Medical Care Systems Medical Care Systems WorldwideWorldwide

Henderson 5Henderson 5thth Edition Edition

International Comparisons Slide 1:

– US has higher incomes (Swiss, Canada close) but others 30% less– US spends a lot more by a wide margin– US MDs per person and hospital beds per person mid-range– LOS at bottom (w/ France)– Only Japan has more equipment person generally– US has more transplants, stents, CABGS than others

Slide 2:– Real per capita spending rose fastest in US in 1980s, slowed in

1990s but still faster, then rose to about average rate in 2000s.

Slides 3, 4 & 5:– Life expectancy and infant deaths relatively high in US. Lifestyle?– Better survival rates for cancers but middle range rate for heart

attacks in US.

Key StatisticsKey Statistics 2008

Canada

France

Germany

Japan

Switzerland

United Kingdom

United States

Population (millions) 33.1 61.8 82.1 127.7 7.6 60.5 304.5 GDP per capita1 39,288 33,134 35,436 34,132 43,131 36,128 47,193 Health Expenditures

Health care spending per capita

4,079 3,696 3,737 2,7297 4,627 3,129 7,538

Health care spending (percent of GDP)

10.4 11.2 10.5 8.17 10.7 8.7 16.0

Medical Services Number of physicians

(per 1,000) 2.2 3.4 3.6 2.1 3.8 2.6 2.4

Acute care beds (per 1,000)

2.77 3.5 5.7 8.1 3.3 2.7 2.77

Average length of stay acute care (days)

7.57 5.2 7.6 18.8 7.7 7.1 5.5

Medical Technology2 CT Scanners 12.77 10.37 16.37 97.3 32.0 7.4 34.37 MRI Units3 6.77 5.77 8.27 43.1 14.47 5.6 25.97 Lithotripters 0.6 1.5 3.9 7.16 4.9 - 3.25 Patients undergoing

dialysis 6.6 4.9 8.17 21.5 - 4.2 12.27

Heart Treatment4 Transplants 0.5 0.6 0.5 0.0 0.4 0.2 0.7 Angioplasty and stenting 118.17 189.1 567.6 - 140.6 92.9 436.86 CABG 68.97 31.3 124.2 - 34.7 44.7 84.56 AMI deaths 41.55 18.47 44.26 15.67 - 37.67 37.95

Source: OECD Health Data 2010, OECD, Paris, 2010.

Health Care SpendingHealth Care SpendingAnnual Compound Growth RatesAnnual Compound Growth Rates

Decade of the 1980s Canada France Germany Japan2 Switzerland United Kingdom

United States

Nominal health care spending 9.64 9.64 4.19 4.73 7.17 8.91 9.78 Nominal per capita health care

spending 8.47 9.06 4.11 4.19 6.59 8.78 8.90

Real health care spending1 4.68 3.59 1.63 2.94 2.99 3.13 5.69 Real per capita health care

spending1 3.57 2.72 1.54 2.42 2.47 2.97 4.84

Decade of the 1990s Nominal health care spending 3.89 3.82 6.87 3.83 5.13 6.80 5.76 Nominal per capita health care

spending 2.89 3.48 4.12 3.57 4.38 6.58 4.59

Real health care spending1 2.55 2.31 4.95 3.52 3.07 3.82 3.76 Real per capita health care

spending1 1.57 1.97 2.24 3.26 2.43 3.61 2.61

2000–2008 Nominal health care spending 7.20 5.17 2.73 1.13 3.89 7.80 7.09 Nominal per capita health care

spending 6.20 4.45 2.75 1.04 3.08 7.43 6.07

Real health care spending1 4.38 2.94 1.54 2.34 2.65 4.98 4.42 Real per capita health care

spending1 3.40 2.24 1.56 2.25 1.85 4.63 3.43

Source: OECD Health Data 2010, Paris: OECD.

Health OutcomesHealth Outcomes

2007 Life Expectancy at Birth1 Life Expectancy at Age 801 Infant Mortality Rate2

Perinatal Mortality Rate2

Country

Males

Females

Males

Females

Canada 78.3 83.0 8.33 10.13 5.1 6.4 France 77.4 84.4 8.34 10.54 3.8 11.24 Germany 77.4 82.7 8.2 9.3 3.9 5.5 Japan 79.2 86.0 8.5 11.4 2.6 3.0 Switzerland 79.5 84.4 8.4 10.3 3.9 6.6 United Kingdom 77.6 81.8 8.1 9.4 4.8 7.7 United States 75.3 80.4 7.9 9.3 6.74 6.63 Source: OECD Health Data 2010, Paris: Organization for Economic Cooperation and Development, 2010.

Mortality Ratios - Mortality Ratios - CancerCancer

Type of Cancer Country

Colon/Rectal

*

Breast

Cervical

Prostate

All Sites Except Skin*

Canada 38.2 25.0 32.5 21.2 47.8 France 44.6 23.4 31.6 30.7 56.1 Germany 43.7 27.1 35.2 26.1 50.9 Japan 35.1 25.4 23.3 45.2 59.0 Switzerland 35.8 24.2 20.5 27.9 45.5 United Kingdom 44.6 27.9 37.3 34.3 56.7 United States 34.1 18.8 29.9 12.7 37.5 All Developed Countries

44.3 26.7 38.8 24.0 54.0

* Male only Source: J. Ferlay et al., GLOBOCAN 2002: Cancer Incidence, Mortality, and Prevalence Worldwide, Version 1.0, IARC Cancer Base No. 5, Lyon: IARC Press, 2001.

AMI OutcomesAMI Outcomes

Table 14.5 Mortality Ratios for Acute Myocardial Infarction Country Incidence

(per million) Mortality (per million)

Mortality Ratio (%)

France 1,968 431 21.9 Germany 3,832 891 23.3 Japan 520 365 70.2 United Kingdom 1,660 1,017 61.3 United States 1,920 685 35.7

Source: McKinsey & Company (2008).

CanadaCanada Single-payer conceptSingle-payer concept

– Each province is provided with Federal matching Each province is provided with Federal matching funds like Medicaid (currently 30% of total)funds like Medicaid (currently 30% of total)

– Everyone has access to hospital and medical Everyone has access to hospital and medical servicesservices

– No deductibles or copayments.No deductibles or copayments.– Patients have free choice of physicians and Patients have free choice of physicians and

hospitals.hospitals.– Private health insurance is not permitted for Private health insurance is not permitted for

these basic hospital and medical services.these basic hospital and medical services.– Hi-Technology funding region-wide limiting Hi-Technology funding region-wide limiting

excess investment.excess investment.

Canada limits costs by limiting fees and Canada limits costs by limiting fees and expendituresexpenditures– Each province sets its own overall health Each province sets its own overall health

budget and negotiates total budgets with each budget and negotiates total budgets with each hospital, which they cannot exceedhospital, which they cannot exceed

– The province also negotiates with the medical The province also negotiates with the medical association uniform fees with all physicians, association uniform fees with all physicians, who are paid fee-for-service and who must who are paid fee-for-service and who must accept the province’s fee as payment in full for accept the province’s fee as payment in full for their service.their service.

– In some provinces, physicians’ incomes are also In some provinces, physicians’ incomes are also subject to controls; once physicians’ revenues subject to controls; once physicians’ revenues exceed a certain level, further billings are paid exceed a certain level, further billings are paid at 25 percent of their fee schedule.at 25 percent of their fee schedule.

Consequences of System?Consequences of System?– Free care leads to excess demand. With spending and Free care leads to excess demand. With spending and

fee limits, lots of waiting time (see slide).fee limits, lots of waiting time (see slide).– Investment in technology is stifled because government Investment in technology is stifled because government

must plan and fund itmust plan and fund it Tech in US occurs if it saves money or improves Tech in US occurs if it saves money or improves

quality (& demand)quality (& demand)– Hospital care isHospital care is

Excessively long (no incentive for hospitals to provide Excessively long (no incentive for hospitals to provide outpatient care)outpatient care)

Not oriented to providing new services (no extra funds Not oriented to providing new services (no extra funds for new staff, equipment, etc.)for new staff, equipment, etc.)

– Wealthier Canadians (10% of population) purchase travel Wealthier Canadians (10% of population) purchase travel insurance that covers them outside of Canada (i.e., US)insurance that covers them outside of Canada (i.e., US)

– Canadian Supreme Court has ruled ban on private Canadian Supreme Court has ruled ban on private insurance unconstitutional due to long waits in Quebec insurance unconstitutional due to long waits in Quebec

provinceprovince..

Exhibit 32.5 Canadian Hospital Waiting Lists: Total Expected Exhibit 32.5 Canadian Hospital Waiting Lists: Total Expected Waiting Time from Referral by General Practitioner to Treatment, Waiting Time from Referral by General Practitioner to Treatment,

by Specialty, 2009by Specialty, 2009

FranceFrance Single-payer concept Single-payer concept

– (83% covered by Natl HI plan) & rest by special plans (83% covered by Natl HI plan) & rest by special plans for students, govt, agriculture and freelancer workers)for students, govt, agriculture and freelancer workers)

– Financed by payroll and income taxes that Financed by payroll and income taxes that total nearly 20% of income)total nearly 20% of income)

– Substantial copays for all but the poorSubstantial copays for all but the poor 25% for MDs, 20% for hospitals, 30% for lab tests 25% for MDs, 20% for hospitals, 30% for lab tests

and dental and 35-65% for covered drugsand dental and 35-65% for covered drugs 91% purchase supplementary insurance to pay 91% purchase supplementary insurance to pay

copays which costs 2.5% of incomecopays which costs 2.5% of income– In practice, MDs fees tightly regulated and fee-for-In practice, MDs fees tightly regulated and fee-for-

serviceservice MDs average just 2x what average worker makesMDs average just 2x what average worker makes

Hospitals:Hospitals:– Most (72%) beds are in public hospitals Most (72%) beds are in public hospitals

operating under global budgetsoperating under global budgets– Private for-profit clinics (22%) offer Private for-profit clinics (22%) offer

short-stay care like elective surgeries short-stay care like elective surgeries and maternity for per-diem and maternity for per-diem reimbursementreimbursement

ConsequencesConsequences– MD incomes very lowMD incomes very low– Few waits but access to new tech very Few waits but access to new tech very

limited (see slide #2 above)limited (see slide #2 above)

GermanyGermany92% of population has coverage from 1 of 1100 “sickness 92% of population has coverage from 1 of 1100 “sickness funds” organized by provincefunds” organized by province

– All individuals must have insurance either thru All individuals must have insurance either thru sickness funds or private insurance. Latter mostly sickness funds or private insurance. Latter mostly civil servants who receive better insurance paid by civil servants who receive better insurance paid by their employers.their employers.

– 10% buy supplementary coverage for sickness fund 10% buy supplementary coverage for sickness fund insuranceinsurance

– Premiums paid by payroll deduction averaging 15% Premiums paid by payroll deduction averaging 15% of worker’s pay (half from employer)of worker’s pay (half from employer)

– Low-wage and unemployed get subsidies, retirees Low-wage and unemployed get subsidies, retirees pay out of their pension checks.pay out of their pension checks.

– Copays are low for MDs, hospitals, drugs and Copays are low for MDs, hospitals, drugs and preventive screeningpreventive screening

– Dental copays are high (50-100%)Dental copays are high (50-100%)

Cost-control mechanismsCost-control mechanisms– Hospital MDs on salary, non-hospital MDs fee-for-service, can’t Hospital MDs on salary, non-hospital MDs fee-for-service, can’t

be both.be both.– Volume penalties for nonhospital MDs – once quarterly budget Volume penalties for nonhospital MDs – once quarterly budget

limits for office visits, lab tests, referrals, etc. are reached fees limits for office visits, lab tests, referrals, etc. are reached fees are cut proportional to keep spending within target. Penalties are cut proportional to keep spending within target. Penalties are global as well as individual.are global as well as individual.

– Hospitals receive DRGs for treatment and capital spending Hospitals receive DRGs for treatment and capital spending funded by state.funded by state.

Consequences:Consequences:– Cost control has been effective so far in limiting spending Cost control has been effective so far in limiting spending

increasesincreases– Hospital admit rates and LOS are much higher than in US, no Hospital admit rates and LOS are much higher than in US, no

incentive to cut (see slide #1)incentive to cut (see slide #1)– Primary care MD income is low (only 2.7 times average worker) Primary care MD income is low (only 2.7 times average worker)

and they never know what they’re going to be paid due to and they never know what they’re going to be paid due to volume penaltiesvolume penalties

– Technology investment is low (state controlled) : see slide #2Technology investment is low (state controlled) : see slide #2– System lacks incentive to rationally contain costs & improve System lacks incentive to rationally contain costs & improve

quality.quality.

Swiss SystemSwiss System Individual mandateIndividual mandate

– Generous coverage in basic planGenerous coverage in basic plan– 40% purchase supplementary policies40% purchase supplementary policies– Pay community rated (by age/sex) Pay community rated (by age/sex)

premiums within cantonpremiums within canton– Subsidies after 8-10% of income – 45% get Subsidies after 8-10% of income – 45% get

subsidiessubsidies– Approx 20% of premiums subsidizedApprox 20% of premiums subsidized– Choice of 6 deductibles - $240 to $1,200 Choice of 6 deductibles - $240 to $1,200

and then 10% copayand then 10% copay– Premium savings of 40% for high deductible Premium savings of 40% for high deductible

plan ($2,388 for low plan)plan ($2,388 for low plan)

Private Non-Profit Managed Care Insurers (90)Private Non-Profit Managed Care Insurers (90)– Plans that suffer adverse selection (by age-Plans that suffer adverse selection (by age-

sex) draw subsidies from insurer fundsex) draw subsidies from insurer fund– Plans are either staff model HMO or Primary Plans are either staff model HMO or Primary

Care Gatekeeper modelsCare Gatekeeper models– Insurers compete for enrolleesInsurers compete for enrollees

Provider PaymentsProvider Payments– MDs paid fee-for-service rates negotiated between MDs paid fee-for-service rates negotiated between

canton medical association and insurer groupcanton medical association and insurer group– Hospitals paid DRGs, with 50% from insurers/50% Hospitals paid DRGs, with 50% from insurers/50%

from canton. Govt funds 80% of capital investment.from canton. Govt funds 80% of capital investment. Public-private spending breakdown similar to Public-private spending breakdown similar to

US (40/60)US (40/60) High spending levels, second to USHigh spending levels, second to US

LessonsLessons It is difficult to achieve universal coverage. Even with It is difficult to achieve universal coverage. Even with

mandatory participation, most systems leave 1-2 percent mandatory participation, most systems leave 1-2 percent of the population uncovered. of the population uncovered.

Uncontrolled health care spending growth is a universal Uncontrolled health care spending growth is a universal problem. problem.

Near universal access to high-quality medical care is Near universal access to high-quality medical care is possible without strict reliance on a single-payer system possible without strict reliance on a single-payer system or a pure public sector approach.or a pure public sector approach.

Price-conscious behavior, with the use of deductibles and Price-conscious behavior, with the use of deductibles and copays, can be encouraged with little impact on health.copays, can be encouraged with little impact on health.

Free access to health care with no out-of-pocket Free access to health care with no out-of-pocket requirements diminishes personal responsibility, leaving requirements diminishes personal responsibility, leaving no demand-side constraints often resulting in limited no demand-side constraints often resulting in limited availability of technology and waiting lists for services. availability of technology and waiting lists for services.

LessonsLessons People who cannot afford to purchase health People who cannot afford to purchase health

insurance on their own can still have access to insurance on their own can still have access to essential services within a system of essential services within a system of subsidized premiums. subsidized premiums.