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Building the Foundation: Health Care Costs

Building the Foundation: Health Care Costs. Presentation to the Citizens’ Health Care Working Group May 13, 2005. Jennifer Jenson Specialist in Health Economics. The Big Picture: National and Federal Health Spending. US spending: est. $1.9 trillion in 2005 $6,423/person

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Building the Foundation: Health Care Costs

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  1. Building the Foundation: Health Care Costs Presentation to the Citizens’ Health Care Working Group May 13, 2005 Jennifer Jenson Specialist in Health Economics

  2. The Big Picture: National and Federal Health Spending • US spending: est. $1.9 trillion in 2005 • $6,423/person • More than 15% of GDP • Federal spending in 2005 • Medicare, Medicaid and SCHIP ($520 billion) • Tax expenditures for health insurance and expenses (about $90 billion) • Health benefits for military, veterans, and federal employees ($89 billion) • Public health service ($52 billion) Building the Foundation: Health Care Costs (May 13, 2005)

  3. The Big Picture: Private Insurance Premiums & Coverage • Premiums for employer coverage in 2004 • $3695 Individual, $9,950 Family of four • Source of coverage in 2003 (v. 2000) • 63.9% Employer (down from 67.8%) • 5.3% Nongroup (up from 5.1%) • 10.9% Medicaid & state (up from 8.8%) • 2.3% Veterans and Medicare (up from 2.1%) • 17.7% Uninsured (up from 16.1%) • How much is too much? Building the Foundation: Health Care Costs (May 13, 2005)

  4. Thinking About Spending International perspective Valuing health care compared with other goods What can we afford? 1 2 3 Building the Foundation: Health Care Costs (May 13, 2005)

  5. International Perspective • US spends more on health care than other developed countries • 14.6% of GDP in 2002 (OECD) • 8.5% median for OECD countries • Per capita spending more than double OECD median • But given our wealth, this isn’t necessarily a problem Building the Foundation: Health Care Costs (May 13, 2005)

  6. Health Care v. Other Goods • Despite high spending • Might want to spend the same amount • Or even more on health care • Choice depends on how we value health care, compared with other goods Building the Foundation: Health Care Costs (May 13, 2005)

  7. U.S. Spending on Health Care and Other Items In 1996 dollars Source: Chernew, et al., Health Affairs (July/Aug 2003) Building the Foundation: Health Care Costs (May 13, 2005)

  8. What Can We Afford? • A growing economy can support both • More spending on health care and • More spending on everything else • Federal spending on health has costs • Opportunity costs, national saving • Distribution matters • Uninsured, access to care Building the Foundation: Health Care Costs (May 13, 2005)

  9. Getting More for Our Money • General sense that we could do better • U.S. public health statistics are average • Infant mortality • Life expectancy at birth • Variation in spending seems unrelated to outcomes or satisfaction with care • Could buy more with the same money • Or the same with less money Building the Foundation: Health Care Costs (May 13, 2005)

  10. Optimism is a Good Thing • Genetics and science • Care management • Information technology • Focus on health • But it also helps to be realistic • Technology both a solution and a problem • Tension between goals regarding access and spending • Ultimately, spending = (price) x (quantity) Building the Foundation: Health Care Costs (May 13, 2005)

  11. What Next? • Disclaimer • Federal perspective • Individuals, employers, states, insurers, and health care providers all are important • Three policy directions • Changing health care • Changing federal programs • Improving access to private insurance Building the Foundation: Health Care Costs (May 13, 2005)

  12. Changing Health Care • Goal is improving quality and efficiency • And maybe reducing costs in the process • What are we buying? • Focus on high-cost patients and conditions • Case management, disease management • And on health (vs. medical care) • Improving the delivery system • Technology a terrific tool • But also need a paradigm shift Building the Foundation: Health Care Costs (May 13, 2005)

  13. Changing Federal Programs • Tools for influencing federal spending • Set a budget • Change eligibility and/or benefits • Change other program features • Tension between competing objectives • Access to benefits • Adequate payments for providers • Controlling spending Building the Foundation: Health Care Costs (May 13, 2005)

  14. Improving Access to Health Insurance and Health Care • Subsidies for insurance • Exclusion for employer-provided coverage • Deduction for self-employed workers • Tax credit for certain displaced workers • Subsidies for health expenses • Deduction for spending exceeding 7.5% of AGI • Tax-favored accounts • Reduce the apparent cost of insurance and care, but probably increase spending Building the Foundation: Health Care Costs (May 13, 2005)

  15. You Have a Difficult Job! • Things to keep in mind • Shifting costs is not reducing costs • Spending less probably means using less • What do we value as individuals and as a society? • Government can play an important role • Information and coordination • Scientific research, consumer and provider education, guidelines/standards for systems, and more • Financing care – For whom? Building the Foundation: Health Care Costs (May 13, 2005)

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