Transcript Congressional Budget Office

Congressional Budget Office
Presentation for The Hastings Center
Rising Health Care Costs
and the Federal Budget
May 20, 2008
Excess Cost Growth in Medicare, Medicaid, and
All Other Spending on Health Care
Percentage Points
Medicare
Medicaid
All Other
Total
1975 to 1990
2.9
2.9
2.4
2.6
1990 to 2005
1.8
1.3
1.4
1.5
1975 to 2005
2.4
2.2
2.0
2.1
Spending on Health Care as a Percentage of GDP If Excess
Cost Growth Continues at Historical Averages
Percent
100
90
80
70
60
50
All Other Health Care
40
30
Medicaid
20
10
Medicare
0
2007
2012
2017
2022
2027
2032
2037
2042
2047
2052
2057
2062
2067
2072
2077
2082
Projected Spending on Health Care as a Percentage of
Gross Domestic Product
Percent
50
45
40
35
30
All Other Health Care
25
20
15
Medicaid
10
Medicare
5
0
2007
2012
2017
2022
2027
2032
2037
2042
2047
2052
2057
2062
2067
2072
2077
2082
Federal Spending for Medicare and Medicaid as a Percentage of
GDP Under Different Assumptions About Excess Cost Growth
Percent
40
35
Excess Cost Growth of:
2.5 Percentage Points
1 Percentage Point
30
Zero
25
20
CBO's
Projection
15
10
5
0
2007
2012
2017
2022
2027
2032
2037
2042
2047
2052
2057
2062
2067
2072
2077
2082
Federal Spending Under CBO’s Alternative
Fiscal Scenario
Percentage of Gross Domestic Product
40
Actual
Projected
30
Medicare and Medicaid
20
Social Security
10
Other Spending (Excluding debt service)
0
1962
1972
1982
1992
2002
2012
2022
2032
2042
2052
2062
2072
2082
Sources of Growth in Projected Federal Spending on
Medicare and Medicaid
20
Percentage of GDP
15
Effect of Excess Cost Growth
10
Interaction of Aging
and Excess Cost Growth
Effect of Aging of Population
5
0
2007
2012
2017
2022
2027
2032
2037
2042
2047
2052
2057
2062
2067
2072
2077
2082
Estimated Contributions of Selected Factors to Long-Term
Growth in Real Health Care Spending per Capita, 1940 to 1990
Aging of the Population
Changes in Third-Party
Payment
Personal Income Growth
Prices in the Health Care
Sector
Administrative Costs
Defensive Medicine and
Supplier-Induced Demand
Technology-Related Changes
in Medical Practice
Smith, Heffler, and
Freeland (2000)
Cutler
(1995)
Newhouse
(1992)
2%
2%
2%
10%
13%
10%
11-18%
5%
<23%
11-22%
19%
Not
Estimated
3-10%
13%
Not
Estimated
0%
Not
Estimated
0%
38-62%
49%
>65%
Challenge and Opportunity?
 High or rising costs for health care might not be
considered a “problem” if the benefits were clearly
commensurate
– Even if they were, have to figure out how to pay for them
 But a substantial body of evidence suggests that the
U.S. is not getting the most “bang for its buck”
 Could the use of health care services (quantity and
intensity) be reduced without harming health?
– If so, how? What are the options and their effects?
Medicare Spending per Capita in the
United States, by Hospital Referral Region, 2003
$7,200 to 11,600 (74)
6,800 to < 7,200 (45)
Source: www.dartmouthatlas.org.
6,300 to < 6,800 (55)
5,800 to < 6,300 (60)
4,500 to < 5,800 (72)
Not Populated
Medicaid Payments per Elderly Enrollee, FY2005
Source: The Urban Institute and Kaiser Commission on Medicaid and the Uninsured
What Additional Services Are Provided in
High-Spending Medicare Regions?
Source: Elliot Fisher, Dartmouth Medical School.
The Relationship Between Quality and
Medicare Spending, by State, 2004
Composite Measure of Quality of Care
88
83
78
73
4,000
5,000
6,000
Spending (Dollars)
Source: Data from AHRQ and CMS.
7,000
8,000
Variations Among Academic Medical Centers
Use of Biologically Targeted Interventions and Care-Delivery Methods Among
Three of U.S. News and World Report’s “Honor Roll” AMCs
UCLA
Medical
Center
Massachusetts
General
Hospital
Mayo Clinic
(St. Mary’s
Hospital)
Biologically Targeted Interventions:
Acute Inpatient Care
CMS composite quality score
81.5
85.9
90.4
50,522
40,181
26,330
Hospital days
19.2
17.7
12.9
Physician visits
52.1
42.2
23.9
2.9
1.0
1.1
Care Delivery―and Spending―Among
Medicare Patients in Last Six Months of Life
Total Medicare spending
Ratio, medical specialist / primary care
Source: Elliot Fisher, Dartmouth Medical School.
Factoids About End-of-Life Care
 More than 80 percent of deaths occur on Medicare
 25-30 percent of Medicare’s costs are for decedents
– That share has been stable over time – meaning that end-oflife spending has risen along with other health care costs
 One older study examined predicted probabilities
survival for ICU patients
– Among those who lived, much more was spent on those who
had been expected to die
– Among those who died, much more was spent on those who
had been expected to live