1 An Overview of Healthcare Costs and What Are You Going To Do About Them? Our health system research undertaken with generous support from Doug Hall Executive Director November 9, 2005

2 All of our reports are available on the web: New Hampshire Center for Public Policy Studies Board of Directors Martin L. Gross, Chair John B. Andrews Cotton M. Cleveland John D. Crosier Todd I. Selig Donna Sytek Georgie A. Thomas James E. Tibbetts Kimon S. Zachos Executive Director Douglas E. Hall Deputy Director Stephen A. Norton “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”

3 The NH Health Care “System” As complex as any ecological system Effects are simultaneously causes $7.5 billion this year, 16% of the Gross State Product Affects everyone Growing in size by about 10-12% per year Does not differ much from national averages or national trends Just about 50% is funded with tax dollars Costs are highly concentrated in certain individuals Not a market system because there is no access to and little use of price or quality information; supply generates its own demand

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9 About 130,000 are Uninsured

10 Little Change in Last 5 Years

11 6% chronically uninsured 13% transitionally insured

12 Common View InsuredUninsured Realistic View  Insured for what? drug rehab, prescription drugs, mental health, “experimental” procedures, dental, …  How much annual deductible and out-of-pocket?  Pre-existing conditions

13 This slide from Financial Assistance Application Study, September 2002, NH Health Access Network

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18 Differences Among Employers Provide many employees a health insurance benefit Large employers Manufacturers High wage and full time employers Provide few employees a health insurance benefit Small employers Construction, retail sales, hospitality Low wage and part time employers The former are effectively subsidizing the latter through family policies and cost-shifting by health care providers. Can you name the employers in your community that are dumping the health care costs of their employees onto you?

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21 Cost-Shifting The allocation of unpaid costs of care delivered to one patient population through above-cost revenue collected from other patient populations. For hospitals, nursing facilities and physicians, the historical cause of cost shifting has been below-cost reimbursement rates paid by public programs and uncompensated care losses due to charity care and bad debt.

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33 Quantifying the 2004 Cost-Shift in 26 New Hampshire Hospitals

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36 Health Care is NOT A Traditional Market System Consumers have limited, if any, access to information on price or quality. There are institutional monopolies. The seller determines what the consumer will get; supply drives demand. Important health care services are often obtained at a time of personal crisis. Government regulation and programs alter provider behavior.

37 What Are You Going To Do ? More of the Same? Seek cheaper insurance plans including Health Savings Accounts Increase co-premiums and co-pays On turnover, add part-time employees ineligible for benefits Drop retiree health benefits Recognize that these actions do NOT reduce the actual cost of health care; they simply shift it onto someone else. Health care costs will be controlled only when health care providers’ costs are controlled.

38 What Are You Going To Do ? Support efforts to end direct-to- consumer drug advertising. Those TV ads work or the drug companies wouldn’t be adding more all the time.

39 What Are You Going To Do ? Have your local Chamber of Commerce or trade association create a public list of its members with the number of employees who are and are not offered health insurance benefits by each member. Recognize those that are good citizens and put pressure on those that shift their health care costs onto you.

40 What Are You Going To Do ? Don’t play cheerleader for new and improved health services in your community and later complain about the costs. Don’t let local providers “compete” on the basis of adding some technology already available a short distance away.

41 What Are You Going To Do ? Talk with your state legislators and the NH Congressional delegation about how below cost payments by Medicare and Medicaid result in a hidden tax on insurance premiums through cost-shifting, increasing your cost of doing business.

42 What Are You Going To Do ? Insist that health insurers and local health care providers provide you the list of prices they have agreed to for services so you can make comparisons among providers and among insurers.

43 What Are You Going To Do ? Support regulations that will require physician practices, laboratories, ambulatory care centers, and other non-hospital providers to submit annual financial reports. Currently we cannot see inside this major part of the health care system.

44 This presentation is available for downloading on our website: