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The Deadly Experiment: Lessons From the United States Lessons for Greece from a “free market” health care system Ida Hellander Executive director PNHP.

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Presentation on theme: "The Deadly Experiment: Lessons From the United States Lessons for Greece from a “free market” health care system Ida Hellander Executive director PNHP."— Presentation transcript:

1 The Deadly Experiment: Lessons From the United States Lessons for Greece from a “free market” health care system Ida Hellander Executive director PNHP USA

2 US Health Care: A Failed Experiment 45 million uninsured/8.4 million children 2 million bankrupt from medical debts/yr Highest health spending > $6,000 person 1/3 of health spending = paperwork/profit 18,000 excess deaths per year - IOM study “Wal-Martization” shrinking health benefits Failed Democracy


4 Who Are The Uninsured?

5 Chronically Ill and Uninsured

6 Millions Can’t Afford Prescriptions

7 18,314 Adult Deaths Annually Due to Uninsurance

8 A recent study followed for 8 years individuals who were between 55and 65 at the outset of the study. Death rates for those who were uninsured were dramatically higher, even after statistical adjustment for baseline health status, health habits, and socioeconomic and racial differences.

9 These data illustrate the The fragility of coverage for working Americans. More than half of employers routinely terminate health benefits within one year when a worker becomes disabled and unable to work. Medicare disability coverage does not start until two years after the commencement of disability, and few workers can afford to continue their private coverage using COBRA provisions. Hence, for many, even most workers, becoming disabled means becoming uninsured.


11 Who Pays for Health Care? Regressivity of US Health Financing

12 The U.S. continues to trail most other developed nations in key health indicators, despite spending far more on care.






18 Illness and Medical Costs, A Major Cause of Bankruptcy Half of all bankruptcies involve medical debts (1 million/year) About two million people affected by medical bankruptcy/year including 700,000 children 75% of of those bankrupted by illness were INSURED when they first got sick. 2200% increase in bankruptcy for medical debt since 1981 Source: Health Affairs, Feb 2, 2005, Warren, Himmelstein and Woolhandler


20 For-Profit HMOs’ Increasing Dominance, 1985- 2000

21 Private insurers’ High Overhead

22 Investor-Owned HMOs Provide Lower Quality Care

23 Is there any mystery why many Blue Cross executives are anxious to turn for-profit and join Anthem (a former Blue Cross plan).

24 For-Profit Hospitals Unhealthy for Society What is the relative impact of investor owned hospitals versus not-for-profit hospitals? Results of a systematic literature review (8,000 articles) and meta-analysis (15 observational studies) PJ Devereux, McGill University, 6/2004

25 Meta-Analysis of of US Data on 38 Million Patients 15 observational studies met eligibility All met quality criteria Studies were conducted in the US Data came from –approximately 38 million patients –between 1982-1995

26 Relative Risk of Hospital Mortality: Adult Patients ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Shortell 653 144,159 1.43 Keeler 220 4,937 0.04 Hartz 2,368 3,107,616 11.38 Manheim MH 1,252 1,537,660 9.78 Manheim FS 1,617 2,228,593 2.59 Kuhn 2,580 3,353,676 12.34 Pitterle 3,482 4,529,206 14.11 Mukamel 1,653 5,298,812 17.21 Bond 3,224 4,210,468 12.66 Yuan Medical 3,316 7,386,000 11.90 Yuan Surgical -- 4,396,000 5.05 Lanska 799 16,983 0.00 McClellan 2,875 181,369 1.48 Sloan 2,360 7,079 0.03 Totals 26,399 36,402,558 100.00 Relative Risk and 95% CI Favours Private Not-For-Profit Favours Private For-Profit Study Number of Hospitals Number of Patients % Weight Random Effects Pooled Estimate

27 How important is a relative risk increase of 2% Canadian statistics for 1999-2000 –108,333 Canadians died in hospital If we converted our private not-for- profit hospitals to investor owned private for-profit hospitals –result an extra 2200 deaths a year –range of how many patients die from MVAs, colon cancer, or suicide each year


29 How important is a relative increase in payment for care of 19% United States statistics for 2001 –payment to investor owned hospitals $37 billion –$6 billion could have been saved

30 Relative Risk of Mortality in Hemodialysis Patients All Studies Included in the Systematic Review ! ! ! ! ! ! ! ! ! ! Relative Risk and 95% CI Favours Private Not-For-Profit Favours Private For-Profit Oldest Data Newest Data AuthorRR95% CI Plough0.710.49 - 1.02 Farley1.111.04 - 1.18 Garg1.181.02 - 1.37 Irvin(1)1.091.07 - 1.12 Irvin(2)1.161.09 - 1.23 McClellan1.090.83 - 1.44 Port1.061.01 - 1.12 Irvin(3)1.051.03 - 1.07 Random Effects Pooled Estimate for All 8 Studies RR = 1.09 (95% CI, 1.05 - 1.12) Random Effects Pooled Estimate for 4 Selected Studies RR = 1.08 (95% CI, 1.04 - 1.13)

31 How important is a relative risk increase of 8% United States statistics for 2001 –208,000 patients receive in-centre hemodialysis –75% receive their care in private for-profit facilities –20% die every year –therefore likely 2,500 excessive premature deaths annually in US for-profit dialysis centres

32 Why are For-Profit Facilities more Costly? Private for-profit health care facilities face significant economic challenges –need revenues to satisfy shareholders –they must pay taxes –higher executive bonuses –higher administrative costs

33 There are some things in life too precious, intimate or corruptible to entrust to the market. Yet for-profit health care has expanded even into hospices. On October 18, 2004, the Justice Department announced an investigation of one of the largest for-profit hospice chains, Odyssey Healthcare, over allegations of wrongdoing in “patient admissions, patient retention and billing practices” The New York Times reported concerns that Odyssey served disproportionately few high- cost cancer patients. Odyssey owns 72 hospices in 30 states.

34 Waits for Publicly-Paid Cataract Surgery, Manitoba Longer When Surgeon Also Operates Privately

35 Investor-Owned Care Summary of Evidence Hospitals: Costs higher, fewer nurses, higher overhead, death rates higher, fraud HMOs: Higher overhead, worse quality, invest in the the tobacco industry Dialysis: Death rates higher, less use of transplants & peritoneal dialysis, fraud Nursing Homes: More citations for poor quality, fraud Rehab Hospitals: Costs higher

36 Profit-Driven Care Begets Fraud

37 Tenet (AKA “NME”)

38 Fraud in for-profit hospitals Columbia/HCA $18 billion revenues/yr. Fined $1.7 billion for defrauding Medicare program “upcoding” “bundling” “kickbacks” “billing for management fees at in-hospital wound subsidaries” “false cost reports” “two sets of books” Brother of founder is head of the U.S. Senate Sen. Bill Frist (R-TN) financed his election with $3 million in Columbia/HCA stock profits. Pushing privatization “modernization” of Medicare The “Halliburton” of health care

39 HealthSouth – the “Enron of HealthCare” Giant for-profit operator of rehabilitation hospitals and clinics, surgery centers and diagnostic laboratories (“integrated service model”) 209 surgery centers, 1,427 outpatient and 118 inpatient rehabilitation facilities, 136 diagnostic centers, four medical centers $4.5 billion in revenues/year 49,000 employees Founder Richard M. Scrushy profited $225 million from stock sales 1999- 2001

40 Drug Company Fraud In 2003, spent average of 31% of revenues on marketing and overhead, 13% on R & D, and took 20% as profit. Top executives at nine large drug companies averaged $21 million in pay and $48 million in stock options Categories of fraud 1) Kickbacks to insurers, pharmacy benefit managers, doctors, or pharmacists 2) Overcharging government programs 3) Patent law abuse 4) Meddling with research

41 Drug Fraud - kickbacks Merck fined $42.5 million for kickbacks to pharmacy benefit managers to switch patients to Merck products (Medco received $3.5 billion in kickbacks between 1997- 1999) TAP Pharmaceuticals paid fine of $875 million in 2001 for kickbacks to doctors to prescribe Lupron, for prostate cancer

42 Drug fraud – overcharging government programs 1) Medicaid –Bayer and GlaxoSmithKline fined $350 million –Pfizer overcharged for Lipitor, fined $49 million 2) Medicare –Overcharged approx. $1.9 billion every year for 24 most common medications

43 While drug firms have trumpeted their research innovations, they have developed few important new drugs in recent years. Indeed, drug stocks have slumped recently because investors fear that the pipeline of new drugs is largely empty. Among important new drugs that have been introduced in recent years, most were the products of either NIH-funded research, or were discovered at small firms and sold to the major drug firms at a late stage in their development. It appears that the evolving model of commercial domination of science, with many scientists and research universities scrambling to cut deals with drug firms, may be leading down a scientific dead end.

44 Drug Companies’ Cost Structure

45 Drug Company Profits

46 General Motor’s Health Care Costs

47 High health costs are a major problem for some firms (e.g. U.S. auto manufacturers). But other firms actually derive a competitive advantage from the current system For instance, Walmart covers few of its workers, and generally offers skimpy coverage to those who are covered. It sometimes tutors employees on how to qualify for Medicaid and other public programs, which effectively subsidize Walmart. Many of its competitors offer far more generous health benefits, driving their costs up and giving Walmart a price advantage.






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