Ana Malinow, MDAssociate Professor Pediatrics, BCM

Co-founder, Health Care for All Texas

September 22, 2009

Rising health care costs are the root of most of the problems in health care

Most costs are fixed whether health care is used or not

Other countries cover everyone, have more services, higher quality and live longer yet spend far less than we do

We are already paying the whole bill You can’t hold down costs without a

system!

Average Health Insurance Premiums and Worker Contributions for Family Coverage, 1999-2009

$4,247

$9,860

$1,543$3,515

1999 2009

Employer Contribution

Worker ContributionNote: The average worker contribution and the average employer contribution may not add to the average total premium due to rounding.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.

$5,791 128% Worker

Contribution Increase

131% Premium Increase

$13,375

Cumulative Changes in Health Insurance Premiums, Inflation, and Workers’ Earnings, 1999-2009

131%

38%

28%

0%

20%

40%

60%

80%

100%

120%

140%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Health Insurance Premiums

Workers' Earnings

Overall Inflation

Note: Due to a change in methods, the cumulative changes in the average family premium are somewhat different from those reported in previous versions of the Kaiser/HRET Survey of Employer-Sponsored Health Benefits. See the Survey Design and Methods Section for more information, available at http://www.kff.org/insurance/7936/index.cfm.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2009 (April to April).

65% 68% 68% 66% 65% 63%59% 60% 59% 62%

99% 99% 99% 98% 98% 99% 98% 98% 99% 99%

56% 57% 58% 58%55% 52%

47% 48% 45%49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

All Small Firms (3-199 Workers)

All Large Firms (200 or More Workers)

3-9 Workers

Percentage of All Firms Offering Health Benefits, 1999-2008*

*Tests found no statistical differences from estimate for the previous year shown (p<.05).

Note: Estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and those that answered just one question about whether they offer health benefits.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008.

Total Annual Household Income and Federal Poverty Level

Texas U.S.

Total Median Annual Household Income www.kff.org

$44,861 $49,901

100% FPL family of 4, 2007Dept of US Health and Human Services

$22,050 $22,050

200% FPL family of 4, 2007

$44,100 $44,100

Minimum Wage $7.25/hr

or $8.00/hr $15,080 $15,080

Ave*. Annual ES HI Premiums for Family of 4, 2009

$13,375 $13,375

*Does not include out-of-pocket costs; group market only

Getting Public Insurance in Texas

Take a family with a 2-mo old, 4 y/o & parents who make $40,792/year (185% FPL) and no employer-sponsored health insurance:

The 2 month-old qualifies for Medicaid

The 4 year-old qualifies for S-CHIP

Parents make over the limit to qualify for public health insurance.

The limit?$6,000 / year

Public Health InsurancePublic Health Insurance

Public Health Insurance is financed through federal and state taxes

TX pays

40% Medicaid bill and 30% S-CHIP bill

TaxesState

Pays % Fed

Pays %

Medicaid 40 60

CHIP 30 70

Medicare 0 100

VA 0 100

FEHBP 0 100Source: www.kff.org State Facts

Distribution of Total Population by FPLTexas

%

Mass

%

U.S.

%

<100%FPL 22 16 17

100-199% 21 15 19

Low Income

43 31 36

200%+ 57 71 64

www.statehealthfacts.org Nonelderly Population and Poverty Rate: Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on the Census Bureau's March 2007 and 2008 Current Population Survey (CPS: Annual Social and Economic Supplements). Data are for states (2006-2007) and U.S. (2007).       

Number of Uninsured Americans 1976 - 2006

44,840 Adult Excess Deaths AnnuallyDue to Uninsurance in U.S.

17-64 years

State Total % Uninsured

2005

Excess Deaths

Texas 29.7 4,675

Sourxe: AP Wilper, et al. American Journal of Public Health, Dec 2009, Vol 99, No. 12

0%

500%

1000%

1500%

2000%

2500%

3000%

1970 1975 1980 1985 1990 1995 2000

Physicians Administrators

Administration is the Fastest Growing job in

Health Care

Source: Bureau of Labor Statistics and NCHS

69%

31%Clinical Care

Administrative Costs

Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004

$775 Billion

One-Third of Health Spending is Consumed by Administration

Total: $2.5 Trillion

Distribution of National Health Expenditures, by Type of Service, 2007

Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc.

Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2007; file nhe2007.zip).

Physician/ Clinical Services 21.4%

Hospital Care 31.1%

Other Personal Health Care

12.7%

Nursing Home Care, 5.9%

Prescription Drugs10.1%

Home Health Care, 2.6%

Other Health Spending 16.2%

74% Fixed Costs

The cost of the infrastructure is there whether or not it is used (nurse, hospital)

84% of hospital costs are fixed Cost containment for utilization won’t work

if most costs are in infrastructure Trying to save money by keeping patients

out of the hospital is like trying to save money on schools by keeping kids home for the day

It is much more cost effective to invest in only what we need.

The Implications of Fixed costs

Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?

$803

$624

$519$472

$403

$239

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

U.S. Australia Italy Canada Germany France

$/per capita

Source: OECD 2006Data are for 2004 or for most recent year available Figures adjusted for purchasing power parity

Out of Pocket Costs are Higher

Administrative Costs US vs Canada

U.S. (%) Canada (%)

31 17

Source: Woolhandler et al. New England Journal of Medicine 349 (8): 768   August 21, 2003

Fewer Americans Smoke Compared with Other Nations

17.0

24.2 24.326.0

30.0

17.5

0

5

10

15

20

25

30

35

Canada U.S. Italy Germany U.K. Japan

% p

op

ula

tio

n s

mo

kin

g d

aily

OECD, 2006 (2003 Data)

We Drink Less Alcohol

7.4

10.211.2

14.0

8.47.6

0

2

4

6

8

10

12

14

16

Japan Canada U.S. Germany U.K. France

Lit

ers/

cap

ita

(15+

)

OECD, 2006 (2003 Data)

But… We Don’t Live as Long

78.5 78.679.4 79.7 79.9

81.8

77.5

70

75

80

85

U.S. U.K. Germany France Italy Canada Japan

OECD, 2006 (2003 Data)

6.9

5.34.7

4.1 4.1 3.9

3.1

0

1

2

3

4

5

6

7

U.S. Canada Australia Italy Germany France Sweden

OECD, 2006Data are for 2004 or more recent year available

More Babies Diein the U.S. in the First Year

of Life

We Do an Average Number of Bone

Marrow Transplantsper million people

4045

6871

61

0

10

20

30

40

50

60

70

80

U.K. Germany U.S. France Italy

OECD, 2006 (2003 Data)

2931

34 35 3538

0

5

10

15

20

25

30

35

40

U.K. Australia U.S. Sweden Canada France

OECD, 2004

Transplants/million population

We are Average in Number of Renal

Transplants (2001/2002)

2.84.7 6

8.6 9.1 11

35.3

0

5

10

15

20

25

30

35

40

France Canada Germany U.S. Denmark Italy Japan

Source: OECD, 2005Note: data are for 2004 ,or most recent year available

MRIs/ million population

We are Average in the Number of MRI Units

Procedures per 100,000 population

Source: OECD 2006Data are for 2004 or most recent year available

106125 126 133

146

182

0

20

40

60

80

100

120

140

160

180

200

Canada U.S. N.Z. Italy Australia U.K. Sweden

197

We Do Fewer Hip Replacements

Australia Canada England N.Z. U.S.

Breast Cancer 2nd 4th worst 3rd bestColorectal Cancer 2nd 3rd worst best 4thCervical Cancer best 3rd worst 4th 2ndChildhood Leukemia worst best 3rd 4th 2ndKidney Transplant 2nd best 3rd 3rd worstLiver Transplant 2nd best worst * 3rdNon-Hodgkin’s Lymphoma

best 4th worst 2nd 3rd

AMI, ages 20-84 best worst NA 2nd NAStroke, ages 20-84 2nd best NA worst NA

Source: Health Affairs Vol 23:#3 , 2004

Our Quality is Not the Best in the World Survival Rates for 5 Countries

(2007=$7,421/p/y www.cms.hhs.gov)

US Health Costs Rise Faster than Other Countries’ Costs

Source: Health United States 2005, Natl. Center for Health Statistics

0

2

4

6

8

10

12

14

16

18

1960 1970 1980 1990 1995 2000 2004

Hea

lth

Co

sts

as

Per

cen

t o

f G

NP US

Canada

France

Germany

Japan

UK

Availability of expensive technology

Rising drug costs

Have similar demographics

Similar levels of service

Why are their costs so much lower?

Other Industrialized Countries

Administrative simplicityNegotiated pricesMore primary care and

preventionHealth planningGlobal budgets They have a system

Why Costs Are So Much Lower in Other Countries

$1,500

$1,309

$1,040

$449 $419

$207$97

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

GM Ford Chrysler BMW Mercedes Toyota (US) Toyota(Japan)

$/Car

Source: Modern Healthcare 10/24/05: 14

Japan Has a $1400 Competitive Advantage on Every Car They Sell

Everyone Included

Clear AccountabilityPublic StewardshipBudget Process

Public Financing

Fundamental Features of a True Health Care

System

Lower wages

Private employers

pay for health insurance Higher prices

for goods

Out of pocket

Individual health insuranceTaxes for

Medicare and Medicaid

Property taxes

Health insurance for public employees

INDIVIDUAL

HOUSEHOLDS

In the End Individual Households Pay for All of Health Care

How Much is the U.S. Health Care System Costing You NOW?

What Americans Pay Into the U.S. Health Care System Today

Household Income Level

$25,000 $50,000 $75,000

Share and Amount of Income Going to Health Care via Taxes Alone without Insurance

9.0%($2,425)

9.8%($5,300)

10.7%($8,633)

Share and Amount of Total Wage Packet Going to Health Care for Household with Insurance (not including out of pocket costs)

Individual 22.0%($6,904)

16.8%($9,779)

15.4%($13,112)

Family 37.2%($14,531)

26.4%($17,406)

22.3%($20,749)

Source: Dollars & Sense, May/June 2008 OOP = co-pays, deductibles, co-insurance, uncovered expenses

Share of total wage packet going to HC= (amount of total tax burden going to health + annual health insurance premium) (annual salary + payroll tax [FICA and Medicare] + annual health insurance premium)

Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150

60%20%

20%

Taxpayers

Private Employe

rs{Deferre

d Wages}

Individuals

{Medicare, Medicaid,Public employees,tax subsidies}

60% of our Health Care is Financed through Taxes100% Financed by Us!

$2.5 Trillion

$1,500 B

69%

31%Clinical Care

Administrative Costs

Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004

$775 Billion

One-Third of Health Spending is Consumed by Administration

Total: $2.5 Trillion

Clinical Care$387 B + $1.75 T =$2.14 Trillion

85%

Enough to pay for all uninsured and underinsured!

Healthcare is regarded as a public good with investment in needed services for the whole population

The costs of these shared services are spread across the whole population (when you are not using them, someone else is—that’s what keeps them operational)

Pools money and pays for health care directly

Investment Model

Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing

Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care

Everyone has access to privately delivered, publicly financed health care services

Public can buy health insurance for services not covered by public plan.

Single Payer Health Care Systems

National Health InsuranceNational Health Insurance

• Everybody in, nobody out• Portable• Uniform, comprehensive benefits• Prevention oriented• Choice of physician• Ends insurance industry influence• Reduced administrative waste• Cost savings• Common sense budgeting• Public oversight

Source: http://thomas.loc.gov/cgi-bin/thomas

Single-PayerSingle-Payer

MedicareMedicare

MedicaidMedicaid

Payroll TaxPayroll Tax

Income TaxIncome Tax

Single-Payer Single-Payer Health Care Health Care

FundFund

$$$$$$

Financing Single-Payer

Negotiated formulary with physicians, global budget for hospitals, Negotiated formulary with physicians, global budget for hospitals, increased primary and preventive care, reduction in unnecessary increased primary and preventive care, reduction in unnecessary high-tech interventions, bulk purchasing of drugs and medical high-tech interventions, bulk purchasing of drugs and medical supplies = supplies =

long term cost control.long term cost control.

US National Health Insurance Act

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