Perfect Storm 15 For Nurse Symposium 1

“ The Perfect Storm” The Current Crisis State of U.S. Healthcare * * * 34th National Primary Care Nurse Practitioner Symposium * * * Vince Markovchick, MD, FAAEM Director, Emergency Medical Services Denver Health Professor of Surgery Division of Emergency Medicine University of Colorado

Dr. Markovchick is the father of one of my fellow students. He, though now retired (as of the day he gave us this presentation), will continue to present this all across Colorado. The slides are his, though I have not included several of them and deleted some unsupported information from others. These footnotes are almost all my own, but a few are his (I have indicated which ones).
References are provided at the bottom of each page. I have made a note on any page that was without references.

2009 Nurse Practitioner Symposium Vince Markovchick, MD, FAAEM
Financial Disclosures
There are no relevant financial relationships with any commercial interests to disclose
Ben: The organization to which Dr. Markovchick belongs is a financially un-biased source for healthcare reform, made up of physicians and nurses alike who advocate for healthcare reformation.

Health care costs and inflation out of control
Increasing demand for care
Decreasing resources
Poor health care outcomes
Increasing number of uninsured
Increasing number of underinsured
B: This is a brief synopsis of the following slides….

Health Insurance Costs Keep Rising Health insurance premiums are rising 2-3 times as fast as inflation and wages.

Administration is the Fastest Growing job in Health Care Source: Bureau of Labor Statistics and NCHS

Dr. Marko: The previous chart helps us explain why we can spend so much more for so much less. Among the nations we will look at, all of them have taken the fundamental step of rejecting the financing of care by for-profit insurance companies, excepting the United States.
The natural market behavior of insurance companies is to compete to cover healthy, profitable people while shunning anyone who actually needs care. To do this, they erect massive bureaucracies with no purpose other than to fight claims, issue denials and screen out the sick. They consume care dollars, but their main output is paperwork headaches. In response, hospitals and doctors’ offices must employ virtual armies of administrators to deal with the separate payment bureaucracies of thousands of different insurance companies. U.S. businesses are saddled with the costly burden of administering their own health benefits. Co-payment collection and processing, eligibility determinations, utilization reviews: the scope of the bloat is staggering.
This slide begins to give a idea of the explosion of administrative waste within our health system.

48+ MILLION UNINSURED
50+ MILLION UNDERINSURED
Reference: www.census.gov or http://www.medscape.com/viewarticle/567737 retrieved August 2, 2009. These numbers were true roughly three years ago; they have worsened since then.

B: Unemployed is probably closer to 8 or 9% now. Children have increased in coverage dramatically since this study, by about 22% due to the SCHIP program.

Unemployed is probably closer to 8 or 9% now. Children have increased in coverage dramatically since this study, by about 22% due to the SCHIP program.

18,314 Adult Deaths Annually Due to Uninsurance

Health care spending
2008 - $2.2 trillion
69% for health care
31% for other costs
Administrative overhead
Profits
Note: NO REFERENCE, though we know that overhead costs and HMOs are a huge part of any health insurance company. It is essentially that the less care that is offered, the less the insurance company pays.

Who pays the costs?
66% - Government (taxpayers) – Federal/State/Local
Medicare - $431 billion (2007)
Medicaid - $329 billion (2007)
SCHIP - $8 billion (2007)
Government Employee Insurance Premiums
U.S. Public Health Services
U.S. Military
VA System (235,000 employees)
Prisoners (3 million incarcerated)
Public hospitals and clinics
Tax subsidies
Note: NO REFERENCE

Tax subsidies of private health insurance
Premiums paid by employer and employee are tax deductible
In 2006 tax subsidy was $209 billion or 35% of cost of health insurance premiums
Tax subsidies are regressive and unfair
Higher tax bracket employee pays less for health insurance than lower paid employees
e.g. $1,000 premium
40% tax bracket - $600 cost
20% tax bracket - $800 cost

Our tax-financed health care spending is the highest of ANY NATION IN THE WORLD, without having a nationalized health care system. Our taxes currently pay for 59% of healthcare costs in the United States. Reference: Paying For National Health Insurance—And Not Getting It
Steffie Woolhandler and David U. Himmelstein, retrieved Aug 2 2009 from http://content.healthaffairs.org/cgi/content/full/21/4/88

Small Business
Health insurance premiums rose 74% between 2001-2008
Companies offering health benefits
1995 – 67%
2000 – 51%
2007 – 41%
2008 – 38%
National Small Business Association Survey
Kaiser Health Foundation

Cost of U.S. health care
$2.2 trillion ($7,400 per capita in 2007) - more than double any other developed country
Now it is closer to $7,700 per capita.

National Health Spending: Per Person Source: Centers for Medicare & Medicaid Services Projected Actual Per capita expenditures

In comparison to other countries, why do we:
Spend far more per capita?
Have 100 million uninsured or underinsured?
Have overall poorer outcomes?

Obviously we have lower numbers here, simply because our life expectancy is less.

If you were in an insurance company CEO, who would you want to insure? Source:Agency for Healthcare Research and Quality MEPS, 1999 Percent of health Care Expenditures 1% 1% 2% 4% 6% 13% 73% 0% 0% 0%

Dr. Marko: This graph shows a population divided into 10ths. It shows how health care services are utilized in any one year in any population. Take even 1000 people in a population and you will find that the majority of them (80%) are healthy and use very little care. 30% of them in fact, use no care at all!. In actuality most of the services are used in any one year by a small percentage. 10% use 72 % of the health care dollars. If we add to that the 10% who use 13% of the care we find that 20% use 86% of health care services. It is worth keeping in mind that these are not the same people all the time. All of us move in and out of this group at one or many times in our lives. And when we are in that group ( birth of a baby, coronary bypass, cancer diagnosis) we expect health care services to be there waiting for us. Health care is not like other human needs. We all have the same basic needs for food. shelter, clothing etc. When you look at the population’s needs in regard to health care needs are vastly different. Because at any one time the healthy majority use very little care - 80% of the population in Vermont use only 14% of the health care dollars. On the other hand, 10% use 73% of the health care dollar. Another important point is that the most expensive services The NICU, the trauma unit, dialysis to name a few are used by a very small number of people. Dialysis is used by only 380 people per year in Vermont. Yet the infrastructure costs of sustaining these services are enormous.

Most of the money is spent on a few people in any one year Source:Agency for Healthcare Research and Quality MEPS, 1999 Percent of health Care Expenditures 1% 1% 2% 4% 6% 13% 73% 0% 0% 0% 20% use 86% of the care

Dr. Marko: Most people are not using care. 80% use around 15%. We could just look at their needs and adjust services according to the needs of the overwhelming majority. Go from $2 trillion to a mere $300 billion. Preposterous, of course, we all expect these services when we need them. Problem is, there is no health care system that guarantees adequate financing of these services.

If you were in an insurance company CEO, who would you want to insure? Source:Agency for Healthcare Research and Quality MEPS, 1999 Percent of health Care Expenditures 1% 1% 2% 4% 6% 13% 73% 0% 0% 0% 80% uses less than $1000 of care per year

Dr. Marko: This graph shows a population divided into 10ths. It shows how health care services are utilized in any one year in any population. Take even 1000 people in a population and you will find that the majority of them (80%) are healthy and use very little care. 30% of them in fact, use no care at all!. In actuality most of the services are used in any one year by a small percentage. 10% use 72 % of the health care dollars. If we add to that the 10% who use 13% of the care we find that 20% use 86% of health care services. It is worth keeping in mind that these are not the same people all the time. All of us move in and out of this group at one or many times in our lives. And when we are in that group ( birth of a baby, coronary bypass, cancer diagnosis) we expect health care services to be there waiting for us. Health care is not like other human needs. We all have the same basic needs for food. shelter, clothing etc. When you look at the population’s needs in regard to health care needs are vastly different. Because at any one time the healthy majority use very little care - 80% of the population in Vermont use only 14% of the health care dollars. On the other hand, 10% use 73% of the health care dollar. Another important point is that the most expensive services The NICU, the trauma unit, dialysis to name a few are used by a very small number of people. Dialysis is used by only 380 people per year in Vermont. Yet the infrastructure costs of sustaining these services are enormous.

Definitions to what happens in private insurance companies. HMOs perform these actions in order to decrease costs. No reference provided for statistics on this page.
Recision – cancellation of an existing policy for a pre-existing, unreported condition or prior illness
Purging – pricing premiums to small businesses with high costs to insurers out of reach so they dump insurance coverage
20,000 cancellations with $300 million savings to insurers over 5 years

Administration is the Fastest Growing job in Health Care Source: Bureau of Labor Statistics and NCHS

This chart helps us explain why we can spend so much more for so much less. Among the nations we just looked at, all of them have take the fundamental step of rejecting the financing of care by for-profit insurance companies, except for the United States.
Dr. Marko: The natural market behavior of insurance companies is to compete to cover healthy, profitable people while rejecting anyone who actually needs care. To do this, they erect massive bureaucracies with no purpose other than to fight claims, issue denials and screen out the sick. They consume care dollars, but their main output is paperwork headaches. In response, hospitals and doctors’ offices must employ armies of administrators to deal with the separate payment bureaucracies of thousands of different insurance companies. U.S. businesses are saddled with the costly burden of administering their own health benefits. Co-payment collection and processing, eligibility determinations, utilization reviews: the scope of the bloat is staggering.
This slide begins to give a idea of the explosion of administrative waste within our health system.

One-Third of Health Spending is Consumed by Administration 69% 31% Clinical Care Administrative Costs Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004 ($2000 per person)

Dr. Marko: Does not guarantee health coverage- people get sick, especially very sick, get care, no way to pay Is complicated and creates a massive bureaucracy that consumes 31% of the health care dollar When the fixed costs of the infrastructure aren’t paid, a deficit results.

Non-profit organizations typically spend between 1-5% on administrative costs, as opposed to the 15-31% of private healthcare organizations.

Essentially, our taxes going to pay private insurance companies.

Yet another example of how corrupted and inefficient are the bills passed by congress. They try to “improve” the current program, resulting in more costs that essentially get wasted.

For Profit Hospitals
Don’t they provide higher quality care and cost less?
B: This is a myth. Personally, I’m sick and tired of hearing this claim. You may be able to FIND higher quality, but as a general rule this is not true.

AMI stands for acute myocardial infarction and CHF is congestive heart failure.

Who are the underinsured?
Most are working
Employer, employee or individual cannot afford increased premiums
Accept high deductibles
Higher co-pays
Exclusions in policy
References provided on previous slides; this is mainly a summary.

Why is an unexpected medical bill the major reason for 62% of personal bankruptcies in the U.S.?
Individual charged full costs for healthcare
Insurers negotiate discounts
Individual is “underinsured”
Reference: see following slide

B: The individual is charged full-price, but the insurance company negotiates a discount. For example, if you are charged $20,000 for a three-day visit to the hospital for an appendectomy, then you will pay the full price. If you have insurance, they’ll usually have a negotiated price of between 40-70% of the normal price, and you pay the co-pay. In other words, the insurance company would have to pay only $10,000 and you would pay the $5,000 premium, leaving the insurance company to pay for $5,000 of your bill while increasing your premium or denying you coverage renewal at the end of the contract.

What is the current cost of health insurance?
Over $13,000 for employer sponsored family policy
Individual policy (if it can be purchased) more the $13,000 after tax dollars
Median income was $48,000 in 2007.
Note: No reference
Can the average worker afford health insurance?

Do we have the “best health care system in the world”?
Yes, if you are wealthy or have excellent insurance and are in an area with access to our highest quality care.
No, if you are not in the above group.
B: I would add that you also can have excellent healthcare if your are poor and qualify for Medicaid or Medicare coverage

When compared to Canada, Australia, Germany, New Zealand and the United Kingdom, the U.S. ranks last or next to last in:
Quality
Access
Efficiency
Equity
Healthy lives
The Commonwealth Fund 5/2007

Healthcare inflation
Cost of healthcare has risen at a rate 2-4 times that of inflation over the past 10 years
Largest factor is cost of pharmaceuticals
$235 billion in 2008

This is EXACTLY why it would be so difficult to implement any sort of an effective NHP in the US….there are so many other factors, such as education and private businesses, etc. Because of this, the only way to really implement it would be to do it on a city or state level, because the people could vote and be represented according to their needs; changes would occur much more gradually, and corruption would be less evident.

U.S. Drug Spending, 1990-2003 Source: HCFA, Office of the Actuary $40 $46 $48 $51 $55 $61 $67 $75 $104 $122 $142 $161 $182 $85
0
20
40
60
80
100
120
140
160
180
200
1990 1992 1994 1996 1998 2000 2002
Prescription Drug Spending
(Billions of Dollars)

This is simply unacceptable. The rise came when pharmaceutical companies began advertising on television and lobbyists and drug representatives began providing biased drug education to congress, physicians, and the public. For example, Plavix is something like 4 bucks a pop, whereas aspirin is maybe half a cent. Aspirin is MORE EFEFCTIVE at preventing an MI; Plavix is only indicated in the case of a stent. However, millions of people request Plavix because it is advertised with animations of atherosclerosis “dissolving” from the blood vessels! The people aren’t paying for it (insurance is), so they do it. Doctors prescribe it because drug representatives spend millions of dollars per year delivering their lunches and providing biased drug information. However, I believe that the system itself is to blame…not the individuals involved in the pharmaceutical companies.

How does PHARMA justify U.S. citizens paying 2-3 times more for drugs than people in other countries?
R&D is expensive, and if we can’t change this, we will not develop new (life-saving) drugs.

What role do medical liability costs play?
3% of total costs ($66 billion)
Majority of patients who are harmed are not compensated
Some not harmed are compensated
Tort reform is not the comprehensive solution to health care costs
54% of total costs are administrative overhead (legal costs)
Note: no reference provided

What is “socialized medicine”?
Government health care system in which the hospital and clinics are owned by the government and all providers are government employees
U.S. Military medical system
Veteran’s Administration health system

What is a social insurance program?
Government financed with private/individual providers
Medicare/Medicaid/SCHIP

What are the attributes of the ideal health insurance plan?
Affordable
Minimal or no co pays
Comprehensive
Basic medical coverage
Cradle to grave
Universal
Insure all
Between jobs
Unemployed
Portable
Same coverage throughout U.S.
Unrestricted choice of
Provider
Hospital
Colorado Medical Society - 2007

The challenge!
Can you buy comprehensive, quality, affordable health insurance on the open market that does not exclude you or your pre-existing medical condition?

Is there consumer legislature and physician support for single payer universal health insurance?
HB 676 (Medicare for all) has 83 House co-sponsors
Sen. Sander’s single payer bill in Senate has one sponsor

59% of over 2,000 AMA members support single payer national social insurance
PCPs are probably about eighty percent, whereas specialty areas are probably about 15% (because, obviously, their salaries would be negatively impacted).
No Reference

How do we achieve the ideal?
Dramatically reduce overhead costs. How?
Eliminate “for profit” entities in delivery of healthcare
Create a risk pool of all citizens
Will make insurance affordable to all
Reduce costs of pharmaceuticals
Allow Medicare to negotiate price
Eliminate Medicare subsidies to private insurers (Medicare Choice)
Eliminate direct to consumer marketing of Rx drugs

How can this be funded?
Create a single payer tax supported fund administered by
U.S. government, e.g., Medicare for all
If private health insurers are part of the solution, they must:
Be not-for-profit
Agree to cover everyone at a reasonable and affordable cost
Have no exclusions for pre-existing conditions
Have limits on administrative overhead costs

I don’t really understand this slide, but maybe you will….it’s twenty years old, anyway.

What positive results could result from a national tax supported single payer system?

Free choice of provider and hospital
Universal coverage
Equitable payment (based on income)
Low cost due to universal risk pool
Low overhead (31% to 5%)
Transparent system
Improved quality assurance and safety
Improved access to primary/preventative care

No premium paid by employer or employee
Should result in increased salaries
No workmen’s compensation premiums
No need for workman’s compensation litigation for medical costs
Disabled veterans care now available everywhere without restriction of access to Veterans Administration

Elimination of auto insurance medical premium
Decrease in auto insurance premiums
Eliminate medical care portion of malpractice settlements
Eliminate personal bankruptcies for unpaid medical expenses
Increase competitiveness of U.S. companies
Increase in U.S. jobs

“ Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”
Martin Luther King, Jr.

“ We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
Declaration of Independence
July 4, 1776

We as a country must decide if health care is a right or a privilege?
If it’s a right, we must convince our political leaders to move toward COMPREHENSIVE reform.

What is the current status of U.S. Healthcare Reform?

“ We need a uniquely American approach to health care reform.”
Robert Zirkelbach – spokesman for America’s Health Insurance Plans

What is “uniquely American”?
Not single payor , which is the system almost all industrialized countries have
Keep our employer-based, private health insurance system

B: Essentially, President Obama’s plan.
What is the additional cost of covering our 50 million uninsured?
If the current cost of a family health care policy is $13,000/yr. and single coverage is $6,500/yr., assuming 25 million are families of 4 and 25 million are single, the cost equals $325 billion/yr.
Where do we get $325 billion new dollars?

Proposals for funding:
$600 billion new money over 10 years in current Senate bill
Cut “waste” in system – may be 30% ($600+ billion) of health care dollar – a great challenge
Tort reform – small change – approximately $30 billion/yr
PHARMA - $80 billion drug cost savings over 10 years
American Hospital Association - $155 billion over 10 years from Medicare and Medicaid
This “new money” DOES NOT EXIST. The current healthcare “reform” is not a reform at all, it is a black hole of debt. It just encourages private insurance companies to dump their sick people on the government while still charging exorbitant prices to the healthy.

Where are the “low hanging fruit?”
Reduce overhead from 31% to 5%  $550 billion/yr
Eliminate subsidy to Medicare Advantage (currently adds 19% to Medicare costs)
Reform Medicare Part D
Allow Medicare to negotiate pricing
Remove private health insurers from system
Total in excess of $600 billion/yr
This is an enormous proposition, of reducing overhead costs (going from profit to non-profit organizations).

What are the impediments to reform?
SPECIAL INTEREST $$$
From 1997-2008, health care sector has spent $3.4 billion on lobbying (Finance sector $3.6 billion)
Currently total health care lobbying cost = $1.4 million/day
Almost all members of Congress have received huge $$ from this lobby—some like Senator Baucus $1.5 million
Where does this lobbying money come from?

As of 7/13/09, total $$ from health insurance interests to Senators:
Baucus - $3,973,485
Bayh - $1,565,088
Conrad - $2,154,200
Feinstein - $1,749,889
Kerry - $8,994,077
Landrieu - $1,653,943
Lieberman - $3,308,621
Nelson - $2,214,715

Is there any hope for real reform? Yes, if:
Private insurers are prohibited by meaningful legislation from “cherry picking”, i.e., cannot exclude pre-existing conditions
If a “public option” is available that cannot become the option of last resort to cover the most seriously ill; i.e., those private insurers can “dump” on this insurer
“ Affordable” insurance is available to all – THE GREATEST CHALLENGE

RECOMMENDED READINGS:
Angell M. The Truth About the Drug Companies and How They Deceive Us and What To Do About It. Random House 2004
Barlett D, Steele J. Critical Condition - How Healthcare in America Became Big Business and Bad Medicine. Bradbury Books 2006
Kassirer J. On the Take – How Medicine’s Complicity with Big Business Can Endanger Your Health. Oxford University Press 2005
Arch Int Med 2006;166:2511
AHRQ, MEPS 1999
Carroll & Ackerman, Ann Int Med 2008;148:566

Perfect Storm 15 For Nurse Symposium 1

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