Transcript Health care costs concern Americans most

Health care costs concern
Americans most
By JIM ABRAMS
Associated Press Writer
http://hosted.ap.org/dynamic/stories/H/HEALTH_CARE_PRIORITIES?SITE=MIDTN&SECTION=HOME&TEMPLATE=DEFAULT
National Health Expenditures as a Share of
Gross Domestic Product (GDP)
Between 2001 and 2011, health spending is projected to grow 2.5 percent per year faster
than GDP, so that by 2011 it will constitute 17 percent of GDP.
20
Actual
Projected
Percent of GDP
18
16
14
12
10
8
1980
1985
1990
1995
Calendar Years
Source: CMS, Office of the Actuary, National Health Statistics Group.
2000
2005
2010
Health Care Problems
• Most Americans see health care and insurance costs
as a more pressing problem than malpractice
lawsuits, a survey says, although the Bush
administration often cites litigation as a reason for
high medical bills.
• The Kaiser Family Foundation, a nonprofit
organization that studies health care issues, and the
Harvard School of Public Health said reducing
malpractice jury awards ranked 11th on a list of 12
items people thought should be health care priorities
for the president and Congress.
• Named most often, by 63% of respondents, was
lowering the cost of health care and insurance,
followed closely by making Medicare more
financially sound and increasing the number of
Americans with insurance.
Drug Expenditures
• The survey found that 73% favor
changing the law to allow
Americans to buy prescription
drugs imported from Canada.
That change is strongly
opposed by the pharmaceutical
industry, and the administration
says it is too costly to do safely.
• Four out of five surveyed also
want the government to
negotiate with drug companies
for lower prices, a practice
expressly banned by the
Medicare law enacted in 2003.
Among those 65 and older, 46%
viewed that new law
unfavorably, against 29% with a
favorable impression. Four-fifths
of those seniors said the law
was too complicated for people
to understand.
Expenditures for Health Services, by All Payers
In recent years, the hospital share of total spending has decreased while the prescription drug
share has increased.
40
36.5
35
Calendar Years
1990
2000
31.7
Percent Share
30
25.2 25
25
23.1
24.3
20
15
9.4
10
5.8
5
1.8
7.6 7.1
2.5
0
Hospital
Phys. & Other
Professionals
Home Health
Prescription
Drugs
Nursing Home
Care
Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
All Other
Factors Accounting for Growth in Personal
Health Care1 Expenditures Per Capita
The most important factor accounting for the slowdown in personal health care expenditure
growth after 1993 was the decline in medical price growth.
14
Utilization
2
Medical Prices
12
Average Annual Percent
Change
10
8
11.2
6
6.0
4
3.4
2.9
2
1.5
2.3
1.4
2.0
0
1980-1982
1982-1993
1993-1999
1999-2000
Selected Calendar Year Periods
1
Personal health care spending comprises therapeutic goods or services rendered to treat or prevent a specific disease or condition in a
specific person.
2 Utilization includes quantity, quality, and mix of services. As a residual, this factor also includes any errors in measuring prices or total
spending.
Note: Medical prices are calculated using the personal health care chain-type index constructed from the producer price index
for hospital care, nursing home input price index for nursing home care, and consumer price indexes specific to each of the remaining
personal health care components.
Source: CMS, Office of the Actuary, National Health Statistics Group.
The Economics?
What leads to changes in health care costs
(expenditures)?
Thought Process:
Expenditures = Price x Quantity
Suppose that Expenditures = $900 billion
If Price  by 3.4%, and Quantity  by 2.0%
THEN:
New Exp = (1.034 x Price) x (1.02 x Quantity)
New Exp = (1.034 x 1.02) x Old Expenditures
New Exp = (1.055) x Old Expenditures