HEALTH CARE SPENDING, COST AND WASTE OPENING THE BLACK BOX: HEALTH CARE SPENDING, COST AND WASTE http://copahi.org/ The website 'Healthcare Colorado' is a product of the 'Colorado Progress and Health Initiative' a bipartisan group of people interested in research and fact finding.

The American Healthcare System Source: Elisabeth Rosenthal, An American Sickness: How Healthcare Became Big Business and How you Can Take it Back), 2017

A Free Market?

Spending

The Amount of Money We Spend on Health Care

In 6 Years Health Expenditures Will Reach $5.1 Trillion

The Cost of Health Care for American Families 2016 Source: Sentier Reserach from U.S. Census Bureau Source: Milliman Medical Index 2016 / http://publications.milliman.com/periodicals/mmi/pdfs/milliman-medical-index-2016.pdf

Why are Healthcare Costs So High? Source: http://www.rwjf.org/en/library/research/2012/09/what-is-driving-u-s--health-care-spending.html

COSTS & SETTING PRICES

If the Price of Other Commodities had Increased at the Same Pace as Healthcare Costs According to the Institute of Medicine, if the price of other commodities had increased at the same rate as health care costs between 1945 and 2010 10 Source: http://resources.iom.edu/widgets/vsrt/healthcare-waste.html 10

The Practical Result of Rising Hospital Costs Source: Elisabeth Rosenthal, An American Sickness: How Healthcare Became Big Business and How you Can Take it Back), 2017

2013 Commonwealth Fund Healthcare Scorecard Source: http://www.commonwealthfund.org/publications/press-releases/2014/jun/us-health-system-ranks-last

Health Care Spending is a Major Driver of Premium Increases On average, across the individual and small group markets in the U.S. premiums increased $25.26 per month from 2015 to 2016.   69% of this premium increase ($17.35) was due to hospital outpatient, inpatient, physician and prescription drug spending $7.91 of the premium increase was not related to health care costs Caroline F. Pearson - Nov 16, 2015, Health Insurance Premium Increases Largely Mirror Spending http://avalere.com/expertise/managed-care/insights/health-insurance-premium-increases-largely-mirror-spending

Prices Not Utilization are the Major Driver of Cost Trend PwC’s Health Research Institute (HRI) annually projects the growth of medical costs in the employer insurance market Medical cost trend: is the projected percentage increase in the cost to treat patients from one year to the next, assuming that benefits remain the same. “In the early 2000s, price and utilization contributed to the growth in healthcare costs. Since then, the use of services has declined and higher prices are driving the growth.” For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 14 Source: PWC / HRI Medical Cost Trend: Behind the Numbers 2018

Health Care Costs for Employers 2007 and 2017 For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 15 Source: PWC / HRI Medical Cost Trend: Behind the Numbers 2017 Source: GM CEO R. Wagoner, Testimony before the House Financial Services Committee, December 5, 2008

Price Variation for Similar Treatment

Price Variation: Case Study #1 Source: Archives of Internal Medicine, “Health Care as a ‘Market Good’? Appendicitis as a Case Study,”, 2012 Archives of Internal Medicine /Vol. 172 (No. 10) May 28, 2012 For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 17

Price Variation: Case Study #1 Source: Archives of Internal Medicine, “Health Care as a ‘Market Good’? Appendicitis as a Case Study,”, 2012 Archives of Internal Medicine /Vol. 172 (No. 10) May 28, 2012 For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 18

Price Transparency / Variation: Case Study #2 Source: Does price transparency legislation allow the uninsured to shop for care? Kate Stockwell Farrell, Leonard J. Finocchio,, Amal N. Trivedi, and Atee Mehrotra, University of Pittsburgh School of Medicine, 2009 For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 19

Price Variation Colorado 2012 For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 20 Source: https://cha.com/resources/publications/

Price Variation Colorado 2012 For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 21 Source: https://cha.com/resources/publications/

Drug Prices

Prescription Drug Spending U.S. spending on prescription drugs has increased by 67% since 2004 and is projected to increase by another 64% over the next 8 years Source: Kaiser Family Foundation 10 Essential Facts About Medicare and Prescription Drug Spending Jul 07, 2016 http://www.kff.org/infographic/10-essential-facts-about-medicare-and-prescription-drug-spending/

Health Care Pricing: Prescription Drugs Source: USA Today: Preemie birth preventive spikes from $10 to $1,500, March 9, 2011 Source: Jim Doyle (March 10, 2011). "KV boosts prenatal drug price 100-fold". St. Louis Today. Source: Daily Mail (March 9, 2011). "Preemie outrage: Cost of drug that prevents premature birth to rise from $10 to $1500.". For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 24

Health Care Pricing: General Trend / Prescription Drugs Source: Elisabeth Rosenthal, An American Sickness: How Healthcare Became Big Business and How you Can Take it Back) Source: Lazarus, David, LA Times Sick: The biggest increase in healthcare costs in 32 years,, September 2016 Source: Herper, Matthew, Forbes, Why Did That Drug Price Increase 6,000%? It's The Law, Feb. 2017 , For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 25

Research vs. Advertising: Prescription Drugs Source: Elisabeth Rosenthal, An American Sickness: How Healthcare Became Big Business and How you Can Take it Back) Source: http://www.mmm-online.com/commercial/drugmakers-again-boost-dtc-spending-to-56-billion-in-2016/article/642028/ , For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 26

WASTE

Spending and Waste: 2009 Data Source: http://www.kaiserhealthnews.org/daily-reports/2012/september/07/iom-report.aspx Source: Institute of Medicine, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America, September 6, 2012 http://www.iom.edu/Reports/2012/Best-Care-at-Lower-Cost-The-Path-to-Continuously-Learning-Health-Care-in-America.aspx Source: http://www.thefiscaltimes.com/Articles/2013/02/21/~/media/Images/Inline/2013/02/02212013_medical_costs.ashx?w=560&h=386&as=1

Spending and Waste Source: http://healthaffairs.org/healthpolicybriefs/brief_images/82-2-full.jpg Source: www.pbs.org/wnet/need-to-know/economy/the-true-cost-of-the-bank-bailout/3309/ Source: https://www.nationalpriorities.org/campaigns/military-spending-united-states/ Source L https://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2014301

Policy Solutions

Possible Solutions Source: http://www.latimes.com/business/hiltzik/la-fi-hiltzik-healthcare-mergers-20160527-snap-story.html

Possible Solutions Source: http://www.latimes.com/business/hiltzik/la-fi-hiltzik-healthcare-mergers-20160527-snap-story.html

Possible Solutions Source: http://www.latimes.com/business/hiltzik/la-fi-hiltzik-healthcare-mergers-20160527-snap-story.html

Possible Solutions Source: Emanuel, E., Sharfstein, J., Sprio, T., O’Toole, M. State Options To Control Healthcare Costs and Improve Quality. http://healthaffairs.org/blog/2016/04/28/state-options-to-control-health-care-costs-and-improve-quality/

Possible Solutions Source: Emanuel, E., Sharfstein, J., Sprio, T., O’Toole, M. State Options To Control Healthcare Costs and Improve Quality. http://healthaffairs.org/blog/2016/04/28/state-options-to-control-health-care-costs-and-improve-quality/

Why Charges May Vary: Colorado Hospital Assoc. For profit hospitals were at the high end of the cost spectrum Can we really have this kind of pricing variation going on at a time when an additional 30 million people will be getting coverage. A recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. American Board of Internal Medicine’s Foundation Choosing wisely campaign Top five lists for 27 different specialties within medicine Volume a recent survey of PC physicians from the Archives of internal medicine 42% state that their patients receive too much medical care 25% say that they provide too much medical care. 36 Source: Colorado Hospital Association report on Hospital Charges and Average Length of Stay, July 2015