Critical Condition: How Health Care in America Became Big Business & Bad Medicine Donald L. Barlett & James B. Steele

Failure of a Market-Driven System Failure to control costs. Failure to provide equitable access to care Distortions in the provision of care. Lack of incentives for needed medical/ pharmaceutical research.

Health Care Spending 2004 USA National health Expenditures $1.87 Trillion USA $6,280 per capita OECD median $2,193 per capita 53% more than any other OECD country 140% above the OECD median

Health Care Spending 2003 USA spent 16.0% GDP Only Switzerland and Germany spent more than 10% Annual Growth in spending –USA 3.3% –OECD 3.4% In every OECD the growth of health care spending outpaced inflation.

Uninsured million million 15.2% population

Health Status 2003 Male Life Expectancy 1. Japan 85.3 years 2. Spain83.7 years 3. Switzerland83.0 years 23. USA79.9 years

Health Status 2003 Male Life Expectancy 1. Japan 78.4 years 2. Switzerland77.8 years 3 Spain77.2 years 22. USA74.5 years

Reasons for Rising Health Care Costs Aging Technology Waste/Inefficiency The Legal System New Diseases Fraud Rising Prices

Efforts to Slow Rising Costs in the USA Increased cost sharing Consumer choice Disease management Evidence-based practice Information Technology Tort Reform

Supply of Health Resources Number of RNs –USA 7.9/1,000 pop –OECD 8.9/1,000 Number of Physicians –USA 2.4/1,000 pop –OECD 3.1/1,000 Number of Hospital Beds per capita –USA 2.9/1,000 pop –OECD 3.7/1,000

Supply of Health Resources Number of CT Scanners –USA 12.8/million pop –OECD 13.3/million Number of MRI Units –USA 1.4/million pop –OECD 1.0/million

Malpractice Claims and Payments 2001 CountryClaims/1,000 pop Av. Payment or settlement USA0.18$265,103 Canada0.04$309,417 UK0.12$411,171 Australia0.12$ 97,014

Annual Growth of Malpractice Payments USA 5% UK 10% Canada 20% Australia 28%

Most Important Reasons for Higher USA Spending Higher incomes Higher medical care prices for pharmaceuticals, hospital stays, physician visits, etc.

Reform Proposals Universal coverage Single-payer system Administration oU.S. Council on Health Care (USCHC). oQuasi-governmental organization like the Federal Reserve System. oSet policy for health care. oControl federal spending for basic and catastrophic medical coverage.

Reform Proposals Funding: Two taxes oTax on gross receipts of businesses. oFlat tax on individual income (like the Medicare tax). USCHC Regions oTake into account regional differences Individual could supplement basic government supported coverage with private insurance.

Curing the Problems Guarantee basic levels of care for everyone. Establish flexible co-pays for basic care. Pay all costs of catastrophic illness. Restore freedom of choice. Redirect health care spending to disease prevention. Curtail out-of-control prescription drug costs.

Curing the Problems Provide drug information to consumers. Concentrate health care spending on cost- effective areas. Control costs by reducing variation in health care spending. Correct unrealistically low provider reimbursement rate. Stop the trend toward over-diagnosis and over treatment.

Advantages Reduce medical errors. Reduction in malpractice claims and malpractice insurance premiums Reduction in defensive medicine. Provide information on best practices. Negotiate drug prices.

Health Spending : Driving Forces Prices Technology Ageing Waste and inefficiency The legal system New diseases Corporate consolidation Profligate providers and consumers

Efforts to Slow Rising Costs Increased cost sharing Consumer choice Disease management Evidence-based practice Information technology Tort reform

If insurers and Employers require members to pay more out-of- pocket for health care, how much do you think each of the following will happen? (Harris Poll September, 2003)