Where Are We Headed: Healthcare and America’s Economic Future Raimondi Lecture St. Louis, Missouri November 28, 2012 Rosemary Gibson, M.Sc. Section Editor, Less is More Archives of Internal Medicine Author, The Battle Over Health Care, The Treatment Trap, Wall of Silence

Overview of Presentation   Discuss the role of health care spending in the U.S. economy and its impact on America’s economic future   Identify the opportunity costs of unabated spending on health care   Identify action steps to “bend” the cost curve to help ensure sustainable, high- quality health care

  The past 50 years have seen an explosion in biomedical advances, dramatic innovation in therapies and surgical procedures, and success in management of diseases that were once fatal.   US economic growth has underwritten the innovation and its application to millions of Americans who have benefitted   What will it take to enable the same pace of innovation in the next 50 years?

Part I   The role of health care spending in the U.S. economy and the impact on America’s economic future

Price x Volume = Total Spending

Prices and Price Variation   Researchers at UCSF examined hospital charges in California for the treatment of an uncomplicated appendectomy in 2011   Charges ranged from $1,529 to $182,955. Source: Renee Y. Hsia et al, “Health Care as a “Market Good”? Appendicitis as a Case Study, Archives of Internal Medicine, May 28,

Price vs. Income   The median hospital charge for an uncomplicated appendectomy in CA was $33,611   Annual per capita income in California was $44,481 in 2011   Median hospital charge is 75 percent of the annual per capita income in the state Source: Renee Y. Hsia et al, “Health Care as a “Market Good”? Appendicitis as a Case Study, Archives of Internal Medicine, May 28,

Price Escalation   In 2011 a drug company gained exclusive rights to produce a progesterone shot used to prevent premature births in high-risk mothers   A non-branded version used for many years cost $10/injection, or $300 per pregnancy   Price was raised to $1,500/injection for the branded version, or $30,000 per pregnancy, with minimal additional clinical benefit Source: J. Armstrong, NEJM, May 5,

Medical Profession Response to Price Escalation   American College of Obstetrics and Gynecology:   “The US health care system simply cannot be expected to absorb the cost of Makena™ at its current prohibitive price without significant negative repercussions.”*   Under pressure, the company reduced the price Price_Reduction_Is_Inadequatehttp:// Price_Reduction_Is_Inadequate, April 1, 2011

Price   A 65-year old Medicare beneficiary was billed $244,041 for 1 night in a hospital for a procedure   A Maryland man received a hospital bill for $104,000 for treatment of two kidney stones

Volume   42% of U.S. primary-care doctors believe patients they see receive too much care   More than 25% believe they themselves provide too much care to some patients   About 75% of those surveyed said they are interested in learning how their practice compares to that of their peers Source: B. Sirovich, “Too Little, Too Much? Primary Care Physicians Views on US Health Care, “ Arch Internal Medicine, September 26, 2011 Source: B. Sirovich, Archives of Internal Medicine

Choosing Wisely   The American Board of Internal Medicine Foundation launched Choosing Wisely   Multi-year effort to help physicians be better stewards of finite health care resources.   Medical specialty organizations have identified five tests or procedures commonly used in their field whose necessity should be questioned and discussed. Source:

Choosing Wisely Partners American Academy of Allergy, Asthma & Immunology American Academy of Allergy, Asthma & Immunology American Academy of Allergy, Asthma & Immunology American Academy of Allergy, Asthma & Immunology American Academy of Family Physicians American Academy of Family Physicians American Academy of Family Physicians American Academy of Family Physicians American College of Cardiology American College of Cardiology American College of Cardiology American College of Cardiology American College of Physicians American College of Physicians American College of Physicians American College of Physicians American College of Radiology American College of Radiology American College of Radiology American College of Radiology American Gastroenterological Association American Gastroenterological Association American Gastroenterological Association American Gastroenterological Association American Society of Clinical Oncology American Society of Clinical Oncology American Society of Clinical Oncology American Society of Clinical Oncology American Society of Nephrology American Society of Nephrology American Society of Nephrology American Society of Nephrology American Society of Nuclear Cardiology American Society of Nuclear Cardiology

Choosing Wisely Partners New specialty societies are currently developing lists to be released in early 2013: American Academy of Hospice and Palliative Medicine American Academy of Hospice and Palliative Medicine American Academy of Hospice and Palliative Medicine American Academy of Hospice and Palliative Medicine American Academy of Neurology American Academy of Neurology American Academy of Neurology American Academy of Neurology American Academy of Ophthalmology American Academy of Ophthalmology American Academy of Ophthalmology American Academy of Ophthalmology American Academy of Otolaryngology–Head and Neck Surgery American Academy of Otolaryngology–Head and Neck Surgery American Academy of Otolaryngology–Head and Neck Surgery American Academy of Otolaryngology–Head and Neck Surgery American Academy of Pediatrics American Academy of Pediatrics American Academy of Pediatrics American Academy of Pediatrics American College of Obstetricians and Gynecologists American College of Obstetricians and Gynecologists American College of Obstetricians and Gynecologists American College of Obstetricians and Gynecologists American College of Rheumatology American College of Rheumatology American College of Rheumatology American College of Rheumatology American Geriatrics Society American Geriatrics Society American Geriatrics Society American Geriatrics Society American Society for Clinical Pathology American Society for Clinical Pathology American Society for Clinical Pathology American Society for Clinical Pathology American Society of Echocardiography American Society of Echocardiography American Society of Echocardiography American Society of Echocardiography American Urological Association American Urological Association American Urological Association American Urological Association Society of Cardiovascular Computed Tomography Society of Cardiovascular Computed Tomography Society of Cardiovascular Computed Tomography Society of Cardiovascular Computed Tomography Society of Hospital Medicine Society of Hospital Medicine Society of Hospital Medicine Society of Hospital Medicine Society of Nuclear Medicine and Molecular Imaging Society of Nuclear Medicine and Molecular Imaging Society of Nuclear Medicine and Molecular Imaging Society of Nuclear Medicine and Molecular Imaging Society of Thoracic Surgeons Society of Thoracic Surgeons Society of Thoracic Surgeons Society of Thoracic Surgeons Society for Vascular Medicine Society for Vascular Medicine Society for Vascular Medicine Society for Vascular Medicine

Choosing Wisely Partners Another group of societies is developing lists to be released in mid-2013: American College of Surgeons American College of Surgeons American College of Surgeons American College of Surgeons American College of Chest Physicians American College of Chest Physicians American College of Chest Physicians American College of Chest Physicians American Headache Society American Headache Society American Headache Society American Headache Society American Society for Hematology American Society for Hematology American Society for Hematology American Society for Hematology American Society for Radiation Oncology American Society for Radiation Oncology American Society for Radiation Oncology American Society for Radiation Oncology

The “Top Five” in Internal Medicine Don’t do imaging for low back pain within the first 6 weeks unless red flags are present Don’t obtain blood chemistry panels or urinalysis for screening in asymptomatic, healthy adults Don’t order annual ECGs or any other cardiac screening for asymptomatic low-risk patients Use only generic statins when initiating lipid- lowering drug therapy Don’t use DXA done density screening for osteoporosis in women under age 65 or men under 70 with no risk factors.

“I get a chest x-ray every 3 months from my doctor. I don’t have any underlying medical condition. Next time I’m going to ask him if I really need them.” State legislator Council of State Governments August 2012

“ My knees were hurting and I went to a well-known orthopedic surgeon. He said he could do surgery. He didn’t talk about me or my situation. I left and found a personal trainer who helped me strengthen my muscles. I’m much better now.” Consumer Reporter Washington, D.C. Radio Station

“My 83-year old mother-in-law was having problems with her shoulder. She went to a doctor who said he could operate. I went with her to get a second opinion. With physical therapy and time for healing, she was fine.” Quality improvement coordinator at a Midwest teaching hospital

  Impact of price and volume on total health care spending: - Employees - Medicare

W W

Changes in Employer-Sponsored Health Insurance   Employees are paying more of their income for health insurance   Fewer employers are providing insurance   Employers will be moving to defined contribution, vs. defined benefits -- similar to the switch to 401(k) pensions

  Annual medical costs for a family of four: $20,728   The median family income in the U.S. in 2011 was $50,429 Source: Milliman and US Census Bureau

  Will health care reform mitigate the cost of health care?

What is the Estimated Cost of the Individual Mandate to Buy Insurance?   A 45-year old head of household in a family of 4 will pay $2,672 a year for insurance in 2014   In addition, maximum out-of-pocket costs are $4,172 Source: Kaiser Family Foundation, Congressional Budget Office,

What is the Estimated Cost of the Individual Mandate to Buy Insurance   A 60-year old person earning $48,000 a year will pay $10,100 a year for insurance in 2014   In addition, maximum out-of-pocket costs are $6,100 Source: Kaiser Family Foundation, Congressional Budget Office,

  In 2010 Secretary of HHS Kathleen Sebelius was asked on ABC News what people should do about enormous premium increases   “They should contact the governor of their state and state legislature demanding that those laws be changed.”   The laws referred to are those governing health insurance rate review

  Nothing in the health care reform law stops the increase in cost of private health insurance

Lack of Insurance or Lack of Affordability?   Health care reform diagnosed the problem as lack of insurance   Is lack of insurance the challenge for individuals and families?   Or is it affordability?

Medicare’s Trajectory

President Obama and Rush Limbaugh Agree on This   President Obama: "The U.S. government is not going to be able to afford Medicare… on its current trajectory.... The notion that somehow we can just keep on doing what we're doing and that's OK, that's just not true.’   Rush Limbaugh: “I don't like the idea of letting Medicare collapse. There won’t be any Medicare if we don’t’ fix it. It is not sustainable.”

  Both Democrats and Republicans have: - - proposed limiting the rate of increase in Medicare spending - - proposed increasing the Medicare eligibility retirement age from 65 to proposed increasing premiums among higher-income older adults

Independent Payment Advisory Board   In the health reform law, an Independent Payment Advisory Board would be set up with fifteen members appointed by the president and confirmed by the Senate   Members would recommend ways that Medicare can keep spending in check

Independent Payment Advisory Board   It cannot change Medicare eligibility, ration care, raise premiums, or cut benefits.   If Congress doesn’t like the recommendations, it doesn’t have to implement them   But Congress needs to find equivalent savings and pare back Medicare spending by an alternative means that it chooses.   IPAB is targeted for repeal

Part II   The opportunity cost of spending 18.6 percent of the country’s income on health care

Source: Congressional Budget Office, Long-Term Budget Outlook, 2007, Appendix D

The Changing US Economy * The US was the world’s creditor and loaned money to other countries * In 1985 it became debtor and borrows from other countries * Total current federal debt: $16 trillion * Magnitude of a trillion dollars

Impact on Physician Practice   More of your patients will have health insurance   But as health care costs continue to increase, they will have gaps in coverage = the Swiss cheese effect

Downward Pressure on Physician Payment   A cost pressure escalate, pressure will continue to keep payments to doctors and other providers down   To compensate, volume will increase   This will increase the pace of work and expectations for “productivity”

Part III   Where to begin to “bend” the health care cost curve to ensure financial sustainability

IOM Report: Best Care at Lower Cost   Institute of Medicine report, Best Care At Lower Cost, estimates that 30 percent of $2.6 trillion in annual health care spending does not add value to health   The “waste” includes overuse, inefficiency, fraud   How much is $760 billion? Source: Best Care at Lower Cost, September 2012, National Academies Press

Palliative Care for Seriously Ill Patients   64% of all Medicare spending goes to the 10% of beneficiaries with 5 or more chronic conditions   Despite high spending, evidence of poor quality of care

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