Health Economics Pp t

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Healthcare EconomicsIs it all just dollars and cents?

19 April 2009

James S Eadie MD, FACEPCo-Chair, ACEP FGA CommitteeGSACEP, Immediate Past President

Academic Faculty, Wilford Hall Medical Center,San Antonio, Texas


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Overview

1. How much does the US spend on

health care?

2. Where do the dollars go?3. How fast are the costs growing?

4. What can be done to contain the

costs?5. Is the system really at a crisis?


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Economics..ouch

Why do we need to study economics?

Id rather be herding cats.


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Health Care Economics 101 Quiz

How much did the US pay for health

care in 2007?

What is the % GDP spent on healthcare?

What are the most expensive parts of

the health care system?


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Health Care Spending2007

>$2.2Trillion dollars

16.2% of GDP, Switzerland next highest 11.4%

$7,421 per living person Spending rose 6.1% (inflation 4.1%)

Spending is driven by new medical treatments,

rising prices and growing utilization.

Smith et al.Health Affairs Jan 2006


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US Healthcare = French Economy


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Percent Health Care of GDP 2006

data from WHO http://www.who.int/en/


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Expenditures per Capita 2006

data from WHO http://www.who.int/en/


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Per Capita Health Spending in 2006

Source: McKinsey Global Institute and NEJM 2009


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WHO Health Care Rankings

1. France

18. England

25. Germany

30. Canada

36. Costa Rica37. United States

38. Slovenia


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Health Comparisons


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Health Care Spending - 2006

Hospital Care

31%of total health care expenditures

$648.2 billion

Physician Payment

21%of total health care expenditures $447.6 billion

Growth from inc. office visits and imaging


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Prescription drugs

10%of total expenditures

Total: $216.7 billion * greater than nursing homes and home

health care combined ($177.6 billion)

Health Insurance Admin Costs(private + Gov)

- $204.1 billion


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Medicare

$401.3 billion

19%of national health expenditures Revenue

65% from payroll taxes and premiums

35% from general taxes

Key: this competes with Gov. spending


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Medicaid

$310.6 billion

15% of national health expenditures > 20% state budgets

SCHIP $ 8 billion

Federal Government pays over 46%Health care bills


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Federal Budget 2008

Federal Budget 2008 2.979 Trilliondollars

Social Security 612 billon

Medicare/Medicaid 682 billion

Defense 613 billion

Education 59 billionDebt Interest 249 billion


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Federal Spending FY 2008

Source: Congressional Budget Office


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US Federal Spending


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Federal ReceiptsFY 2008

Source: Congressional Budget Office


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Projected Growth

Health Care Projected Growth Rates 6.2% annually through 2018

16.2% GDP2007to 20.3%GDP2018

Public Payers

2016will be largest source of funding

2018over half of all health care spending

Why?

Baby Boomers76 M


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Projected Growth


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Health Care ReformIs it Possible?


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Health Care Timeline

1930s70sPhysicians /

AMA Strong

Pre-1880Physicians limited

authority

Progressive Era1910 - 17

18801920Industrial Revolution

Rise in prestige

1980s - PresentCorporations

Competing InterestsLoss of Political Influence

Germany1883

Social Security1935 Clinton

1994

Rapid Health Care Growth1950s-70s

Medicare1965

Nixon1970s

Truman Plan1945

MedicareDrug Bill

2003


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Health Care Reform Issues

Uninsured and Underinsured

Quality Initiatives

Patient Centered Medical Home

Health IT

Physician Pay Reform

Medical Liability


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Health Care Costs


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How Do You Share The Resources?


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How Do You Slice The Pie?

Whos going to take the smaller piece? Physicians?

Hospitals?

Drug Companies?

Trial Lawyers?


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Emergency Medicines Slice of Pie

119.2 million ED visits 2006

$ 37.5 billionon emergency care

Only 1.8% of all health care expenditures

Emergency Medicine is a small fish

Fixing the over-utilization of emergency

departments will NOTfix the problem


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1 in 10 Jobs in US is Health Care Related


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Are we in Crisis?

US health care costs have been in crisis for

roughly 40 yearsBrown, NEJM 24 Jan 08

Imminent Collapse rests on 3 indicators1. There are 47M uninsuredwe must have

universal coverage

2. Health care costs are extraordinarily high3. US system is in fact not a system, but

incoherent hodge-podge


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Are we in Crisis?

1. The Safety Netfor the Uninsured

Community Health Centers

Emergency Departments

Public and voluntary hospitals

Funds come from donations, Medicaid,

grants, etc. 11thhour infusion of money

President Bush told everyone that they can

always go to the emergency room


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Are we in Crisis?

2. Health Care Costs are High

Costs have been skyrocketing since 1965

when Medicare/Medicaid were signed into

law

US system has pushed technology

Research hospitals, drugs, medicines

Public health fell to the side


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Are we in Crisis?

3. The non-system of US health care willultimately drive reform

Clearly deep interest on all parties to bring

together the fragmented system, BUT:

Business, insurance, and providers have

different priorities, but all agree:

Big Government is NOT the answer

Costs of reform should not fall on them

Their agenda takes precedence


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Law of Reform

There is nothing more difficult tomanage, more dubious of success

than to initiate a new order of things.

The reformer has enemies in all thosewho profit from the old order and only

lukewarm defenders in all those who

would profit from the new order.

Machiavelli 1513


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What Glasses Are You Looking Through?


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Every System is Perfectly Designed To

Produce The Results It Produces

Don Berwick, MD

The Institute for Healthcare Improvement


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Here we go again.

1917, 1935, 1948, 2009

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