Transcript why is medical care so expensive

Why is Medical Care So
Expensive ?
Neil A Kurtzman MD
Sandra Sabatini PhD MD
Feynman’s Rules
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Richard Feynman 1918-88
The universe in not only stranger than you think,
it's stranger than you can imagine
Anyone who says he understands quantum
mechanics, doesn’t understand quantum
mechanics
Medicine is a surrogate for the
entire economy
Absence of medical insurance is
not absence of medical care
Possible Causes of Increased Medical
Care
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Technology
Pharmaceuticals
Doctor’s fees
Insurance companies
Hospital fees
Government
Defensive medicine
No competition
Insurance
The equitable transfer of the risk of loss, from
one entity to another in exchange for payment.
It is a form of risk management primarily used
to hedge against the risk of a contingent,
uncertain loss.
Cost Comparisons
1958
NOW
Change
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CPI
29
233
8x
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Toaster
6.5 hr
1.35 hr

24”TV/26”HDTV
136 hr
6h
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Phonograph/iPod
Classic
43 h
10 h
4.8x
decrease
22.6 X
decrease
4X
decrease
Comparison Costs
1958
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Car ( Ford )
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NOW Increase
10.3
Gallon of gas
$1960 - $30,300
3900
24 cents $3.25
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Loaf of bread
19 cents $2.50
13.2
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Consumer Price Index
29
8
233
13.5
Cost Comparisons
1958
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Median Wage $/yr
House, median $
Medical Insurance $/yr
College, total costs/yr
NOW
Increase
$4650 $52,000
11.2
$30,000 $202 K
6.7
$134
$8900
67
$2725
$58,135
21.1
Total Health Expenditures
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United States of America
Switzerland
Canada
United Kingdom
Japan
United States of America
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320 million population; heterogeneous with most of
the population urban; highly concentrated on each
coast and Texas
Private, government, employee-based insurance
began during WWII
Unfunded mandates
Unfunded liabilities of Medicare = $38.6T or
$328,404/person! (WSJ June 24, 2013)
Switzerland
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~ 8 million population, relatively homogeneous, land
locked; long-lived
Compulsory basic insurance (not risk based); $84 8% of income up to ~ $1500; this may be
supplemented with private (risk based) which
enhances room type, dental, additional Rx, etc
Health care cost ~ 11.5% GDP and rising; just
recommended abolishing mammography as one effort
to control costs (NEJM, 22May 2014)
Canada
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25 – 30 million people, relatively
homogeneous
~ 90% live within 200 miles of the USA
border
Canada Health Act -must have public
insurance; does not address delivery
Some private clinics allowed; cannot operate at
profit; 2006 BC provincial gov’t shut one
down
Provinces use wait-time strategies(ie,
rationing); those with $$ come to USA
Japan
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~ 120 million population; completely
homogeneous
Long-lived; use MD and health services more
than in other countries; 33% hospital stays >
30 days; 8.2 MDs/1000 (cf USA)
High prevalence of HTN, diabetes and
smoking
70% govt & 30% patient responsibility; 8.5%
of GDP; all hospitals non-profit & run by MDs
United Kingdom
60 – 70 million population
 NHS began after WWII; went 65 years without
building a new hospital
 90% population covered by NHS
10% population buy private insurance
**Salaries of NHS physicians 2x that of private
**Rationing of services --- age, time of appointment,
type of service offered, etc
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NICE
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National Institute for Health & Care Excellence
Est 1999, United Kingdom for the NHS
Provide evidenced-based guidance (clinical
guidelines, tech appraisal, Dx review, etc)
Develop quality standards/outcomes
Provide information services for managers, MDs,
commissioners, local govt
QALY = quality-adj life yr (eg an intervention is cost
effective if <20k pounds; if >30k there MUST be
“strong reasons”) (NICE Guidelines Manual, p 54)
IPAB
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Independent Payment Advisory Board
15 member US govt agency created in 2010;
members appointed; confirmed by Senate
Has the explicit task of achieving savings in
Medicare without affecting coverage or quality
Can change Medicare program; Congress can
overrule only by supermajority vote
Mass Medical Society – 2013 Report
The Greater the Government
Involvement the Lower the
Productivity and the Higher the Cost
Medical Care Spending,2011
Public Health
3%
 Infrastructure, research
6%
 Administrative
7 %*
 Rx, durable medical
13 %
 Professional services
30 %
 Inpt/nursing home/etc
42 %
 Total $2.7 trillion
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CMS data in JAMA 310: p 1950, Nov 2013
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Professional Personnel
In 2011---
Total
MDs
RNs
DDS
= 21,587,800
=
830,700
= 2,725,000
=
96,000
US Dept Labor - 2013
USA Insurance Status 2012
(% Population)
Private
54 %
Medicare 11 %
Medicaid 13 %
Military
4 %
Uninsured 15 %
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(data from US Census, JAMA 310:1952, 2013)
Actual Causes of Increased
Medical Care
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Inappropriate use of the Insurance Model
Medicare
Third party payers separate the patient from
costs
Lack of price competition
Technology without competition
Unrealistic expectations by the public
The idea that medical care is a right
Unreformed tort law
$164 Billion in 2015 Budget (6.7 million pts)
It will be of little avail to the people that
their laws are made by men of their own
choice, if the laws be so voluminous that
they cannot be read, or so incoherent that
they cannot be understood.
James Madison
The Federalist #62
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Mancur Olson (1932-98)
Great systems can only be reformed after they
collapse
Passionate minorities prevail in a democracy
Benefits persist irrespective of their societal
value
If you like your benefits, you will keep your
benefits
You have heard of too big to fail
Medicine is too big to fix!
Thomas B Edsall:
Joseph Pulitzer II and Edith Pulitzer Moore
Professorship in Public Affairs Journalism
at Columbia University
New York Times Nov 19, 2013
A man cannot know more than a tiny part of the
whole of society…all a man’s mind can
effectively comprehend are the facts of the
narrow circle of which he is the center…nobody
can know who knows best…The fundamental
assumption…is the unlimited variety of human
gifts and skills and the consequent ignorance of
any single individual of most of what is known to
all the other members of society taken together.
Frederich Hayek
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