FIFTY YEARS IN MEDICINE, : WHERE ARE WE HEADED NOW? John P. Geyman, M.D. 50 th Reunion, Class of 1960 UCSF School of Medicine

Major Trends Over 50 Years 1. Expansion of medical industrial complex. 2. Service ethic to business “ethic” of marketplace. 3. Medicine from cottage industry to employment by systems. 4. Increasing sub-specialization; near-collapse of primary care. 5. Growing system fragmentation; decreased continuity of care. 6. Increasing bureaucracy in multi-payer system. 7. Decline in professional sovereignty.

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

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 Drivers Of Health Care Costs

Health Care Costs In U.S. 17% of GDP $2.5 trillion per year Increased cost-shifting to individuals/families Incremental “reforms” ineffective

Escalating Costs of Care Double digit increases in health insurance premiums Average family premium now $13,000- $15,000 per year 31% of total health costs are administrative $8,300 per capita health care spending

Growing Unaffordability Of Health Care “Medical divide” at about $50,000 annual income Median household debt over $100,000 Median family income $50,000 a year Health insurance premiums to consume all of average household income by 2025

Private Health Insurance Industry In U.S. 1,300 companies fragment risk pools Medical underwriting, favorable risk selection $400 billion a year industry Minimal regulation, mostly at state level Medical-loss ratios range from 70% - 85%

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

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)

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: premium support for defined benefits privatizing of Medicare medical savings accounts

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

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

Annual Health Insurance Premiums And Household Income,

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

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

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

Advantages of National Health Program Assured access for all Americans Assured access for all Americans Cost savings ($400 billion/year) Cost savings ($400 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

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

Approaches To Real Health Care Reform 1. Base policy alternatives on health policy science and documented experience. 2. Enact single-payer national health insurance. 3. Accept need to steward limited resources for care of the whole population. 4. Change how physicians are paid: re-negotiation of fees within global budgets. 5. Establish independent, science-based Comparative Effectiveness Institute empowered to recommend coverage and reimbursement policies. 6. Rebuild primary care and its infrastructure.

How Physicians And Medical Schools Can Lead Toward Reforming Health Care 1.Role modeling and mentoring service ethic over business values and behaviors. 2. Advocacy of patients’ interests above providers’ “needs”. 3. Take increased responsibility for addressing system problems. 4. Redistribution by specialty of graduate medical education positions based on system needs. 5.Increased transparency and elimination of conflicts- of-interest with industry. 6.Lead toward comparative effectiveness/cost- effectiveness research