Author: Justin P. Swearingen, MHA, DrPH

1. Author:Justin P. Swearingen, MHA, DrPH Introduction to issues in the US Health System

2. The US Healthcare System • Many people believe that the US Health Care System is too complex for the average consumer to understand. • While it can be confusing, it is not as challenging as it seems! • Getting involved in the world of healthcare policy for the first time can be as exhilarating and intimidating as jumping on a moving train • everything is in motion, change is constant, and the excitement builds once your on board!

3. Trends and Directions Illness Wellness Acute care Primary care Inpatient Outpatient Individual health Community wellbeing Fragmented care Managed care Independence Integrated systems Service duplication Service Continuum

4. The Irion Triangle There has to be a balance Increased Access to Everyone = increase costs OR let quality suffer Best Quality Health System = expensive OR require limiting access to it Dramatically Decrease Cost = Less people are using it OR lower quality tech

5. The Call for Reform! Let’s watch a 6 min video: The Future of US Healthcare http://youtu.be/y51eT-1-BE8 Costs are rising faster than inflation: • $2.5 trillion spent on health care in 2009 • Represents 17.6% of Gross Domestic Product • By 2020, it is projected be upwards of 20% of GDP… and growing! Health Insurance Access is decreasing: • 50 million people are uninsured (16.7%) in 2009 • 40 Million seniors (doubling in next 30 years) The Delivery System Quality is Strained: • Disparities in health • WHO: 37th among the world health systems • #1 in Obesity (>30%) • #47th infant survival

6. “America has the finest healthcare system in the world” – Right? • Its truth depends on the criteria used to evaluate the system. The Best or the Worst? • Best: • medical technology • medical training • research • sophistication • institutions • products • processes • Worst: • duplication • overlap • inadequacy • inconsistency • waste • complexity • inefficiency • financial manipulation • fragmentation

7. Health System Overview • The Health System (A very high-level overview)- First 4 minutes • https://www.khanacademy.org/science/healthcare-and-medicine/health-care-system/v/healthcare-system-overview?playlist=Healthcare%20and%20Medicine

8. Don’t worry! It will become more clear!

9. Health Workforce • The health care workforce employs approximately 16 million people • 822,000 active MDs • 70,480 DO’s • 2.5 million nurses • 5,815 hospitals • 15,730 nursing homes • 1,131 health centers • 300+ medical, dental and pharmacy schools • 1,500+ nursing programs

10. How does the US compare? K. Davis, C. Schoen, and K. Stremikis, Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally 2010 Update, The Commonwealth Fund, June 2010.

11. Government’s Role(s) • Major financier of health care delivery • Determine reimbursement rates to providers who render Medicare / Medicaid services • Regulates through licensing personnel and health care establishments • Health policy

12. Iron Triangle: Cost • Three meanings(be clear about what you mean) • Price: physician’s bill, prescription bill, premiums paid 2) Expenditures: how much a nation spends on health care (Hospital services, doctor visits, pharmaceuticals, etc.) 3) Production: cost of production (staff salaries, capital, supplies)

13. Highest Costs (Per person and GDP)

14. What is driving health care costs? • Technology and Drugs- Expensive tech and new drugs fuel health care spending: Need to recoup investment, Advertising, Demand • Chronic disease –Longer life spans and greater prevalence of chronic illnesses.  • Aging of the population – Health expenses rise with age and as the baby boomers are now in their middle years, • Administrative costs – The costs of overseeing and managing health services (e.g., marketing, billing) • Imperfect market- Doctor’s make decisions (as agents) for patients who don’t usually pay for services themselves. i.e: Providers control how much money they make. • Defensive medicine- actions to safeguard against possible malpractice liability, not the health of the patient • Waste and abuse- Fraudulent billing • Practice variations- More services than necessary for same outcome

15. Imperfect Market • No Free Market: Market prices are “set” by external agencies and are not governed by supply and demand. • Barriers to Market Entry: High technology and education costs make it hard to competition to enter the market • Asymmetry of Information: Patients lack the skills, time and resources to make rational decisions. Prices are also not transparent. • Moral Hazard: Patients do not directly bare the costs of all services. Once people have health insurance, they will use more than if they had to pay • Agents: Patients do not make their own decisions. Instead, a health provider makes decisions for them as their “agent.” Agents do not always have an incentive to do best for the consumer (provider-induced demand) Such “market failure” is often used as a justification for government intervention

16. What are the major proposals to contain costs? • Managed Care: Greater control over utilization of services (seemed to generate savings:1980s and 1990s… than backlash) • Investment in information technology (IT) – Greater use of technology, such as electronic medical records (EMR), has potential to more efficiently share information and reduce overhead costs.  • Improving quality and efficiency –Decreasing unwarranted variation in medical practice and decrease unnecessary spending (Some experts estimate that up to 30% of health care is unnecessary) • Adjusting provider compensation – The current system of provider compensation pays physicians a given fee per procedure or test.Currently, there are proposals to revamp some provider payments to ensure that fees paid to physicians reward value and health outcomes, rather than volume of care. • Universal Healthcare: Combining aspects of delivery and finance to produce the most cost-effective outcomes

17. What are the major proposals to contain costs? • Government regulation –Medicare seen as a success and private market fails the disadvantaged. Regulation may stifles innovation and market-based approaches could be more cost-effective with more choice. • Prevention - Chronic diseases (diabetes, heart disease) has risen dramatically. Proposals to emphasize prevention by providing financial incentives for wellness. Paradoxically unclear how prevention programs will decrease costs, as healthier people will use the health system longer.  • Disease management- To improve and streamline the treatment regimen and costs for common, chronic health conditions. • Increasing consumer involvement in purchasing – “Consumer-driven” health care, greater price transparency, more price sensitive and more prudent purchasers and thus save consumers and employers money.  • Altering employer-sponsored taxes – Currently, employees do not pay income tax on money employers spend on their health insurance. Unfair to unemployed, unhealthy, etc. Could tax these to benefit all.

18. Iron Triangle: Access Access is the ability to obtain services when needed Four factors that affect access: • Ability to pay • Do you have health insurance? • Availability of services • Rural and remote areas lack adequate services • Acceptance of Payment • Many providers don’t accept Medicaid • Enablement barriers • Transportation, racial, cultural and language barriers

19. Insurance Mechanisms • Employer-based health insurance (private) • Blue Cross, United, Aetna • Privately-purchased health insurance • Blue Cross, United, Aetna • Government programs (public) • Federal/ State Employees • Employees • Medicare • Elderly and certain disabled people • Medicaid and SCHIP • Indigent, poor (if they meet the eligibility criteria), children • TriCare • Military

20. Insurance Trends • A slight majority obtain insurance • through employer • Employer-based is quickly decreasing • Government insurance is rising • Uninsured is rising

21. Insurance Coverage

22. Sometime in 2011-2012Gov’t spending>Private Spending FEBRUARY 4, 2010 “Public Health Tab to Hit Milestone” Wall Street Journal http://online.wsj.com/article/SB10001424052748703575004575043490639289022.html

23. Premium Growth

24. An Unsustainable System

25. Why Are People Uninsured? • Unemployed • Unemployed individuals lack group buying power, so same plan is MUCH more expensive • Employers not required to offer health insurance • Percent of employers offering health insurance is decreasing (Working poor) • Employees not required to buy health insurance • Some cannot afford, even when offered (Working poor) • Don’t fit eligibility of government programs • Such as childless adults

26. Where are the uninsured?

27. Iron Triangle: Quality • The Institute of Medicine defines healthcare quality as: • the extent to which health services provided to individuals and patient populations improve desired health outcomes • Care should be based on • the strongest clinical evidence • and provided in a technically and culturally competent manner • with good communication and shared decision making.

28. Six Aims The Institute of Medicine has designed six “aims” for improving the delivery of care in the United States: • Safe- Avoiding preventable injuries, reducing medical errors • Effective- Providing services based on scientific knowledge (clinical guidelines) • Patient centered- Care that is respectful and responsive to individuals • Efficient- Avoiding wasting time and other resources • Timely- Reducing wait times, improving the practice flow • Equitable- Consistent care regardless of patient characteristics and demographics

29. Micro • Clinical (technical) aspects: # of health attack patients getting aspirin • Interpersonal aspects: Patient Satisfaction • Quality of life: Activities of Daily Living • Macro • Mortality- Death from Cancer • Incidence and prevalence: Prevalence of Diabetes Quality is Multidimensional

30. Access – Cost - Quality

31. Discussion Video: Access to Healthcare American Cancer Society: http://youtu.be/-O1Woc145F8