american health policy

American Health Policy: A ParadoxAmerican Health Policy: A Paradox

Pinaki BhattacharyaPinaki Bhattacharya

Four Dominant models of health financing

American Model is a peculiar mixture

Medicare(National Health Insurance Model)

• Covers the elderly (ages 65 and older) and non-elderly with disabilities

• Administered by the federal government (essentially a single-payer system … more on this in the future)

• Financed through:– Federal income taxes– Payroll taxes on employers and employees– Out-of-pocket payments by enrollees

Medicaid(Limited Beverage Model)

• Covers certain low-income individuals (pregnant, children, elderly, disabled)– Not every poor person is covered!

• Administered by state governments• Financed jointly by the state and federal

governments• Benefits are fairly comprehensive, but many

providers won’t take care of Medicaid patients– Low reimbursement rates

State Children’s Health Insurance Program (S-CHIP) (Limited Beverage Model)

• Supplements Medicaid by covering low-income children who are ineligible for Medicaid

• Administered and financed similarly to Medicaid• Similar problems to Medicaid:

– Low reimbursement rates → some providers refuse to accept S-CHIP

– Under-enrollment– Eligibility varies by specific populations and states

Other Public Insurance Programs(Beverage Model)

• Veterans Health Administration– Health benefits plan available to all veterans – Services delivered through VA health care

facilities– Financed by the federal government

• Native American Indian Health Service

U.S. Health Care FinancingU.S. Health Care Financing

Funds Payers ProvidersPublic & Private

Many "pools"Employer Multiple private payers Doctors

& many benefit plans HospitalsPremium contrib. PPO vs capitated, Pharmacies

many blends/variants Device vendorsIncome taxes Public: Medicare, Medi-Cal, Skilled Nursing Fac.

S-CHiP, VA, Indian Health,. OtherOut-of-pocket ~ 60 safety net programs

Admin costs of insurance 15%Admin costs overall 30%

Multi-payer health care financing

The Flow of the Dollar • Costs, Payment, Delivery, and Insurance Coverage are completely

intertwined in our system!

Insurance Company

Individually Insured

Government

Insured Employees

Uninsured

Physicians

EmployerPublicly Insured

Payment made to this entity

Service provided by this entity to individuals

Source: Roby DH. 2009 (forthcoming). Impacts of Being Uninsured in Handbook of Health Psychology (edited by Suls, Kaplan, Davidson), Guilford Publications: New York, NY.

Where the Health Care Dollar Came From

17%

16%

12%5%

14%

36%

Medicare

Medicaid & SCHIP

Other Public

Other Private

Private Insurance

Out-of-Pocket

Where the Health Care Dollar Went

23, 23%

30, 30%22, 22%

7, 7%

11, 11%

7, 7% Other Spending

Hospital Care

Physician & ClinicalServices

Nursing Home Care

Prescription Drugs

ProgramAdministration

US standing on health care outcomesRank of 13 industrialized nationsRank of 13 industrialized nations

Low birth weight %

Infant mortality

Years of potential life lost

Age adjusted mortality

Life expectancy @ 1 yr

Life expectancy @ 40 yrs

Life expectancy @ 65 yrs

Life expectancy @ 80 yrs

Average for all indicators

BestPoorest

(U.S. in Red)

Health Spending in the U.S. Compared to Health Spending in the U.S. Compared to Other Industrialized Countries, 2003Other Industrialized Countries, 2003

Source: Organisation for Economic Cooperation and Development Health Data (OECD), 2006

1,551

1,053

1,114

1,056

2,473

843

670

666

675

709

509

467

581

454766

- 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500

U.S.

Japan

Germany

France

Canada

Per Capita Health Spending (in U.S. Dollars)

Inpatient Outpatient Ancillary

Home Health Pharmacy Nursing Home

Source: The Commonwealth Fund, calculated from OECD Health Data 2006.

Health Care Spending per Capita,1980-2004- adjusted for cost of living differences -

U.S.: $12,357 per person, 20% of GDP

by 2015

Problem lies in Philosophy of Healthcare

Contributes to 60% of health outcome

We may find an answer in

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