Trends In Health Care Industry KNH 413. Difficult questions What is health insurance? What is health...
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Transcript of Trends In Health Care Industry KNH 413. Difficult questions What is health insurance? What is health...
Trends In Health Care Industry
KNH 413
Difficult questions What is health insurance? What is health care versus health
insurance? Is one or both a right or a
privilege?
Trends in Health Care
OutlineI. Where We Spend our Health Care Dollars
II. Major Trends on Health Care Industry 1. Increase in Health Care Costs
2. Cost Control Strategies Avoid Risks Share Risks
3. Shifts in Hospitalization
III. Who Pays for Health Care A. Where health care dollars come from B. Types of health care plans
Health Care CostsHealth Care Plan vs Health Care per Capita
Average Cost Health Care Plan in US Family = $11,480; Single = $4,242 (2006 data)
Note: Family coverage is defined as health coverage for a family of four. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006.
Average Per Capita Cost Health Care
(2005 Data for UK, 2006 data US)
Organization for Economic Co-Operation and Development http://www.oecd.org/
Where Personal Care Dollars Went: 2006
Source: Health Care Financing Administration
National Health Expenditures, US
$2.105 Trillion/year
Summary of Charts Healthcare cost are high Healthcare $ go primarily for personal
care Personal care $ divided among many
different categories, therefore can not focus cost controls on just one category.
Trends in Health Care 1. Costs of Health Care Increasing 2. Strategies to Control Cost 3. Shifts in Hospitalization
Health Plan Costs: 1988 - 2006Rising faster than earnings and inflation
http://www.kff.org/insurance/7148/sections/ehbs04-1-2.cfm
Paying for Health Care
US Spends More on Health Care
Percent of GDP* Spent on Health Care Health Care Spending Per Capita
*GDP = Gross Domestic Product
FYI: Are We Getting Our $’s Worth?Life Expectancy: 1960-2005
Males Females
OECD Health Data 2006. http://www.oecd.org/document/16/0,2340,en_2825_495642_2085200_1_1_1_1,00.html
Health Care Costs: Strategies to Control CostsHealth Care Cost Survey
Factors causing health care costs
Public Opinion Poll Spring 2005
“…Very Important factor in causing higher health care costs.”
“…Most Important factor in causing higher health care costs.”
High profits of drug and insurance companies
71% 35%
# of malpractice lawsuits 58% 19%
Amount of greed and waste in health system
59% 14%
Aging of the population 50% 8%
Use of expensive, high-tech medical equipment and drugs
46% 8%
Dr’s make too much money 31% 5%
People having little incentive to look for lower cost doctors / services
34% 4%
From Henry J. Kaiser Family Foundation http://www.kff.org/about/index.cfm
Trends in Health Care 1. Costs of Health Care Increasing 2. Strategies to Controls Cost 3. Shifts in Hospitalization
Strategies to Control Cost
Strategies to Control Cost 1. Avoiding Risk (financial risk)
2. Shared Risk (financial risk)
Strategies to Control Costs
Avoid Risk: Don’t Provide Health Benefits
http://www.census.gov/hhes/www/hlthins/hlthin06/fig07.pdf
Strategies to Control Costs
Share Risk Share financial risk with benefiters
Increase Co-pay
Share financial risk with health care providers
Strategies to Control CostsIncreased Utilization a Factor in ’d Health Care
Costs
Significant portion of increased health care costs from increased utilization
Personal Choice?
Ave
rag
e A
nn
ual
Per
cen
t C
han
ge
Source: CMS, Office of the Actuary, National Health Statistics Group.
Strategies to Control Costs: Share Risk Sharing Risk w/ Benefitees
RAND Health Insurance Experiment “Enrollee cost sharing greatly affects both
necessary and unnecessary health service use.”
“Those who paid nothing used 40 percent more services.”
3-yrs of experiment no effect on health status
Keeler, Emmett B., et al. 1987. "Effects of Cost Sharing on Physiological Health, Health Practices, and Worry." Health Services Research 22:279-306.
Strategies to Control Cost: Share Risk Increase Deductibles/Out-of-Pocket Expenses to Share Risks
Benefitees paying higher deductibles and more of expense for prescription drugs
Strategies to Control Cost: Share Risk
Higher Costs for Services “Outside” the Plan
Insurance companies have contracts with providers for lower fees.
Go outside these plan providers…. You share more of the cost.
Strategies to Control Cost: Share Risk FYI: Determinants of HealthShared Risk Tries to Influence Patient to Alter Things Can Control
Patients Determinants of Patient’s Health
Source: Center for Disease Control
Strategies to Control Cost: Share Risk Share Risk w/ Health Care Providers
No more “blank checks” Two Scenarios for Food Costs at
College Open account for food and costs gets put
on state tax payers cost.
State gives PSU set amount of $ for semester of food, and PSU gets to keep any leftover $.
Strategies to Control Cost: Share Risk Share Risk w/ Health Care Providers
No more “blank checks” Two Scenarios for Food Costs at College
Open account
System give you set amount
How about giving some of this profit back to “you” the student?
Strategies to Control Cost: Share Risk Shift Types of Health Plan Contracts From Fee-For-Service
Profit
RevenueFixed ExpensesVariable Expenses
Dollars
Patient Encounters
Fee-For-Service World, Volume Yields Profit
Loss
Strategies to Control Cost: Share Risk Shift Types of Health Plan Contracts To Prospective Payments Plans
LossRevenue
Fixed Expenses
Variable Expenses
Dollars
Patient Encounters
Prospective, Volume Yields Loss
Profit
Strategies to Control Cost: Share Risk Shift in Type of Health Care Plans that Shares Risk’s w/ Health Care Providers
*
*
*
*
*
*
Trends in Health Care 1. Costs of Health Care Increasing 2. Cost Controls and Competition 3. Shifts in Hospitalization
Inpatient to Outpatient Shorter Lengths of Stay
Source: CMS, Office of the Actuary, National Health Statistics Group.
Per
cen
t o
f T
ota
lShifts in Hospitalization Hospital Expenditures: Inpatient vs. Outpatient Shares
Less expensive to treat outpatient
Dis
char
ges
per
1,0
00
Da y
s
Source: U.S National Center for Health Statistics, Vital and Health Statistics, Series 13.
Shifts in Hospitalization Short-Stay Hospitals: Discharges and Length of Stay
Conclusions of Health Trends 1. Health Care costs primarily on personal
care. 2. Controlling costs difficult
spending not concentrated in specific area(s). can’t just focus spending controls.
3. Consumer/patient important fact in effort to control costs.
Paying for Health Care A. Where health care dollars come from. B. Types of health care plans
Government – Federal/State Private
C. Types of health care contracts
Paying for Health Care
Where Nation’s Health Dollar Dollars Came From: 2006
http://cms.hhs.gov/researchers/pubs/datacompendium
Types of Health Care Plans
Government Plans Medicare – Federal Program since 1965
Eligibility
Part A (Hospital Insurance)
Part B (Medical Insurance)
Part C (Medicare Advantage)
Part D (Prescription drug coverage)
Types of Health Care Plans
Government Plans Medicaid – Federal/State Program since
1965 Eligibility
Low income + specific categories of individuals. Broadly defined categories are (established by
Feds)
Coverage Each state sets own guidelines …but basic services (e.g. hospitalization and
pediatric services) required to receive federal dollars
Types of Health Care Plans
Private Health Insurance 100’s of policies Employer sponsored
Typically, employer pays majority of premiums.
Typically, employee has some, but limited choice.
Self-employed You decide, you pay Usually very expensive
Types of Health Plan Contracts Traditional
Managed Care Health Maintenance Organization (HMO)
Preferred Provider Organization (PPO)
Point of Service (POS)
FYI: National Health Spending by Source of Funds, 2000
Source: OECD Health Data 2002 2nd ed.