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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

Physician

Problems

Overconsumption

Payer has no impact on supply and demand

Payer

Patient

medicine in the 1980s 1990s managed care

“Provider”

Payer

Patient

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?

Cost

access1
ACCESS

Developing countries

Developed countries

access2
ACCESS

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

CONSERVATIVE

LIBERAL

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

quality1
QUALITY
  • Among the 29 industrialized nations,

the United States ranks:

Infant mortality – ?

Life Expectancy – ?

24th

19th

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

quality2
QUALITY

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

2

  • 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?
discussion
Discussion
  • 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

(Measurement)

Pay for Performance

Consumerism