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Growing Unaffordability of Health Care: Incremental vs. Real Health Care Reform John P. Geyman, MD Professor Emeritus- Family Medicine University of Washington,

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Presentation on theme: "Growing Unaffordability of Health Care: Incremental vs. Real Health Care Reform John P. Geyman, MD Professor Emeritus- Family Medicine University of Washington,"— Presentation transcript:

1 Growing Unaffordability of Health Care: Incremental vs. Real Health Care Reform John P. Geyman, MD Professor Emeritus- Family Medicine University of Washington, Seattle

2 Increased Costs Decreased Access Variable Quality Increased Fragmentation Increased Administrative Burden Technological Imperative Medicolegal Liability System Out of Control Major Problems of Health Care System

3 Drivers of Health Care Costs 1.Technological advances 2. Aging of population 3.Increase in chronic disease 4.Inefficiency and redundancy of private insurers 5.Profiteering by investor ‑ owned companies, facilities and providers 6.Consumer demand 7.Defensive medicine

4 HEALTH CARE COSTS IN U.S. 16.5% of GDP $2.3 trillion per year Increased cost-shifting to individuals/families Incremental “reforms” ineffective

5 Escalating Costs of Care Double digit increases in health insurance premiums Average family premium now over $15,000 per year 31% of total health costs are administrative HMO rates up by 11.7% in 2007 vs CPI increase of 2-3%

6 GROWING UNAFFORDABILITY OF HEALTH CARE “Medical divide” at about $50,000 annual income Median household debt over $100,000 Median family income $41,000 a year Health insurance premiums to consume one-third of average household income by 2010

7 CHANGE IN REAL FAMILY INCOME 1979-2004 SOURCE: Bureau of the Census








15 Three Alternatives For Health Care Reform 1. Employer mandate 2. Individual mandate (Consumer ‑ driven health care) 3. Single ‑ payer system

16 Problems With Employer ‑ Based Approach 1. Only 59 percent of employers provide coverage 2. Trend toward part ‑ time work force 3. Defined contributions vs. benefits 4. Increasing cost ‑ sharing and unaffordability 5. Job lock problem 6. Competitive disadvantage in global markets 7. A failed track record (eg., Hawaii)

17 Consumer Choice (“Individual Mandate”) Increasingly popular pro-market “solution” Shifts responsibility for coverage from employers to consumers Assumes a free market in health care Assumes adequate information and options for consumers Current examples: privatizing of Medicare health savings accounts

18 Problems With Option 2 Less service for more cost Serves for-profit insurance industry Coverage by risk selection Limited choice for consumers “Bad plans can drive out the good ones” Is still the most politically popular and likely

19 Why Incremental "Reforms” Keep Failing 1. Favorable risk selection by insurers 2. High administrative costs and profiteering 3. No mechanisms to contain costs 4. Fragmentation of risk pools 5. Decreasing access to necessary care 6. Lack of accountability for value and quality

20 "In America, the over reliance on market logic and marketing institutions is ruining the health care system. Market enthusiasts fail to tabulate all the costs of relying on market forces to allocate healthcare-the fragmentation, opportunism, asset rearranging, overhead, underinvestment in public health, and the assault on norms of service and altruism. They assume either a degree of self-regulation that the health markets cannot generate, or farsighted public supervision that contradicts the rest of their world view. Health care now consumes fully one-seventh of our entire national income. There is no realm of our mixed economy where markets yield more perverse results.” Robert Kuttner - Everything for Sale: The Virtues and Limits of Markets

21 Incremental Change and U.S. Health Care By John Jonik

22 Option 3: Single Payer System Socialized insurance, not socialized medicine Universal coverage through National Health Program Eliminates private health insurance industry Hospitals and nursing homes with global budgets Physicians reimbursed by fee-for-service Blend of federal and state government roles

23 Fundamental Features of a Universal Healthcare System Everyone included Public financing Public stewardship Global budget Public accountability Private delivery system

24 What Would a NHP Look Like? Everyone receives a health care card assuring payment for all necessary care Free choice of physician and hospital Physicians and hospitals remain independent and non-profit, negotiate fees and budgets with NHP Local planning boards allocate expensive technology Progressive taxes go to Health Care Trust Fund Public agency processes and pays bills

25 Advantages of National Health Program Assured access for all Americans Assured access for all Americans Cost savings ($200 billion/year) Cost savings ($200 billion/year) Administrative simplicity Administrative simplicity Decreased overhead (Medicare 3% vs private insurance 15%-26%) Decreased overhead (Medicare 3% vs private insurance 15%-26%) Distributes risk and responsibility to finance care Distributes risk and responsibility to finance care Improves access, costs, and quality of care Improves access, costs, and quality of care


27 Growing Support for NHI Physicians (egs., PNHP, ACP, AMWA, APHA) 2008: 59% national study 2006: 64% Minnesota 2002: 62% Massachussetts 1999: 57% of Deans, faculty, residents, and medical students Nurses (eg., CNA) Labor (egs., AFL-CIO and Working America) Mayors of 25 Cities (egs., Austin, Baltimore, Boston, Chicago, Detroit, San Francisco, Louisville) Public: average 60-65% over many years



30 How Physicians Win with NHI More time for patient care Less overhead Less bureaucracy More clinical autonomy All paying patients Increased reimbursement (primary care and shortage specialties) Increased practice satisfaction Restored professionalism


32 Problems with Option 3 Political acceptance Lobbying by special interest stakeholders Disinformation by media coverage Philosophic concerns about “big government” Denial of ineffectiveness of market-based system



35 Why Private Health Insurance is Obsolete ・ Inefficiencies vs public-financing ・ Fragments risk pools by medical underwriting ・ Increasing epidemic of underinsurance ・ Excessive administrative and overhead costs ・ Profiteering ム shareholders trump patients ・ Pricing itself out of the market ・ Unsustainable and resists regulation


37 Annual Health Insurance Premiums And Household Income, 1996-2025 SOURCE: Reprinted with permission from Graham Center One-Pager. Who will have health insurance in 2025? Am Fam Physician 72(10):1989, 2005

38 1. Single-payer national health insurance (NHI) 2. Evidenced-based coverage process 3. Reimbursement reform 4. Strengthening of primary care 5. Quality improvement 6. Transition from for-profit to not-for-profit system 7. Rebuild the capacity of government 8. Malpractice liability reform Basic Building Blocks For Health Care Reform

39 Alternative Scenarios for 2020


41 Principle of Social Justice The medical profession must promote justice in the health care system, including the fair distribution of health care resources. Physicians should work actively to eliminate discrimination in health care, whether based on race, gender,socioeconomic status, ethnicity, religion, or any other social category. SOURCE: Project of the ABIM Foundation. ACP.-ASIM Foundation and EuropeanFederation of Internal Medicine. Medical professionalism in the new millennium:A physician charter. Ann Intern Med 136(3):244, 2002.

42 “The evidence is conclusive that our people do not yet receive all the benefits they could from modern medicine. For the rich and near-rich there is no real problem since they can command the very best science has to offer. - - - Among the majority of the population, however, there are great islands of untreated or partially treated cases - - - Although it is a principle of far-reaching and, perhaps, of revolutionary significance, I think there are few who would deny that our ultimate objective should be to make these benefits available in full measure to all of the people.” Ray Lyman Wilbur, M.D. Chairman of the Committee on the Costs of Medical Care, 1932 Report First Dean of Stanford Medical School and President of Stanford University (1916-1943)

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