202 health services intro session 1 -- overview of us health services 8-29-11

8/3/2019 202 Health Services Intro SESSION 1 -- Overview of US Health Services 8-29-11

http://slidepdf.com/reader/full/202-health-services-intro-session-1-overview-of-us-health-services-8-29-11 1/21



Overview of US Health Services

Agenda

• Health services are different

• Major parties in health services

• Major issues in health services

• Sources and uses of health services funds

• History of health services: 3 eras• Recent history of health cost increases

• Uninsured in US

2



Health Services are Different

Five Key Factors

1. Pain, disability and death: important topatients and family

2. Health services are effective

3. Physicians and professionals manage care

4. Health insurance pays for care

5. Constant development of new technologyand services

3



Four Major Parties

In Health Services System

1. Patients

2. Providers

• Hospitals, physicians, Rx drugs3. Health insurers

• Employment based insurance including BlueCross and United HealthCare, Medicaid,

Medicare

4. Source of revenues

• Employers, Federal government, state

governments, personal out-of-pocket 4



Sources and Uses of Health Spending Total Health Spending 2011 is $2.7 trillion

Major sources

• Private health insurance $850 b 31%

• Medicare $556 b 21%

• Medicaid $428 b 16%• Out-of-pocket $321 b 12%

Major uses

• Hospitals $831 b 31%• Physicians & clinical $538 b 20%

• Rx drugs $244 b 10%

• Nursing home/home hlth $213 b 8%

• Hlth insurance admin $178 b 6%5



Key Figures in Health Spending2011

Total health spending $2.7 trillion

Per capita health spending $8,650

Annual increase health spending 2015-20 6.2%

Annual increase in US GDP 2015-20 4.7%

Excess increase in health spending/year 1.5%

Health expenditures as % of GDP 2000 13.8%

Health expenditures as % GDP 2011 17.7%

Health expenditures as % GDP 2020 19.8%6



History of Health Services

Characteristics of Eras

• Type of disease and medical conditions inpopulation

• Prevalent type of health and health services

• New services and technology introduced

8




Three Eras

• 19th century to 1900

– Epidemics of infectious disease

– Development of public health

• 20th century to WWII/1945

– Individual infections and trauma to individuals

– Initial effective medical care

• Current era since 1945

– Chronic diseases

– Biomedical science based technological care

9




19th

Century to 1900• Type of disease: Epidemics of infectious

disease

– Cholera, typhoid, smallpox• Type of health and health services:

Development of public health measures

– Clean water, clean food, better housing andheating

• New services and technology

– Anesthesia, aseptic surgery, aseptic child delivery 10




20th

Century to WW II/1945

• Type of disease: Individual acute disease

– Infections and trauma to individuals

• Type of health services: Beginning ofscientifically trained physicians

– Flexner report 1910 prompting scientific basedmedical schools

• New services and technology

– Radiology, EKGs, earliest antibiotics/sulfa drugs

11



History of Health Services WW II to Present

• Type of disease: Chronic diseases – Cardiac/circulatory 40%, cancer 23% of deaths

• Type of health services: Hospitals and everincreasing specialty services; growth ofhealth insurance – Development of hospitals: Hill-Burton program in late 40s

and 50s

– Expansion of employer health insurance post WW II andestablishment of Medicare and Medicaid in 1966

• New services and technology – Penicillin, antibiotics and other new drugs: blood plasma,

radiology and imaging

– Continued new products and procedures from NIH funded

and Rx drug firm research 12



History of Health Care Cost IncreasesAnnual Increase in Health Insurance Premiums Paid by Employers

8.5% 8.3%

10.5%

4.8%

0.8%

12.0%

0%

3%

6%

9%

12%

15%

1988 1993 1996 1999 2000 2001

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000;

KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996. 13



History of Cost Increases Over 40 YearsFactors in Cost Increases

1. Price

2. Quantity

3. Intensity/new technology

Costs = Price x quantity x intensityC = p x q x i

14



History of Cost Increases Over 40 Years

Cost Increases in 1970s Led to Regulation

• High costs for employers and government in 1960s and early

70s led to regulatory efforts in health care

• Regulatory efforts to limit price/increase in price paid for careincluded state hospital rate setting

• Efforts to limit new technologies include health planning withState approval of new building and equipment thru StateCertificate of Need approval and technology assessment

• Efforts to limit growth of use of new technologies includedproposals to train a greater share of physicians in primary carerather than specialties

15



History of Cost Increases over 40 YearsEnd of Regulation in 80s and Cost Increases

Led to Growth of Managed Care in 90s

• Regulatory efforts were largely discarded in early tomid 1980s due to national policies favoring limited

role for government• Costs increases for employers in late 80s and early

90s led to growth of managed care and managedcompetition

– Growth of managed care plans: group/staff plans like Kaiser-Permanente, more loosely organized IPA/network plans

– Theory of managed competition: competition among tightlyorganized plans

16



History of Cost Increases Over 40 YearsFailure of Managed Care in Late 90s

Led to Cost Increases in 2000s• Managed care plans control health care costs by limiting

increases in price, quantity, and intensity of care in early 90s

• Providers learned to dislike and then push-back againstmanaged care plans efforts to limit medical services in late 90s

• Patients dislike of plan efforts that limit care led to patient rightslegislation at state and national levels in late 90s

• Employees complaints about accessibility of care and of planefforts to limit care led employers in a robust economy to pushplans to loosen efforts to limit costs of care

• Plans added more physicians to networks and reduce utilizationreview based efforts to limit care

• Increases in health care costs reached double digit levels inearly 2000s

17



Impact of the Status of Economy on Health Care Costs

• Robust economy/growing Gross DomesticProduct (GDP)

– Accommodates increase in health care costs

– Provides funds to pay for increased costs of healthinsurance by employers, State governments

• Recession/declining GDP

– Spending for health care continues to increase ratherthan decrease with most sectors of economy – thehealth care sector is largely recession proof

– Leads to increase in share of economy in health carebecause denominator/GDP declines

18



High Costs and Cost IncreasesLead to Increase in the Number of Uninsured

• High costs for payers: employers and stategovernments

• Small, low-wage firms can’t afford to pay for health insurance at monthly costs of>$14,000/family and $5,000/individual

– Minimum wage is $7.25/hour or $15,000 per year

• States can’t afford to cover low-income withMedicaid and other programs

19



Lack of Health Insurance in the US

50 m Americans are Uninsured

• 50 million uninsured in 2009

– This number will increase when numbers for 2010

are released by US Census this September

• Mostly low-income employees and familymembers

• Uninsured have – Reduced access to care

– Reduced health status

20



Sources and Uses of Health Spending Total Health Spending 2011 is $2.7 trillion

Major sources

• Private health insurance $850 b 31%

• Medicare $556 b 21%

• Medicaid $428 b 16%• Out-of-pocket $321 b 12%

Major uses

• Hospitals $831 b 31%

• Physicians & clinical $538 b 20%

• Rx drugs $244 b 10%

• Nursing home/home hlth $213 b 8%

• Hlth insurance admin $178 b 6%21

202 health services intro session 1 -- overview of us health services 8-29-11

Documents