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Understanding Health Care
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Understanding Health Care

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David M. Schreck, MD, FACEP, FACP, FHM , Chairman, Department of Emergency Medicine at Summit Medical Group provided this presentation on health care trends as part of a community lecture series on …

David M. Schreck, MD, FACEP, FACP, FHM , Chairman, Department of Emergency Medicine at Summit Medical Group provided this presentation on health care trends as part of a community lecture series on the Berkeley Heights, NJ campus. The presentation explains the impact on patient care and how to navigate the system.

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  • 1. “The Perfect Storm The Storm” Health Care Trends Impact on Patient Care: How t N i t th S t H to Navigate the SystemDavid M. Schreck, MD, FACEP, FACP, FHM Chairman, Department of Emergency Medicine Summit Medical Group S it M di l G
  • 2. IntroductionsDavid M. Schreck, MD, MS, FACP, FACEP, FHM Chairman – Department of Emergency Medicine, SMG Private practice - IM Specialist - Hospital Medicine Clinical Asst Prof Med - RWJ Adj Professor - Stevens Tech MS Biomedical engineering Past-Vice Chairman, Medicine Overlook
  • 3. Agenda• How did we get here? – You will get angry!!!• The “Perferct Storm Perferct Storm” – You will get angrier!!!• N i ti th system Navigating the t – You will try to hurt me!!!• Questions and Answers So … Don’t Shoot the Messenger!
  • 4. Beware Data Analysis• 3 f i d d i t Fl id friends drive to Florida• They stop at a motel• Motel l k h M l clerk charges $30 per night i h• Each of the friends pay $10 for the motel fee• Manager found that they were overcharged $5 per night (should have been $25 per night)• C Clerk instructed to refund $ f $5…
  • 5. Data Analysis• …However, the clerk decided to pocket $ $2 figuring the friends would never find out.• So the clerk refunded $3 to the friends…• How much did each of the friends pay ???• How much did the clerk pocket ??? WHERE S WHERE’S THE EXTRA DOLLAR ???
  • 6. Viewpoint• There are no “bad guys”• Physicians p their p y put pants on “one leg at a g time”• Patients have a need (and a right) to know• Is healthcare a right?• Wh t i quality…who d id ? What is lit h decides?• This is a very complex situation….
  • 7. Patients are at the center… Employers Hospitals H i l Doctors Media Patients Insurers Pharmacy Govt: Bio- President industry Legislators
  • 8. Bias• But there are biases out there….• Physicians have experience based preferences … “preferences”…• Insurance companies have shareholders• Th There are “ambulance chasers”… “ b l h ”• Patients want they think is best… – (ie, antibiotics for a “cold”)• Media sensationalism…
  • 9. Sensationalism• “Mercks Vioxx scandal widens: Drug maker knew Vioxx was deadly for years before risk was made public (opinion)”• January 26, 2011, 11:13 pm “Breast Implants Linked to Rare Cancer”• The Vaccine Victim
  • 10. Real Issues Do Exist• Who is “passing the buck”• We cannot legislate morality – 10% of us give us 90% of the headaches• …but where does the buck stop?• Quality…who pays for it?• Technology advances…who pays for it?• Access to care who pays for it? care…who• Convenience…who pays for it?• Unscheduled urgencies who pays for it? urgencies…who
  • 11. ED Marketplace
  • 12. USA ED Visits 1984 2008 1984-2008 “America’s safety net: ~ $100 Billion”
  • 13. National Health Expenditures p National Health Expenditures 2020 $4,638.40 $4,346.50 2018 $4,080.00 $3,849.50 2016 $3,632.00 $3,417.90 2014 $3,227.40 $2,980.40 Projected 2012 $2,823.90 $2,708.40 $2 708 40 2010 $2,584.20 $2,486.30Year 2008 $2,391.40 $2,283.50 2006 $2,152.10 $2.7 TRILLION $2,021.00 2004 $1,877.60 $1,740.60 2002 $1,607.90 $1,358.50 1999 $1,270.30 $1 270 30 $1,129.70 Reported 1993 $916.50 $717.30 1980 $254.90 $0.00 $0 00 $500.00 $500 00 $1,000.00 $1 000 00 $1,500.00 $1 500 00 $2,000.00 $2 000 00 $2,500.00 $2 500 00 $3,000.00 $3 000 00 $3,500.00 $3 500 00 $4,000.00 $4 000 00 $4,500.00 $4 500 00 $5,000.00 $5 000 00 BillionsSource: www.cms.gov
  • 14. National Health Expenditures and Their Share of (GDP) 1980-2020 ( ) $5,000.00 25% National health spending is projected to continue to increase as a $4,500.00 share of GDP over the next decade. 20% $4,000.00 Projected 20% Actual $3,500.00 17.7% $3,000.00 15% $2,500.00 $2,000.00 $2 000 00 10% $1,500.00 $1,000.00 , 5% $500.00 $0.00 0% 80 90 93 97 99 00 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 National Health Expenditures % GDPSource: CMS, Office of the Actuary, National Health Statistics Group.
  • 15. National Health Expenditures and Their Share of Gross Domestic Product 1960 2009 Product, 1960-2009 Dollars in Billions: 5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.0% 16.1% 16.2% 16.6% 17.6%Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, athttp://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip).
  • 16. Health Care Economics
  • 17. CPI 1970-2010US Census Bureau
  • 18. Total Health Expenditure as a Share of GDP, U.S. and Selected Countries, 2008 18% 16% 14% 12%As Percentage of GDP 10% 8% 16.0% 6% 11.2% 11 2% 0 % 10.5% 10.5% 0 % 10.7% 10 7% 11.1% 11 1% 9.9% 10.4% 9.0% 9.1% 9.4% 8.5% 8.5% 8.7% 4% 8.1% 2% 0% Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350- en (Accessed on 14 February 2011). Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted.
  • 19. Total Health Expenditure per Capita, Per Capita Health Spending, 2002 U.S. and Selected Countries, 2008 $8,000 Each year, the US spends roughly 2x the amount on $7,538 health care as the next most spending country $7,000 $6,000Per Capita Spending - PP Adjusted $5,003 $5,000 $4,627 PP $3,970 $4,063 $4,079 $4,000 $3,677 $3,696 $3,737 $3,353 $3,470 $3,129 $2,870 $2,902 $3,000 $2,729 $2,000 $1,000 $0 Anderson GF, Hussey PS, Frogner BK, Waters HR. Health spending in the United States and the rest of the industrialized world. Health Aff (Millwood ). 2005;24:903-914.
  • 20. Total Expenditure on Health as a Share of GDP, U.S. and Selected Countries, 1970, 1980, 1990, 2000, 2008 18% 16% 14%Health Spending as Percent of GDP 12% 10% 8% 1970 6% 1980 1990 4% 2000 2008 2% 0% Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350- en (Accessed on 14 February 2011). Notes: Data from Australia and Japan are 2007 data. 2008 figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. 200 figures for Belgium are OECD estimates. Break in Series AUS (1998); AUSTRIA(1990); BEL(2003, 2005); CAN(1995); FRA(1995); GER(1992); JAP(1995); NET(1998, 2003); NOR(1999); SPA(1999, 2003); SWE(1993, 2001); SWI(1995); UK (1997). Starting in 1993 Belgium used a different methodology.
  • 21. Total Health Expenditure Per Capita, U.S. and Selected Countries, 1970, 1980, 1990, 2000, 2000 2008 $8,000 $7,000 apita Spending - PPP Adjusted $6,000 $5,000 1970 1980 $4,000 1990 2000 $3,000 2008Per Ca $2,000 $1,000 $- $ Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-en (Accessed on 14 February 2011). Notes: Data from Australia and Japan are 2007 data. 2008 figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. 2000 figured for Belgium are OECD estimates. Numbers are PPP adjusted. Break in Series AUS (1998); AUSTRIA(1990); BEL(2003, 2005); CAN(1995); FRA(1995); GER(1992); JAP(1995); NET(1998, 2003); NOR(1999); SPA(1999, 2003); SWE(1993, 2001); SWI(1995); UK (1997. Starting in 1993 Belgium used a different methodology.
  • 22. Growth in Total Health Expenditure Per Capita, U.S. and Selected Countries, 1970-2008 $8,000 $7,000 edPer Capita Spendin - PPP Adjuste $6,000 United States $5,000 Switzerland ng Canada $4,000 OECD Average Sweden C $3,000 $3 000 United Kingdom $2,000 $1,000 $0 1970 1975 1980 1985 1990 1995 2000 2005 Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350- en (Accessed on 14 February 2011). Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted. Break in series: CAN(1995); SWE(1993, 2001); SWI(1995); UK (1997). Numbers are PPP adjusted. Estimates for Canada and Switzerland in 2008.
  • 23. Total Health Expenditure per Capita and GDP per Capita, US and Selected Countries, 2008 Countries $8,000 USA $7,000 $7 000Pe Capita Heal Spending $6,000 Austria $5,000 Switzerland lth Germany Canada Norway Belgium $4,000 France Netherlands $3,000 Italy U.K. Australia er Japan Sweden $2,000 Spain $1,000 $0 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 GDP Per Capita Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350- en (Accessed on 14 February 2011). Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates.
  • 24. We are in for a rough ride!!!! BAD NEWS WORSE NEWS CURRENT MEDICARE’S UNFUNDED CURRENT LIABILITY OF UNFUNDED SOCIAL SECURITY LIABILITY IS IS ABOUT ABOUT $11 TRILLION + $66 TRILLION! = $250 000 per person $250,000 (310,000,000 est. pop. 2010) Who’s paying for this???Source: Orlikoff & Associates, Inc. 2008
  • 25. Population Data Are these groups motivated to pay the debt????And to pay for us as we age??? $39k $21k $37k $31k AGE GROUPS
  • 26. Projected National Health Expenditures in the United States, States by Source of Payment, 2010 Payment Where the money comes from…… Private Health Insurance 32% Other Private Spending 7% 21% Medicare Out-of-Pocket 11% Payments 12% 16% Other Public Medicaid and Spending CHIP1 Total National Health Expenditures, 2010 = $2.6 TrillionNOTES: 1Includes Children’s Health Insurance Program (CHIP) and Children’s Health Insurance Program expansion (Title XIX). Percentages do not sum to 100% dueto rounding.SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, Updated National Health Expenditure Projections 2009-2019, January 2011.
  • 27. Distribution of National Health Expenditures, by Type of Service, 2009 Service Where it goes…… Hospital Other Health Care, 30.5% Spending, 15.9% Other Personal Health Care, 14.9% Home Health Care, 2.7% Prescription p Nursing Home Drugs, 10.1% Care, 5.5% Physician/ Cli i lNote: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment,etc. O h Health Spending includes, for example, administration and net cost of private health insurance, public health activity, Other H l h S di i l d f l d i i i d f i h lhi bli h l h i iresearch, and structures and equipment, etc.Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of theActuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National HealthExpenditures by type of service and source of funds, CY 1960-2009; file nhe2009.zip).
  • 28. Distribution of National Health Expenditures, by Type of Service, Service 1999 and 2009 Hospital Physician/ Prescription Nursing Home Health Other Other Health Care Clinical Drugs Home Care Care Personal Spending Services Health CareNotes: Percentages may not total 100% due to rounding. Other Personal Health Care includes, for example, dental and other professional healthservices, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private h lth insurance, i d bl di l i t t Oth H lth S di i l d f l d i i t ti d t t f i t health ipublic 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, NationalHealth Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of serviceand source of funds, CY 1960-2009; file nhe2009.zip).
  • 29. Concentration of Health Care Spending in th U S P i the U.S. Population, 2008 l ti Percent of To Health Care Spending 100% Is heathcare a right? 96.9% 80% Is rationing on the way? 80.2% 73.4% 63.6% 60% h 47.5% 40% otal 20.2% 20 2% 20% 3.1% 0% Top 1% Top 5% Top 10% Top 15% Top 20% Top 50% Bottom 50% (≥$44,338) (≥$16,336) (≥$9,148) (≥$6,074) (≥$4,374) (≥$825) Percent of Population, Ranked by Health Care Spending (<$825)Note: Dollar amounts in parentheses are the annual expenses per person in each percentile. Population is the civilian noninstitutionalizedpopulation, including those without any health care spending. Health care spending is total payments from all sources (including directpayments from individuals, private insurance, Medicare, Medicaid, and miscellaneous other sources) to hospitals, physicians, other providers(including dental care), and pharmacies; health insurance premiums are not included.Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for HealthcareResearch and Quality, Medical Expenditure Panel Survey (MEPS), 2008.
  • 30. Hospitals
  • 31. Number of Public Community Hospitals, 1990-2008 1990 2008Notes: Includes nonfederal (i.e., state and local government), short-term general and specialty hospitals whose facilities are available to the public. ( , g ), g p y p pPublic community hospitals represent 23% of all community hospitals, and community hospitals represent about 85% of all hospitals. Federalhospitals, long term care hospitals, psychiatric hospitals, institutions for the mentally retarded, and alcoholism and other chemical dependencyhospitals are not included.Source: American Hospital Association Annual Surveys: 1990-1998 data from Hospital Statistics, 2002, Table 1; 1999-2008 data from AHA AnnualSurveys, Copyright 2010 by Health Forum LLC, an affiliate of the American Hospital Association, at http://www.ahaonlinestore.com.
  • 32. Hospital Patient Volume
  • 33. Hospital LOS
  • 34. Aggregate Total Community Hospital Margins, 1980-2008 1980 2008Note: Total Community Hospital Margin calculated as the difference between total net revenue and total expenses, divided by total net revenue.Source: American Hospital Association and Avalere Health, Avalere Health analysis of 2008 American Hospital Association Annual Survey data,for community hospitals, Trendwatch Chartbook 2010, Trends Affecting Hospitals and Health Systems, Table 4.1, p. A-32, athttp://www.aha.org/aha/trendwatch/chartbook/2010/appendix4.pdf.
  • 35. Community Hospital Payment-to-Cost Ratios, b Source of Revenue, 1980 2008 R ti by S fR 1980-2008Note: Payment-to-cost ratios show th degree to which payments fN t P tt t ti h the d t hi h t from each payer cover th costs of treating its patients. They cannot be h the t f t ti it ti t Th tbused to compare payment levels across payers, however, because the service mix and intensity vary. Data are for community hospitals.Medicaid includes Medicaid Disproportionate Share payments.Source: American Hospital Association and Avalere Health, Avalere Health analysis of 2008 American Hospital Association Annual Surveydata, for community hospitals, Trendwatch Chartbook 2010, Trends Affecting Hospitals and Health Systems, Table 4.4, p. A-35, athttp://www.aha.org/aha/trendwatch/chartbook/2010/appendix4.pdf.
  • 36. Health Insurance Coverage 2007 Other Private Uninsured 24,500,000 Medicaid 39,600,000 45,700,000 Medicare 41,400,000 Military 4,000,000 Employer 177,400,000Source: U.S. Census Bureau: Income, Poverty, and Health Insurance Coverage in the United States 2007
  • 37. Payment Sources for Uncompensated Care, 2004 Private Dollars $6 Billion (15%) Federal Dollars $24 Billion (58%) State Dollars $11 Billion (27%) Total = $40.7 BillionSOURCE: Kaiser Commission on Medicaid and the Uninsured analysis of data from Hadley, J. and J. Holahan. 2004. The Cost of Care forthe Uninsured: What Do We Spend, Who Pays, and What Would Full Coverage Add to Medical Spending? KCMU, Issue Update, May 2004.
  • 38. Growth in Workers by Type of Industry, 2000 to 2005 +5.6 million -2.0 million Growth in Workers in Industries Decline in Workers in Industries where Employer-Sponsored Health where Employer-Sponsored Health Coverage is Less Common Coverage is More CommonNotes: Excludes those aged 65+. Uninsured rates are 23% in industries where coverage is less common, such asconstruction and agriculture; 10% where coverage is more common, such as education and manufacturing.Source: Urban Institute analysis of the 2001 and 2006 March CPS for KCMU, 2006.
  • 39. Cumulative Changes in Health Insurance Premiums and Workers’ Earnings, 2001-2007Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2001-2007; Bureau of Labor Statistics, Seasonally Adjusted Data from theCurrent Employment Statistics Survey, 1988-2007 (April to April).
  • 40. Average Annual Worker Premium Contributions Paid by Covered Workers for Single and Family Coverage 1999 2010 Coverage, 1999-2010*Estimate is statistically different from estimate for the previous year shown(p(p<.05). )Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2010.
  • 41. Average Annual Health Insurance Premiums and Worker Contributions for Family Coverage, y g 2000-2010 $13,770 114% Premium Increase $6,438 147% Worker Contribution C t ib ti IncreaseSource: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,2000-2010.
  • 42. HMO Median Medical Expense Ratios, 1995- 2002Note: Medical expense ratio calculated as Total Medical Expenses/(Total Revenue - Investment Revenue).Source: InterStudy Publications, The InterStudy Competitive Edge 13.2, Part II: HMO Industry Report, (reporting data as of January 1,2003), October 2003, Figure 9, p. 60.
  • 43. The storm cometh ….
  • 44. Nope… it’s already here!!!
  • 45. The Perfect Storm• Looming physician shortages• Elderly population rises• Health care population rises p p• Specialists refuse to take “call” from ED• Higher unemployment: uninsured• Employees begin to pay more for care• Increased regulatory environment• Malpractice environment p
  • 46. Total Number of Active Physicians per 1,000 Persons, 1980 – 2004 (1) (2)Source: CDC, NCHS Health United States, 1982, 1996-97, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006.(1) 1980 does not include doctors of osteopathy.(2) 2004 includes both federal and non-federal physicians. Prior to 2003, data included non-federal physicians only.
  • 47. First-Year M.D. Enrollment per 100,000 Population Has Declined Since 1980 i i SiSource: AAMC 2006; U.S. Census Bureau
  • 48. Average Physician Income Adjusted f I fl ti 1995 2003 Adj t d for Inflation 1995-2003Source: Community Tracking Study Physician Survey Center for Studying Health System Change
  • 49. Mean Time Spent with Physician ( p y (in Minutes), 1989-2006Minutes Note: Includes ambulatory care visits made to nonfederally employed physicians’ offices in the United States (excluding physicians in the specialties of anesthesiology, radiology, and pathology). Visits to private, nonhospital-based clinics and HMOs are included if they are not federally operated facilities or hospital-based outpatient departments. Only visits where face-to-face contact with the physician occurred are included. Time spent with th physician excludes ti i l d d Ti t ith the h i i l d time spent waiting t see th physician, receiving care f t iti to the h i i i i from someone other th th th than the physician without the presence of the physician, or time spent by the physician in reviewing patient records and/or test results. Source: Center for Disease Control and Prevention, National Center for Health Statistics, Division of Health Care Statistics: 2006 data at National Health Statistics Reports, No. 3, August. 6, 2008, National Ambulatory Medical Care Survey: 2006 Summary, Table 28, p.36, at http://www.cdc.gov/nchs/data/nhsr/nhsr003.pdf.
  • 50. LOOMING PHYSICIAN SHORTAGE • Retiring physicians – 250,000 physicians will retire in the next 10-20 years 10- …JUST WHEN THE BOOMERS HIT 70 – 9,000 physicians retired in 2000 • 23,000 WILL RETIRE IN 2025 • Decreasing medical student matriculation per thousand population • 2020 E ti t of th shortage of physicians Estimate f the h t f h i i – 85,000 TO 200,00Association of American Medical Colleges
  • 51. Medicare Enrollment, 1966-2010 46.1 47.0 45.4 44.0 43.3 42.5Number in millions: 39.6 37.6 34.2 31.1 28.5 25.0 20.5 19.1NOTES: Numbers may not sum to total due to rounding. People with disabilities under age 65 were not eligible for Medicare prior to 1972.SOURCE: Centers for Medicare & Medicaid Services, Medicare Enrollment: Hospital Insurance and/or Supplemental Medical Insurance Programs for Total,Fee-for-Service and Managed Care Enrollees as of July 1, 2008: Selected Calendar Years 1966-2008; 2009-2010, HHS Budget in Brief, FY2011.
  • 52. Medicare Beneficiaries as a Percent of State Populations, 2010 p , National Average, 2010 = 15% 18% 14% 20% 17% 17% 16% 15% 16% 16% 15% 16% 17% 14% 17% 16% 14% 16% 18% 15% 17% 15% 16% 16% 13% 14% 15% 14% 10% 21% 12% 15% 14% 17% DC 13% 13% 17% 16% 16% 14% 15% 16% 18% 17% 9%-14% (14 states and DC) 17% 18% 12% 15% (8 states) 12% 15% 16% (12 states) 9% 17%-21% (16 states) 18% 16%NOTES: Percent enrollment calculated using U.S. Census Bureau July 2009 population estimates.SOURCE: Centers for Medicare & Medicaid Services (CMS) Management Information Integrated Repository (MIIR), February 16, 2010. Medicare beneficiaries as ashare of state population estimates are based on July 1, 2009 state-level population estimates from the U.S. Census Bureau.
  • 53. Number of Medicare Beneficiaries 1970-2040 Enrollment in the Medicare Program is projected to nearly double in the next 30 years. Actual Projected Enrollment (millions) E (.Source: Medicare Trustees Report 2006
  • 54. Doctor Visits Are Sharply Higher for Those O f Th Over 65Source: National Ambulatory Medical Care Survey, 1980, 1990, 2000, and 2003Prepared by AAMC Center for Workforce Studies
  • 55. Growth in Medicare Expenditures 1970–2015 Dollars in billionsNote: Figures for 2010 and 2015 are projected.Source: The Commonwealth Fund; Data from 2006 Medicare Trustees’ Report.
  • 56. Medicare % of U.S. Population 1970-2030 p The U.S. population will age rapidly through 2030, when 22 percent of the populationwill be eligible for Medicare. 22.0% 18.5% 2.4 15.0% 2.7 13.9% 13.1% 12.1% 1.9 2.4 1.2 9.5% 1.3 9.5 10.8 11.9 12.0 12.6 15.8 19.5 Total Number of Medicare Beneficiaries: 20.4 28.4 34.3 39.6 46.5 61.6 78.6 (millions)Source: Social Security Administration, Office of the Actuary.
  • 57. Median out-of-pocket health care spending as a percent of income continues to rise for people on Medicare l M di AARP IS A VERY BIG LOBBY Median Out of Pocket Health Out-of-Pocket Spending as % of IncomeSOURCE: Kaiser Family Foundation analysis of CMS Medicare Current Beneficiary Survey Cost and Use Files, 1997-2006.
  • 58. Health Care Spending as a Share of Social Security Income for a Typical 65-Year-Old Medicare Beneficiary, 2022 B fi i Average Social Security $25,560 Income, 2022 $25,560 Beneficiary Spending as a share of Social Security Payment Traditional Medicare “Path to Prosperity” ProposalSOURCE: Kaiser Family Foundation analysis. Beneficiary health care spending under Medicare (extended baseline scenario) and Mr. Ryan’s proposal iscalculated based on data in the CBO letter to Chairman Paul Ryan dated April 5, 2011. Social Security income for an average wage 65-year old retiring at age 65 is based on Social Security Administration data (Table VI.F10 of the 2010 Trustees Report) adjusted to current dollars (based on annual CPIprojections in Table VI.F6. See http://www.ssa.gov/OACT/TR/2010/lr6f6.html factors).
  • 59. Prescription Drug Coverage Among Medicare Beneficiaries, 2010 No Drug Coverage Stand- Alone 4.7 Prescription million Drug Plan Other Drug 10% (PDP) Coverage1 5.9 million Total in 17.7 17 7 Part D 13% million 38% Plans: 27.7 Million 8.3 (60%) Retiree Drug million Coverage2 18% 9.9 99 million 21% Medicare Advantage Drug Plan Total Number of Medicare Beneficiaries = 46.5 MillionNOTES: Numbers do not sum to 100 percent due to rounding. 1Includes Veterans Affairs, retiree coverage without RDS, Indian Health Service, state pharmacyassistance programs, employer plans for active workers, Medigap, multiple sources, and other sources. 2Includes Retiree Drug Subsidy (RDS) and FEHBP andTRICARE retiree coverage.SOURCE: Centers for Medicare & Medicaid Services, 2010 Enrollment Information (as of February 16, 2010).
  • 60. Standard Medicare Prescription Drug Benefit, 2011 CATASTROPHIC Enrollee Plan pays 15%; pays 5% Catastrophic COVERAGE Medicare pays 80% Coverage Limit = $6,448 in Total D T t l Drug Costs C t Brand-name drugs Enrollee pays 50%; COVERAGE 50% manufacturer discount GAP Generic drugs Enrollee pays 93%; Plan pays 7% Initial Coverage Limit = $2,840 in Total Drug Costs INITIAL Enrollee COVERAGE pays Plan pays 75% PERIOD 25% $310 DeductibleSOURCE: Kaiser Family Foundation illustration of standard Medicare drug benefit for 2011 (standard benefit parameter update from Centers for Medicare & MedicaidServices, April 2010). Amounts rounded to nearest dollar.
  • 61. Percent of Medicare Part D Enrollees Who Reached the Coverage Gap and Catastrophic Coverage in 2007 g p p g Excludes Part D Enrollees Who Receive Low-Income Subsidies and Non-Users Remained in the coverage gap Did not reach the Reached the coverage gap coverage gap Reached catastrophic hi coverage levelNOTES: Estimates based on analysis of retail pharmacy claims for 1.9 million Part D enrollees in 2007.SOURCE: Georgetown University/NORC/Kaiser Family Foundation analysis of IMS Health LRx database, 2007.
  • 62. Components of Average Health Care Spending by Medicare Households, 2009 Share of Total Spending 9.8% Health Insurance ($3,038) ($3 038) (65.7% (65 7% of Health Care Spending) Other Health Household Care Spending 14.9% 85.1% 2.6% Medical Services (17.4%) ($804) 2.1% 2 1% Prescription Drugs ($654) (14.2%) 0.4% ($125) Medical Supplies (2.7%) Average Total Spending = $30,966 A T lS di $30 966 Average Health Care S A H l hC Spending = $4 620 di $4,620NOTES: Numbers may not sum to total due to rounding.SOURCE: Kaiser Family Foundation analysis of the Bureau of Labor Statistics Consumer Expenditure Survey Interview and Expense Files, 2009.
  • 63. Medicare’s Share of National Personal Health Expenditures, Expenditures by Type of Service 2010 Service, Expenditures in Billions Medicare $489 $31 $235 $62 $105 $29 Total $2,142 $77 $789 $260 $536 $149NOTES: Total also includes dental care, durable medical equipment, other professional services, and other personal health care/products.SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Expenditure Projections 2009-2019, February 2010.
  • 64. Historical and Projected Number of Medicare Beneficiaries and Number of Workers Per Beneficiary Number of Beneficiaries (in millions) Number of Workers Per BeneficiarySOURCE: 2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.
  • 65. Solvency Projections of the Medicare Hospital Insurance Trust Fund, 1970-2011 Projected Number of Years to Insolvency and Projected Year of Insolvency: (1972) (1994) (2003) (2005) (1999) (2001) (2001)Report Year ( (2015) ) (2029) (2026) (2020) (2019) (2017) (2029) (2024)Source: Intermediate projections from 1970-2011 Annual Reports of the Boards of Trustees of the Federal Hospital Insurance and FederalSupplementary Medical Insurance Trust Funds.
  • 66. Medicare is less generous than FEHB and other large employer plans Share of Total Spending Paid by Plan in 2007 Total Average Medical Spending = $ l di l S di $14,270 2 0 85% 83% 74% Medicare Typical Large Employer PPO Plan FEHBP Standard OptionNOTE: The FEHBP (Federal Employees Health Benefits Program) standard option is offered through Blue Cross Blue Shield. Employer plans includedental benefits.SOURCE: Hewitt Associates analysis for the Kaiser Family Foundation, 2008.
  • 67. The Perfect Storm• Our patients are sicker p• Our patients are older• There are more of them• They must all be seen and treated faster• ….in less number of hospital beds• ….in less days• ….for less money• ….with much improved quality – ….TRANSLATION: without any errors!!!!
  • 68. THE COMMODITIZATION andGLOBALIZATION OF HEALTH CAREWHOLESALE TO RETAIL RETAIL CLINICS QUALITY & PRICE INFORMATION MEDICAL TOURISM MARKET SEGMENTATION
  • 69. HEART SURGERY WITH A WARRANTY! SU GGeisinger Health System ProvenCare:•Flat rate for Bypass surgery $25,000 – $30,000•Includes any complications 90 days post-op Includes post op•Relies on following 40 Best Practice Guidelines•In 117 cases, •mortality rate 0 from 1.5% •30 day readmission 5.1% from 6.6% •Hospital charges d H it l h dropped 5 2% d 5.2%
  • 70. NOV. 2007 HEADLINE: “DENNIS QUAID’S NEWBORN TWINS GIVEN 1,000 TIMESINTENDED DOSE OF BLOOD THINNER”• The CMO At CEDARS-SINAI MEDICAL CENTER in LA Stated: “As a result of a preventable error, the patients patients’ IV Catheters were flushed with heparin from vials containing a concentration of 10 000 units per milliliter 10,000 instead of from vials containing a concentration of 10 units per milliliter ” milliliter.
  • 71. • Multispecialty group Northern Central NJ – 120 physicians – 1700 patients per day• 40+ Acres• 250,000 sq ft facility• Urgent Care facility – 10 exam rooms – 3000 sq ft
  • 72. Accountable Care Organizations 75
  • 73. PATIENT CENTERED MEDICAL HOME The following principles were written and agreed upon by the four Primary Care Physician Organizations – the American Academy of Family Physicians, the A F il Ph i i th American A d i Academy of P di t i th f Pediatrics, the American College of Physicians, and the American Osteopathic Association. Principles: Ongoing relationship with personal physician Physician di t d Ph i i directed medical practice di l ti Whole person orientation Coordinated care across the health system Quality d f t Q lit and safety Enhanced access to care Payment recognizes the value added 76Source: PCPCC (www.pcpcc.net)
  • 74. Defining the Medical Home •Specialist care is coordinated, and systems are in place to prevent •Patients can easily make appointments and select errors that occur when multiple p the d th day and ti d time. physicians are involved. •Waiting times are short. Care •Follow-up and support is provided. Superb •eMail and telephone consultations are offered. Coordination Access to •Off-hour service is available. Care • Integrated and coordinated team care depends on a free flow of communication among physicians, nurses case physicians nurses, managers and other health professionals (including BH specialists). •Patients have the option of being informed and • Duplication of tests and procedures is engaged partners in their care. Team Care avoided. •Practices provide information on treatment plans, preventative and follow-up care reminders, Patient at e t access to medical records, assistance with self-Engagement care, and counseling. • Patients routinely provide feedback to doctors; practices take advantage of low- in Care cost, internet-based patient surveys to learn from patients and inform treatment •These systems support high-quality care, plans. practice-based learning, and quality improvement. Patient •Practices maintain patient registries; monitor Practices Feedback adherence to treatment; have easy access to lab and test results; and receive reminders, decision Clinical support, and information on recommendedInformation treatments. •Patients have accurate, standardized Systems information on physicians to help them choose a practice that will meet their needs. needs Publically P bli ll available information 77 Source: Health2 Resources 9.30.08 8
  • 75. WHY IS IT IMPORTANT? • In the U.S., PCP supply is consistently associated with , pp y y improved health outcomes for conditions like cancer, heart disease, stroke, infant mortality, low birth weight, weight life expectancy, and self rated care expectancy self-rated care. • In England, each additional PCP per 10,000 persons is associated with an approximate decrease in mortality of 6%. % • In the U.K., an increase in PCP’s resulted in a significant decrease in both acute and chronic hospital admissions.Starfield B. Shi L, and Macinko J. Contributions of Primary Care to Health Systems and Health, Millbank Quarterly, Vol. 83, No. 3,2005 (457-502)
  • 76. WHY IS IT IMPORTANT? U.S. adults who reported having a PCP rather than a specialist as their regular source of care had lower 5 year mortality rates after controlling for initial differences in health status, demographics, health insurance status, health perceptions, reported diagnosis, and smoking status.Starfield B. Shi L, and Macinko J. Contributions of Primary Care to Health Systems and Health, Millbank Quarterly, Vol. 83, No. 3, 2005 (457-502)
  • 77. WHY IS IT IMPORTANT? Patients who use a particular doctor for their care have more preventive care, more p , accurate diagnosis, fewer diagnostic tests, fewer prescriptions, fewer ER visits, and fewer h it li ti f hospitalizations, resulting i l lti in lower cost t of care.Starfield B. Shi L, and Macinko J. Contributions of Primary Care to Health Systems and Health, Millbank Quarterly, Vol. 83, No. 3, 2005 (457-502)
  • 78. WHY IS IT IMPORTANT? In the U.S., when adults have a medical home, access to needed care, receipt of routine preventive screenings, and screenings management of chronic conditions improve substantially. yA. C. Beal, M. M. Doty, S. E. Hernandez, K. K. Shea, and K. Davis, Closing the Divide: How Medical Homes Promote Equity in Health Care: Results From TheCommonwealth Fund 2006 Health Care Quality Survey, The Commonwealth Fund, June 2007
  • 79. PCMH as Foundation for Accountable Care Organizations ACOs are defined as a group of providers that has the legal structure to receive and distribute incentive payments to participating providers.Source: Premier Healthcare Alliance 82
  • 80. What is an Accountable Care Organization? • The PPACA Section 3022 definition – Organization of health care providers that agrees to be accountable f quality, cost and overall care of Medicare for f beneficiaries who are enrolled in traditional fee-for-service program and who are assigned to it – For each 12-month period, participating ACOs that meet specified quality performance standards eligible to receive share of any savings if actual per capita expenditures for y g p p p assigned Medicare beneficiaries are sufficient percentage below specified benchmark amount • A partnership among health care providers to coordinate and deliver efficient care – Assumes joint accountability for improving quality and slowing cost growth83
  • 81. ACO Envisions Integrated Care Hospital Other Payers Healthcare Providers Patients Primary Specialists Care Providers Purpose of ACOs is to create incentives for providers to collaborate to treat patients across health care settings84
  • 82. Basic Requirements for ACOs• ACOs are required to: – Operate as a single integrated organization that accepts shared responsibility for the cost and quality of care provided to a specific population of patients cared for by the groups’ clinicians – Operate consistently with principles of a patient- centered medical home and other requirements of State legislation on ACOs – Have a formal legal structure to receive and distribute savings – Comply with federal requirements related to ACOs 85
  • 83. Functional R F ti l Requirements f ACO i t for ACOs• At a minimum, ACOs are required to have or provide through contractual arrangements: – Clinical service coordination, management, and delivery functions – Population management functions, including Health Information functions Technology (HIT) – Financial management capabilities – Contract management capabilities – Quality measures to report on performance • There is a performance penalty if ACO fails to achieve certain quality measures – Patient and provider communication functions – Ability to provide behavioral health services within ACO or by contractual arrangements 86
  • 84. Eligibility Criteria for Forming ACOs• Under PPACA, ACOs may be formed by: , y y – ACO professionals (physicians and practitioners) in group practice arrangements – Networks of individual practices of ACO professionals – Partnerships or joint venture arrangements between acute care hospitals and ACO professionals – Acute care hospitals employing ACO professionals• CMS roughly estimates th t th t t l average start-up hl ti t that the total t t investment and the first year of operating expenses for an entity forming an ACO to participate in the Medicare Shared Savings P Sh d S i Program would b approximately $1 7 ld be i t l $1.7 million 87
  • 85. Participation in ACOs• SNFs, long-term care hospitals, and federally qualified health centers may not form ACOs, but may participate in established ACOs• Participation in ACOs is voluntary 88
  • 86. Beneficiary Assignment to ACOs• Beneficiaries are assigned to an ACO based on p g primary care y services rendered by physicians in general practice, internal medicine, and geriatric medicine• Under PPACA, an ACO is required to have at least 5,000 beneficiaries assigned to it to qualify to participate in shared savings• Assignment is made on a retrospective basis• Beneficiaries do not enroll in a specific ACO and ACOs do not know which beneficiaries are assigned to it until the end of the year• Two reasons CMS proposed retrospective assignment of beneficiaries: – “… the ACO should be evaluated on the quality and cost of care furnished to those beneficiaries who actually chose to receive care from ACO participants during the course of the performance year.” – “… to encourage the ACO to redesign its care processes for all Medicare FFS [Fee for Service] beneficiaries, not just for the subset of beneficiaries for whom the ACO is being evaluated.” 89
  • 87. Medicare BM di Beneficiaries’ F d fi i i ’ Freedom of Ch i f Choice • The assignment of a patient to an ACO in no way restricts a Medicare FFS patient’s freedom of choice in selecting physicians and other health care providers and suppliers from whom he/she wishes to receive services 90
  • 88. Payment Model – Shared Savings• CMS will develop a performance benchmark for ACOs to assess whether they qualify for shared savings• ACOs will receive a share of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are below the benchmark• ACOs will select either: – A one-sided risk payment model (sharing of savings only for the first two years, and sharing of savings and losses in the third year); or – A two-sided risk payment model ( h i of savings and l t id d i k t d l (sharing f i d losses for all three years)• CMS has no authority to specify how shared savings will be distributed by ACOs y 91
  • 89. Quality Measures and y Performance Thresholds• 65 quality measures are proposed for the first year (January 1, 2012 through December 31, 2012) in the following 5 areas: – (1) Patient/Caregiver Experience of Care – (2) Care Coordination – (3) Patient Safety – (4) Preventative Health – (5) At Risk Population/Frail Elderly Health At-Risk• ACOs which do not meet quality performance thresholds for all proposed measures would be ineligible for shared savings 92
  • 90. Patient Protections• ACOs are required to ensure access by disabled individuals and other individuals with chronic or complex medical conditions to appropriate specialty care• ACOs are required to accept all patients regardless of payor or clinical profile• The Office of Patient Protection is directed to establish regulations relating to consumer appeals of ACO determinations• The DHCFP is required to: – Safeguard against underutilization of services and inappropriate denials of services or treatment – Safeguard against, and impose penalties for, inappropriate selection of low cost patients and avoidance of high cost patients by ACOs and ACO network providers 93
  • 91. How should patients navigate the system in such a “ f t storm”? t i h “perfect t ”? Do Your Homework!• Is the physician taking new patients?• Does the physician accept your insurance?• Is the physician part of a group?• What are the office hours?• Where did th physician attend medical Wh the h i i tt d di l school?• Is the physician board-certified?
  • 92. Let sLet’s start with a “Day in the Office” Day Office• How many of you have been kept waiting for a scheduled appointment? – Did it make you angry?• How many of you have been late for an appointment?
  • 93. Start of the Day’s Schedule Day s• 730am: Staff shows up to begin the day• 8:00am: First patient shows up for scheduled 8am 20min appointment• What needs to happen during this visit? – Staff brings you to the room – BP, P, Temp, Wt, medication list, allergies – Verify complaint – Update data on EMR
  • 94. Enter the Physician… Physician• It’s now 8:07am… It s• The physician – Patient history: Wassuppp! – Physical exam: any findings? – Order any testing – Counsel the patient on assessment • Dx, medication, expected course, instructions, what to watch for, f/u Q/A etc for f/u, Q/A, etc…. – Write/dictate the medical record of encounter• All of this needs to get done in 13 min!
  • 95. Suggestions• Request copies that require your signature ahead of time to allow reading them• Come in 15 min earlier… – To register • Have insurance card – To have EMR updated so that visit can begin on time• Have meds/OTC/herbs list for updating• Is your scheduled visit enough time?
  • 96. ASK QUESTIONS!!! -Newsweek: September 1, 2003, page 17 Newsweek:
  • 97. Schreck’s Top 10 Value Considerations f P i V l C id i for Patients• Get a PCP to help you • Keep list of your current meds NAVIGATE • Physician EMR utilization• Physician Ph i i credentials: d ti l • Discuss end-of-life decisions with Board-Certified your PCP (have family member with Fellow of the College you to hear your wishes)• Physician accessibility • “One stop shopping” One shopping• Physician’s personality • ACTIVELY PARTICIPATE IN YOUR• Understand insurance policy CARE !!!
  • 98. Closing Comments• Do your homework• Ask A k questions ti• Not all conditions are “cut and dry”• Be active and participate in your own care – Your medical care is a TEAM EFFORT!
  • 99. • Government has been trying to herd the medical system• B t getting physicians t d anything i But tti h i i to do thi is like herding CATS!!!!
  • 100. Answer• There is no “extra” dollar -> depends on extra > accounting basis (“balance”): Friends: Motel: Clerk: -$30 (motel fee) +$30 (motel fee) +$5 (refund) + 3 (refund) - 5 (refund) -$3 (“commission”) -$27 net loss $27 +$25 net gain t i +$2 net gain t i -$27 balances + $27 $27 NO EXTRA DOLLAR!
  • 101. Prescription Drug Coverage Among Medicare Beneficiaries, by Income, 2008 23% 26% 30% Part D ­ Stand­alone  PDP 49% Part D ­ Medicare  66% 19% 16% Advantage Drug Plan g g 24% 1% 1% Self­Purchased Only 1% Employer­Sponsored 25% 44% 48% Other Public/Private 31% 1% 20% 13% No Drug Coverage <1% 1% <1% 5% 1% <1% <1% 12% 14% 13% 8% 9% $10,000 $10,001- $20,001- $30,001- $40,001 or less 20,000 30,000 40,000 or more (5.9 million) (8.9 million) (6.8 million) (6.4 million) (7.7 million)NOTES: Percents rounded to the nearest whole number. Numbers may not sum due to rounding.SOURCE: Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Access to Care File, 2008.
  • 102. Medicare Part D Standard Benefit Parameters, 2006-2011 Total drug spending: $7,000 Catastrophic Limit $6,000 $6,440 $6,448 $6,154 $5,726 $ , $5,000 $5,451 $5,100 Coverage G C Gap $3,610 $3,608 $3,454 $4,000 $3,216 $3,051 $2,850 $3,000 $ Initial $2,830 $2,840 Coverage $2,700 Limit $2,000 $2,400 $2,510 $2,250 $1,000 $250 $265 $275 $295 $310 $310 Deductible $0 2006 2007 2008 2009 2010 2011NOTE: Estimates rounded to nearest whole dollar. Enrollees in non-standard benefit plans may face different thresholds depending on the design of their PartD plan benefits and cost-sharing amounts.SOURCE: Centers for Medicare & Medicaid Services.
  • 103. Total Medicare Private Health Plan Enrollment, 2000-2010 Enrollment in millions: 11.4 10.8 10 8 9.6 8.3 6.8 68 6.2 6.1 5.6 5.3 5.3 5.3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010% ofMedicarebeneficiaries 17% 15% 14% 13% 13% 12% 14% 19% 22% 24% 24%NOTE: Includes local HMOs, PSOs, PPOs; regional PPOs; PFFS plans; 1876 cost plans; demos; HCPP; and PACE plans.SOURCE: MPR, “Tracking Medicare Health and Prescription Drug Plans Monthly Report,” February 2000-2010.
  • 104. Supplemental Coverage Among Medicare Beneficiaries, by Income, 2008 , y , 7% 16% 33% 22% 36% Employer 50% 29% 56% Medicare  Advantage 24% Medicaid 29% 53% 22% Medigap 23% 15% 18% 4% Other Public/  1% Private 18% 1% 18% 17% 18% No Supplemental  7% % 1% 20% Coverage 1% 1% 1% 15% 1% 10% 11% 12% 8% <1% 5% All $10,000 $10,001- $20,001- $30,001- $40,001 beneficiaries or less 20,000 30,000 40,000 or more 41.8 million 5.9 million 8.9 million 6.8 million 6.4 million 7.7 millionNOTES: Numbers may not sum due to rounding.SOURCE: Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Access to Care File, 2008.
  • 105. Median Out-of-Pocket Health Care Spending As a Percent of Income Among Medicare Beneficiaries, 1997–2006 18% 16.2% Total health 15.5% 15 6% 15 6% 15.6% 15.6% care out-of- t f 16% 14.9% pocket 14.0% spending 14% 12.8% 11.9% 11.8% 12.0% 12% 10% 8.0% Premium 8% 7.4% 7 4% out-of-pocket out of pocket 6.7% 6.9% 6.5% spending 6.0% 6% 5.5% 5.3% 5.4% 5.5% Non-premium 5.5% 5.8% 5.6% 5.5% 5.4% out-of-pocket 4% 4.9% 4 9% 5.2% % 4.4% spending 4.1% 4.2% 2% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006NOTES: Annual amounts for the components of total health care spending do not sum to total amounts because values shown are median, not mean,values. Premium spending includes Medicare Part A, B, and D and private health insurance premiums.SOURCE: Kaiser Family Foundation analysis of CMS Medicare Current Beneficiary Survey Cost and Use Files, 1997-2006.
  • 106. Medicare Spending as a Percent of Total Federal Spending, Fiscal Year 2010 Social Security y Defense D f Discretionary 20% 20% 15%Medicare1 Nondefense 19% Discretionary 8% Medicaid 6% 12% and CHIP Net Interest Other2 Total F d T t l Federal Spending, FY2010 = $3 5 T illi lS di $3.5 TrillionNOTES: FY is fiscal year. 1Amount for Medicare includes offsetting premium receipts. 2Other category includes disaster costs and negative outlays forTroubled Asset Relief Program.SOURCE: Office of Management and Budget, FY2011 Budget, Summary Tables; February 2010.
  • 107. Projected National Health Expenditures in the United States, States by Source of Payment, 2010 Payment Private Health Insurance 32% Other Private Spending 7% 21% Medicare Out-of-Pocket 11% Payments 12% 16% 6% Other Public Medicaid and Spending CHIP1 Total National Health Expenditures, 2010 = $2.6 TrillionNOTES: 1Includes Children’s Health Insurance Program (CHIP) and Children’s Health Insurance Program expansion (Title XIX). Percentages do not sum to 100% dueto rounding.SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, Updated National Health Expenditure Projections 2009-2019, January 2011.
  • 108. Medicare’s Share of National Personal Health Expenditures, by Type of Service Expenditures Service, 2010 40% 30% 23% 24% 20% 20% Total Home Hospital Prescription Physician Nursing Services Health Care Services Drugs Services Home Care Expenditures in Billions Medicare $489 $31 $235 $62 $105 $29 Total $2,142 $77 $789 $260 $536 $149NOTES: Total also includes dental care, durable medical equipment, other professional services, and other personal health care/products.SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Expenditure Projections 2009-2019, February 2010.
  • 109. Medicare Benefit Payments, by Type of Service, 2010 and 2020 Part A Parts A and B Part B Part D Outpatient Prescription Drugs Outpatient Hospital Prescription Hospital Inpatient Drugs Inpatient Hospital 11% Services Outpatient Services Services 6% 19% 27% 27% Hospital Physician Outpatient 8% 13% Payments Services 5% Skilled 6% Skilled Nursing 12% Nursing 11% Facilities 10% Facilities Physician Other Services 23% Payments 4% 5% Medicare Medicare 12% Advantage Advantage Home (Part C) (Part C) Other Home Health Services Health Medicare Benefit Payments Medicare Benefit Payments 2010 = $509 Billion $ 2020 = $914 Billion $NOTES: Totals do not include administrative expenses and are net of recoveries. Other Services include hospice services; durable medical equipment;ambulance services; independent, physician in-office, and hospital outpatient department laboratory services; hospital outpatient services that are not paid forusing the prospective payment system (PPS); Part B prescription drugs; rural health clinic services; outpatient dialysis; and benefit payments not allocated tospecific services, including adjustments to reflect year-to-date spending (2010), and savings from the Independent Payment Advisory Board (2020).SOURCE: Congressional Budget Office, Medicare Baseline, August 2010.
  • 110. Distribution of Medicare Fee-for-Service Beneficiaries and Medicare Spending, 2006 Spending Average per capita Medicare FFS M di spending: $8,344 Average per capita Medicare FFS spending among top 10%: $48,210 Average per capita Medicare FFS spending among bottom 90%: $3,910 Total N T t l Number of FFS b f Total M di T t l Medicare FFS Beneficiaries: 35.9 million Spending: $299 billionNOTES: FFS is fee-for-service. Excludes Medicare Advantage enrollees. Includes noninstitutionalized and institutionalized beneficiaries.SOURCE: Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Cost and Use File, 2006.
  • 111. Estimated Sources of Medicare Revenue, 2010 General Revenue 43% Payroll Taxes 74% 85% 82% Beneficiary Premiums Payments from States 37% Taxation of Social Security Benefits Interest and 13% 1% Other 25% 10% 6% 3% 1% 7% 7% 4% 1% TOTAL PART A PART B PART D $499 billion $218 billion $219 billion $63 billionSOURCE: 2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.
  • 112. Prescription Drug Coverage Among Medicare Beneficiaries by Income 2008 Beneficiaries, Income, 23% 26% 30% Part D ­ Stand­alone  PDP 49% Part D ­ Medicare  66% 19% 16% Advantage Drug Plan g g 24% 1% 1% Self­Purchased Only 1% Employer­Sponsored 25% 44% 48% 31% Other Public/Private 1% 20% 13% No Drug Coverage <1% 1% <1% 5% 1% <1% <1% 12% 14% 13% 8% 9% $10,000 $10,001- $20,001- $30,001- $40,001 or less 20,000 30,000 40,000 or more (5.9 million) (8.9 million) (6.8 million) (6.4 million) (7.7 million)NOTES: Percents rounded to the nearest whole number. Numbers may not sum due to rounding.SOURCE: Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Access to Care File, 2008.
  • 113. Distribution of Medicare Advantage Enrollment, by Plan Type, 2010 y yp , HMO 65% Beneficiaries in Traditional Beneficiaries Fee-for- in Medicare service Advantage Medicare Plans 76% 24% Private Fee-for-Service 13% Local PPO 12% Regional PPO 7% Cost (3%) Other (1%) Total Medicare Beneficiaries in Medicare Advantage, 2010 = 11 MillionNOTES: HMO is health maintenance organization. PPO is preferred provider organization.SOURCE: Mathematica Policy Research (MPR) and Kaiser Family Foundation analysis of CMS Medicare Advantage enrollment files, 2010.
  • 114. Nearly half of all Medicare beneficiaries live on incomes below twice the federal poverty level, level 2008 150-199% of Poverty 100-149% of Poverty <100% of Poverty 70% 67% 67% 12% 57% 11% 12% 47% 11% 21% 42% 41% 23% 12% 14% 15% 19% 11% 17% 16% 15% 35% 34% 35% 16% 16% 12% 11% Total Under age 65 Age White Black Hispanic Asian disabled 65+ Age in Years Race/Ethnicity Total Medicare Population, 2008 = 45.0 MillionNOTES: Numbers may not sum to total due to rounding. In 2008, the federal poverty level was $10,400 for an individual and $14,000for a couple. SOURCE: Kaiser Family Foundation analysis of the 2008 Current Population Survey and Medicare administrative data.
  • 115. Distribution of Personal Health Care Expenditures by Source of Payment, 1999 and 2009 1999 2009 Public 42.6% Private 57.4% Public 47.4% Private 52.6% Other Other Government Government Programs, 8.0% Consumer Out- Programs, 8.3% Consumer Out- of-Pocket, 17.5% of-Pocket, 14.3% Medicaid, 15.7% Medicaid, 16.5% Private Health Private Health Insurance, Insurance, Medicare, 18 9% Medicare 18.9% 34.1% 34 1% 34.2% Medicare, 22.5% Other Private, , Other Private, Private 5.7% 4.2% $1.1 Trillion $2.1 TrillionNotes: Personal health care expenditures are spending for health care services, excluding administration and net cost of insurance, public health activity, research,and structures and equipment. Out-of-pocket health insurance premiums paid by individuals are not included in Consumer Out-of-Pocket; they are counted as part equipment Out of pocket Out of Pocket;of Private Health Insurance. Medicaid spending for the State Childrens Health Insurance Program (which began in 1998) is included in Other GovernmentPrograms, not in Medicaid.Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health StatisticsGroup, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2009;file nhe2009.zip).
  • 116. Community Hospital Beds per 100,000 Population, 1975-2008 500 436 435 450 421 400 372 350 328 292 290 285 280 300 275 271 269 266 265 250 200 150 100 50 0 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008Note: Data are for community hospitals, which represent 85% of all hospitals. Federal hospitals, long term care hospitals, psychiatric hospitals,institutions for the mentally retarded, and alcoholism and other chemical dependency hospitals are not included.Source: K iS Kaiser F il F Family Foundation calculations using hospital bed data from American Hospital A d ti l l ti i h it l b d d t f A i H it l Association (AHA), H i ti (AHA) Hospital St ti ti it l Statistics, 1994 1994,Table 1, p.7 (1975, 1980 data); personal communication, Health Research and Educational Trust, October 2003 (1985-2001 data); and 2002-2008 AHA Annual Survey data, Copyright 2003-2010 by Health Forum LLC, an affiliate of the American Hospital Association, and July 1population data from U.S. Census Bureau at http://www.census.gov/population/estimates/nation/popclockest.txt (1975-1999) andhttp://www.census.gov/popest/states/NST-ann-est.html (2000-2008).
  • 117. Solvency Projections of the Part A Hospital Insurance Trust Fund, 1970-2009 Projected Number of Years to Insolvency and Projected Year of Insolvency: 1970 2 (1972) 1980 14 (1994) 1990 13 (2003) 1991 14 (2005)Report 1993 6 (1999) Year 1995 6 (2001) 1997 4 (2001) 1999 16 (2015) 2001 28 (2029) 2003 23 (2026) 2005 15 (2020) 2007 12 (2019) 2009 8 (2017)Source: Intermediate projections from 1970-2009 Annual Reports of the Boards of Trustees of the Federal Hospital Insurance and FederalSupplementary Medical Insurance Trust Funds.
  • 118. Solvency Projections of the Medicare Part A Trust Fund, 1970-2010 Projected Number of Years to Insolvency and Projected Year of Insolvency: (1972) 1970 2 (1994) 1980 14 (2003) 1990 13 (2005) 1991 (2002) 14 1992 (1999) 10 1993 6 (2001) 1994 7 (2001) 1995 (2001) 6 1996 5 (2001) 1997 4 Year of 1998 10(2008)Trustees’ 1999 16 (2015) Report R t 2000 25 (2025) 2001 28 (2029) 2002 28 (2030) 2003 23 (2026) 2004 15 (2019) 2005 15 (2020) 2006 12 (2018) 2007 12 (2019) 2008 11 (2019) 2009 8 (2017) 2010 19 (2029)NOTES: ‘Insolvency’ refers to the depletion of the trust fund. No insolvency projections were made for 1973-1975 and 1989. For all other years notdisplayed, the Hospital Insurance Trust Fund was projected to remain solvent for 17 or fewer years.SOURCE: Intermediate projections from 1970-2010 Annual Reports of the Boards of Trustees of the Federal Hospital Insurance and FederalSupplementary Medical Insurance Trust Funds.

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