Transcript Male - University of Notre Dame

The Health Care Landscape
Bill Evans
University of Notre Dame
1
Two Goals
• What are the issues?
• How the reform proposal deals with these
issues?
2
What issues must health care reform
address?
• Access
• Cost (both the level and rate of change)
• Medicare
• Tax equity
3
The Uninsured
• Percent uninsured
– 1987: 12.9%
– 2008: 15.4%
• Number uninsured
– 1987: 31 million
– 2008 46 million
4
Uninsurance Rates: 2008
• By age:
– 28.6% aged 18-24
– 26.5% aged 25-34
• By ethnicity
– 30% for Hispanics
– 19.1% for Blacks
• Income
– 24.5% for those < $25K family income
5
Percent of Firms Offering Health Insurance
100%
95%
98%
50-199
200+
% Offering Insurance
87%
80%
72%
60%
46%
40%
20%
0%
3-9
10-24
25-49
Firm Size
6
Uninsured Non-Elderly Population by
Work Status of Family Head, 2007
Non-worker,
Part-year, 11.0%
part-time
worker, 4.1%
Part-year,
full-time
worker,
11.5%
Fullyear,parttime worker,
6.6%
Full-year,fulltime worker,
66.7%
7
What issues must health care reform
address?
• Access
• Cost (both the level and rate of inflation)
• Medicare
• Tax equity
8
Expenditures on Medical Care
• Data for 2007
• Projected, 2018
• $2.2 trillion on HC
• $4.4 trillion
• $7,290 per capita
• $13,100 per capita
• 16.2% of GDP
• 20.3% of GDP
9
Per Spending on Health Care, 2007
$8,000
$7,290
$6,000
$4,000
$2,000
$0
US
NOR
SWZ
CAN
IRE
Country
UK
SPN
JPN
10
Per Spending on Health Care, 2007
$8,000
$7,290
87% more than Canada
143% more than UK
$6,000
$4,763
$4,417
$3,895
$4,000
$3,424
$2,992
$2,581 $2,581
$2,000
$0
US
NOR
SWZ
CAN
IRE
Country
UK
SPN
JPN
11
Average Annual Premiums
Covered Workers, 2008 (KFF)
• Individual plan
– $4,704 total
• Family plan
– $12,690
12
Price Changes, 1999 to 2008
Price Changes
160%
119%
120%
80%
40%
29%
34%
Overall inflation
Earnings
0%
Health
insurance
premiums
13
Bang per buck??
• US ranks 25 of 29 countries in life expectancy
– 4.3 years shorter than Japan (highest)
– 2.4 years shorter than Canada
• 24th worst of 28 countries in infant mortality
– More than twice the rate of Japan (lowest)
– 31% higher than Canada
– 28% higher than UK
14
Are high expenditures a bad thing?
• A key driver of health care costs is technology
• Expensive items tend to be new technologies
• Think of the technologies not available 30 years ago but
are commonplace today
• MRIs/CT scans, angioplasty, anti-psychotropic drugs,
hip/knee replacements, neo-natal intensive care,
treatments for AIDS, statin drugs
15
What is accurate picture of US?
• Innovator to the world – tremendous gains to
new advances
• Wasteful spender of tremendous resources
with little return
• Maybe a little of both
16
Problem?
• Life expectancy is a coarse outcome
• Some important causes of death are NOT
impacted by health care
• US has very high rates of those deaths
– Murders
– Motor vehicle fatalities
17
Homicide Rate, 2000
(deaths per 100,000)
30
25
20
15
10
5
1.4
0.9
0.6
1.2
0.7
0
Country
18
Homicide Rate, 2000
(deaths per 100,000)
30
26.1
25
20
15
10
5
7.3
1.4
0.9
0.6
1.2
3.2
0.7
0
Country
19
Traffic Fatality Rate, 2000
(deaths per 100,000)
20
15
10
9.3
10.1
8.3
4.9
5
6
0
Can.
Ger.
JPN
Sweden
UK
US
Country
20
Traffic Fatality Rate, 2000
(deaths per 100,000)
20
15.3
15
10
9.3
10.1
8.3
4.9
5
6
0
Can.
Ger.
JPN
Sweden
UK
US
Country
21
Life Expectancy, 2000
80
79
78
77
76
75
74
SWZ
NOR
CAN
GER
JAP
SWE
UK
US
Country
Real
Standardized
22
Life Expectancy, 2000
80
79
78
77
76
75
74
SWZ
NOR
CAN
GER
JAP
SWE
UK
US
Country
Real
Standardized
23
Where would you rather be treated
for a disease: US or elsewhere?
24
5-year Cancer Survival Rates
Country
US
UK
Dnmk.
France
Swed.
Switz.
Breast Cervical
(Female) (Female)
82.8
66.7
70.6
80.3
80.6
79.6
69.0
62.6
64.2
64.1
68.0
67.2
Colon
(Male)
Lung
(Male)
61.7
51.0
39.2
49.6
51.8
52.3
12.0
7.0
5.6
8.7
8.8
10.3
Prostate Thyroid
(Male) (Female)
81.2
44.3
41.0
67.6
64.7
71.4
95.9
74.4
71.7
77.0
83.7
78.0
25
Heart Attack Treatment
Canada vs. US (2004)
• Category
Canada
US
• Angioplasty
11.4%
30.5%
4.0%
11.4%
21.4%
19.6%
• Bypass
• 5-year mortality
26
27
If you want to cut costs, where do you
look?
• Administrative/overhead
– 3% in Canada (single payer)
– 1.5% in Medicare
– 8-30% in US system
• Chronic conditions
– 5 conditions are responsible for 1/3 of costs
– 15 conditions are responsible for 50% of growth in past 15
yrs
• Unnecessary care
28
Percent of Total Health Care Expenses by
Different Percentiles of Population, 2002
97%
% of total expenditures
100%
80%
80%
64%
60%
49%
40%
22%
20%
0%
1%
5%
10%
20%
50%
Percentiles of population
29
Per Capita Medicare Spending by Hospital Referral
Region, 2006
$9,000 to 16,352 (57)
8,000 to < 9,000 (79)
7,500 to < 8,000 (53)
7,000 to < 7,500 (42)
5,310 to < 7,000 (75)
Not Populated
30
What issues must health care reform
address?
• Access
• Cost (both the level and rate of inflation)
• Medicare
• Tax equity
31
Medicare
• 2007
• 2040
• 44.1 million recipients
• 87 million recipients
• $432 bill. exp.
• 3.2% of GDP
• 7.6% of GDP
• 30% of fed. budget
• 16% of fed. budget
32
Future problems
• Rising number eligibles
• People are living longer
– Older people spend a lot more on health care
• Rising costs
• Falling fraction of people to tax
33
Medicare Enrollment
100
Millions of People
87.0
79.2
80
62.3
60
40
20
28.4
34.3
39.7
46.8
20.4
0
1970 1980 1990 2000 2010 2020 2030 2040
Year
34
Remaining Life Years at Ages 65 and 75
20
18.0
18
17.2
At age 65
Remaining Years
16.4
16
14
18.7
15.2
13.9
12
10.4
14.3
10.9
11.0
11.2
11.3
11.4
12.0
At age 75
10
8
6
1950
1960
1970
1980
1990
2000
2005
Year
35
Per Person Health Care Spending, 2004
$30,000
$25,691
$25,000
$20,000
$16,389
$15,000
$10,778
$10,000
$5,000
$7,887
$5,210
$2,650
$3,370
0-18
19-44
$0
45-54
55-65
64-75
75-84
85+
Age group
36
Ratio: 20-64 Population/Medicare
6
5.5
4.7
5
4.5
4.3
Ratio
4
4.0
3.2
3
2.6
2.5
2030
2040
2
1
0
1970
1980
1990
2000
2010
2020
Year
37
Medicare Sources as % of GDP
38
What issues must health care reform
address?
• Access
• Cost (both the level and rate of inflation)
• Medicare
• Tax equity
39
Tax System Equity
• EPHI a tax-free fringe benefit
• WW II era program
• Greatly reduces costs of HI to consumer
– Encourages more generous insurance
• Helps solve problem of adverse selection
• Has encouraged the growth of EPHI
– 170 million have insurance through employers
40
Tax Benefit of EPHI
• A family w/ $70,000 in income
• 36.4% marginal tax rate
– 25% federal
– 3.4% state (Indiana)
– ~8% Social Security and Medicare
• Want to purchase $12,000 policy in AFTER
TAX DOLLARS
41
Without tax advantage:
• Receive $18,897 in income
• Pay 36.4% or $6,897 in taxes
• $12,000 left over for health insurance
• Net benefit of tax deduction is $6,897
42
Inequalities
• Costs Fed. Govt. $250 billion/year
• Tax break only available to people who receive
insurance from their firm
– More likely high wage workers
• Regressive tax
– Benefits are much higher in upper income groups
43
Patient Protection and
Affordable Care Act
An outline and some likely outcomes
44
Overview
• Primary goal was coverage expansion
• Of the four areas outlined above, major
changes in one, modest changes in the other
– Increased coverage
– Some efforts to ↓ growth of Medicare fees
– Modest effort to reduce tax benefits of EPHI
– No efforts to constrain costs
45
Overview
• Builds out from existing system
– Tries to fill in the gaps in coverage
• Large scale insurance industry reform
– Community rating
– Eliminate pre-existing conditions
46
Coverage expansions
• Individual mandate (tax of 2.5% of AGI)
• Pay or play: employer mandates
• Expand Medicaid to include higher income
groups
47
Coverage expansions
• Provide tax credits for the low income in
individual market
• Tax credits for small firms to provide HI
• Establish health insurance exchange where
people can purchase insurance
48
Why is coverage mandatory?
• Insurance industry reform
– Community rating
– eliminate pre-existing condition clauses
• If adopted under current system
– Costs for low risk would rise – exit system
– Would not buy insurance until they needed it
• Force low cost users into the system, drives
down average cost
49
Impact on Uninsured
• Reduce uninsured by 32 mil. in 2019
• 60% reduction in the uninsured
• Leaves another 22 mil. uninsured
• Uninsured will overwhelmingly be Hispanics
50
Pay or play
• Firms w/ >50 employees must offer qualified
health insurance and pay $2000 tax/employee
• Tax incentives/credits for small firms to
provide insurance
• Language is that firms must pay “fair share”
• Economists believe workers pay for insurance
in the form of lower wages
• Will firms pay or play?
51
Problem?
• Small firms not subject to pay/play mandate
• Face extremely high cost of providing HI
• Workers face much lower wages if they receive HI
from firm
• Gov’t now provides high subsidy rate for
uninsured
52
Problem?
• Makes sense for small firms with low wage to
drop coverage
• Who benefits:
– Workers: after-tax wages would increase and cost
of HI declines
– Firms: Don’t have to worry about HI anymore
– Costs to the government will increase
53
Financing
• New taxes: on insurance companies, drug
makers, medical devices
• Increase Medicare tax on high income, tax
unearned income for this group
• Revenues from firms paying and not playing
54
Financing
• Tax on people without insurance
• 40% tax on high-cost insurance
• Reductions in Medicare reimbursements
• CLASS Act –long term care insurance program
– Automatic enrollment
– Starts in 2011. No benefits paid for 5 years
55
Balance Sheet – CBO 2010-2019
(Billions of dollars)
• Expenditures
•
•
•
•
Expand private
Expand public
Small firm credit
Total
• Revenues
$ 466
$ 434
$ 40
$ 940
• Higher taxes
• Reduced
•
Spending
• Total
$ 551
$ 507
$1058
• $118 billion ↓ deficit
• CBO adjustment of + $115
billion
56
Revenues, 2010-2019
(billions of $)
•
•
•
•
•
•
•
•
Tax on high cost health care plans
Firm/individual taxes, no ins.
Expand taxes on Medicare
Reduce Medicare reimbursements
CLASS premiums
Tax on Rx/Med device/Ins.
Other taxes
Total
$ 32
$ 69
$ 210
$ 437
$ 70
$ 107
$ 133
$1,058
57
What is missing?
Cost controls
58
• Add 32 million people to the market
• No effort to change supply (hospitals, physicians,
etc.)
• Should increase price
• But with Medicare cuts, may discourage some
providers from participating in program
59
P
S
P2
P1
D*
D
Q
60
61
Insurance rates, 1990-2009, Children 19 and Under
< 200% of Federal Poverty Limit
60%
Public
50%
Percent
40%
30%
20%
10%
0%
1990
1993
1996
1999
2002
2005
2008
Year
62
Insurance rates, 1990-2009, Children 19 and Under
< 200% of Federal Poverty Limit
60%
Public
50%
Percent
40%
30%
20%
Uninsured
10%
0%
1990
1993
1996
1999
2002
2005
2008
Year
63
Insurance rates, 1990-2009, Children 19 and Under
< 200% of Federal Poverty Limit
60%
Public
50%
Percent
40%
Private
30%
20%
Uninsured
10%
0%
1990
1993
1996
1999
2002
2005
2008
Year
64
65