the future of healthcare in america

The Future of Healthcare in The Future of Healthcare in AmericaAmerica

MedicareMedicareMedicareMedicare

• Financing–Financial resources of government are

limited

• Obligations of an insured–$30,000 spell of illness

–$18,000 will be paid by Medicare

–$12,000 will be patient’s responsibility

MedicareMedicareMedicareMedicare

• Growing role of supplemental insurance–Depended upon to pick up the

difference

–Gaps here as well & growing • Pharmaceuticals

MedicareMedicareMedicareMedicare

– Upcoding– Phantom billing– Bogus billing– Unnecessary

services– Double billing or

unbundling– Pharmacy fraud

– Laboratory fraud–Mental health fraud– Kickbacks– Home health fraud–Managed care

fraud

• Fraud & abuse concerns

MedicaidMedicaidMedicaidMedicaid

• Uncertainty as how far federal mandate for coverage will be extended

• Will variations among states be narrowed

• Will added funding be available

Managed CareManaged CareManaged CareManaged Care

• How far will federal & state officials go in enacting patients’ bill of rights

• What will happen to costs as access to care is mandated by law

Private Health InsurancePrivate Health InsurancePrivate Health InsurancePrivate Health Insurance

• Limited understanding of Americans regarding the impact of health care costs on other insurance coverage– i.e. hospital, physician, &

pharmaceutical costs impact several insurance costs

Private Health InsurancePrivate Health InsurancePrivate Health InsurancePrivate Health Insurance

• Other insurance coverage (cont.)

–General liability coverage• BI component

–WCN coverage• Part A medical expenses & rehabilitation

costs• Part B employer liability BI

–Auto coverage• Medical payments

Private Health InsurancePrivate Health InsurancePrivate Health InsurancePrivate Health Insurance

• Failure to understand & appreciate the importance of alternative forms of insurance to protect welfare of persons in old age–50+ years = 63M people

–65+ years = 34M people

–Those who are 50+ years control $800B in disposable income = 1/2 of total disposable income of all Americans

Private Health InsurancePrivate Health InsurancePrivate Health InsurancePrivate Health Insurance

• Welfare of persons in old age (cont.)

–90M seniors are projected by 2010

–By 2030, proportion of seniors will be 22% of the population

–Between 1990 & 2020, nursing home utilization will double

–Today 64% of persons over 85 need nursing home care

Private Health InsurancePrivate Health InsurancePrivate Health InsurancePrivate Health Insurance

• Welfare of persons in old age (cont.)

–Probability of needing nursing home care grows as person ages• Age 55 = 10% chance• Age 65 = 40% chance• Age 75 = 60% chance

Misconceptions Regarding Misconceptions Regarding Available ResourcesAvailable Resources

Misconceptions Regarding Misconceptions Regarding Available ResourcesAvailable Resources

• Medicare will cover use–Less than 5% of $65B spent on long

term care is paid by Medicare• Now up to 100 days & only after hospital

stay + 50 day lifetime for longer than anticipated LTC stay

• Medicare Supplements will pay the difference–Coverage not addressed by Medicare is

similarly uncovered by supplements

Misconceptions Regarding Misconceptions Regarding Available ResourcesAvailable Resources

Misconceptions Regarding Misconceptions Regarding Available ResourcesAvailable Resources

• Medicaid can be relied upon–Only if you “spend down” to poverty

level• You can keep your home, your care, and

$2,000 in assets

• My family will care for me–Seldom is this realistic

Misconceptions Regarding Misconceptions Regarding Available ResourcesAvailable Resources

Misconceptions Regarding Misconceptions Regarding Available ResourcesAvailable Resources

• I’ll use my personal assets–Very few people can self insure to that

level or extent

• Denial of possibility of a future problem is the most significant challenge faced today

Additional FactsAdditional FactsAdditional FactsAdditional Facts

• 34% of persons entering a long term care facility today will be there from 1 to 5 years–21% will be there 5+ years

–Average LTC facility stay is 2½ years

• Average annual cost = $40,000

Cost of LTC InsuranceCost of LTC InsuranceCost of LTC InsuranceCost of LTC Insurance

• Premiums–50 year old subscriber will pay

approximately $600/year

–For couple from 50 years to 75 years:$1,200/year x 25 years = $30,000 in premiums

• If one spouse is admitted to LTC facility for one year = $40,000 cost

• Will have saved equivalent premiums paid by end of 8th month

Eligibility for LTCEligibility for LTCEligibility for LTCEligibility for LTC• Necessity of human assistance for 2

or more activities of daily living (ADL)–Dressing

–Toileting

–Continence

–Transferring (in & out of chair or bed)

–Eating

• Cognitive impairment

• Injury or sickness

Tort ReformTort ReformTort ReformTort Reform

• Malpractice–Limits on liability exposure for non-

economic damages

• Limits on lawyers fees

Disability Compensation LawsDisability Compensation LawsDisability Compensation LawsDisability Compensation Laws

• Currently we have WCN, LTD, & STD

• Confusing & fraught with cost shifting

• Are we headed for 24 hour coverage?

Disability Compensation LawsDisability Compensation LawsDisability Compensation LawsDisability Compensation Laws

• Disaffection with current system is a function of:–Soaring cost of benefits• Medical costs = 40% of total WCN costs

–Significant increase in litigation costs

–Fragmentation of the system

What are the solutions to these What are the solutions to these issues?issues?

What are the solutions to these What are the solutions to these issues?issues?