1. Congressional Budget Office Presentation for The Hastings Center Rising Health Care Costs and the Federal Budget May 20, 2008

2. Excess Cost Growth in Medicare, Medicaid, and All Other Spending on Health Care MedicareMedicaidAll OtherTotal 1975 to 19902.9 2.42.6 1990 to 20051.81.31.41.5 1975 to 20052.42.22.02.1 Percentage Points

3. Spending on Health Care as a Percentage of GDP If Excess Cost Growth Continues at Historical Averages Percent

4. Projected Spending on Health Care as a Percentage of Gross Domestic Product Percent

5. Federal Spending for Medicare and Medicaid as a Percentage of GDP Under Different Assumptions About Excess Cost Growth Percent

6. Federal Spending Under CBO’s Alternative Fiscal Scenario Percentage of Gross Domestic Product

7. Sources of Growth in Projected Federal Spending on Medicare and Medicaid Percentage of GDP

8. Estimated Contributions of Selected Factors to Long-Term Growth in Real Health Care Spending per Capita, 1940 to 1990 Smith, Heffler, and Freeland (2000) Cutler (1995) Newhouse (1992) Aging of the Population 2% Changes in Third-Party Payment 10%13%10% Personal Income Growth 11-18%5%<23% Prices in the Health Care Sector 11-22%19% Not Estimated Administrative Costs 3-10%13% Not Estimated Defensive Medicine and Supplier-Induced Demand 0% Not Estimated 0% Technology-Related Changes in Medical Practice 38-62%49%>65%

9. Challenge and Opportunity?  High or rising costs for health care might not be considered a “problem” if the benefits were clearly commensurate –Even if they were, have to figure out how to pay for them  But a substantial body of evidence suggests that the U.S. is not getting the most “bang for its buck”  Could the use of health care services (quantity and intensity) be reduced without harming health? –If so, how? What are the options and their effects?

10. Medicare Spending per Capita in the United States, by Hospital Referral Region, 2003 Source: www.dartmouthatlas.org. $7,200 to11,600 (74) 6,800 to <7,200 (45) 6,300 to <6,800 (55) 5,800 to <6,300 (60) 4,500 to <5,800 (72) Not Populated

11. Medicaid Payments per Elderly Enrollee, FY2005 Source: The Urban Institute and Kaiser Commission on Medicaid and the Uninsured

12. What Additional Services Are Provided in High-Spending Medicare Regions? Source: Elliot Fisher, Dartmouth Medical School.

13. The Relationship Between Quality and Medicare Spending, by State, 2004 Composite Measure of Quality of Care Source: Data from AHRQ and CMS.

14. Variations Among Academic Medical Centers UCLA Medical Center Massachusetts General Hospital Mayo Clinic (St. Mary’s Hospital) Biologically Targeted Interventions: Acute Inpatient Care CMS composite quality score81.585.990.4 Care Delivery―and Spending―Among Medicare Patients in Last Six Months of Life Total Medicare spending50,52240,18126,330 Hospital days19.217.712.9 Physician visits52.142.223.9 Ratio, medical specialist / primary care2.91.01.1 Use of Biologically Targeted Interventions and Care-Delivery Methods Among Three of U.S. News and World Report’s “Honor Roll” AMCs Source: Elliot Fisher, Dartmouth Medical School.

15. Factoids About End-of-Life Care  More than 80 percent of deaths occur on Medicare  25-30 percent of Medicare’s costs are for decedents –That share has been stable over time – meaning that end-of- life spending has risen along with other health care costs  One older study examined predicted probabilities survival for ICU patients –Among those who lived, much more was spent on those who had been expected to die –Among those who died, much more was spent on those who had been expected to live