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The American Health Care System. Tom Schlesinger, Ph.D . Executive Consultant Gundersen Lutheran. How the current system came about. Medicine in early 20 th Century. Physician. Patient. Medicine in the 1930s-1970s Third Party Payment. Physician. Problems Overconsumption

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the american health care system

The American Health Care System

Tom Schlesinger, Ph.D.

Executive Consultant

Gundersen Lutheran

medicine in the 1930s 1970s third party payment
Medicine in the 1930s-1970sThird Party Payment




Payer has no impact on supply and demand



medicine in the 1980s 1990s managed care




Medicine in the 1980s-1990sManaged Care

Payers attempt to control costs by regulating the supply of health care.

medicine in the 1980s 1990s managed care1
Medicine in the 1980s-1990sManaged Care
  • Lower costs through:
      • Controlling supply Pre-authorizations
      • Provider incentives
      • Lower fees through exclusive agreements with providers
  • But patients have little ‘skin in the game.’
decline of managed care 1990s
Decline of Managed Care 1990s
  • Restricted freedom of choice
    • Unpopular with many doctors and patients
  • Managed care loosened restrictions
    • End of ‘exclusive’ networks, pre-auths.
  • But with fewer restrictions, we also saw the return of higher prices
access quality
Access Quality

How else can we as a society try and control costs while improving quality?



Developing countries

Developed countries


U.S. only developed country w/o near universal coverage*

US has over 15% uninsured

- 45.7 million people

Equal to populations of

New York, Ohio, Pennsylvania

backdrop the appropriate role of government
Backdrop: The Appropriate Role of Government



Individual Responsibility

Liberty/ Minimal government

Free Market

Emphasis on Equity/Fairness

Role of Government to correct market failures

access new legislation
ACCESSNew Legislation

Public option

Individual mandate

Subsidies for poor/small businesses

Expansion of Medicaid Coverage

Insurance Exchange

Improve individual/sm business market

Standard Packages

  • Among the 29 industrialized nations,

the United States ranks:

Infant mortality – ?

Life Expectancy – ?



why do we score low on this rough indicators

Why Do We Score Low on this rough indicators?

U.S. health status varies based on race, income


But in terms of:

  • Spread of advanced technology

We rank near the top

but there are really cost problems
But there are really cost problems


  • We spend so much more than other developed countries
  • Health care costs continue to rise much more quickly than everything else
what drives the rate of increase
What Drives the Rate of Increase?
  • Widespread use of expensive tests and treatments, much of it of marginal value
  • Rising prevalence of chronic disease, some estimates put it at 75% of health care costs

- Much of this due to lifestyle choices

where are the costs
Where are the costs?

The top-spending 5% of patients account for almost 50% of all costs!

reform cost no bold ideas
Reform – Cost / No Bold Ideas
  • Prevention/wellness
  • HIT
  • Tax on Cadillac (Maserati) plans
  • Comparative effectiveness research
  • Pay for Performance
  • Accountable Care Organizations
how to limit cost increases
How to Limit Cost Increases?
  • Efforts to increase access will ultimately fail unless we can address underlying cost problems?
  • Will Americans accept limits on how much health care they can receive?
left unsaid
Left Unsaid…
  • How will we control rising utilization of high technology?
    • Ration care??
    • Set global budgets? Regulatory
    • Pass along more cost to pts? Market
    • Reduce marginal treatments?
  • Much of the political debate centers around the nature of health insurance
    • Should it be a ‘market good’ purchased privately?
    • Or is it closer to a right of citizenship like K-12 education, and guaranteed by the government?
under republican leadership the health care reforms were
Under Republican Leadership the health care reforms were:

Public Reporting


Pay for Performance