Jamie A. Koufman, M.D., F.A.C.S., Director, Voice Institute of New York

www.voiceinstituteofnewyork.com

THE PAST, PRESENT, AND FUTURE OF HEALTHCARE IN AMERICA

ALTERNATIVE TITLE FOR THIS PRESENTATION

FIX HEALTHCARE AND HEAL THE NATION

2010 U.S. GNP $14,000,000,000,000• Wholesale/Trade 20%

• Healthcare 17%

• Manufacturing 17%

• Retail 14%

• Finance/Insurance 13%

• Construction 6%

• Information 5%

• Transportation 3%

• Entertainment 1%

• Education 1%

HOSPITAL REVENUE & EXPENSES PER ADMISSION (1981-2006)

• During this period, inflation was 4-5%• Healthcare costs grew 20-25% per year

U.S. HEALTHCARE COSTS• U.S. healthcare costs increasing faster than any other sector• Per capita healthcare cost in U.S. $8,086 (elsewhere ~$2K)

• Hip surgery costing $200K in the U.S. costs $10K in Sweden• No substantive data indicate that U.S. healthcare is superior

WHO* WORLD HEALTH RANKINGS 1 France 2 Italy 3 San Marino 4 Andorra 5 Malta 6 Singapore 7 Spain 8 Oman 9 Austria 10 Japan 11 Norway12 Portugal

13 Monaco 14 Greece 15 Iceland 16 Luxembourg17 Netherlands18 U.K.19 Ireland 20 Switzerland21 Belgium22Colombia 23 Sweden 24 Cyprus

25 Germany 26 Saudi Arabia27 U.A.E. 28 Israel 29 Morocco 30 Canada 31 Finland 32 Australia 33 Chile 34 Denmark 35 Dominica 36 Costa Rica37 U.S.A.

* World Health Organization (2000)

TWO CONFLICTING REALITIES

Americans believe that healthcare is a right and rationing unacceptable -- U.S. consumers don’t act like consumers

Nationalized healthcare, “socialized medicine,” is the best(only) alternative to stabilize cost & promote competition

Capitalism cannot solve the healthcare crisis. Healthcare is not a commodity any more than police and fire services;

and it should have never been treated as such. - Koyaanisqatsi

THE HISTORY OF HEALTHCARE• The idea of individuals’ pooling resources to minimize

risk first began with “funeral societies” in ancient Greece• Some Greek city states even had tax-supported physicians• Medieval craft societies were first precursors of unions

and they often set up welfare funds for the sick and needy• Calling the surgeon or the priest was often a toss up

HISTORY OF HEALTHCARE (cont.)• In 1900, with medicine being primitive/ineffective and at

low ($5) cost levels, health insurance just wasn’t needed• Births 26:1000 (mortality 30%), life expectancy 55 years• Services paid/bartered/traded and doctors relatively poor• In the early 1900s, major health risks were related to poor

sanitation, infectious diseases, and hazardous workplaces

• Penicillin discovered 1928 & sulfa drugs 1935

HISTORY OF HEALTHCARE (cont.)• From the 10th century, almshouses provided charitable

housing/hospitals for the poor; in 1900, mostly elderly• Benjamin Franklin founded first U.S. hospital in 1752• State-sponsored lunatic asylums established in the 1850s• NY Eye & Ear Infirmary first specialty hospital in 1810

HISTORY OF HEALTHCARE (cont.)

City hospitals also founded in the 19th Century by wealthy

benefactors and religious orders for the general population;

and cities contributed; Boston City Hospital (1864) was: “Intended for the use and comfort of poor patients, to whom

medical care will be provided at the expense of the city, and to provide accommodations and medical treatment to others.”

SIDE BAR: TOP 10 GREATEST PUBLIC HEALTH ACHIEVEMENTS U.S. (CDC)

• Vaccination • Family planning • Safer workplaces • Motor vehicle safety • Safer and healthier foods • Healthier mothers and babies • Control of infectious diseases • Fluoridation of drinking water • Recognition of tobacco as a health hazard • Decline in deaths from heart disease & stroke

HISTORY: HEALTH INSURANCE• In the U.S., compulsory insurance began in 1798 with the

Marine Hospital Service; ship owners paid 20¢/seaman/mo.• First national health insurance law was in Prussia in 1854• In the 1900s, as the industrial revolution gained momentum,

unions and employers required participation in relief funds

HEALTH INSURANCE (cont.)• In the U.S., industrial accidents were insured by workers

compensation; by 1915 laws had been passed in 30 states

• First U.S. health insurance program was in Texas in 1929

Blue Cross created to cover 21 days of hospitalization for teachers by making monthly payments to Baylor Hospital

• Health insurance didn’t really flourish until after WW II

SIDE BAR:PARADOX OF THE FEDERAL SYSTEM

• Prior to the Great Depression, States were responsible for social welfare matters but they were reluctant to fund new programs that might economically burden local industries

• The result was a built-in block against social welfare legislation by the States or by the Federal Government

• Public philosophy changed after the Great Depression

HEALTH INSURANCE: MEDICARE• In 1963, Pres. Johnson declared that healthcare was a right• Medicare established by the Social Security Act of 1965• Financed by FICA (Federal Insurance Contributions Act)

and the Self-Employment Contributions Act (about 3%) • 2011 Medicare budget for was $530 billion, 5% of GDP

PROJECTED FEDERAL SPENDING ON MEDICARE AND MEDICAID [Source: Congressional Budget Office]

GROSS NATIONAL PRODUCT (GNP) AND TOTAL HEALTHCARE EXPENSES (HCE)

(† Trillions of dollars; β Billions of dollars)

Year GNP† HCEβ %GNP

1960 $0.5 $27 6%

1970 1.0 75 8%

1980 2.8 256 9%

1990 5.8 724 12%

2000 9.9 1,400 14%

2010 14.0 2,500 17%Of the wealth created since 1980, a hugely

disproportionate share has gone to the wealthiest 5% of the population

HOW DID WE GET TO THIS POINT?• Medicine today is dominated by for-profit managed care

• Providers have shown strong proclivity to chase funding

• Personal bankruptcy due to illness 62% of total in 2010

• Huge problems of quality of care & inequalities of access

• Healthcare costs rising in the face of national bankruptcy

HOW DID WE GET TO THIS POINT?• Healthcare “administration” has gone from 2% to 41%

• Profound devaluation of the doctor-patient relationship

• There are no economic incentives to provide quality care

• Privatization equates to unrestrained for-profit companies

• Remember, this is a publicly funded healthcare system!

SIDE BAR: ‘MAJOR UPHEAVAL’ IN NEW YORK RACE DRIVEN BY MEDICARE FIGHT [Bloomberg]

• A special election was held on May 24, 2011 in Western NY to fill the seat of pre-Weiner “sexter” Christopher Lee

• The district had been a Republican stronghold for decades

• Democrat, Kathy Hochul, defeated Republican lawmaker, Jane Corwin, on the sole issue of “Medicare privatization”

Voters recognized the vulnerability of health to market forces

FEDERAL BUDGET

2010

HEALTHCARE

Surprise! The American people are in the boat

IT’S A WHALE OF AN INDUSTRY! $2,500,000,000,000

AND GROWING

LESSONS OF FOUR DECADES OF PRIVATIZATION IN A PUBLICLY FUNDED HEALTCARE SYSTEM

• Before 1965, the elderly, poor, and disabled were uninsured

Thus, Medicare provided a financial windfall for providers

• In 1972, when Medicare expanded to cover end-stage renal disease, for-profit firms established new dialysis facilities

• With soaring health costs in the late 1970s employers began attempting to assert control with HMOs and managed care

LESSONS OF FOUR DECADES OF PRIVATIZATION IN A PUBLICLY FUNDED HEALTCARE SYSTEM

• In 1983, Medicare attempted cost containment with DRGs

• DRGs didn’t control costs but did stimulate management

• Hospitals rewarded for “upcoding” and “moving patients”

• From 1983-89, number of hospital administrators doubled

• Medicare encouraged elderly to join HMOs, which then cherry picked with doctors’ help (“efficiency bonuses”)

LESSONS OF FOUR DECADES OF PRIVATIZATION IN A PUBLICLY FUNDED HEALTCARE SYSTEM

• Investor-owned firms have eclipsed charitable, public, and professional bodies that used to finance and deliver care

• Providers unwilling to subordinate clinical priorities to financial ones have withered -- regardless of efficiency

• Public $$ account for most of U.S. healthcare (10% GNP)

• Today’s predicament unrelated to “intrusive government”

HEALTHCARE INDUSTRY PROFITS• Humana (11 million enrollees) $ 992,850,000

• Aetna (16 million enrollees) $ 1,384,100,000

• Wellpoint (34 million enrollees) $ 2,490,700,000

• Pfiser Pharmaceutical $10,000,000,000

• Johnson & Johnson $13,300,000,000

Executive Compensation?

$1-200 million per year

TWO CONFLICTING REALITIES

Americans believe that healthcare is a right and rationing unacceptable - U.S. consumers don’t act like consumers

Nationalized healthcare, “socialized medicine,” is the best(only) alternative to stabilize cost & promote competition

ARE THERE ANY PLAUSIBLE AND AFFORDABLE SOLUTIONS?

IF WE CAN FIX HEALTHCARE WE CAN HEAL THE NATIONMost Americans clearly favor free-market systems,but in healthcare, we don’t have a free market …

Since the 1970s, the transformation of healthcare has been driven by market power over prices*

and perverted (hegemonic) investment strategies.

*There is “price inelasticity of demand” for medical services

DOES THE U.K. HAVE SOCIALIZED MEDICINE? (IS THAT SOCIALISM?)

• The NHS was created in the 1946 after World War II

• The NHS provides free healthcare for all of its citizens

• The U.K. National Health Service (NHS) is a sacred cow

• Vast majority of U.K. citizens highly satisfied with NHS

• England has a private insurance “second tier” (only 15%)

U.K. NATIONAL HEALTH SERVICE • NHS costs UK $170 billion annually or about 6% of GNP• Headline: British Fear American Style Healthcare System• The A-Word: “For a people accustomed to free healthcare

for all, regardless of income, the fact that millions of their

cousins across the Atlantic have no insurance and can't

afford decent treatment is a farce as well as a tragedy.”

THE SWISS HEALTHCARE SYSTEM• Everyone required to have Krankenkasse, health insurance

• People entering the Switzerland to work must pay for this

• Different insurance companies have different costs and

benefits; all are private, and all are government regulated

• You are eligible to “social security” after five years

SIDE BAR: YOU SURPRISED THAT THERE IS ALREADY A U.S. NATIONAL HEALTH SERVICE?

• It’s a Department of Health & Human Services program

• Incentives for primary docs to work in underserved areas

• Provides medical student loans as well (up to $170,000)

• In FY2010, there were 1,375 applicants and 210 awards

• This year, there are sufficient funds for only 120 awards

WE NEED A NATIONAL HEALTH SERVICE IT SHOULD NOT BE AN INSURANCE PROGRAM

• National system to provide the poor/all with healthcare

• Every neighborhood should have its own health clinic

• Med student financing and loans with NHS pay-back

• Financial incentives for training primary care physicians

• Competitive bidding for almost all goods and services

U.S. POSTAL SERVICE MODEL

• U.S. Postal Service is a magnificent government system

• A 44¢ 1st class letter will arrive anywhere in U.S. in 2 days

• Does it matter that is it operates at a deficit of $5 billion?

• 44¢ is the standard against which all others must compete

• What would happen if the postal system was not there?

A THREE-TIER SYSTEM WOULD BE BOTH CIVILIZED AND AMERICAN

• Tier I would provide “basic” healthcare for all Americans

• Tier II: Competitive health insurance for any other services

• Tier III: Fee-for-service care above and beyond insurance

• Tier I would establish a baseline cost structure, economies

of scale, discourage redundancy, and restore competition

CONCLUSIONS

• For-profit “capitalism” can not fix the healthcare crisis

• The two choices are National Healthcare or bankruptcy

• NHS will bolster economic development, reboot rational

markets creating competitive cost containment, and it

will form the cornerstone of a rational three-tier system

FIX HEALTHCARE AND HEAL THE NATION

CONCLUSIONS (cont.)• In our lifetimes, market forces have evolved a dangerous,

powerful, self-perpetuating, for-profit healthcare system

• The Medical-Industrial Complex must be deconstructed

• How? If we are to remain a democracy, we must limit

(deescalate) campaign spending and prohibit lobbying

to reduce the ability of wealth to concentrate power

FIX HEALTHCARE AND HEAL THE NATION

SOME FINAL THOUGHTS FOR YOU, MY YOUNG COLLEAGUES

• If you went into medicine for money, you’ll be miserable

• Avoid all situations that might create conflicts of interest

• “It is an honor to make a difference in the lives of others”

• Make decisions for and with patients as if they were your own family members (your mother, father, sibling, child)

• The healthcare and political systems are broken; fix them!

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