The U.S. National Health Care System PH 150, Professor Roger Detels Ninez A. Ponce, MPP, PhD Associate Professor Department of Health Services UCLA School of Public Health 15 October 2008

(1) Overview of U.S. system compared to other developed countries (2) Private insurance (3) Public coverage & the Safety Net (4) Presidential Candidates’ Health Reform Proposals

How does the US “national system” compare to others?

 Characteristics of U.S. System:  Big  $ 2.1 trillion on healthcare in 2006  $800 billion more for healthcare than eight years ago  $7,026 per person or 16 percent of the nation's Gross Domestic Product.  Relies on marketplace  Competition and cost containment  Patchwork of insurance coverage  “Safety net” to cover the patches

 Employer-sponsored private insurance  (if offered, if you are eligible, & if you buy it)  Individual private insurance  Medicare: over 65 or disabled  Medicaid: some (about ½) of poor  Military or veterans coverage  Indian Health Services  Uninsured (safety net providers)

Per Capita Expenditures in U.S. $ Ratio of Expenditures to the U.S.’ Level % of Gross Domestic Product Spent on Health Australia $ % Canada2, France2, Germany2, Japan1, Netherlands2, Sweden2, Switzerland3, U.K. 1, United States4,

Acute Care Bed Days per Capita* Physician Visits per Capita** Coronary Artery Bypass Operations per 100,000+ Coronary Angioplasty Operations per 100,000++ Australia Canada France Germany JapanNA16.0NA Netherlands NA Sweden NA Switzerland United Kingdom United States

AustraliaCanada United Kingdom United States Waiting times for non- emergency surgery for themselves or a family member: None Less than one month months months or more Source: Donelan, K., et al “The Cost of Health System Change: Public Discontent in Five Nations.” Health Affairs 18(3):

Life Expectancy at Birth (years) Infant Deaths per 1,000 Live Births Australia 78.7 (80.6)5.0 (4.6) Canada78.6 (80.3)5.5 (4.6) France78.4 (79.9)4.6 (4.2) Germany77.5 (79.0)4.7 (4.1) Japan80.6 (81.4)3.6 (3.2) Netherlands Sweden79.4 (80.6)3.5 (2.8) Switzerland79.5 (80.6)4.6 (4.3) United Kingdom 77.3 (78.7)5.8 (5.0) United States 76.7 (78.0)7.2 (6.4) * Data for Canada are for Data for 2007 from US Census Bureau International Database

Source: Huber, M “Health Expenditure Trends in OECD Countries, ” Health Care Financing Review 21(2):

Overview of the US health care system Billions of Current US $

1 Other public includes programs such as workers’ compensation, public health activity, Department of Defense, Department of Veterans Affairs, Indian Health Service, and State and local hospital subsidies and school health. 2 Other private includes industrial in-plant, privately funded construction, and non-patient revenues, including philanthropy. Note: Numbers shown may not sum due to rounding. Source: CMS, Office of the Actuary, National Health Statistics Group. Medicare, Medicaid, and SCHIP account for one-third of national health spending. Total National Health Spending = $2.1 Trillion

Note: Other spending includes dentist services, other professional services, home health, durable medical products, over-the-counter medicines and sundries, public health, research and construction. Source: CMS, Office of the Actuary, National Health Statistics Group. Hospital and physician spending accounts for more than half of all health spending. Total National Health Spending = $2.1 Trillion

Source: CMS, Office of the Actuary, National Health Statistics Group. Calendar Years Percent of GDP ActualProjected Between 2001 and 2011, health spending is projected to grow 2.5 percent per year faster than GDP, so that by 2011 it will constitute 17 percent of GDP.

% Share Calendar Years Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. In recent years, the hospital share of total spending has decreased while the prescription drug share has increased.

Public 22% Out-of-pocket 32% Private Health Insurance 46% Out-of-pocket 60% Public 16% Private Health Insurance 24% Note: Data are Calendar Year. Source: CMS, Office of the Actuary, National Health Statistics Group. The financing of prescription drug expenditures has rapidly shifted from consumer out-of- pocket spending to private health insurance.

Source: CMS, Office of the Actuary, National Health Statistics Group. Over the decade, out-of-pocket payments declined while private insurance payments increased.

 Story begins around 1930 in U.S., although earlier in countries such as Germany  First example: 21-day hospital benefit for $6/year (Baylor University, Dallas, 1929)  Hospitals then banded together to give choice of facility; gave them $$ even if beds in Great Depression even when beds were empty, which led to the formation of “Blue Cross”

 A.M.A. was worried that insurance could lead to “socialized medicine,” so “Blue Shield” plans didn’t form till 1940s  10 tenets of coverage (MDs have complete control over care, free choice of MD, etc.)  WWII stimulated development; with labor shortage and wage controls, health insurance became attractive fringe benefit, and courts later ruled it not taxable income

 Medicare & Medicaid in mid-1960s  Compromise between liberals who wanted social insurance, and providers who didn’t want excess government interference  Compromise: 3-pronged approach put together by Congressman Wilbur Mills:  Part A of Medicare, hospital insurance, is like social insurance, financed from payroll taxes  Part B, physician coverage, voluntary and partly paid by beneficiaries and partly from general revenues – but with generous reimbursement rules  Medicaid was not made an entitlement program, but a rather welfare-like program for poor people.

Percentage of population under age 65: 45 million people (17.2%) in 2007  Location:  Worst: Texas, New Mexico,Florida, Oklahoma, and Arizona  Best: Massachusetts, Minnesota,Hawaii, Wisconsin, and Iowa  Employment  Nearly 83 percent of the uninsured lived in families headed by workers  Self-employed, part-time  Industry  agriculture, forestry, fishing, mining, and construction  small firms  Demographics  Younger, minorities, men, low-income

The “Safety net” Intact? Endangered? Imaginary? IOM: Definition: “Those providers that organize and deliver a significant level of health care and other health-related services to the uninsured, Medicaid and other vulnerable populations.”

 IOM: Definition:  “ core safety-net providers”-  Legal mandate of “open door” policy  Serves a substantial share of uninsured, Medicaid and other vulnerable populations  No set threshold, but deemed detrimental to community if these providers disappear

Sources: LA Times Families USA Kaiser Family Foundation Commonwealth Fund

 Senators McCain and Obama both promote reigning in healthcare costs by:  Better Information  cost and quality of care  evidence-based medicine  Health IT and electronic prescribing,  Medical malpractice reform  Disease prevention and management

SENATOR M CCAIN’S PLANSENATOR O BAMA’S PLAN  Remove the favorable tax treatment of employer-sponsored insurance  Provide a tax credit to all individuals and families to increase incentives for insurance coverage  Require all children to have health insurance and employers to offer employee health benefits or contribute to the cost of the new public program.

 Eliminate current tax exclusion for employer- paid health insurance.  Provide refundable tax credits of $2,500 for individuals or $5,000 for families, for everyone who obtains private health insurance -- employed or not.  Require employers to either offer health insurance to employees or pay a tax that would be used to help uninsured people get insurance.  Provide subsidies for low-income Americans to help them afford coverage.

 Provide a variety of insurance choices, national and across state lines, that would not be dependent on a job.  Work with state governors to increase insurance pools for people uninsurable on the individual market.  Create a new national health plan, similar to Medicare, for the uninsured and small businesses.  Require that all children have health insurance.

 Deregulate insurance markets, allowing insurers to sell across state lines. People could buy less costly, less comprehensive policies in states with fewer mandates.  Pass medical malpractice reform.  Regulate private insurance plans to end risk-rating based on health status  Establish a federal reinsurance program to protect businesses against the costs of workers' expensive medical episodes.

cCain's plan would cost the federal budget $1.3 trillion bama's plan would cost $1.6 trillion

Access/equity  About 45 million uninsured but could grow with unemployment  Catastrophic versus comprehensive care  Getting access to care in HMOs  Disparities in access and treatment Rising costs  Higher premiums, higher cost sharing  Especially pharmaceuticals  Movement away from tightly managed care  Emphasis on disease prevention and management Quality  Does competition improve or deter quality?  Do HMOs provide as good quality of care?  Consumer-driven health care

The U.S. National Health Care System