schools - Police - Fireman

  15. Part II Political Solutions • Make the public aware (Recognize well-funded opposition) • Universal health coverage will save major $$ • Establish credibility With ALL parties (Red, Blue, Liberal, ….) • Consider Non-political dimensions

  16. Part II Professional Components • Utilization - the great multiplier Who decides? • Malpractice Issues Costs, Court systems, Fairness • Peer Review Active, respected, evidence-based review • Professional Medical Conduct Active, respected, profession-supported

  17. A look at national healthcare • Everyonereceives a health care card • Free choice of doctor and hospital • Public agency processes and pays bills • Doctors and hospitals remain independent, non- profit. Negotiate fees and budgets with NHP • Local regional agencies allocate expensive technology (Certificate of Need) • Progressive taxes go to Health Care Trust Fund

  18. Renal Transplants No. per million population France Canada Sweden US Australia UK 34 38 35 29 31 35 Source: OECD, 2004. Data for 2001, 2002

  19. Change in Spending in a Single Payer Program

  20. WHY IS NATIONAL HEALTH INSURANCE POSSIBLE? • Market forces do not address fundamental problems of cost, choice, access and quality. • Everyone will be affected: the uninsured, the underinsured, and the rest of us, (we are already paying the bill!) • Employers want to be relieved of the burden of rising health care costs.

  21. The Institute of Medicine says: • Between the heath care we have and could have,lies not just a gap but a chasm • The American health care delivery system is in need of a fundamental change • The challenge is the enormity of the change required 2004

  22. Physicians for a national health program (PNHP) say: • We’ve tried and failed with incremental reforms for 100 years (Common Sense: “You cannot cross a chasm in two jumps”) • The time has come for single-payer National Health Insurance - an improved Medicare-for-All.

  23. Single-Payer WILL fix • Overheads: costs of approvals • Profits by competing “ROI” industries • Specialty hospitals • Insurance companies • PHARMA budgets • Direct-to-consumer advertising (Canadian prices)

  24. Single-Payer WILL NOT fix • Unregulated competition hospitals, doctors, companies • Fraudulent billing (1%) • Unregulated facility growth Certificate of Need • National Recessions Canada, UK, Japan

  25. Who will be in control? • National Commissions, Regional offices • *States have different needs, resources • IOM, AMA, specialty societies, JCAHO, Nurses, Social Workers, Pharmacists, IHI, NBME, FSMB, elected government • Citizen involvement: the Oregon experiment

  26. TOWARD A BETTER SYSTEM PATHWAY 1 • Recover the non-profit model institutional providers • Recruit leaders: • Public: Church, Service, Chambers…. • Professional: Societies and organizations • Business: Many • Labor A new, large element • Academic: Economists, Sociologists, • Clinicians, Public Health! • Foundations: Many

  27. TOWARD A BETTER SYSTEM PATHWAY 2 • Change laws for insuring Healthcare Federal Legislation -A Contested scene State Legislation - ME, VT, NJ, OR, MA, PA (33 states are considering legislation) • Enter the Political Process!

  28. TOWARD A BETTER SYSTEM PATHWAY 3 • Identify The Opposition “Medical-Industrial Complex” is powerful - Health Insurance Industries arefor-profit - Managed care companies arefor profit - Pharmaceutical Industries aremost profitable - Medical Professional Societies are Pro & Con Pro:APHA, AAFP, APedA, APsychA, ACP Con:AMA, surgical societies

  29. Summary • Universal HealthCare will save $$, increase efficiency. The Perfect Storm was required • Political Action The next target • Agents for Change Medical leadership - well advanced Business leadership - rapidly advancing Labor leadership - uneven, growing rapidly Political leadership - highly variable

  30. Right Wing Think Tanks 2003 budgets, million dollars • Heritage Foundation 31.5 • American Enterprise Institute 17.5 • Cato Institute 15.6 • Manhattan Institute 10.7 • Hudson Institute 9.3 • Fraser Institute 6.1 • National Center for Policy Analysis 4.5 • Discovery Institute 4.2 • Pacific Research Institute 4.1 • Association of American Physicians 0.25

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