Transcript The Cure: How Capitalism Can Save American Health Care Dr

Presented by: Aisha Price Hicklen
MANA 5334
October 31, 2007
The Cure
• Dr. David Gratzer, Canadian-born physician
– Senior fellow at the Manhattan Institute for Policy
Research
– Blames America’s current health care “crisis” on its
reliance on outdated economic factors
– IRS tax ruling 1943- “biggest event to shape American
health insurance”
• Tax exemption gave rise to 3rd party payers & employer-based
health coverage
America the Beautiful
• Rapid progression of modern medicine began in 1941
with penicillin
• Now the leader in medical technology, surgery, drug
interventions and diagnostic measures
• Live longer healthier lives, but at what cost???
The Cure
• Dick Cheney’s Heart
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4 heart attacks (the first at age 37)
Quadruple bypass in 1988
Angioplasty in 2000
Pacemaker implanted 2001
• Cost between $20-$25,000
• 50 times the average cost of health care in 1950
• Example of the extreme rise of costs in America
Employer-based Coverage
• Over-insured Americans
– Accustomed to paying little to no out-of-pocket expenses for
basic medical care
– No incentive to make educated, cost-cutting choices which
further drives up costs
– Health care in America = “shopping with someone else’s
credit card”
Health Savings Accounts (HSAs)
• Consumer-driven; give patients choice
• Low-cost, high deductible coverage for “catastrophic”
events
• Tax-free savings account to cover basic out-of-pocket
medical expenses
– Roll over funds each year
– Create financial incentive to be more responsible and cut
costs
• Example: John Mackey, founder/CEO of Whole Foods
– Deposit $300-$1800/year into employee accounts
Health Savings Accounts (HSAs)
• Gratzer’s Steps Towards Building a Healthcare
Market
– Make HSAs popular to create more choice
• Use politicians to promote consumer-driven health care & local
governments to provide option to employees
– Free HSAs
• Raise annual contribution amount
• Allow flexibility in deductibles within plans & among consumers
– Government deregulation to provide more choice and
promote competition
• > 100,000 pages of Medicare regulations; state regulations;
malpractice law; insurance regulations; certificates of need; public
health reporting requirements; etc.
The Uninsured in America
• Myth of the 46 million
• Many Americans uninsured by choice
– 16% earn >$75,000 annually
– 1/3 earn at least $50,000 annually
– 1 in 4 lack coverage because of high costs associated with state
regulations
• Health care costs about $1,587/year compared to $2,484/year
expense of the insured
– Bottom Line: Medical attention is readily available for those who need
it.
The Uninsured in America
Alternatives to Healthcare
• Make Health Insurance
Affordable
– HSAs
– Increase annual contribution
• Tool for long-term savings
• Interstate Insurance
Option
– Freedom to choose lowregulation state to purchase
coverage
– ↑ choice=↑ competition
among carriers
• Tax Reform
– Necessary to reduce premiums
by 30%
• Block Funding to States by
Federal Government
– States given freedom to design
own coverage options for
uninsured
Medicaid Concerns
• Loosened Eligibility Requirements
– Fraud & abuse
• TennCare ( covers 1.3 million of state’s 5.8 million population)
– ↑ prescription costs
• Slow Reform efforts due to aggressive litigation
• Cut Physician Reimbursement to Control Costs
• States use of “creative accounting”
Medicaid Reform
• Make private insurance more attractive
– Reserve Medicaid for the needy
– Provide HSAs & interstate insurance options
• Block Grant Funding to States by Federal
Government
– Leave Medicaid regulations to the state
– Inspires accountability and innovation
• Provide Financial Incentives for Recipients to Cut
Costs
– Example: Gov. Mark Sanford of S. Carolina proposes “health
dollars”
Medicare Concerns
• Inadequate
– Elderly potentially pay large out of pocket expenses
• Inefficient
– Many over insured for the services covered (but not
necessarily services needed)
• Inequitable
– Geographic variations in spending
• Insolvent
– #1 problem; will consume 25% of federal income tax
revenues by 2030
– Unfunded liability over next 75 years is $68.3 trillion
Medicare Reform
• Choice, Competition &
Light (Federal)
Regulation
– Federal Employee Health
Benefits Program
(FEHBP)
• Measuring stick for reform
• Choice of over 240 plans
(HMOs, PPOs, HSAs, feefor-service)
• Federal government’s role
limited to paying the bill
– Benefits of an FEHBPlike program
• Contain costs without
controlling price
• Combine a fragmented
system (Part A, B, C, D)
• Modest increases in
retirement age (over the
years)
• Flexible Premiums
Prescription Drug Concerns
• High costs associated with consumers not
directly paying for drugs
• Overregulated FDA
• Limited follow up process on drugs post
approval
Prescription Drug Reform
• Reform FDA approval process
– 1. Create an independent office designed to monitor
negligent employee actions
– 2. Outsource non-government analyzers
• Free up FDA time & money
• Create a competitive market for non-government analyzers
– 3. Implement “post-approval surveillance” to improve drug
safety
• Gather information from physicians at point of care and from real
world settings (drug companies, insurance agencies, etc.)
• Win-win-win for patients, drug companies & the FDA
National Health Care
• Canadian-style health care
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Complete government funded
No co-payments
No deductibles
No insurance forms to complete
Hospitals and physicians government funded
Low administrative costs
Most medical visits, diagnostic tests, & surgical procedures
are covered if deemed “medically necessary”
• So What’s the Problem????
“O Canada”
• The Problem
– Extremely long waits for care
– Overcrowded hospitals and
ERs
– Increasing demand
• As result of no fees for
services
– Many cost cutting measures
• Intentional shortages of
clinics, physicians, restricted
access to specialists; capped
physician income; hospital
bed closures; denial of critical
services
• “The Cure”
– Trend towards private health
care clinics & diagnostic
facilities
– Travel abroad (to America) for
medical care
• Americans are leaders in
medical innovation and
technology
The Cure~ Capitalism
• Decentralize decision making
• Price control by increasing choice
• Increase competition
– Among insurance agencies, physicians, &
prescription drug analyzers
• Budget caps
– “block grants” for Medicaid and Medicare