Acs0008 Health Care Economics The Broader Context

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Acs0008 Health Care Economics The Broader Context

  1. 1. © 2008 BC Decker Inc ACS Surgery: Principles and Practice ELEMENTS OF CONTEMPORARY PRACTICE 8 HEALTH CARE ECONOMICS: THE BROADER CONTEXT — 1 8 HEALTH CARE ECONOMICS: THE BROADER CONTEXT Linda G. Lesky, MD, MA, Robert S. Rhodes, MD, FACS, and Charles L. Rice, MD, FACS In a companion chapter [see ECP:7 Elements of Cost-Effective Economists differ on whether such spending represents a Nonemergency Surgical Care], we review the principles of risk to the overall economic well-being of the United States. cost-effective surgical care and discuss the implications of Those who are concerned about both the amount that is such principles for health care spending. Our primary focus spent on health care and the rate at which this amount is there is on the interaction between an individual surgeon and growing cite a number of concerns: an individual patient. In this chapter, we explore some of 1. In spending more on health care, society spends less the issues surrounding health care spending on a larger (i.e., on other goods and services—a process referred to as national) scale. We believe that it is important for surgeons to displacement. Thus, health care consumes resources that have a broad understanding of these issues, in particular might otherwise have been allocated to services such as because such concerns are increasingly becoming the subject education or public safety. of political debate. 2. The health care sector of the economy is so large—not only in terms of the amounts of money involved but United States Health Care Expenditures and Health also in terms of the number of people employed—that short-term changes in its growth rate (in either direction) Outcomes necessarily exert substantial and painful economic effects. In 2006, US National Health Expenditures (NHE) Moreover, the potential magnitude of these effects may amounted to $2.1 trillion (approximately 16% of the now thwart political consideration of potential changes to gross domestic product [GDP]).1 According to data from the the system. World Bank (<http://www.worldbank.org/data/databytopic/ 3. As costs increase, voluntary participation by employers in GDP.pdf>), if the current level of US health care spending the provision of health insurance to employees and retirees were viewed as a separate economy, it would be the seventh comes under increasing pressure, with the result that largest economy in the world, nearly equal to the GDPs of employers either shift more and more of the costs of insur- France and the United Kingdom. This level of spending ance to employees or decide to stop providing health translates into a per capita expenditure of $7,026, which insurance altogether. Between 2001 and 2006, the contri- is more than double the average of other Organisation for bution of households to health care expenditures increased Economic Co-operation and Development (OECD) coun- by more than 35%.1 tries and which surpasses the per capita expenditure of the Others dismiss these concerns and argue that the health next highest-spending country, Switzerland, by more than care share of GDP has no natural limit as long as health care 30%. Between 1950 and 2001, US per capita spending on is more highly valued than the goods and services that it dis- health care in constant dollars increased more than 11-fold. places.4 Proponents of this viewpoint distinguish between Since the end of World War II, the growth rate of health spending that is affordable (i.e., sustainable) and spending care spending has exceeded the overall growth of the econ- that the country is unwilling to sustain. omy. Although the rate of growth of per capita health care The proponents of these two perspectives agree that spending has slowed over the past 4 years, there is reason to increases in spending should reflect the increased value placed believe that this slowing trend will be short-lived.2 Over the on health care services relative to non–health care goods and past 30 years, total national spending on health care has more services that are forgone. There is substantial evidence, how- than doubled as a share of GDP. According to Congressional ever, that increased health care expenditures are not invari- Budget Office projections, total health care spending will ably associated with demonstrable improvements in health reach $4 trillion by 2015, and in the absence of a significant outcomes. Although the United States spends more on health change in the long-term trends, the share of GDP will double care than any other OECD country, its health status rankings again by 2035, to 31% of GDP. Only a small percentage of do not compare well with those of other industrialized coun- this spending growth can be attributed to general inflation, tries. OECD data indicate that of the 30 OECD countries, growth in the size of the population, and changes in the age the United States has the highest rate of obesity, ranks 15th distribution of the population.3 The majority is projected to in infant mortality, 13th in cancer mortality, 21st in mortality be attributable to rising costs of care. from ischemic heart disease, and 15th in life expectancy at 65 years.5 An analysis of mortality from causes that were potentially avoidable with timely and effective health care in The views expressed are those of the author(s) and do not reflect the 19 industrialized countries found that the United States official policy or position of the USUHS, the Department of Defense, ranked last in the level of decline in these deaths between or the United States Government. 1997 and 2002.6 DOI 10.2310/7800.SECC08 08/08
  2. 2. © 2008 BC Decker Inc ACS Surgery: Principles and Practice ELEMENTS OF CONTEMPORARY PRACTICE 8 HEALTH CARE ECONOMICS: THE BROADER CONTEXT — 2 Within the United States, several major studies have shown reveals why a market-based health care delivery system that patients treated in higher-spending regions do not have contributes to rising costs and poor health outcomes. either better health outcomes or greater satisfaction with their care than patients treated in lower-spending regions.7 One model of supply and demand such study reported that the differences in spending were The model of supply and demand is a useful tool for largely attributable to the higher frequency of physician visits, understanding the behavior of buyers and sellers in a market the tendency to consult specialists more readily, the ordering [see Figure 1]. With price on the vertical axis and quantity of of more tests, the performance of more minor procedures, a particular good or service on the horizontal axis, the demand and the more extensive use of hospital and intensive care curve represents the total demand by all consumers for that services in the higher-spending regions. The authors could good or service. The downward slope of this curve reveals find no evidence that these types of increased utilization that as price decreases, consumers are willing to purchase resulted in improved survival, better functional status, more. The demand curve also shows the amount of a good or enhanced satisfaction with care.7 These findings have or service that the market is willing and able to purchase at a profound implications for efforts aimed at containing the given price. Similarly, the supply curve represents the total further growth of health care spending. quantity of a good or service that suppliers are willing to produce at a given price. The point where the two curves intersect represents the equilibrium price and quantity of the Discrepancy between Costs and Outcomes good or service. Many factors influence the cost of health care and the It is this equilibrium between supply and demand that health outcomes of a population. The increase in the size of gives markets their most valued attributes. A competitive the uninsured population is often cited as contributing to market price forces producers to satisfy consumers’ demands poorer health outcomes of US residents and the slow decline for a quality product with the least-cost methods of produc- in the US amenable mortality.6 Wider availability of advanced tion. Markets also ensure the most efficient and least wasteful technology, an increasingly older population, newer and more allocation of resources, in that only the quantity demanded at expensive prescription drugs, inefficiencies in health care a specific price is produced. Markets assume, however, delivery, and the rising costs of medical malpractice insurance that consumers who cannot afford to pay the market price are all contributors to rising health care costs. However, the either will find a less expensive substitute product or will do single factor that distinguishes health care in the United without. They also assume that consumers can be knowl- States from that in other developed countries is the market- edgeable enough about a product to assess its quality and based delivery system that characterizes US health care. With appropriateness for their needs. Finally, markets exist both to the exception of the aging of the population, the health care maximize the utility of consumers through the purchase of market influences all of the factors that contribute to the cost goods and services and to maximize the profits of suppliers. of health care and health care outcomes in the United States. Research and the development of innovative products are A simple review of how the health care market functions driven by the opportunity to be the first to enter a market with a new or improved product and thus reap maximum Model of Supply and Demand profits. A key question is whether the features that are normally Supply: Qs = fs(P) associated with well-functioning markets in other areas are also applicable to health care. Further analysis of the supply- and-demand model as it relates to the health care market may shed some light on this question. Price affordability of health care Pe Despite the massive growth of employer-sponsored health insurance, the universal coverage of the Medicare population over the age of 65, the addition of more than 1 million Demand: Qd = fd(P) disabled persons under Medicare, and widespread coverage of the poor under Medicaid, more than 45 million US citi- Qe zens (almost one out of every six) have no health insurance Quantity coverage. Health insurance, in and of itself, leads to distortions in the Market Equilibrium market because consumers of health care do not see the Qe = Qd = Qs actual price being paid for health care goods and services. This creates a situation referred to as moral hazard. This term Figure 1 The model of supply and demand determines the originated with the purchase of fire insurance in the 19th quantity produced at a given price. Illustrated here is the century, when it was recognized that the owner of a property application of this model to health care. Persons who fall that was insured might have an incentive to incur a loss either below the equilibrium point on the demand curve cannot afford health care at the market price and must either do by deliberately setting a fire (a moral hazard) or by not taking without care or seek it in the safety-net health care system. steps to reduce the likelihood of a fire. The implication of the P = price; Q = quantity; Qd (quantity demanded) = fd (P) moral hazard effect for health care spending is that those who (the demand equation, which includes price); Qs (quantity are insured (or more generously insured) will tend to use supplied) = fs(P) (the supply equation, which includes price). more health services without regard to cost. Insurers seek to reduce the extent of the moral hazard problem by increasing 08/08
  3. 3. © 2008 BC Decker Inc ACS Surgery: Principles and Practice ELEMENTS OF CONTEMPORARY PRACTICE 8 HEALTH CARE ECONOMICS: THE BROADER CONTEXT — 3 the coinsurance and making the consumer pay a larger share this unusual market behavior stemmed from the observation of the full cost. that in geographic areas that were similar with respect to A more significant economic and ethical concern centers demographics, socioeconomic characteristics, and burden of on those persons with no health insurance coverage, who disease, hospital utilization rates were higher in areas with a fall below the equilibrium point on the demand curve greater supply of hospital beds.12 In a study of the supply of [see Figure 1]. In a well-functioning market, it is expected that surgeons and the demand for surgery, it was estimated that a those who cannot afford to pay the market price for a good 10% increase in the supply of surgeons, as measured by the or service will do without, but our society seems unwilling surgeon-to-population ratio, led to a 3% increase in the per to allow this when it comes to health care. The result is a capita surgery rate.13 A number of other studies have addressed patchwork of substitute care that serves the uninsured and the effect of physician ownership on health care utilization underinsured. The so-called safety-net health care system rates. In a study examining the issue of physician ownership comprises hospitals, “free” clinics, and emergency rooms. of ancillary services, 50% more visits were ordered at The Institute of Medicine estimated that in 2001, the safety- physician-owned physical therapy clinics in Florida than were net health care system cost $99 billion in direct services ordered at clinics that received no referrals from owners.14 and $65 to $130 billion in lost productivity.8 Under current The authors of the study could find no discernible difference arrangements, the costs of this care are built into the prices in the quality of care across ownership structures. An analysis charged to those who do have the ability to pay. A 1992 of more than 65,000 insurance claims found that doctors analysis of the distribution of the health care financing burden who owned imaging machines ordered more than four times associated with the US health care system showed that the more imaging studies than those who referred to independent greatest financial burden fell on those in the middle class: radiologists.15 Finally, in a study addressing the impact of the the fourth to seventh income deciles devoted approximately 1990 Medicare physician reimbursement changes on thoracic 12% of their cash income to finance health care, whereas the surgeons who were predicted to lose substantial income if highest income decile devoted about 8%.9 surgical volumes remained unchanged, the Medicare fee Despite this degree of public spending, the safety-net health cuts led to volume increases in both Medicare and private- care system does not ensure continuity of care or access to all pay patients, to the point where 70% of the fee loss from needed care, and as a consequence, the uninsured have Medicare was recaptured through higher patient volume.16 poorer health outcomes than those with continuous health These findings make supplier-induced demand (SID) insurance coverage.10 Every category in which other devel- one of the most controversial issues in health economics. If oped countries achieve better health outcomes than the SID exists to a substantial extent, economic analysis would United States can be explained by the large segment of the then suggest that competitive markets are useless as a means US population that is uninsured or underinsured. Not only of managing health care delivery and reducing costs [see does this safety-net system cost a great deal and result in Figure 2]. Although numerous other hypotheses have been suboptimal health outcomes for the population it serves, but offered to explain the empirical findings of the increases in there is also increasing evidence that in the United States, all demand associated with increased supply, none disproves patients seeking emergency care for critical conditions wait SID. longer for needed attention as a consequence of overcrowding Physician-Induced Demand and the utilization of emergency departments by uninsured patients who lack a regular source of health care.11 The struc- ture of any market assumes that there are those who cannot S1 S2 or will not pay for the good or service at the market price. As long as a market structure for health care delivery is maintained, there will be those who will not have access to 2 1 appropriate health care. Price asymmetric knowledge Consumers rely heavily on the advice of their physicians for P3 P1 D2 guidance regarding diagnosis and treatment. In this setting, not only do physicians function as suppliers of health care P2 D1 services, but they also play a major role in determining the level of demand for these services. For example, physicians advise patients about the frequency of office visits, the types Q1 Q2 Q3 of diagnostic tests to undergo, and the treatment or treat- Physician Services ments that may be needed. Asymmetry of knowledge between Figure 2 Given an initial supply and demand for physician patients and their physicians forces patients to rely on this services at S1 and D1, assume that the number of physicians advice for health care decisions. increases (arrow 1), thereby shifting the supply curve to the Substantial evidence exists to support the notion that phy- right. In normal economic conditions, the quantity of sicians do increase the demand for health care. Supply-and- physician services would increase (to Q2) and the price would demand theory dictates that the entry of more sellers into a fall (to P2). Empirical evidence, however, suggests that the demand for services also increases, shifting the demand curve market should result in increased competition, lower prices, to D2 (arrow 2) and resulting in an increase in both price (P3) and lower total costs for goods and services. Yet in health and quantity (Q3). D = demand; P = price; Q = quantity; care, it has been demonstrated repeatedly that an increased S = supply; subscripts 1, 2 and 3 reflect the order in which supply of health care services results in an increased demand quantity and price change in response to a change in supply for services and an increase in costs. Initial concerns about (arrow 1) followed by a change in demand (arrow 2). 08/08
  4. 4. © 2008 BC Decker Inc ACS Surgery: Principles and Practice ELEMENTS OF CONTEMPORARY PRACTICE 8 HEALTH CARE ECONOMICS: THE BROADER CONTEXT — 4 Physicians find the SID hypothesis disturbing because it whereas consumers pay less than 3% of hospital service suggests that they manipulate the demand for health care to costs out of their own pockets, they pay about 32% of advance their own economic interests. Most physicians are pharmaceutical costs. aware of the relation between service volume and income, but One of the factors contributing to these increased costs is various other factors (e.g., rapidly evolving technologies, the presence of legal restrictions, in the form of patents medical uncertainties at all levels of care, and defensive afforded to pharmaceuticals and medical devices, that practices to avoid the risk of litigation) make it impossible to prevent other firms from entering the market with a similar determine the exact impact of SID. The concept of target product. Patents give pharmaceutical companies and device incomes is certainly known to be a factor in other arenas of manufacturers legal monopolies for a period of 20 years. The the economy. Regardless of the true extent of SID’s impact purpose of this law, as expressed in Article 1, Section 8 of the on the cost of health care, it is the market-based structure of US Constitution, is “to promote the progress of science and health care that creates incentives for physicians to influence the useful arts by securing for limited times to inventors the the demand for health care. exclusive right to their respective discoveries.” In addition, at markets, monopolies, new drugs, and technology the end of the patent period, pharmaceutical companies can switch their products from prescription to over-the-counter The market is uniquely effective in fostering innovation status and gain 3 additional years of market exclusivity if and technological advances. Firms compete to introduce new they can demonstrate that any misuse of a drug will not products, and in doing so, they gain monopoly power and endanger a consumer’s health. During these protected enhance profits through increased market share and mono- periods, companies work to establish brand loyalty among poly pricing. Unlike competitive markets, where supply and physicians and consumers. demand determine the price of a good or service, monopolies Pharmaceutical companies and device manufacturers argue set their own price. The profit-maximizing price is achieved that the costs of research, development, and testing would be by equating the marginal cost of producing one additional impossible to recoup without these legal protections. Others, unit to the marginal revenue from selling one additional unit however, are concerned that companies are using their [see Figure 3]. This results in a higher price and a lower level monopoly power to raise prices, restrict output, and earn of production than would be achieved in a competitive excessive profits. Since 1980, the rate of growth in drug prices market. Monopoly profits are typically short-lived because as has exceeded consumer price inflation rates. In addition, the more suppliers enter the market, the marginal revenue curve profitability of drug firms has been consistently higher than shifts so that it eventually equals the demand curve, thereby that of the manufacturing industry average.19 reducing the price and increasing the quantity supplied. Again, pharmaceutical companies argue that the high rate In virtually every other sector of the economy, the intro- of profit observed in the industry is justified by the significant duction of new technology tends to reduce the cost of a risk and cost of innovations. However, not all innovations particular good or service. Health care is one of the few are costly to the company, risky to investors, or beneficial to exceptions to this general rule. A 2003 analysis of the relation between the availability of advanced technologies and health society. One of the most notable examples of profiteering care spending found that for certain technologies (e.g., diag- by a pharmaceutical company was the introduction of the nostic imaging, cardiac catheterization facilities, and intensive “new little purple pill.” The original purple pill, Prilosec care facilities), increased availability was often accompanied (a trade name for omeprazole), was introduced in 1989 by by increased usage (and hence increased spending).17 Simi- AstraZeneca. In 2000, it was the best-selling drug in the larly, expenditures on prescription drugs doubled between world, with over $6 billion in sales per year. When the patent 1990 and 2000, and are expected to account for one-seventh was due to expire in 2001, the company applied for a patent of total health care costs by 2012 [see Table 1].18 Moreover, for the “new little purple pill,” Nexium (esomeprazole mag- nesium), which was simply a chemical isomer of Prilosec. Monopoly Pricing Despite the Food and Drug Administration’s determination that Nexium offered no significant clinical advance over Supply = Marginal Cost Prilosec, a patent was awarded. The company launched a very successful marketing campaign, and in 2006, sales of Pm Nexium exceeded $5 billion. The price of Prilosec for consumers is $30 per month, whereas that of Nexium is Price $200 per month. The current market-based model of new product development accompanied by long periods of Pc monopoly protection can be predicted to increase the costs of health care substantially. Demand administrative costs Marginal Revenue Qm Qc In general economic terms, markets function best and Quantity society benefits most when multiple suppliers compete to produce the highest quality product at the lowest cost. With Figure 3 Monopolies set prices to maximize profits by equating the marginal cost of production and the marginal health care, however, this process has resulted in a bewilder- revenue. This process results in higher prices and lower ing array of insurers and contracts. Virtually every physician levels of production than would be found in a competitive in the United States has had to expend considerable time market. Pc = competitive price; Pm = monopoly price; and effort dealing with complicated, arcane, and apparently Qc = competitive quantity; Qm = monopoly quantity. deliberately confusing rules and requirements. 08/08
  5. 5. © 2008 BC Decker Inc ACS Surgery: Principles and Practice ELEMENTS OF CONTEMPORARY PRACTICE 8 HEALTH CARE ECONOMICS: THE BROADER CONTEXT — 5 Table 1 Growth Rates for Major Components of Health Care Spending Component of Spending Growth in Expenditure (%) 1990 1993 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Hospital care 9.6 8.0 3.6 3.2 5.0 5.6 8.2 8.2 7.5 7.4 7.3 7.0 Physician and clinical services 12.8 8.5 4.6 6.4 5.2 7.0 8.5 7.9 8.5 7.3 7.4 5.9 Nursing home and home health 12.1 10.2 8.1 3.1 −0.6 3.1 6.3 4.7 6.1 6.3 6.9 5.3 Prescription drugs 12.8 8.2 11.1 14.1 18.1 15.3 14.7 14.0 10.5 8.4 5.8 8.5 The repeal in 1986 of laws that sought to regulate Implications for Surgeons the growth of the health care industry resulted in an abandon- Market-based health care has not only increased the ment of all efforts to constrain market-based entrepreneurship costs of care but also changed the professional behavior of in health care. Not-for-profit hospitals and health mainte- physicians. Organized medicine’s priorities place the financial nance organizations converted to for-profit status. Consolida- interests of physicians above access to and quality of care. tion of the insurance industry reduced the number of plans Hospitals invest in programs that promise a high return on available in a market area, thus affording insurers monopoly investment with less regard for evidence of benefit or greater power and leading to higher prices. The cost of administering societal need. The fragmentation of the profession into over private health insurance in the Untied States reached $143 130 specialties and subspecialties has resulted in competition billion in 2005.20 For-profit insurance companies have among disciplines, further promoting self-interest over reaped impressive profits and gains in stock value, as well as best practices. In this environment and despite advances in significant political power. evidence-based medicine, individual physicians are equally As a reaction to this state of affairs, some critics of the US system have asserted that the adoption of a simplified tempted to place their own interests above those of patients Canadian-style, single-payer health insurance system would by recommending interventions of limited value. A 2007 yield large savings in administrative costs that could then study highlighted these disturbing trends by revealing that be used to expand coverage to those who are currently unin- median wait times for both routine and urgent dermatology sured. A 2003 study compared administrative health care appointments were nearly four times longer than wait times costs in the United States with those in Canada. In 1999, per for an appointment to receive cosmetic botulinum toxin capita health administration costs amounted to $1,059 in the injections.23 Patients with a potentially cancerous skin lesion United States (for a total cost of $294 billion), contrasted wait a median of 26 days to be seen by a dermatologist. with $307 in Canada [see Table 2].21 The authors arrived at Adam Smith’s 1776 book Inquiry into the Nature and Causes these figures by analyzing data from governments, hospitals, of the Wealth of Nations is considered the first full-scale trea- insurance companies, and physicians. They argued that much tise in classical economics. In it, Smith espoused the virtues of the difference between the two countries was accounted for of the market as a means toward national wealth. He made by the multiple sources of health coverage in the United the case that self-interest leads naturally to greater public States, as opposed to the single source in the Canadian good: “It is not from the benevolence of the butcher, the system. This analysis has not been replicated by others, and brewer, or the baker, that we expect our dinner, but from an accompanying editorial questions the methodology used.22 their regard for their own interest. We address ourselves, Nevertheless, the author of the editorial did agree that the not to their humanity, but to their self-love and never talk current system is “an administrative monstrosity, a truly to them of our own necessities but to their advantages.”24 bizarre mélange of thousands of payers with payment systems However, Smith was also quick to draw a distinction between that differ for no socially beneficial reason.” self-interest and greed. He criticized those who desired Table 2 Administrative Costs of Health Care: United States versus Canada Administrative Cost United States Canada Category Total Cost ($ billion) Per Capita Cost ($) Total Cost ($ billion) Per Capita Cost ($) Insurance overhead 72 259 1.43 47 Employer costs 15.9 57 0.257 8 Hospital administration 87.6 315 3.1 103 Practitioners 89.9 324 3.3 107 Total 294.3 1,059 9 307 08/08
  6. 6. © 2008 BC Decker Inc ACS Surgery: Principles and Practice ELEMENTS OF CONTEMPORARY PRACTICE 8 HEALTH CARE ECONOMICS: THE BROADER CONTEXT — 6 excessive wealth, for whom “the chief enjoyment of riches equity, besides, that they who feed, clothe, and lodge the whole consists in the parade of riches, which in their eyes is never body of the people, should have such a share of the produce of so complete as when they appear to possess those decisive their own labour as to be themselves tolerably well fed, clothed, marks of opulence which nobody can possess but them- and lodged. selves.” In his view, the market’s ability to foster the growth Arguably, health care is as necessary to the prosperity of a of a nation depended on social cooperation, discipline, and society as food and lodging are. respect for others. Greed denied others and thereby weak- Although individual physicians can do little to fix the ened the whole. society-wide problems created by market-based health care, Finally, Smith understood the intrinsic failure of the market surgeons can help to restore confidence in the profession to ensure equity and the vital role of government in this by helping to develop and then adhering to evidence-based regard. approaches to surgical intervention. Communication skills and attention to the needs of patients should be stressed as Is this improvement in the circumstances of the lower ranks vital to the best patient care. Equally important is remember- of the people to be regarded as an advantage or as an inconve- niency to the society? The answer seems at first sight abun- ing that the profession of medicine is not merely another dantly plain. Servants, labourers, and workmen of different way of making a living [see ECP:1 Professionalism in Surgery]. kinds, make up the far greater part of every great political The importance of education in evidence-based and compas- society. But what improves the circumstances of the greater part sionate care, preferably one-on-one, for the training of surgi- can never be regarded as an inconveniency to the whole. No cal residents and students must also be emphasized. Mastery society can surely be flourishing and happy, of which the far of these skills, which place patient interests ahead of surgeon greater part of the members are poor and miserable. It is but interests, truly defines professionalism. References 1. National Health Expenditures Data. Center for health system reform. Inquiry 1992;29: W3-537–51. <http://content.healthaffairs. for Medicaid and Medicare Services. <http:// 231–48. org/cgi/content/full/hlthaff.w3.537vl/DC2>. www.cms.hhs.gov/NationalHealthExpend- 10. Committee on the Consequences of Unin- 18. Heffler S, Smith S, Keehan S, et al. Data/02_NationalHealthAccountsHistorical. surance. Care without coverage. Institute Health spending projections for 2002– asp>. of Medicine of the National Academy of 2012. Health Aff (Millwood) 2003;(Suppl 2. Ginsberg PB. Don’t break out the cham- Sciences, May 2002. Web Exclusives):W3-54–65. <http://content. pagne: continued slowing of health care 11. Wilper AP, Woolhandler S, Lasser KE, et al. healthaffairs.org/cgi/content/full/hlthaff. spending growth unlikely to last. Health Aff Waits to see an emergency department w3.54vl/DC1>. (Millwood) 2008;27:30–2. physician: U.S. trends and predictors, 1997– 19. Comanor WS, Schweitzer SO. Pharma- 3. Congressional Budget Office. The long-term 2004. Health Aff (Millwood) 2008;27: ceuticals. In: Adams W, Brock J, editors. The outlook for health care spending. Congress w84–95. structure of American industry. Englewood of the United States, November 2007. 12. Roemer MI. Bed supply and hospital utiliza- Cliffs, NJ: Prentice Hall; 1995. Washington: Government Printing Office; tion. Hospitals 1961;35:36–42. 20. Centers for Medicare and Medicaid Services. 2007 13. Fuchs VR. The supply of surgeons and the National health expenditures by type of 4. Chernow ME, Hirth RA, Cutler DM. demand for operations. J Hum Resour 1978; service and source of funds, CY 1960–2005. Increased spending on health care: how much 13(Suppl):35–56. <http://www.cms.hhs.gov/NationalHealth- can the United States afford? Health Aff 14. Mitchell JM, Sass TR. Physician ownership ExpendData/02_NationalHealthAccounts- (Millwood) 2003;22:15–25. Historical.asp#TopOfPage>. of ancillary services: independent demand 5. OECD Health Data 2007. Statistics and 21. Woolhandler S, Campbell T, Himmelstein inducement or quality assurance. J Health indicators for 30 countries. Available at: DU. Costs of health care administration in Econ 1995;14:263–89. www.oecd.org/health/healthdata. the United States and Canada. N Engl J Med 15. Hillman BJ, Joseph CA, Mabry MR, et al. 6. Nolte E, McKee CM. Measuring the health 2003;349:768–75. of nations: updating an earlier analysis. Frequency and costs of diagnostic imaging in 22. Aaron HJ. The costs of health care Health Aff (Millwood) 2008;27:58–71. office practice: a comparison of self-referring administration in the United States and 7. Fisher ES, Wennberg DE, Stukel TA, et al. and radiologist referring physicians. N Engl J Canada—questionable answers to a question- The implications of regional variations in Med 1990;323:1604–8. able question. N Engl J Med 2003;349: Medicare spending. Part 2: Health outcomes 16. Yip W. Physicians responses fo medical fee 801–3. and satisfaction with care. Ann Intern Med reductions: changes in the volume and inten- 23. Resneck JS Jr, Lipton S, Pletcher MJ. 2003;138:288–98. sity of supply of coronary artery bypass graft Short wait times for patients seeking 8. Committee on the Consequences of Unin- surgeries in Medicare and the private sector. cosmetic botulinum toxin appointments with surance. Hidden costs, value lost. Institute J Health Econ 1998;17:675–700. dermatologists. J Am Acad Derm 2007;57: of Medicine of the National Academy of 17. Baker L, Birnbaum H, Geppert J, et al. 985–9. Sciences, June 2003. The relationship between technology avail- 24. Smith A. An inquiry into the nature and 9. Holohan J, Zedlewski S. Who pays for health ability and health care spending. Health Aff causes of the wealth of nations, vol I, book 1, care in the United States? Implications (Millwood) 2003;(Suppl Web Exclusives): (1776). New York: Random House; 1994. 08/08

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