Medical Care Systems Worldwide Henderson 5 th Edition

International Comparisons l l Slide 1: – –US has higher incomes (Swiss, Canada close) but others 30% less – –US spends a lot more by a wide margin – –US MDs per person and hospital beds per person mid-range – –LOS at bottom (w/ France) – –Only Japan has more equipment person generally – –US has more transplants, stents, CABGS than others l l Slide 2: – –Real per capita spending rose fastest in US in 1980s, slowed in 1990s but still faster, then rose to about average rate in 2000s. l l Slides 3, 4 & 5: – –Life expectancy and infant deaths relatively high in US. Lifestyle? – –Better survival rates for cancers but middle range rate for heart attacks in US.

Key Statistics

Health Care Spending Annual Compound Growth Rates

Health Outcomes

Mortality Ratios - Cancer

AMI Outcomes

Canada l Single-payer concept –Each province is provided with Federal matching funds like Medicaid (currently 30% of total) –Everyone has access to hospital and medical services –No deductibles or copayments. –Patients have free choice of physicians and hospitals. –Private health insurance is not permitted for these basic hospital and medical services. –Hi-Technology funding region-wide limiting excess investment.

l Canada limits costs by limiting fees and expenditures –Each province sets its own overall health budget and negotiates total budgets with each hospital, which they cannot exceed –The province also negotiates with the medical association uniform fees with all physicians, who are paid fee-for-service and who must accept the province’s fee as payment in full for their service. –In some provinces, physicians’ incomes are also subject to controls; once physicians’ revenues exceed a certain level, further billings are paid at 25 percent of their fee schedule.

l Consequences of System? –Free care leads to excess demand. With spending and fee limits, lots of waiting time (see slide). –Investment in technology is stifled because government must plan and fund it l Tech in US occurs if it saves money or improves quality (& demand) –Hospital care is l Excessively long (no incentive for hospitals to provide outpatient care) l Not oriented to providing new services (no extra funds for new staff, equipment, etc.) –Wealthier Canadians (10% of population) purchase travel insurance that covers them outside of Canada (i.e., US) –Canadian Supreme Court has ruled ban on private insurance unconstitutional due to long waits in Quebec province.

Exhibit 32.5 Canadian Hospital Waiting Lists: Total Expected Waiting Time from Referral by General Practitioner to Treatment, by Specialty, 2009

France l Single-payer concept –(83% covered by Natl HI plan) & rest by special plans for students, govt, agriculture and freelancer workers) –Financed by payroll and income taxes that total nearly 20% of income) –Substantial copays for all but the poor l 25% for MDs, 20% for hospitals, 30% for lab tests and dental and 35-65% for covered drugs l 91% purchase supplementary insurance to pay copays which costs 2.5% of income –In practice, MDs fees tightly regulated and fee-for-service l MDs average just 2x what average worker makes

l Hospitals: –Most (72%) beds are in public hospitals operating under global budgets –Private for-profit clinics (22%) offer short- stay care like elective surgeries and maternity for per-diem reimbursement l Consequences –MD incomes very low –Few waits but access to new tech very limited (see slide #2 above)

Germany l 92% of population has coverage from 1 of 1100 “sickness funds” organized by province –All individuals must have insurance either thru sickness funds or private insurance. Latter mostly civil servants who receive better insurance paid by their employers. –10% buy supplementary coverage for sickness fund insurance –Premiums paid by payroll deduction averaging 15% of worker’s pay (half from employer) –Low-wage and unemployed get subsidies, retirees pay out of their pension checks. –Copays are low for MDs, hospitals, drugs and preventive screening –Dental copays are high (50-100%)

l Cost-control mechanisms –Hospital MDs on salary, non-hospital MDs fee-for-service, can’t be both. –Volume penalties for nonhospital MDs – once quarterly budget limits for office visits, lab tests, referrals, etc. are reached fees are cut proportional to keep spending within target. Penalties are global as well as individual. –Hospitals receive DRGs for treatment and capital spending funded by state. l Consequences: –Cost control has been effective so far in limiting spending increases –Hospital admit rates and LOS are much higher than in US, no incentive to cut (see slide #1) –Primary care MD income is low (only 2.7 times average worker) and they never know what they’re going to be paid due to volume penalties –Technology investment is low (state controlled) : see slide #2 –System lacks incentive to rationally contain costs & improve quality.

Swiss System l Individual mandate –Generous coverage in basic plan –40% purchase supplementary policies –Pay community rated (by age/sex) premiums within canton –Subsidies after 8-10% of income – 45% get subsidies –Approx 20% of premiums subsidized –Choice of 6 deductibles - $240 to $1,200 and then 10% copay –Premium savings of 40% for high deductible plan ($2,388 for low plan)

l Private Non-Profit Managed Care Insurers (90) –Plans that suffer adverse selection (by age-sex) draw subsidies from insurer fund –Plans are either staff model HMO or Primary Care Gatekeeper models –Insurers compete for enrollees l Provider Payments –MDs paid fee-for-service rates negotiated between canton medical association and insurer group –Hospitals paid DRGs, with 50% from insurers/50% from canton. Govt funds 80% of capital investment. l Public-private spending breakdown similar to US (40/60) l High spending levels, second to US

Lessons l It is difficult to achieve universal coverage. Even with mandatory participation, most systems leave 1-2 percent of the population uncovered. l Uncontrolled health care spending growth is a universal problem. l Near universal access to high-quality medical care is possible without strict reliance on a single-payer system or a pure public sector approach. l Price-conscious behavior, with the use of deductibles and copays, can be encouraged with little impact on health. l Free access to health care with no out-of-pocket requirements diminishes personal responsibility, leaving no demand-side constraints often resulting in limited availability of technology and waiting lists for services.

Lessons l People who cannot afford to purchase health insurance on their own can still have access to essential services within a system of subsidized premiums.