How to talk to business about health care reform
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How to Talk To Business about Health care reform. Deborah Richter, MD. Goals of your talk. Change their perception to view healthcare as a public good rather an itemized purchase in the marketplace To understand that we can’t fix anything without a healthcare system

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How to Talk To Business about Health care reform

Deborah Richter, MD


Goals of your talk

  • Change their perception to view healthcare as a public good rather an itemized purchase in the marketplace

  • To understand that we can’t fix anything without a healthcare system

  • To understand we are paying the whole bill anyway

  • If you get these points across, the business case for single payer is much easier


The Business Perspective

  • They are paying too much for healthcare

  • The reason costs are so high is people are using too much care

  • The uninsured are not their responsibility

  • They don’t trust the government


What Business Does Understand

  • Systems

  • Budgets

  • Fixed Costs

  • Efficiency


The American Health Care Crisis

Deborah Richter, MD


Overview

  • Review of the problems

  • Why we are in this mess

  • What we can do about it


The American health care system is neither healthy, caring, nor a system…

Walter Cronkite


U.S. Health Expenditures 2009

$2.5 trillion

30%

Source: Health Affairs Jan/Feb 2009


National Health Spendingas a share of Gross Domestic Product

Projected

Actual

Percentage

GDP

Source: Centers for Medicare & Medicaid Services


Japan Has a $1400 competitive advantage

on every car they sell

$/Car

Source: Modern Healthcare 10/24/05: 14


Health Insurance Costs Keep Rising


Fewer Firms Are Offering Insurance…


46 MillionUninsured


18,314 Die Every Year Due to Lack of Health Insurance

Source: Care Without Coverage;Institute of Medicine,2002


Major Concepts

  • Few people are using healthcare at any one time

  • Most costs are fixed

  • We are already paying the whole bill

  • We don’t have a health care system so we can’t fix anything


National Health Spending:Per Person

Actual

Projected

Per capita

expenditures

Source: Centers for Medicare & Medicaid Services


National Health Spending:Per Person

Actual

Projected

Per capita

expenditures

Source: Centers for Medicare & Medicaid Services


What are the costs?


JOE

Is he the problem?


The 80/20 rule: Most people use very little healthcare

73%

80% uses less than $1400

of care per year

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


Few are using most of the healthcare

73%

20% use 86% of the care

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


U.S. Health Expenditures

70% spent

on services

&

infrastructure

Source: Health Affairs Jan/Feb 2009

30%


Health Care Infrastructure:

As of 2004, the U.S. had:

  • 13.5 million health care jobs

  • 7,228 hospitals with a total of

    955,768 staffed beds

  • 210,939 physician’s offices

  • 70,589 nursing homes

  • 19,006 home care agencies

  • 121,172 dentist’s offices

  • 3 million administrative jobs

Source: National Center for Health Statistics&

Bureau of Labor Statistics


The Implications of Fixed costs

  • The cost of the infrastructure is there whether or not it is used (nurse, hospital)

  • Trying to save money by keeping patients out of the hospital is like trying to save money on schools by keeping kids home for the day


Question:

  • Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?


How do wePAYfor health care?


Health Care Financing

  • We have no state or national healthcare policy

  • We finance health care services on a wing and a prayer (no dedicated funds)

  • Financing of health care amounts to a shell game… no payer wants to pay the fixed costs of health care

  • When that fails we ask the public to step in (risk shift)


If you were an insurance company CEO, who would you want to insure?

73%

AVOID THESE PEOPLE

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


Administration is the Fastest Growing job in Health Care

Source: Bureau of Labor Statistics and NCHS


One-Third of Health Spending is Consumed by Administration

Administrative

Costs

($2000 per person)

Clinical

Care

31%

69%

Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004


Individual health insurance

Taxes for Medicare and Medicaid

Lower wages

Out of pocket

Private employers pay for health insurance

Property taxes

Higher prices for goods

Health insurance for public employees

In the End Individual Households Pay for All of Health Care

INDIVIDUAL

HOUSEHOLDS


Most of Healthcare is already publicly financed

Individuals

20%

Taxpayers

60%

{Medicare, Medicaid.

Public employees,

tax subsidies}

20%

Private

employers

Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150


Do we really have the best health care in the world?


Health Care Overspending

McKinsey Global Institute Dec 2008

$650 billion- the amount overspent on health care compared with other industrialized nations with no discernable benefit to population health.


We spend twice as much on health care as other nations do

$ Per person

OECD, 2006.

Data for Japan is an estimate


US Health Costs Rise Faster than Other Countries’ Costs

Source: Health United States 2005, Natl. Center for Health Statistics


We pay higher taxes

OECD, 2006 & Health Affairs 2002; 21(4): 99


Out of Pocket Costs are Higher

$/per capita

Source: OECD 2006

Data are for 2004 or for most recent year available

Figures adjusted for purchasing power parity


We are one of the Youngest Populations in the Industrialized World

OECD, 2006 (2003 Data)


Fewer Americans Smoke Compared with Other Nations

OECD, 2006 (2003 Data)


We Drink Less Alcohol

OECD, 2006 (2003 Data)


But… We Don’t Live as Long

OECD, 2006 (2003 Data)


More Babies Diein the U.S. in the first year of life

OECD, 2006

Data are for 2004 or more recent year available


Our Quality is Not the Best in the world

Survival Rates for 5 Countries

Source: Health Affairs Vol 23:#3 , 2004


We Do an Average Number of Bone Marrow Transplantsper million people

OECD, 2006 (2003 Data)


We Do More Heart Transplantsper million people

OECD, 2006 (2003 Data)


We are Average in Number of Renal Transplants (2001/2002)

Transplants/million population

OECD, 2004


We are Average in the Number of MRI Units

MRIs/ million population

Source: OECD, 2005

Note: data are for 2004 ,or most recent year available


We Do Fewer Hip Replacements

Procedures per 100,000 population

197

Source: OECD 2006

Data are for 2004 or most recent year available


Other Industrialized Countries

  • Availability of expensive technology

  • Rising drug costs

  • Have similar demographics

  • Similar levels of service

    Why are their costs so much lower?


Why costs are so much lower in other countries

  • Administrative simplicity

  • Negotiated prices

  • More primary care and prevention

  • Health planning

  • Global budgets

    They have a system


Fundamental Features of a True Health Care System

  • Everyone included

  • Public Financing

  • Clear accountability

  • Public Stewardship

  • Budget Process


Business thinking applied to healthcare reform

  • What is the overall goal? (Preserve, restore and maintain health)

  • How much do we need? (McKinsey says $650 excess spending)

  • How get more for your money?(administrative savings ,formularies, negotiating prices, more primary care and prevention)

  • How would you collect money?

  • How to control overall costs?-(Budget process,

  • Who is in charge?-How to fix when things go wrong-accountability


Investment Model

  • Healthcare is regarded as a public good with investment in needed services for the whole population

  • The costs of these shared services are spread across the whole population

  • Pools money and pays for health care directly


Single Payer Health Care Systems

  • Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing

  • Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care

  • Everyone has access to privately delivered, publicly financed health care services

  • Public can buy health insurance for services not covered by public plan.


Physicians for a National Health Program

Vermont Health Care for All

Deborah Richter, MD

802-371-7764

PO Box 1467

Montpelier, VT 05601

www.vthca.org

[email protected]


Additional Slides


The oft-repeated canard that doctors are fleeing Canada in droves is not supported by the data.


Pros and cons of a true health care system

PROS

  • Everyone Covered

  • Better benefits

  • Effective Cost Containment

  • Fairer financing

  • Stability of financing of services

  • Coverage not linked to employment

CONS

  • Problems are aired in public

  • Some will pay more than they are now

  • Cost containment measures may cut availability of some services


“If done right, health care in America could be dramatically better with true single-payer coverage.”

-Ben Brewer, WSJ, April 18, 2006

  • “[single-payer] is an idea that's so easy to slam politically yet so sensible for business that only Republicans can sell it! …it may take a Republican President to bless the socialization of health spending we need.”

  • -Matt Miller, Fortune, April 18, 2006

CNBC / MSN Money

  • “Think, as a small business, how you could benefit from a single-payer system: you wouldn’t lose potential employees to larger firms that offer more attractive health benefits; health insurance costs would cease to be a line item in your budget. A serious illness befalling you or an employee wouldn’t be a company-wide financial crisis. You might even save money.”

  • -Joseph Antony, CNBC / MSN Money, Winter 2003


Why have incremental reforms proven so ineffective in practice?


Private Insurers’ High Overhead

International Journal of Health Services 2005; 35(1): 64-90


Obstacles

  • Profit

  • Politics

  • Paranoia

  • Perception

Universal healthcare system


How To Talk To Business About Health Care Reform

February 7, 2009

Deborah Richter, MD


Goals of your talk

  • Change their perception to view healthcare as a public good rather an itemized purchase in the marketplace

  • To understand that we can’t fix anything without a healthcare system

  • To understand we are paying the whole bill anyway

  • If you get these points across, the business case for single payer is much easier


The Business Perspective

  • They are paying too much for healthcare

  • The reason costs are so high is people are using too much care

  • The uninsured are not their responsibility

  • They don’t trust the government


What Business Does Understand

  • Systems

  • Budgets

  • Fixed Costs

  • Efficiency


The American Health Care Crisis

Deborah Richter, MD


Overview

  • Review of the problems

  • Why we are in this mess

  • What we can do about it


The American health care system is neither healthy, caring, nor a system…

Walter Cronkite


U.S. Health Expenditures 2007

$2.2 trillion

30%

Source: Health Affairs Jan/Feb 2009


National Health Spendingas a share of Gross Domestic Product

Projected

Actual

Percentage

GDP

Source: Centers for Medicare & Medicaid Services


Japan Has a $1400 competitive advantage

on every car they sell

$/Car

Source: Modern Healthcare 10/24/05: 14


Health Insurance Costs Keep Rising


Fewer Firms Are Offering Insurance…


46 MillionUninsured


18,314 Die Every Year Due to Lack of Health Insurance

Source: Care Without Coverage;Institute of Medicine,2002


Major Concepts

  • Few people are using healthcare at any one time

  • Most costs are fixed

  • We are already paying the whole bill

  • We don’t have a health care system so we can’t fix anything


National Health Spending:Per Person

Actual

Projected

Per capita

expenditures

Source: Centers for Medicare & Medicaid Services


National Health Spending:Per Person

Actual

Projected

Per capita

expenditures

Source: Centers for Medicare & Medicaid Services


What are the costs?


JOE

Is he the problem?


The 80/20 rule: Most people use very little healthcare

73%

80% uses less than $1400

of care per year

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


Few are using most of the healthcare

73%

20% use 86% of the care

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


U.S. Health Expenditures 2007

70% spent

on services

&

infrastructure

Source: Health Affairs Jan/Feb 2009

30%


Health Care Infrastructure:

As of 2004, the U.S. had:

  • 13.5 million health care jobs

  • 7,228 hospitals with a total of

    955,768 staffed beds

  • 210,939 physician’s offices

  • 70,589 nursing homes

  • 19,006 home care agencies

  • 121,172 dentist’s offices

  • 3 million administrative jobs

Source: National Center for Health Statistics&

Bureau of Labor Statistics


The Implications of Fixed costs

  • The cost of the infrastructure is there whether or not it is used (nurse, hospital)

  • Trying to save money by keeping patients out of the hospital is like trying to save money on schools by keeping kids home for the day


Question:

  • Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?


How do wePAYfor health care?


Health Care Financing

  • We have no state or national healthcare policy

  • We finance health care services on a wing and a prayer (no dedicated funds)

  • Financing of health care amounts to a shell game… no payer wants to pay the fixed costs of health care

  • When that fails we ask the public to step in (risk shift)


If you were an insurance company CEO, who would you want to insure?

73%

AVOID THESE PEOPLE

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


Administration is the Fastest Growing job in Health Care

Source: Bureau of Labor Statistics and NCHS


One-Third of Health Spending is Consumed by Administration

Administrative

Costs

($2000 per person)

Clinical

Care

31%

69%

Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004


Individual health insurance

Taxes for Medicare and Medicaid

Lower wages

Out of pocket

Private employers pay for health insurance

Property taxes

Higher prices for goods

Health insurance for public employees

In the End Individual Households Pay for All of Health Care

INDIVIDUAL

HOUSEHOLDS


Most of Healthcare is already publicly financed

Individuals

20%

Taxpayers

60%

{Medicare, Medicaid.

Public employees,

tax subsidies}

20%

Private

employers

Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150


Do we really have the best health care in the world?


Health Care Overspending

McKinsey Global Institute Dec 2008

$650 billion- the amount overspent on health care compared with other industrialized nations with no discernable benefit to population health.


We spend twice as much on health care as other nations do

$ Per person

OECD, 2006.

Data for Japan is an estimate


US Health Costs Rise Faster than Other Countries’ Costs

Source: Health United States 2005, Natl. Center for Health Statistics


We pay higher taxes

OECD, 2006 & Health Affairs 2002; 21(4): 99


Out of Pocket Costs are Higher

$/per capita

Source: OECD 2006

Data are for 2004 or for most recent year available

Figures adjusted for purchasing power parity


We are one of the Youngest Populations in the Industrialized World

OECD, 2006 (2003 Data)


Fewer Americans Smoke Compared with Other Nations

OECD, 2006 (2003 Data)


We Drink Less Alcohol

OECD, 2006 (2003 Data)


But… We Don’t Live as Long

OECD, 2006 (2003 Data)


More Babies Diein the U.S. in the first year of life

OECD, 2006

Data are for 2004 or more recent year available


Our Quality is Not the Best in the world

Survival Rates for 5 Countries

Source: Health Affairs Vol 23:#3 , 2004


We Do an Average Number of Bone Marrow Transplantsper million people

OECD, 2006 (2003 Data)


We Do More Heart Transplantsper million people

OECD, 2006 (2003 Data)


We are Average in Number of Renal Transplants (2001/2002)

Transplants/million population

OECD, 2004


We are Average in the Number of MRI Units

MRIs/ million population

Source: OECD, 2005

Note: data are for 2004 ,or most recent year available


We Do Fewer Hip Replacements

Procedures per 100,000 population

197

Source: OECD 2006

Data are for 2004 or most recent year available


Other Industrialized Countries

  • Availability of expensive technology

  • Rising drug costs

  • Have similar demographics

  • Similar levels of service

    Why are their costs so much lower?


Why costs are so much lower in other countries

  • Administrative simplicity

  • Negotiated prices

  • More primary care and prevention

  • Health planning

  • Global budgets

    They have a system


Fundamental Features of a True Health Care System

  • Everyone included

  • Public Financing

  • Clear accountability

  • Public Stewardship

  • Budget Process


Business thinking applied to healthcare reform

  • What is the overall goal? (Preserve, restore and maintain health)

  • How much do we need? (McKinsey says $650 excess spending)

  • How get more for your money?(administrative savings ,formularies, negotiating prices, more primary care and prevention)

  • How would you collect money?

  • How to control overall costs?-(Budget process,

  • Who is in charge?-How to fix when things go wrong-accountability


Investment Model

  • Healthcare is regarded as a public good with investment in needed services for the whole population

  • The costs of these shared services are spread across the whole population

  • Pools money and pays for health care directly


Single Payer Health Care Systems

  • Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing

  • Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care

  • Everyone has access to privately delivered, publicly financed health care services

  • Public can buy health insurance for services not covered by public plan.


Physicians for a National Health Program

Vermont Health Care for All

Deborah Richter, MD

802-371-7764

PO Box 1467

Montpelier, VT 05601

www.vthca.org

[email protected]


Additional Slides


The oft-repeated canard that doctors are fleeing Canada in droves is not supported by the data.


Pros and cons of a true health care system

PROS

  • Everyone Covered

  • Better benefits

  • Effective Cost Containment

  • Fairer financing

  • Stability of financing of services

  • Coverage not linked to employment

CONS

  • Problems are aired in public

  • Some will pay more than they are now

  • Cost containment measures may cut availability of some services


“If done right, health care in America could be dramatically better with true single-payer coverage.”

-Ben Brewer, WSJ, April 18, 2006

  • “[single-payer] is an idea that's so easy to slam politically yet so sensible for business that only Republicans can sell it! …it may take a Republican President to bless the socialization of health spending we need.”

  • -Matt Miller, Fortune, April 18, 2006

CNBC / MSN Money

  • “Think, as a small business, how you could benefit from a single-payer system: you wouldn’t lose potential employees to larger firms that offer more attractive health benefits; health insurance costs would cease to be a line item in your budget. A serious illness befalling you or an employee wouldn’t be a company-wide financial crisis. You might even save money.”

  • -Joseph Antony, CNBC / MSN Money, Winter 2003


Why have incremental reforms proven so ineffective in practice?


Private Insurers’ High Overhead

International Journal of Health Services 2005; 35(1): 64-90


Obstacles

  • Profit

  • Politics

  • Paranoia

  • Perception

Universal healthcare system


How To Talk To Business About Health Care Reform

February 7, 2009

Deborah Richter, MD


Goals of your talk

  • Change their perception to view healthcare as a public good rather an itemized purchase in the marketplace

  • To understand that we can’t fix anything without a healthcare system

  • To understand we are paying the whole bill anyway

  • If you get these points across, the business case for single payer is much easier


The Business Perspective

  • They are paying too much for healthcare

  • The reason costs are so high is people are using too much care

  • The uninsured are not their responsibility

  • They don’t trust the government


What Business Does Understand

  • Systems

  • Budgets

  • Fixed Costs

  • Efficiency


The American Health Care Crisis

Deborah Richter, MD


Overview

  • Review of the problems

  • Why we are in this mess

  • What we can do about it


The American health care system is neither healthy, caring, nor a system…

Walter Cronkite


U.S. Health Expenditures 2007

$2.2 trillion

30%

Source: Health Affairs Jan/Feb 2009


National Health Spendingas a share of Gross Domestic Product

Projected

Actual

Percentage

GDP

Source: Centers for Medicare & Medicaid Services


Japan Has a $1400 competitive advantage

on every car they sell

$/Car

Source: Modern Healthcare 10/24/05: 14


Health Insurance Costs Keep Rising


Fewer Firms Are Offering Insurance…


46 MillionUninsured


18,314 Die Every Year Due to Lack of Health Insurance

Source: Care Without Coverage;Institute of Medicine,2002


Major Concepts

  • Few people are using healthcare at any one time

  • Most costs are fixed

  • We are already paying the whole bill

  • We don’t have a health care system so we can’t fix anything


National Health Spending:Per Person

Actual

Projected

Per capita

expenditures

Source: Centers for Medicare & Medicaid Services


National Health Spending:Per Person

Actual

Projected

Per capita

expenditures

Source: Centers for Medicare & Medicaid Services


What are the costs?


JOE

Is he the problem?


The 80/20 rule: Most people use very little healthcare

73%

80% uses less than $1400

of care per year

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


Few are using most of the healthcare

73%

20% use 86% of the care

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


U.S. Health Expenditures 2007

70% spent

on services

&

infrastructure

Source: Health Affairs Jan/Feb 2009

30%


Health Care Infrastructure:

As of 2004, the U.S. had:

  • 13.5 million health care jobs

  • 7,228 hospitals with a total of

    955,768 staffed beds

  • 210,939 physician’s offices

  • 70,589 nursing homes

  • 19,006 home care agencies

  • 121,172 dentist’s offices

  • 3 million administrative jobs

Source: National Center for Health Statistics&

Bureau of Labor Statistics


The Implications of Fixed costs

  • The cost of the infrastructure is there whether or not it is used (nurse, hospital)

  • Trying to save money by keeping patients out of the hospital is like trying to save money on schools by keeping kids home for the day


Question:

  • Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?


How do wePAYfor health care?


Health Care Financing

  • We have no state or national healthcare policy

  • We finance health care services on a wing and a prayer (no dedicated funds)

  • Financing of health care amounts to a shell game… no payer wants to pay the fixed costs of health care

  • When that fails we ask the public to step in (risk shift)


If you were an insurance company CEO, who would you want to insure?

73%

AVOID THESE PEOPLE

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


Administration is the Fastest Growing job in Health Care

Source: Bureau of Labor Statistics and NCHS


One-Third of Health Spending is Consumed by Administration

Administrative

Costs

($2000 per person)

Clinical

Care

31%

69%

Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004


Individual health insurance

Taxes for Medicare and Medicaid

Lower wages

Out of pocket

Private employers pay for health insurance

Property taxes

Higher prices for goods

Health insurance for public employees

In the End Individual Households Pay for All of Health Care

INDIVIDUAL

HOUSEHOLDS


Most of Healthcare is already publicly financed

Individuals

20%

Taxpayers

60%

{Medicare, Medicaid.

Public employees,

tax subsidies}

20%

Private

employers

Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150


Do we really have the best health care in the world?


Health Care Overspending

McKinsey Global Institute Dec 2008

$650 billion- the amount overspent on health care compared with other industrialized nations with no discernable benefit to population health.


We spend twice as much on health care as other nations do

$ Per person

OECD, 2006.

Data for Japan is an estimate


US Health Costs Rise Faster than Other Countries’ Costs

Source: Health United States 2005, Natl. Center for Health Statistics


We pay higher taxes

OECD, 2006 & Health Affairs 2002; 21(4): 99


Out of Pocket Costs are Higher

$/per capita

Source: OECD 2006

Data are for 2004 or for most recent year available

Figures adjusted for purchasing power parity


We are one of the Youngest Populations in the Industrialized World

OECD, 2006 (2003 Data)


Fewer Americans Smoke Compared with Other Nations

OECD, 2006 (2003 Data)


We Drink Less Alcohol

OECD, 2006 (2003 Data)


But… We Don’t Live as Long

OECD, 2006 (2003 Data)


More Babies Diein the U.S. in the first year of life

OECD, 2006

Data are for 2004 or more recent year available


Our Quality is Not the Best in the world

Survival Rates for 5 Countries

Source: Health Affairs Vol 23:#3 , 2004


We Do an Average Number of Bone Marrow Transplantsper million people

OECD, 2006 (2003 Data)


We Do More Heart Transplantsper million people

OECD, 2006 (2003 Data)


We are Average in Number of Renal Transplants (2001/2002)

Transplants/million population

OECD, 2004


We are Average in the Number of MRI Units

MRIs/ million population

Source: OECD, 2005

Note: data are for 2004 ,or most recent year available


We Do Fewer Hip Replacements

Procedures per 100,000 population

197

Source: OECD 2006

Data are for 2004 or most recent year available


Other Industrialized Countries

  • Availability of expensive technology

  • Rising drug costs

  • Have similar demographics

  • Similar levels of service

    Why are their costs so much lower?


Why costs are so much lower in other countries

  • Administrative simplicity

  • Negotiated prices

  • More primary care and prevention

  • Health planning

  • Global budgets

    They have a system


Fundamental Features of a True Health Care System

  • Everyone included

  • Public Financing

  • Clear accountability

  • Public Stewardship

  • Budget Process


Business thinking applied to healthcare reform

  • What is the overall goal? (Preserve, restore and maintain health)

  • How much do we need? (McKinsey says $650 excess spending)

  • How get more for your money?(administrative savings ,formularies, negotiating prices, more primary care and prevention)

  • How would you collect money?

  • How to control overall costs?-(Budget process,

  • Who is in charge?-How to fix when things go wrong-accountability


Investment Model

  • Healthcare is regarded as a public good with investment in needed services for the whole population

  • The costs of these shared services are spread across the whole population

  • Pools money and pays for health care directly


Single Payer Health Care Systems

  • Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing

  • Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care

  • Everyone has access to privately delivered, publicly financed health care services

  • Public can buy health insurance for services not covered by public plan.


Physicians for a National Health Program

Vermont Health Care for All

Deborah Richter, MD

802-371-7764

PO Box 1467

Montpelier, VT 05601

www.vthca.org

[email protected]


Additional Slides


The oft-repeated canard that doctors are fleeing Canada in droves is not supported by the data.


Pros and cons of a true health care system

PROS

  • Everyone Covered

  • Better benefits

  • Effective Cost Containment

  • Fairer financing

  • Stability of financing of services

  • Coverage not linked to employment

CONS

  • Problems are aired in public

  • Some will pay more than they are now

  • Cost containment measures may cut availability of some services


“If done right, health care in America could be dramatically better with true single-payer coverage.”

-Ben Brewer, WSJ, April 18, 2006

  • “[single-payer] is an idea that's so easy to slam politically yet so sensible for business that only Republicans can sell it! …it may take a Republican President to bless the socialization of health spending we need.”

  • -Matt Miller, Fortune, April 18, 2006

CNBC / MSN Money

  • “Think, as a small business, how you could benefit from a single-payer system: you wouldn’t lose potential employees to larger firms that offer more attractive health benefits; health insurance costs would cease to be a line item in your budget. A serious illness befalling you or an employee wouldn’t be a company-wide financial crisis. You might even save money.”

  • -Joseph Antony, CNBC / MSN Money, Winter 2003


Why have incremental reforms proven so ineffective in practice?


Private Insurers’ High Overhead

International Journal of Health Services 2005; 35(1): 64-90


Obstacles

  • Profit

  • Politics

  • Paranoia

  • Perception

Universal healthcare system


How To Talk To Business About Health Care Reform

February 7, 2009

Deborah Richter, MD


How To Talk To Business About Health Care Reform

February 7, 2009

Deborah Richter, MD


Goals of your talk

  • Change their perception to view healthcare as a public good rather an itemized purchase in the marketplace

  • To understand that we can’t fix anything without a healthcare system

  • To understand we are paying the whole bill anyway

  • If you get these points across, the business case for single payer is much easier


The Business Perspective

  • They are paying too much for healthcare

  • The reason costs are so high is people are using too much care

  • The uninsured are not their responsibility

  • They don’t trust the government


What Business Does Understand

  • Systems

  • Budgets

  • Fixed Costs

  • Efficiency


The American Health Care Crisis

Deborah Richter, MD


Overview

  • Review of the problems

  • Why we are in this mess

  • What we can do about it


The American health care system is neither healthy, caring, nor a system…

Walter Cronkite


U.S. Health Expenditures 2007

$2.2 trillion

30%

Source: Health Affairs Jan/Feb 2009


National Health Spendingas a share of Gross Domestic Product

Projected

Actual

Percentage

GDP

Source: Centers for Medicare & Medicaid Services


Japan Has a $1400 competitive advantage

on every car they sell

$/Car

Source: Modern Healthcare 10/24/05: 14


Health Insurance Costs Keep Rising


Fewer Firms Are Offering Insurance…


46 MillionUninsured


18,314 Die Every Year Due to Lack of Health Insurance

Source: Care Without Coverage;Institute of Medicine,2002


Major Concepts

  • Few people are using healthcare at any one time

  • Most costs are fixed

  • We are already paying the whole bill

  • We don’t have a health care system so we can’t fix anything


National Health Spending:Per Person

Actual

Projected

Per capita

expenditures

Source: Centers for Medicare & Medicaid Services


National Health Spending:Per Person

Actual

Projected

Per capita

expenditures

Source: Centers for Medicare & Medicaid Services


What are the costs?


JOE

Is he the problem?


The 80/20 rule: Most people use very little healthcare

73%

80% uses less than $1400

of care per year

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


Few are using most of the healthcare

73%

20% use 86% of the care

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


U.S. Health Expenditures 2007

70% spent

on services

&

infrastructure

Source: Health Affairs Jan/Feb 2009

30%


Health Care Infrastructure:

As of 2004, the U.S. had:

  • 13.5 million health care jobs

  • 7,228 hospitals with a total of

    955,768 staffed beds

  • 210,939 physician’s offices

  • 70,589 nursing homes

  • 19,006 home care agencies

  • 121,172 dentist’s offices

  • 3 million administrative jobs

Source: National Center for Health Statistics&

Bureau of Labor Statistics


The Implications of Fixed costs

  • The cost of the infrastructure is there whether or not it is used (nurse, hospital)

  • Trying to save money by keeping patients out of the hospital is like trying to save money on schools by keeping kids home for the day


Question:

  • Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?


How do wePAYfor health care?


Health Care Financing

  • We have no state or national healthcare policy

  • We finance health care services on a wing and a prayer (no dedicated funds)

  • Financing of health care amounts to a shell game… no payer wants to pay the fixed costs of health care

  • When that fails we ask the public to step in (risk shift)


If you were an insurance company CEO, who would you want to insure?

73%

AVOID THESE PEOPLE

Percent

of

health

Care

Expenditures

13%

6%

4%

0% 0% 0%

1% 1% 2%

Source:Agency for Healthcare Research and Quality

MEPS, 1999


Administration is the Fastest Growing job in Health Care

Source: Bureau of Labor Statistics and NCHS


One-Third of Health Spending is Consumed by Administration

Administrative

Costs

($2000 per person)

Clinical

Care

31%

69%

Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004


Individual health insurance

Taxes for Medicare and Medicaid

Lower wages

Out of pocket

Private employers pay for health insurance

Property taxes

Higher prices for goods

Health insurance for public employees

In the End Individual Households Pay for All of Health Care

INDIVIDUAL

HOUSEHOLDS


Most of Healthcare is already publicly financed

Individuals

20%

Taxpayers

60%

{Medicare, Medicaid.

Public employees,

tax subsidies}

20%

Private

employers

Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150


Do we really have the best health care in the world?


Health Care Overspending

McKinsey Global Institute Dec 2008

$650 billion- the amount overspent on health care compared with other industrialized nations with no discernable benefit to population health.


We spend twice as much on health care as other nations do

$ Per person

OECD, 2006.

Data for Japan is an estimate


US Health Costs Rise Faster than Other Countries’ Costs

Source: Health United States 2005, Natl. Center for Health Statistics


We pay higher taxes

OECD, 2006 & Health Affairs 2002; 21(4): 99


Out of Pocket Costs are Higher

$/per capita

Source: OECD 2006

Data are for 2004 or for most recent year available

Figures adjusted for purchasing power parity


We are one of the Youngest Populations in the Industrialized World

OECD, 2006 (2003 Data)


Fewer Americans Smoke Compared with Other Nations

OECD, 2006 (2003 Data)


We Drink Less Alcohol

OECD, 2006 (2003 Data)


But… We Don’t Live as Long

OECD, 2006 (2003 Data)


More Babies Diein the U.S. in the first year of life

OECD, 2006

Data are for 2004 or more recent year available


Our Quality is Not the Best in the world

Survival Rates for 5 Countries

Source: Health Affairs Vol 23:#3 , 2004


We Do an Average Number of Bone Marrow Transplantsper million people

OECD, 2006 (2003 Data)


We Do More Heart Transplantsper million people

OECD, 2006 (2003 Data)


We are Average in Number of Renal Transplants (2001/2002)

Transplants/million population

OECD, 2004


We are Average in the Number of MRI Units

MRIs/ million population

Source: OECD, 2005

Note: data are for 2004 ,or most recent year available


We Do Fewer Hip Replacements

Procedures per 100,000 population

197

Source: OECD 2006

Data are for 2004 or most recent year available


Other Industrialized Countries

  • Availability of expensive technology

  • Rising drug costs

  • Have similar demographics

  • Similar levels of service

    Why are their costs so much lower?


Why costs are so much lower in other countries

  • Administrative simplicity

  • Negotiated prices

  • More primary care and prevention

  • Health planning

  • Global budgets

    They have a system


Fundamental Features of a True Health Care System

  • Everyone included

  • Public Financing

  • Clear accountability

  • Public Stewardship

  • Budget Process


Business thinking applied to healthcare reform

  • What is the overall goal? (Preserve, restore and maintain health)

  • How much do we need? (McKinsey says $650 excess spending)

  • How get more for your money?(administrative savings ,formularies, negotiating prices, more primary care and prevention)

  • How would you collect money?

  • How to control overall costs?-(Budget process,

  • Who is in charge?-How to fix when things go wrong-accountability


Investment Model

  • Healthcare is regarded as a public good with investment in needed services for the whole population

  • The costs of these shared services are spread across the whole population

  • Pools money and pays for health care directly


Single Payer Health Care Systems

  • Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing

  • Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care

  • Everyone has access to privately delivered, publicly financed health care services

  • Public can buy health insurance for services not covered by public plan.


Physicians for a National Health Program

Vermont Health Care for All

Deborah Richter, MD

802-371-7764

PO Box 1467

Montpelier, VT 05601

www.vthca.org

[email protected]


Additional Slides


The oft-repeated canard that doctors are fleeing Canada in droves is not supported by the data.


Pros and cons of a true health care system

PROS

  • Everyone Covered

  • Better benefits

  • Effective Cost Containment

  • Fairer financing

  • Stability of financing of services

  • Coverage not linked to employment

CONS

  • Problems are aired in public

  • Some will pay more than they are now

  • Cost containment measures may cut availability of some services


“If done right, health care in America could be dramatically better with true single-payer coverage.”

-Ben Brewer, WSJ, April 18, 2006

  • “[single-payer] is an idea that's so easy to slam politically yet so sensible for business that only Republicans can sell it! …it may take a Republican President to bless the socialization of health spending we need.”

  • -Matt Miller, Fortune, April 18, 2006

CNBC / MSN Money

  • “Think, as a small business, how you could benefit from a single-payer system: you wouldn’t lose potential employees to larger firms that offer more attractive health benefits; health insurance costs would cease to be a line item in your budget. A serious illness befalling you or an employee wouldn’t be a company-wide financial crisis. You might even save money.”

  • -Joseph Antony, CNBC / MSN Money, Winter 2003


Why have incremental reforms proven so ineffective in practice?


Private Insurers’ High Overhead

International Journal of Health Services 2005; 35(1): 64-90


Obstacles

  • Profit

  • Politics

  • Paranoia

  • Perception

Universal healthcare system


  • Login