Transcript Per Capita Health Care Spending by Age

The Health Care Landscape
Bill Evans
University of Notre Dame
1
Two Goals
• Four issues every health care reform proposal
should confront
• Outline what the recently passed legislation
does for each of these issues
2
What issues must health care reform
address?
• Access
• Cost (both the level and rate of change)
• Medicare
• Tax equity
3
4
Uninsurance rates, 2007
• Overall
• By race
– White, NH
– Black, NH
– Asian, NH
– Hispanic
• Nativity
– Native
– Naturalized
– Not citizen
15.3%
10.4%
19.5%
16.8%
32.1%
12.7%
17.6%
43.8%
• Age
– <18
11.0%
– 18-24 28.1%
– 25-34 25.7%
– 35-44 18.3%
– 45-64 14.0%
– 65+
1.9%
• HH income
– <$25K
– $25-$50K
– $50-$75K
– >$75K
24.5%
21.1%
14.5%
7.8%
5
% Firms offering health insurance
Firm Size
3-9
10-24
25-49
50-199
200+
1999
56%
74%
86%
97%
99%
2004
52%
74%
87%
92%
99%
2009
46%
72%
87%
95%
98%
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 billion
• $7,400 per capita
• $13,100 per capita
• 16.2% of GDP
• 20.3% of GDP
9
US
Luxembourg
Switzerland
Norway
Iceland
France
Belgium
Canada
Austria
Netherlands
Australia
Sweden
Denmark
Ireland
UK
Italy
Japan
Finland
90% more than
Canada
145% more
than the UK
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Per capita spending on health care
10
Average Annual Premiums
Covered Workers, 2008 (KFF)
• Individual plan
– $4,704 total
• Family plan
– $12,690
11
% Changes: Overall Inflation and Health Insurance Premiums
20%
18.0%
16%
Percent Change
14.0%
12%
12.0%
13.9%
12.9%
12.2%
10.9%
10.3%
9.2%
8.5%
8%
8.2%
5.9%
4%
11.2%
7.7%
6.1%
5.5%
4.7%
5.3%
4.0%
3.0%
0.8%
0%
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Year
Overall Inflation
Health Insurance Premiums
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
• MRIs/CT scans, angioplasty, anti-psychotropic drugs,
hip/knee replacements, neo-natal intensive care,
treatments for AIDS, statin drugs
• All not available 20-30 years ago. Now, commonplace
15
HIV/AIDS Drugs
• Early 1990s, 32% annual mortality rates for
patients w/ AIDS
• 1995:4, 1996:1, three new ARVs
• Usage rates increase immediately
• Mortality falls 70% in 18 months
16
Quarterly Mortality Rate and Use of PI/Epivir
9%
60%
6%
40%
3%
20%
Mortality
0%
1994.1
% Using Epivir and/or PI
% Dying Next Quarter
Epivir/PI
0%
1995.1
1996.1
1997.1
1998.1
1999.1
Year:Quarter
2000.1
2001.1
17
• ARVs are expensive, $12K/year in some cases
• AIDS patients are expensive, $20K/year
• ARVs ↑ lifespan after diagnosis by 8 years
• Lifetime cost of treating an AIDS patient
increases by about $256K
18
What is accurate picture of US?
• Innovator to the world – tremendous gains to
new advances
• Wasteful spender of tremendous resources
with little return
19
Fatality Rates 2000*
United States
Whites
Blacks
Canada
Germany
Japan
Sweden
United Kingdom
Homicide
7.3
3.2
26.1
1.4
0.9
0.6
1.2
0.7
* Deaths per 100,000 people
Traffic
15.3
9.3
10.1
8.3
4.9
6.0
20
Life Expectancy
United States
Switzerland
Norway
Canada
Germany
Japan
Sweden
United Kingdom
Actual
75.3
77.6
77.0
77.3
75.4
78.7
77.7
75.6
Standardized
76.9
76.6
76.3
76.2
75.4
76.0
76.1
75.7
21
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
22
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
23
24
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
• Unnecessary care
25
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
26
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
27
What issues must health care reform
address?
• Access
• Cost (both the level and rate of inflation)
• Medicare
• Tax equity
28
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
29
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
30
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
31
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
32
Per Capita Health Care
Spending by Age (2004)
Spending
Age Group Per capita
O-18
$2,650
19-44
$3,370
45-54
$5,210
55-64
$7,887
64-75
$10,778
75-84
$16,389
85+
$25,691
33
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
34
Medicare Sources as % of GDP
35
What issues must health care reform
address?
• Access
• Cost (both the level and rate of inflation)
• Medicare
• Tax equity
36
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
37
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
38
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
39
Inequalities
• Costs Fed. Govt. over $243 billion/year
• Tax break only available to people who receive
insurance from their firm
– High income more likely to have insurance
• Higher income families have higher tax rates
• Regressive tax
– Benefits much higher in upper income groups
40
Overview of Senate Bill
• Plan builds out from existing system
• Tries to fill in the gaps in coverage
• Large scale insurance industry reform
– Community rating
– Eliminate pre-existing conditions
• Aggressive effort to reduce growth of
Medicare fees
• Biggest unknown: controlling costs
41
Coverage Expansions
•
•
•
•
Individual mandate (tax of 2.5% of AGI)
Pay or play: employer mandates
Expand Medicaid to 133% of FPL
Provide tax credits for the low income in
individual market
• Establish health insurance exchange where
people can purchase insurance
42
Why is coverage mandatory?
• Insurance industry reform
– Community rating
– eliminate pre-existing condition clauses
• If adopted under current system
– Costs for young would rise – exit system
– Would not buy insurance until they needed it
• Forces low cost users into the system, drives
down average cost
43
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
• Where coverage will come from
44
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?
45
CBO Estimates
• Fines will generate $20 bill per year
• @ $2000/head, 10 million not receiving health
care from their firm
• There are roughly 16 million uninsured
workers
46
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
• Tax on people without insurance
• 40% tax on high-cost insurance
• Reductions in Medicare reimbursements
47
• CLASS Act –long term care insurance program
– Automatic enrollment
– Starts in 2011. No benefits paid for 5 years
48
Balance Sheet – CBO 2010-2019
(Billions of dollars)
• Expenditures
•
•
•
•
Expand private
Expand public
Small firm TC
Total
• Revenues
$ 466
$ 434
$ 40
$ 940
• Higher taxes
• Reduced
•
Spending
• Total
$ 551
$ 507
$1058
• Diff is $118 billion
reduction in deficit
49
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
50
What is missing?
Cost controls
51
• No supply response at all
– Catholic hospitals have become attractive
• Lots of studies – little guess of future
52
53
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
54
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
55
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
56
57