Earl Goldberg Ed.D. & Joan P Frizzell Ph.D. La Salle University Health Care Economics Earl Goldberg Ed.D. & Joan P Frizzell Ph.D. La Salle University

Health Care Economics Studies issues related to efficiency, effectiveness, value and behavior related to the costs of Health Care. It includes the study of the functioning of health care systems and health-affecting behaviors in the general population.

Historical Perspective At the start of the United States, there was no need for insurance. There was nothing to buy. Health care as it is known today was not available. Civil War (1861-1865) More than 620,000 died – however, more than 2/3 died from disease Poor Hygiene, Improper & inadequate diet, lack of sanitation, impure water Clara Barton Worked with Ladies' Aid societies to obtain bandages, food, and clothing that would later be distributed during the Civil War. Founded the American Red Cross in 1881

Historical Perspective Crimean War (1853-1856) Florence Nighingale demonstrated that Nursing Care makes a difference in survival Infections contributed to the high death rates of Wars No Antibiotics until the 1900s Treatment for pain consisted of Alcohol and Opiates Formal Nursing Education in the Philadelphia Pennsylvania Hospital - 1875 Philadelphia General Hospital - 1885 Hospital of the University of Pennsylvania - 1886

Antibiotics Alfred Bertheim & Paul Erhlich synthesized Arsphenamine as the first medication to treat and infection (syphilis) in 1907 Sulfa Powder was sprinkled onto wounds during WWI Sulfa Antibiotics developed in 1930s in Bayer Laboratories Penicillin developed by Alexander Fleming in 1928 It is the ability to develop large quantities of PCN than made the difference in treatment of infection  Now there was something to purchase for treatment of illness

Workers Compensation Initiated in 1914 Originally concerned with cash payments for wages loss due to job related injury Compulsory insurance for medical expenses and death benefits as a result of job related injury

Private Insurance Initially voluntary In 1850s some private insurance companies provided limited coverage for bodily injury but not illness Early 1900s – coverage for surgical fees 1911 Policies becam available for accidental injury, sickness and nursing services. The Railroad and Unions developed their own policies.

Blue Cross /Blue Shield American Hospital Association lent support for the development of this health insurance to cover hospital admission costs Blue Shield was later developed to cover the cost of physician bills Not for Profit No shareholders would receive profit distributions Fee for Service Payment was based on the cost of care

Employer Based Health Insurance In the post WWII period, inflation rates were high. A wage freeze was mandated to control inflation Health Insurance and Retirement Benefits were offered as a way to compensate employees without giving raises. These benefits were determined to be a legitimate part of Union/Management bargaining agreements These employee benefits were considered to be non-taxable. Essentially free money

Medicaid/Medicare Developed to assist the elderly, unemployed, and the poor people of the US. 1966 – Medicare – Administered by US Government Initially for 65 and older In 2010, Medicare provided health insurance to 48 million Americans—40 million people age 65 and older and eight million younger people with disabilities. It provided coverage for an estimated 15.3 million inpatient stays in 2011, representing 47.2 percent ($182.7 billion) of total a inpatient hospital costs in the United States

Medicare Part A – Hospital Insurance Part B – Medical Insurance Funded by a 2.9% payroll tax levied on employers and workers (each pay 1.45%) Part B – Medical Insurance Outpatient services and care Part C – Health Plans – Medicare Advantage Part D – Perscription Drugs Parts B and D are partially funded by premiums paid by Medicare enrollee There are deductibles and Co-Insurance costs In the Patient Protection & Affordable Care Act legislation of 2010, a surtax was added to the Part B & D premium for higher income seniors to partially fund the PPACA.