Ana Malinow, MD Associate Professor Pediatrics, BCM Co-founder, Health Care for All Texas September 22, 2009

 Rising health care costs are the root of most of the problems in health care  Most costs are fixed whether health care is used or not  Other countries cover everyone, have more services, higher quality and live longer yet spend far less than we do  We are already paying the whole bill  You can’t hold down costs without a system !

Average Health Insurance Premiums and Worker Contributions for Family Coverage, Note: The average worker contribution and the average employer contribution may not add to the average total premium due to rounding. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, $5, % Worker Contribution Increase 131% Premium Increase $13,375

Cumulative Changes in Health Insurance Premiums, Inflation, and Workers’ Earnings, Note: Due to a change in methods, the cumulative changes in the average family premium are somewhat different from those reported in previous versions of the Kaiser/HRET Survey of Employer-Sponsored Health Benefits. See the Survey Design and Methods Section for more information, available at Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), ; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, (April to April).

Percentage of All Firms Offering Health Benefits, * *Tests found no statistical differences from estimate for the previous year shown (p<.05). Note: Estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and those that answered just one question about whether they offer health benefits. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,

Total Annual Household Income and Federal Poverty Level TexasU.S. Total Median Annual Household Income $44,861$49, % FPL family of 4, 2007 Dept of US Health and Human Services $22, % FPL family of 4, 2007 $44,100 Minimum Wage $7.25/hr or $8.00/hr $15,080 Ave*. Annual ES HI Premiums for Family of 4, 2009 $13,375 *Does not include out-of-pocket costs; group market only

Getting Public Insurance in Texas Take a family with a 2-mo old, 4 y/o & parents who make $40,792/year (185% FPL) and no employer-sponsored health insurance: The 2 month-old qualifies for Medicaid The 4 year-old qualifies for S-CHIP Parents make over the limit to qualify for public health insurance. The limit? $6,000 / year

Public Health Insurance Public Health Insurance is financed through federal and state taxes TX pays 40% Medicaid bill and 30% S-CHIP bill Taxes State Pays % Fed Pays % Medicaid 4060 CHIP3070 Medicare 0100 VA0100 FEHBP 0100 Source: State Factswww.kff.org

Distribution of Total Population by FPL Texas % Mass % U.S. % <100%FPL % Low Income % Nonelderly Population and Poverty Rate: Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on the Census Bureau's March 2007 and 2008 Current Population Survey (CPS: Annual Social and Economic Supplements). Data are for states ( ) and U.S. (2007).

Number of Uninsured Americans

44,840 Adult Excess Deaths Annually Due to Uninsurance in U.S years StateTotal % Uninsured 2005 Excess Deaths Texas29.74,675 Sourxe: AP Wilper, et al. American Journal of Public Health, Dec 2009, Vol 99, No. 12

Administration is the Fastest Growing job in Health Care Source: Bureau of Labor Statistics and NCHS

69% 31% Clinical Care Administrative Costs Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004 $775 Billion One-Third of Health Spending is Consumed by Administration Total: $2.5 Trillion

Distribution of National Health Expenditures, by Type of Service, 2007 Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public 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, National Health Statistics Group, at (see Historical; National Health Expenditures by type of service and source of funds, CY ; file nhe2007.zip). 74% Fixed Costs

 The cost of the infrastructure is there whether or not it is used (nurse, hospital)  84% of hospital costs are fixed  Cost containment for utilization won’t work if most costs are in infrastructure  Trying to save money by keeping patients out of the hospital is like trying to save money on schools by keeping kids home for the day  It is much more cost effective to invest in only what we need. The Implications of Fixed costs

Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?

$/per capita Source: OECD 2006 Data are for 2004 or for most recent year available Figures adjusted for purchasing power parity Out of Pocket Costs are Higher

Administrative Costs US vs Canada U.S. (%)Canada (%) 3117 Source: Woolhandler et al. New England Journal of Medicine 349 (8): 768 August 21, 2003

Fewer Americans Smoke Compared with Other Nations OECD, 2006 (2003 Data)

We Drink Less Alcohol OECD, 2006 (2003 Data)

But… We Don’t Live as Long OECD, 2006 (2003 Data)

OECD, 2006 Data are for 2004 or more recent year available More Babies Die in the U.S. in the First Year of Life

We Do an Average Number of Bone Marrow Transplants per million people OECD, 2006 (2003 Data)

OECD, 2004 Transplants/million population We are Average in Number of Renal Transplants (2001/2002)

Source: OECD, 2005 Note: data are for 2004,or most recent year available MRIs/ million population We are Average in the Number of MRI Units

Procedures per 100,000 population Source: OECD 2006 Data are for 2004 or most recent year available 197 We Do Fewer Hip Replacements

AustraliaCanadaEnglandN.Z.U.S. Breast Cancer 2nd4thworst3rdbest Colorectal Cancer 2nd3rdworstbest4th Cervical Cancer best3rdworst4th2nd Childhood Leukemia worstbest3rd4th2nd Kidney Transplant 2ndbest3rd worst Liver Transplant 2ndbestworst *3rd Non-Hodgkin’s Lymphoma best4thworst2nd3rd AMI, ages bestworstNA2ndNA Stroke, ages ndbestNAworstNA Source: Health Affairs Vol 23:#3, 2004 Our Quality is Not the Best in the World Survival Rates for 5 Countries

(2007=$7,421/p/y )

US Health Costs Rise Faster than Other Countries’ Costs Source: Health United States 2005, Natl. Center for Health Statistics

 Availability of expensive technology  Rising drug costs  Have similar demographics  Similar levels of service Why are their costs so much lower? Other Industrialized Countries

 Administrative simplicity  Negotiated prices  More primary care and prevention  Health planning  Global budgets They have a system Why Costs Are So Much Lower in Other Countries

$/Car Source: Modern Healthcare 10/24/05: 14 Japan Has a $1400 Competitive Advantage on Every Car They Sell

 Everyone Included  Clear Accountability  Public Stewardship  Budget Process  Public Financing Fundamental Features of a True Health Care System

Lower wages Private employers pay for health insurance Higher prices for goods Out of pocket Individual health insurance Taxes for Medicare and Medicaid Property taxesHealth insurance for public employees INDIVIDUAL HOUSEHOLDS In the End Individual Households Pay for All of Health Care

How Much is the U.S. Health Care System Costing You NOW ? What Americans Pay Into the U.S. Health Care System Today Household Income Level $25,000$50,000$75,000 Share and Amount of Income Going to Health Care via Taxes Alone without Insurance 9.0% ($2,425) 9.8% ($5,300) 10.7% ($8,633) Share and Amount of Total Wage Packet Going to Health Care for Household with Insurance (not including out of pocket costs) Individual22.0% ($6,904) 16.8% ($9,779) 15.4% ($13,112) Family37.2% ($14,531) 26.4% ($17,406) 22.3% ($20,749) Source: Dollars & Sense, May/June 2008 OOP = co-pays, deductibles, co-insurance, uncovered expenses Share of total wage packet going to HC= (amount of total tax burden going to health + annual health insurance premium) (annual salary + payroll tax [FICA and Medicare] + annual health insurance premium)

Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150 60% 20% Taxpayers Private Employers {Deferred Wages} Individuals { Medicare, Medicaid, Public employees, tax subsidies} 60% of our Health Care is Financed through Taxes 100% Financed by Us! $2.5 Trillion $1,500 B

69% 31% Clinical Care Administrative Costs Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004 $775 Billion One-Third of Health Spending is Consumed by Administration Total: $2.5 Trillion

Clinical Care $387 B + $1.75 T = $2.14 Trillion  85% Enough to pay for all uninsured and underinsured!

 Healthcare is regarded as a public good with investment in needed services for the whole population  The costs of these shared services are spread across the whole population (when you are not using them, someone else is—that’s what keeps them operational)  Pools money and pays for health care directly Investment Model

 Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing  Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care  Everyone has access to privately delivered, publicly financed health care services  Public can buy health insurance for services not covered by public plan. Single Payer Health Care Systems

National Health Insurance Everybody in, nobody out Portable Uniform, comprehensive benefits Prevention oriented Choice of physician Ends insurance industry influence Reduced administrative waste Cost savings Common sense budgeting Public oversight Source: Single-Payer

Medicare Medicaid Payroll Tax Income Tax Single-Payer Health Care Fund $$$ Financing Single-Payer Negotiated formulary with physicians, global budget for hospitals, increased primary and preventive care, reduction in unnecessary high-tech interventions, bulk purchasing of drugs and medical supplies = long term cost control.

US National Health Insurance Act

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