American health policy
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The document summarizes the complex US healthcare system, which combines elements of different models. It discusses the major public programs like Medicare, Medicaid, and SCHIP, as well as private insurance. While healthcare spending per capita is the highest in the US, the outcomes are lower than other developed countries. The US system is characterized by multiple payers and private insurers, and administrative costs are high. Finding solutions may require reexamining the underlying philosophy of the US healthcare system.
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American health policy
- 1. American HealthAmerican Health Policy: A ParadoxPolicy: A Paradox Pinaki BhattacharyaPinaki Bhattacharya
- 2. Four Dominant models of health financing
- 3. American Model is a peculiar mixture
- 4. Medicare (National Health Insurance Model) • Covers the elderly (ages 65 and older) and non- elderly with disabilities • Administered by the federal government (essentially a single-payer system … more on this in the future) • Financed through: – Federal income taxes – Payroll taxes on employers and employees – Out-of-pocket payments by enrollees
- 5. Medicaid (Limited Beverage Model) • Covers certain low-income individuals (pregnant, children, elderly, disabled) – Not every poor person is covered! • Administered by state governments • Financed jointly by the state and federal governments • Benefits are fairly comprehensive, but many providers won’t take care of Medicaid patients – Low reimbursement rates
- 6. State Children’s Health Insurance Program (S-CHIP) (Limited Beverage Model) • Supplements Medicaid by covering low-income children who are ineligible for Medicaid • Administered and financed similarly to Medicaid • Similar problems to Medicaid: – Low reimbursement rates → some providers refuse to accept S-CHIP – Under-enrollment – Eligibility varies by specific populations and states
- 7. Other Public Insurance Programs (Beverage Model) • Veterans Health Administration – Health benefits plan available to all veterans – Services delivered through VA health care facilities – Financed by the federal government • Native American Indian Health Service
- 8. U.S. Health Care FinancingU.S. Health Care Financing Funds Payers Providers Public & Private Many "pools" Employer Multiple private payers Doctors & many benefit plans Hospitals Premium contrib. PPO vs capitated, Pharmacies many blends/variants Device vendors Income taxes Public: Medicare, Medi-Cal, Skilled Nursing Fac. S-CHiP, VA, Indian Health,. Other Out-of-pocket ~ 60 safety net programs Admin costs of insurance 15% Admin costs overall 30% Multi-payer health care financing
- 9. The Flow of the Dollar • Costs, Payment, Delivery, and Insurance Coverage are completely intertwined in our system! Insurance Company Individually Insured Government Insured Employees Uninsured Physicians Employer Publicly Insured Payment made to this entity Service provided by this entity to individuals Source: Roby DH. 2009 (forthcoming). Impacts of Being Uninsured in Handbook of Health Psychology (edited by Suls, Kaplan, Davidson), Guilford Publications: New York, NY.
- 10. Where the Health Care Dollar Came From 17% 16% 12% 5% 14% 36% Medicare Medicaid & SCHI P Ot her Public Ot her Privat e Privat e I nsurance Out -of-Pocket
- 11. Where the Health Care Dollar Went 23, 23% 30, 30% 22, 22% 7, 7% 11, 11% 7, 7% Ot her Spending Hospit al Care Physician & Clinical Services Nursing Home Care Prescript ion Drugs Program Administ rat ion
- 12. US standing on health care outcomes Rank of 13 industrialized nationsRank of 13 industrialized nations Low birth weight % Infant mortality Years of potential life lost Age adjusted mortality Life expectancy @ 1 yr Life expectancy @ 40 yrs Life expectancy @ 65 yrs Life expectancy @ 80 yrs Average for all indicators BestPoorest (U.S. in Red)
- 13. Health Spending in the U.S. Compared toHealth Spending in the U.S. Compared to Other Industrialized Countries, 2003Other Industrialized Countries, 2003 Source: Organisation for Economic Cooperation and Development Health Data (OECD), 2006 1,551 1,053 1,114 1,056 2,473 843 670 666 675 709 509 467 581 454766 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 U.S. Japan Germany France Canada Per Capita Health Spending (in U.S. Dollars) Inpatient Outpatient Ancillary Home Health Pharmacy Nursing Home
- 15. Source: The Commonwealth Fund, calculated from OECD Health Data 2006. Health Care Spending per Capita,1980-2004 - adjusted for cost of living differences - U.S.: $12,357 per person, 20% of GDP by 2015
- 18. Problem lies in Philosophy of Healthcare
- 20. Contributes to 60% of health outcome
- 24. We may find an answer in
Editor's Notes
- In 1965, the Medicare program was created to provide health insurance for the elderly population, and in 1972 coverage for those under 65 with disabilities was added. Medicare is administered by the federal government, and since all the reimbursement (paying) is done only by the government, Medicare is known as a single payer system. Medicare is financed by income taxes, payroll taxes, and out-of-pocket payments made by enrollees, including premiums to enroll in certain part of Medicare.
- Medicaid was established in 1965 to cover the poor and disabled. By federal law, states that receive federal funding for Medicaid must cover certain very poor groups of individuals, including pregnant women, children, the elderly, and the disabled. States can expand eligibility beyond these federally defined floors if they so choose. It’s important to understand that not every poor person is covered by Medicaid – childless adults are not covered, and people who are not poor enough are not covered. Medicaid is administered by state governments, so there are essentially 51 different Medicaid programs (50 states plus the District of Columbia). Beyond the mandatory coverage requirements, states may choose to expand eligibility if they have the resources. States also choose how they contract with providers. For example, they may reimburse providers on a fee-for-service basis or purchase premiums through managed care plans. Medicaid is financed jointly by the federal and state governments. The federal government will match the amount a state spends on Medicaid at least dollar-for-dollar. For particularly poor states, the federal government will match each state dollar spent on Medicaid with more than one federal dollar, such that the federal government overall finances the majority of Medicaid costs. Benefits are fairly comprehensive, and importantly, Medicaid covers a huge portion of the country’s long-term care costs. Part of this is because a lot of middle-class and low-income families lose a ton of money paying nursing homes to take care of elderly members of the family. Once they’ve exhausted their resources, they become eligible for Medicaid long-term care. Despite the good coverage in Medicaid, reimbursement rates are low, so beneficiaries may have difficulty finding a provider that accepts Medicaid. You sometimes hear that Medicaid has “Cadillac coverage”, but that coverage isn’t any good if no one takes it. A Cadillac doesn’t do you much good if you’re only allowed to drive it on certain roads.
- The State Children’s Health Insurance Program was designed in 1997 to supplement Medicaid by covering low-income children who are ineligible for Medicaid. For instance, it might cover a child whose family has an income 200% of the FPL, which is too much for Medicaid. S-CHIP is administered and financed similarly to Medicaid. Like Medicaid, reimbursement rates are low, so some providers do not see S-CHIP patients. There is also a lot of under-enrollment in S-CHIP; it is estimated that more than 7 out of 10 children in America are actually eligible for public insurance but they are not enrolled. Finally, like Medicaid, there are strict and arbitrary eligibility requirements for different groups of people.
- Other public insurance programs include the VA, which is delivered to all veterans of the military. The VA is a truly socialized medicine system in the sense that all health care delivery comes through government-owned facilities and through government-employed doctors. The Indian Health Service is another health insurance program for Native Americans who live on reservations.
- As you can see from this graph, a little more than half health care funding comes from private sources, mostly private insurance premiums and out-of-pocket spending. A little under a half comes from public sources, like taxes to pay for Medicare and Medicaid. [Other Public includes programs such as workers’ compensation, public health activity, Department of Defense, Department of Veterans Affairs, Indian Health Service, and State and local hospital and school health]. [Other Private includes industrial in-plant, privately funded construction, and non-patient revenues, including philanthropy].
- This is where the money went in our health care system. As you can see, about half went to hospitals and physicians. 7% went to nursing care, and 11% went to prescription drugs, which is the fastest growing sector of health care costs. 23% went to other spending, which includes dentist services, other professional services, home health, durable medical products, over-the-counter medicines and sundries, public health, research and construction. According to this way of calculation, 7% of the health care dollar went to program administration and net cost. You’ll often hear that administrative costs represent 30% of the health care dollar. While the numbers can be debated, the vast majority of health policy experts acknowledge that administrative costs in the U.S. are much higher than in other countries, in part due to private insurance profits and the multiplicity of payers, each of which have separate billing practices that add to administrative overhead.
- Per capita spending data shows that we almost double other countries in terms of spending per person, and we spend much more on both inpatient, outpatient, pharmacy, and nursing home care. Despite data that shows the U.S. has lower rates of hospitalization, we spend more on inpatient stays than any other country. Our reliance on outpatient procedures does not appear to help in terms of cost savings. Even though the U.S. is not a “government-run” health system, we spend more than Japan, Germany, and France in direct government spending. In Japan, Germany, and France the residents put money into a “social security” type of pool that supports their health care system and regulates the delivery of health care. In Canada, tax dollars into provincial governments result in the higher government spending for health care. However, all 4 countries spend much less on health care than we do, which these percentages do not show. It is probable that the 32% of government spending in the U.S. exceeds the government/social security spending in most of the other 4 comparison countries.
- The U.S. spends more than any other country in the world, on a per person basis, for health care. It represents over 16% of GDP now, and should surpass 20% by 2015. Our rate of increase has gone up drastically since the late 80s. The rate of increase was slightly better from 1995 to 2000 when managed care was seen as the “cost savior”, but has ticked up sharply at an unprecedented rate since them. We see these cost increases in both cost of services and the premiums paid by employers and individuals for health insurance premiums.