background information on health care...

Background Information on

Health Care System

Compiled by: Blue Ribbon Commission on Health Care Staff Team

June 22, 2006

Background Information -- 1

Costs


Health Expenditures by Country, 2004: Per Capita and as Percent of GDP

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Turk

ey

Mex

ico

Pola

nd

Slov

ak R

epub

lic

Kore

a

Hun

gary

Cze

ch R

epub

lic

Spai

n

Portu

gal

Gre

ece

New

Zea

land

Finl

and

Japa

n

Uni

ted

King

dom

Italy

Med

ian

Aust

ria

Irela

nd

Aust

ralia

Belg

ium

Swed

en

Den

mar

k

Net

herla

nds

Fran

ce

Icel

and

Ger

man

y

Can

ada

Luxe

mbo

urg

Nor

way

Switz

erla

nd

Uni

ted

Stat

es

0%

2%

4%

6%

8%

10%

12%

14%

16%

Spending Per CapitaPercent of GDP

"Health Spending in the United States and the Rest of the Industrialized World," Gerard F. Anderson, et. al.; Health Affairs: July/August 2005; Volume 24, Number 4.

Total US health care expenditures:2004: $1.9 trillion2014: $3.6 trillion (projected)


0

Meet the SharkOutswim It or Spend >50% of Employee and Retiree Income on Health Care

© 2005 A. Milstein MD

Annual Percent Changes per Capita in Health Care Expenditures and in Average Hourly Wages for Workers in All Industries, 2000 through 2005. Average annual incremental benefit = 44 days of good quality life.

0%2%4%6%8%

10%12%14%16%18%20%

2000 2001 2002 2003 2004 2005Year

Ann

ual P

erce

nt C

hang

e

Health Care Spending Average Hourly Wage PEBB

Data from Kaiser Permanente/Health Research & Educational Trust 2005. Dental work by Dr. Milstein.Background Information -- 4

Top 5% of HCA UMP enrollees are responsible for 45% ($153 million) of expenditures.Top 5% of DSHS Medicaid Fee-For-Service enrollees account for 42% ($1.2 billion) of expenditures..

Why are we trying to better manage chronic disease?

Data notes: Sources: 2004 Uniform Medical Plan claims. 2004 DSHS Medicaid Management InformationSystem.

Percent of UMP Users vs. Percent of Expenditures (Non-Medicare, CY2004)

0%

20%

40%

60%

80%

100%

0% 5% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Users

Expe

nditu

res

45% of costs

5% of users

30% of users

2% of costs

Percent of DSHS Users vs. Percent of Expenditures (CY 2004)

0%

20%

40%

60%

80%

100%

0% 5% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Users

Expe

nditu

res

42% of costs30% of users

3.5% of costs

5% of users

Slide # 11Background Information -- 5

�2

Medicare is the national health insurance program for people age 65 or older, some people under age 65 with disabilities, and people with End-Stage Renal Disease (ESRD), which is permanent kidney failure requiring dialysis or a kidney transplant.

Medicaid is a program that pays for medical assistance to individuals and families who meet certain categorical eligibility criteria based on income, assets (like home ownership), and in most states, very high medical expenses. This program is jointly funded by federal and state governments. Medicaid is the largest source of funding for medical and health-related services for people with limited income.

State Children’s Health Insurance Program (SCHIP) is operated by states. This program allows each state to offer health insurance for certain children up to age 19 who are not already insured. Each state sets its own guidelines regarding eligibility and services.

Figure 6:

Public and Private Sources Pay for Health Care, 2003

Other Public Spending is made up of other federal programs like those serving veterans, military and their families, and Native Americans. State and local programs are also included in the percentage of other public spending.

Out-of-Pocket payments are made directly by people receiving health care at the time services are used.

Private Health Insurance is insurance provided through organizations not operated by the local, state, or federal governments. The majority of private health insurance is employer-based, meaning people receive insurance as part of their compensation packages.

Other Private Spending is made up of money spent by private organizations such as charities, which help people pay for health care.

*Note: Percentages may not add up to 100% due to rounding. Out-of-pocket payments do not include premiums.Source: Centers for Medicare and Medicaid Services, National Health Accounts, 2003

17%

16%

13% 5%

36%

14%


0

Employer and Government Share Is Increasing


1

Health Insurance Total Family Premium as a Percent of U.S. Minimum Wage Earnings

020406080

100120

1970 2005Blue Cross/Blue Shield Higher Option Blue Cross/Blue Shield Lower Option

AFFORDABILITY

Minimum wages during this period has increased

from $1.45/hour to $5.15/hour, a 3.6-fold

increase.

Premiums have increased 24-38 times over 1970 levels. 1970 premiums were $38.33 for high option family

coverage and $20.37 for low option family coverage. 2005

premiums are $901.96 for higher option

coverage and $771.29 for the lower option plan.

Figures here reflect total premiums. Note that

under the FEHBP program, employees pay

a minimum of 25% of premium.

Source: U.S. Office of Personnel Management; U.S. General Accounting Office Staff Paper, “Information on 1976 Health Insurance Premium Rate Increases for Federal Employees Health Benefits Program, “ pub. #094882.

Note: Figures reflect monthly Federal Employees Health Benefits (FEHBP) total premiums for the government-wide Blue Cross/Blue Shield options for non-postal workers and minimum wage earnings for full time work of 173.33 hours per month (2080 hour per year/12) in California.

Chart © 2005 California HealthCare Foundation

Why Is Uninsurance/Underinsurance the Current Fate of Many Low Wage Workers and Their Employers?


2

Health and Related Costs*

appropriated state dollars in billions and as percent of all state fund expenditures

$4.8

$12.0

$4.5$4.2

$3.6$3.6$3.4$3.1$2.7

$9.7$10.2

$10.7 $10.5 $10.6 $10.6

$11.725.2%

28.5%

21.7%

23.5%24.2%

25.4%

28.3% 27.8%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000 2001 2002 2003 2004 2005 2006 20070%

5%

10%

15%

20%

25%

30%

Health and Related Expenditures

All Other Expenditures

Health & Related as % of All State Expenditures

*Includes direct health costs such as Medicaid, Basic Health, public health; plus long-term, institutional, and behavioral health costs.

Source: State of Washington Office of Financial Management (July 2005)Background Information -- 9

3

State Health Costs

Source: State of Washington Office of Financial Management (July 2005)

dollars in billions - includes direct health programs, public health, institutional care, and behavioral health

$10.6

$13.9

$7.434.8%

$4.228.3%

$-

$5

$10

$15

$20

$25

State Funds Only All Budgeted Funds

All Other ExpendituresHealth-Related Expenditures

$14.8 billion

$21.3 billion

GF-state = $3.4 bHSA = $0.5 bOther state = $0.3 b


4

Washington State Health Expenditures

dollars in millions • appropriated state funds • actuals FY00-FY04, budget FY05-FY07

$0.0

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07

DSHS Medical Assistance Long-Term & Institutional CareDSHS Behavioral Health DOCDepartment of Health HCA - Basic HealthHCA - Clinic grants, policy, WSHIP, etc. Employee Health Benefits & K-12 SubsidyK-12 Student Health Programs L&I Health Expenditures

Source: State of Washington Office of Financial Management (July 2005)Background Information -- 11

Is WA State paying more than large WA private sector employers?

Analysis• WA State is spending more per employee for

health benefits than large (500+) private sector employers in WA.

Action• Improve the PEBB procurement strategy by:

•Review Mix of plans•Plan design•Care Management•Eligibility•Data Warehouse•Benchmarking.

• Make sure state employee health care benefits are comparable and benchmark favorably to plans offered by other large employers in the State.

Health Care Authority Goal 1: Reduce Cost Trend

Data notes: Sources: 2002 & 2004 Mercer National Survey of Employer-Sponsored Health Plans. HCA Finance & Budget. Costs include medical, dental, Rx, and specialty benefits.

WA State Employee Health Benefit Cost Compared to WA Private Sector (Per Employee Per Year)

$5,5

46

$5,9

57 $6,9

74

$7,5

92

$5,1

62

$5,7

58

$5,9

57 $6,6

53

2001 2002 2003 2004

HCA - PEBB WA Private 500+


3.8%

17.1%

-0.7%

2.5%

1.3%

5.1%

5.8%

4.3%

0.7%

4.0%

4.4%

6.0%5.3%

8.1%

14.5%15.6%

12.2%

16.6%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1999 2000 2001 2002 2003 2004

Perc

ent I

ncre

ase

Health Insurance Premiums

Median Wages

Median Gross Business Income

Washington Small Business: Increases in Health Insurance Premiums Compared to Workers' Earnings and Business Revenue

Source: Washington State ESD /DOR data bases, OIC small group market rate filings


97

70

56

28

97

69

28

56

97

64

49

22

0

20

40

60

80

100

Top 1% Top 5% Top 10% Top 50%

1987 1996 2002

Per

cen

tag

e o

f ex

pen

dit

ure

s

Figure 1. Concentration of health care expenditures in the U.S. civilian noninstitutionalized population

Population ranked by expenditures

Component of the Medical Expenditure Panel Survey, 1996 and 2002 Source: Center for Financing, Access, and Cost Trends, AHRQ, National Medical Expenditure Survey, 1987, and Household

6469

56

31 24

49

0

20

40

60

80

100

Top 1% Top 5% Top 10%

1996 2002

Per

cen

tag

e o

f ex

pen

dit

ure

s

Figure 2. Concentration of health care expenditures in the U.S. civilian noninstitutionalized population

Population ranked by expenditures

1996 and 2002

(age <65 years)

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey,


Source: Behavioral Risk Factor Surveillance System, CDC.

19961991

2003

Obesity Trends* Among U.S. AdultsBRFSS, 1991, 1996, 2003

No Data

<10%

10%-14% 15%-19% 20%-24% ≥ 25%

(*BMI ≥30, or about 30 lbs overweight for 5’4” person)


Access


Project funded by the U.S. Department of Health and Human Services, Health Resources and Services Administration’s Bureau of Professions State Planning Grant #1 P09 HS 00002-02


Distribution of Washington Uninsured (0-64)By Work Force Attachment (approx. 603,000 people)

Self Employed33%

Large Employers (50+)13%

Smaller-of-small employers (2-24)

18%

Small Employers (25-49)7%

Unemployed/ Not in Work Force29%

Source: State Planning Grant analysis of 1993, 1997, RWJF Washington Family Health Insurance Survey; 1998, 2000v5M, 2004v3M Washington State Population Survey

February 3, 2006


Overview of Washington’s Insurance Coverage – 1993 to 2004

Washington State Planning Grant on Access to Health Insurance Project funded by the U.S. Department of Health & Human Services, Health Resources and Services Administration’s Bureau of Professions State Planning Grant #1 P09 HS 00002

1993-2004: Washington's Insurance Story

9.8%

8.4%7.7%

9.5%

13.2%

11.5%

10.0%

11.4%

13.3%14.0%

11.0%13.1%

11.5% 10.3% 9.4%8.6%

6.0%

4.5%5.5%

7.8%7.6%

11.4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Year

Perc

ent U

nins

ured

Source: 1993, 1997, RWJF Washington Family Health Insurance Survey; 1998, 2000v5M , 2002v4M , 2004v3M Washington State Populat ion Survey(Adjustments made to account for M edicaid underreport ing are described in http:/ /www.ofm.wa.gov/sps/ index.htm)

A dult s ( 19 - 6 4 )

A ll under 6 5

T o t al Po p ulat io n

C hild ren ( 0 - 18 )

Primary Source of Insurance for those Under Age 65, 1993-2004

11.0%

11.5%

13.1%8.6%10.3% 9.4%

17.6%

12.5%17.6%

13.3%

8.9%

19.2%

5.6%7.2%7.1% 8.4% 6.1% 4.9%

65.8%70.9% 68.8% 68.0% 67.6% 66.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1993 1997 1998 2000 2002 2004Year

Perc

ent o

f Peo

ple

Source: 1993, 1997, RWJF Washington Family Health Insurance Survey; 1998, 2000v5M, 2002v4M, 2004v3M Washington State Population Survey(Adjustments made to account for Medicaid underreporting are described in http://www.ofm.wa.gov/sps/index.htm)

Employer

PublicUninsured

Individual


The Coverage Gap, April 2006 State Health Access Data Assistance Center (SHADAC)

Embargoed until April 26, 2006 – 12:01 a.m. (ET)

page 4

Uninsured adults are more likely to go without medical care than insured adults.

Figure 1: Percent of Uninsured and Insured Adults (18-64)Unable to See a Doctor When Needed Due to Cost in the Past 12 Months

0%

10%

20%

30%

40%

50%

60%

Nor

th D

akot

a

Mon

tana

Wis

cons

in

Neb

rask

a

Mas

sach

uset

ts

Ariz

ona

Rho

de Is

land

Iow

a

Cal

iforn

ia

Nev

ada

Uta

h

New

Mex

ico

Sout

h D

akot

a

Mai

ne

Ohi

o

Wyo

min

g

Col

orad

o

Illin

ois

Del

awar

e

Verm

ont

Alas

ka

Flor

ida

Mis

sour

i

New

Yor

k

Penn

sylv

ania

Texa

s

Tenn

esse

e

Idah

o

Nor

th C

arol

ina

Loui

sian

a

Geo

rgia

Indi

ana

Con

nect

icut

Mic

higa

n

Dis

trict

of C

olum

bia

New

Ham

pshi

re

New

Jer

sey

Virg

inia

Sout

h C

arol

ina

Kans

as

Alab

ama

Mis

siss

ippi

Arka

nsas

Min

neso

ta

Okl

ahom

a

Mar

ylan

d

Was

hing

ton

Kent

ucky

Ore

gon

Wes

t Virg

inia

UninsuredInsured

Note: Wording of this question changed from 2002 BRFSS. These results are not directly comparable to 2002. Source: Centers for Disease Control and Prevention (CDC), 2004 Behavioral Risk Factor Surveillance System survey data. National estimates for 2004 do not include Hawaii, because 2004 data were not available.

• Nationally, 41.1 percent of adults without health insurance coverage, compared to 9.2 percent of adults with health

insurance coverage, were unable to see a doctor when needed due to cost in the past 12 months. • Uninsured adults in Kentucky, Oregon, and West Virginia were less likely to see a doctor when needed than uninsured

adults in North Dakota, Montana, Wisconsin, and Nebraska. • The percent of insured adults unable to see a doctor due to cost is statistically less than the percent of uninsured adults

unable to see a doctor due to cost in every state.


Quality


1

10

100

1,000

10,000

100,000

1,000,000

U.S Airline flight fatalities/U.S. Industry Best of Class

Airline baggage handling

Breast cancerScreening (WA)

Health Care Quality Defects Occur at Alarming Rates

Detection &treatment ofdepression

Adverse drugevents

Hospital acquired infections

Hospitalized patientsinjured through negligence

1(69%)

2(31%)

3(7%)

4(.6%)

5(.002%)

6(.00003%)

Overall Health Care Quality in U.S.

(Rand Study 2003)

IRS Phone-in Tax Advice

U.S. birth defects

Recommendedwell-child visits (WA)

Treatment ofBronchitis (WA)

NBA Free-throws

Sources: modified from C. Buck, GE; Dr. Sam Nussbaum, Wellpoint; Premera 2004 Quality Score Card; March of Dimes

level (% Defects)

Def

ects

per

mill

ion

∑Background Information -- 24

3

9,600 deaths62% not screenedColorectal Cancer

10,000 deaths36% of elderly didn’t receive vaccinePneumonia

37,000 deaths39% to 55% didn’t receive needed medicationsHeart Attack

68,000 deaths< 65% received indicated careHypertension

2,600 blind; 29,000 kidney failureAverage blood sugar not measured for 24%Diabetes

Avoidable TollShortfall in CareCondition

Source: Elizabeth McGlynn et al, RAND, 2004

Patients get recommended care only half of the time; consequences are avoidable.

Preventing Complicationsand Premature Death


12

Causes of Death in U.S. - 2000

Leading Causes of Death Actual Causes of Death

0 10 20 30 40

Heart disease

Cancer

Other

Stroke

Chronic lower respiratory tract disease

Unintentional injuries

Diabetes

Influenza/pneumonia

Alzheimer’s disease

Kidney disease

Blood poisoning

Percentage (of all deaths) Percentage (of all deaths)

0 10 20 30 40

Tobacco

lack of exercisePoor diet/

Alcohol

Infectious agents

Pollutants/toxins

Motor vehicle

Firearms

Sexual behavior

Illicit drug use

Source: “Actual Causes of Death in the United States, 2000,” JAMA 291(10) 1238-1245 (March 10, 2004)Background Information -- 27

13

Causes of Death

Source: “The Case for More Active Policy Attention to Health Promotion,” Health Affairs 21(2), 78-93, March/April 2002

Behavior/ Lifestyle

Genetic Constitution

Environment Exposures

Lack of Access to Medical Care

Social Circumstances

40 Percent

30 Percent

15 Percent

10 Percent

5 Percent


background information on health care...

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