Overview of the United States Healthcare System Jody Blanke Distinguished Professor of Computer Information Systems and Law Mercer University

Chapter Overview  Provides a general understanding of how the health care system works in the U.S.  Focuses on Health care finance Health care access Health care quality Comparative health systems

Health Care Finance  In 2013, U.S. spent $2.9 trillion on health care services, representing 17.4% of GDP Estimated to reach 19.3% GDP by 2023  See Figure 4-1 Hospitals (34%) and physician services (21%) account for more than half of total health spending  See Figure 4-2

Health Care Finance  In 2014, when many provisions of the Affordable Care Act (ACA) became effective:  Health care spending projected to increase by 5.6%  Private health expenditures expected to increase by 6.8%  Medicaid expenditures to rise by 12.8%

Health Care Finance— Insurance  By 2023, projected that there will be 23 million uninsured in the U.S.  16.4 million have gained coverage under ACA.  Most people in U.S. obtain insurance through their employer.  Health insurance acts as an intermediary between patients and providers. See Figure 4-4

Health Care Finance— Direct Service  Federal, state, and local governments fund programs that directly provide care to individuals: FQHCs (federally qualified health centers) HIV/AIDS programs Family planning programs

Health Care Access  Access refers to ability to obtain needed services.  Key barriers to access Lack of health insurance Inadequate health insurance Insurance coverage limitations Workforce issues

Health Care Access— Uninsured and Underinsured  Key characteristics Poor, low education, non-native, racial/ethnic minority, location, age, gender Higher percentage of uninsured among:  Lower income  Adults (35-54)  Lower education level  Minorities  Immigrants  Non-elderly men  Residents of the South and West

Health Care Access— Uninsured and Underinsured  Problems with being uninsured Less access to care, less timely care, less likely to follow treatment recommendations due to cost  See Figure 4-7  Underinsured do not have financial resources to cover the gap between what their insurance covers and their medical bills.  Safety net providers serve many uninsured and underinsured.

Discussion Questions  If you are trying to reduce the number of uninsured, do you focus on altering insurance programs or on changing the effect of having one or more of the above characteristics?  Whose responsibility is it? Government? Private sector? Individuals?

The Underinsured  Like the uninsured, the underinsured may delay care or forego treatment due to cost.  Everyone ends up paying for the underinsured. Providers shift the cost associated with both the uninsured and the underinsured to those who can afford to pay, including the government and insured individuals.

Health Care Access—Insurance Coverage Limitations  High cost-sharing Co-payments, deductibles, premiums  Reimbursement and visit caps  Service exclusions  Average annual premiums continue to rise See Figure 4-8

Safety Net Providers  Serve disproportionately high numbers of uninsured, underinsured, and publicly insured patients Public and private hospitals Community health centers Family planning clinics Public health agencies

Health Care Access— Workforce Issues  Provider shortages Physician shortage by 2025 of between 46,000 and 90,000 Especially primary care physicians  Only about 25% of 2013 grads opted for primary care  One estimate – a cardiologist can expect to make $2.7M more than a primary care physician over the course of a lifetime Problem exacerbated by influx of newly insured individuals under the ACA

Health Care Access— Workforce Issues  Uneven distribution of providers Significant problem in rural areas  In 2012, the national average was 46.1 primary care physicians per 100,000 residents  Georgia ranked 49 th at 31.0 Rural areas are more likely to attract alternative care models that use nurse practitioners and physician assistants.

Health Care Access— Workforce Issues  Several ACA provisions address these workforce issues: Increase funding for community health centers Provide scholarships and loan repayment to students who agree to become primary care providers or work in underserved communities Increase funding for nurse practitioner and physician assistant training Incentive innovation for boosting the primary care workforce

Health Care Quality  U.S. spends more per person on health care but often ranks poorly on preventive and primary care health care measures. See Figures 4-12 and 4-13  IOM (Institute of Medicine) focuses on six areas to improve quality. Safety, efficacy, patient-centeredness, timeliness, efficiency, and equity  The U.S. spends one-third of healthcare expenditures on administration

Comparative Health Systems  Three common types of health care systems Publically financed, privately delivered national health care system (Canada) Publically financed and delivered national health systems (Britain) Socialized insurance system with mandatory contributions and private delivery (Germany)

Comparative Health Systems — Canada  National Health System – 1968 Universal insurance coverage with medically necessary services provided free of charge Central regulatory authority oversees hospitals Governmental power to negotiate reimbursement rates for physicians

Comparative Health Systems — Canada  Largely decentralized – the provinces and territories are responsible for setting up their own delivery systems  Canada’s Medicare system is a collection of single- payer systems governed by the provinces and territories  The provinces and territories negotiate physician fees schedules with provincial medical associations  Federal government has responsibility for specific areas like prescription drugs, public health and health research

Comparative Health Systems — Canada  Financing varies by benefit type: Hospital services, physician services, and public health are financed through public taxation Prescription drugs, home care, and institutional care are financed through a combination of public taxation and private insurance Dental and vision care, over-the-counter drugs, and alternative medicine are only covered through private insurance  Tax revenue covers 70% of total Medicare expenditures, while private insurance covers 12% and patient out-of-pocket covers 15%

Comparative Health Systems — Great Britain  National Health Service – 1946 Provides universal coverage to all residents of Great Britain. Designed upon the principle that the government is responsible for providing equal access to comprehensive health care that is generally free at the point of service. Largest publicly financed health system in the world.

Comparative Health Systems — Great Britain  Almost half (47%) of the funds are spent on acute and emergency care, with general practice, community care, mental health, and prescription drugs each accounting for 10% of the budget.  The NHS is financed primarily through general tax revenues.  While most residents get their care through the NHS, about 10% of the population also has private health insurance (which allows for reduced waiting times and access to higher quality care in some cases.

Comparative Health Systems — Great Britain  Most general practice physicians and nurses are private practitioners who work for the NHS as independent contractors, not as salaried employees.  The NHS owns the hospitals and the hospital staff are salaried employees.  Patients select a GP (general practitioner) who is the gatekeeper to NHS services.  Almost everyone (99%) has a registered GP and 90% of all patient contact is through this person.  Services are generally free of charge.

Comparative Health Systems — Germany  First healthcare system in the world –  Belief that all should have equal access to health care regardless of ability to pay.  Germans must either enroll in a sickness plan or obtain coverage through private insurance. All those who earn under $60K, or are pensioners, students, unemployed, disabled, poor, or homeless must enroll. Those who earn more than $60K for 3 consecutive years or are self-employed may choose to opt out and purchase private insurance as a supplement.  11% of the population opts out.

Comparative Health Systems — Germany  Sickness funds finance most inpatient hospital care, with states governments covering a small percentage of those costs.  Physicians deliver care through the private sector, although most are authorized SHIS (Social Health Insurance System) providers.  Sickness funds are financed through employer and employee contributions as well as federal subsidies.  If patients are unable to pay their premiums, the welfare system covers the cost.

Comparative Health Systems  Type of health insurance design relates to key issues for patients Affordability Differences in access by income level Waiting lists/wait times (Fig. 4-16) Choice Complexity of interacting with insurance system/paperwork Patient satisfaction