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Health Services Policy Reform Partial Facts and Partial Myths. Dale Lehman Professor of Economics Director, MBA Program Alaska Pacific University October 24, 2009 http://polar.alaskapacific.edu/dlehman. The three legged stool. Cost Why are the US costs so high? Who pays for this?.
Professor of Economics
Director, MBA Program
Alaska Pacific University
October 24, 2009
Why are the US costs so high?
Who pays for this?
Who is uninsured?
How good is our coverage?
What do we get for our money?
How does the US rank?
Conclusion: The US spends a LOT more than other countries
Conclusion: Overall medical service availability does not account for our higher costs
Conclusion: it’s not the usage that accounts for the higher costs in the US, although there are some anomalies
Conclusion: we don’t live longer
“Differences in Disease Prevalence As A Source Of The U.S. – European Health Care Spending Gap,” Thorpe, et.al., Health Affairs, Oct. 2007 (2004 data)
Over age 50 population
Disease prevalence is higher in the US than in Europe
Treatment rates are higher in the US than in Europe
US lives are shorter, but much is due to other causes of death (accidents, crime, etc.) – but also higher infant mortality and less use of services by the uninsured.
OECD, Country Surveys, the USA, chapter 3, “Health Care Reform, 2008
Conclusion: we don’t live healthy lifestyles – this should affect our spending on health care
What about genetics?
Wide ranges of estimates, but US doctors earn more – true for both primary care doctors and hospital doctors
Source: “Comparing Physicians’ Earnings: Current Knowledge and Challenges, A Report for the Department of Health, NERA Economic Consulting, 2004
International Federation of Health Plans, 2009
Does not include legal defense and defensive medicine expenditures
US Comparisons of Services with the OECD“US Health Care Spending: Comparison with Other OECD Countries,” CRS Report for Congress, September 17, 2007
US is lower than OECD in
US is higher than OECD in
Some intensive procedures (e.g., angioplasty, coronary bypass grafts, hip replacements, etc.)
Nurses per acute hospital bed
Medical salaries – but also, educational expenses and hours
Public health expenditures
Caloric and sugar intake
Source: Kaiser Family Foundation, from Census, Agency for Health Care Research & Quality, NHIS
The uninsured are mostly working, disproportionately low income, less educated, minority, and in relatively good health
Ratio of probability of diagnosis of late vs. early stage cancer, Uninsured/private insurance
Equal likelihood between Uninsured and Insured
NOTE: Odds ratios were adjusted for age, sex, race/ethnicity, facility type, region, and income and education on basis of postal code. They represent the odds of being diagnosed with stage III or state IV cancer vs. stage I cancer.
Analysis based on cases occurring between 1998-2004.
SOURCE: Kaiser Family Foundation, based on Halpern MT et al, Association of insurance status and ethnicity with cancer stage at diagnosis for 12 cancer sites: a retrospective analysis." The Lancet Oncology. March 2008.
Source: McKinsey Global Institute
Concentration of Health Care Spending in the U.S. Population, 2006
Percent of Total Health Care Spending
Note: Dollar amounts in parentheses are the annual expenses per person in each percentile. Population is the civilian noninstitutionalized population, including those without any health care spending. Health care spending is total payments from all sources (including direct payments from individuals, private insurance, Medicare, Medicaid, and miscellaneous other sources) to hospitals, physicians, other providers (including dental care), and pharmacies; health insurance premiums are not included.
Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2006.
Notes: Public includes Medicaid, CHIP, other public insurance (mostly Medicare and military-related, e.g., Veterans Administration and TRICARE). Self-employed includes those who describe themselves as being both self-employed and working in firms with less than 25 workers.
Source: Kaiser Commission on Medicaid and the Uninsured and Urban Institute analysis of the 2008 ASEC Supplement to the Current Population Survey.
A more down-to-earth view
We pay more because we are sicker, more diverse, provide more expensive treatments, have higher prices, and spend more on administration
Access to services is very uneven, depending on income and employment
We live about as long (after adjusting for non-health related mortality) – quality?
Future trends: aging population + shortage of providers + rising costs = a more difficult balancing act