So when the words “health care in the United States” are spoken these days do you think about “how good is my care?” or do you think about health care reform? Odds are it is about health care reform. Once there, your mind probably makes a quick jump to terms like socialized medicine, universal access, universal insurance, public options, denial of care, pre-existing conditions, and the uninsured population. It is a new and complex alphabet soup and it is a bit messy. Care reform and care quality are intermingled and polls show reform is wanted and/necessary and this will impact care quality (in a hopefully positive manner). In this blog I would like to present a couple of real challenges for the United States to accomplish this change and some factual background.
First a little factual background on the health care system in the United States:
From a business perspective:
- Since 1970, health care spending has grown at an average annual rate of 9.8%, or about 2.5 percentage points faster than the economy as measured by the nominal gross domestic product (GDP).
- Annual spending on health care increased from $75 billion in 1970 to $2.0 trillion in 2005, and is estimated to reach $4 trillion in 2015.
- As a share of the economy, health care has more than doubled over the past 35 years, rising from 7.2% of GDP in 1970 to 16.0% of GDP in 2005, and is projected to be 20% of GDP in 2015.
- Health care spending per capita increased from $356 in 1970 to $6,697 in 2005, and is projected to rise to $12,320 in 2015[1]
From a national health[2] perspective:
- Life Expectancy is 78.14 years
- Obesity Rate is 30.6%
- Infant Mortality 6.3 deaths per 1,000
- These are some of the worst statistics of the industrialized nations
From an insurance perspective:
- 15.9% of the United States population is uninsured
- 25M US Citizens are underinsured. Underinsured is defined as families paying a deductible that exceeds 5% of their income
- The underinsured population has increased by 60% from 2003 to 2007.[3]
- At this time estimates show the underinsured or uninsured population totals approximately 62M people or approximately 21% of the total population and 33% of the working age population (18 – 65)
- The United States is the only industrialized nation where medical bankruptcy is a significant challenge
- A recent study found that 62 percent of all bankruptcies filed in 2007 were linked to medical expenses. Of those who filed for bankruptcy, nearly 80 percent had health insurance
- According to another published article, about 1.5 million families lose their homes to foreclosure every year due to unaffordable medical costs.
And finally the Medicare perspective
- Medicare beneficiaries with five or more chronic illnesses account for 23% of the Medicare population, but account for 68% of the expenditures
- Rising rates of chronic disease are the greatest factor driving health care spending, accounting for 75 percent of every dollar spent on health care – and 83 percent in Medicaid (one or more chronic diseases) and 99 percent in Medicare (one or more chronic diseases)
- This population averages 50 prescriptions annually and have 14 different physicians they see for an average of 37 physician office visits annually.
Whoa, this paints a tremendously bleak picture of health care in the United States. This seems like a version of Edvard Munch’s “The Scream”. These facts and figures beg the question: "Is care in the United States good?", The answer is yes indeed it is, but this comes at a price. So do not confuse cost with quality, we have great quality but at a tremendous cost. Unfortunately the cost component is not sustainable. In fact the GDP grows on average at a rate of 2% and health care costs rise at a rate of 10% - any economist will confirm this is a perfect recipe for bankruptcy – this is the driver for reform.
So as we look at the facts and figures it is pretty clear that chronic disease is the 800-pound gorilla in terms of cost. The statistics show multi-billion dollar savings could be expected through the efficient management of chronic disease/illness and preventive care programs. So why is this not taking off like a wild fire? There are two big reasons - societal issues and educational approach. The United States’ hallmark “rugged individualism” has served everyone well and has served as a foundation for building one of the greatest cultures this planet has ever known. The downside is that it does not give much room for being told how to adjust lifestyles to accommodate prevention and efficient treatment. This causes a great conundrum and conflict – do we bend on a foundational pillar of our country’s culture or do we risk bankruptcy and risk it all going away? The other component of the societal challenge is that most other industrialized nations have a core belief that access to high quality health care is a a privilege not fundamental right, in the United States this is not necessarily the view. I don’t pretend to have the answer which lays in some type of compromise I am sure.
From an educational/training perspective, most medical schools in the United States teach allopathic medicine. Allopathic medicine can be characterized as a scientific approach that is arguably more focused on the treatment of disease versus the prevention of disease. This does not mean that allopathic approaches are bad or inadequate it is simply a statement of current teaching approaches.
Over time though, it seems there will undoubtedly be more incentives and stricter regulations to get preventive care programs rolling – it is inevitable. ARRA Meaningful Use is a perfect example.
So what does all this mean?
- Well one thing for sure, health care screams for some positive change. Perhaps we would serve ourselves well looking at other countries like Germany, Japan and Switzerland not just our neighbors to the North (Canada) and the UK.
- ARRA Meaningful use is definitely getting the industry to press the accelerator in the IT usage via financial “carrots and sticks”.
- The debate over health care is raging while it is at times quite rancorous. At least we are talking – more or less.
All of these things are quite positive and are causing the limelight to be on our care system. These combined with the unheard of dollar amounts being pumped into our system will drive change. This makes for a tremendously exciting time in health care.
So the conclusion – is our health care system moving at a feverish pace or just suffering from fever? – the answer is yes (on all counts). It does seem that change is inevitable. With this change will come the dread, fear and pain associated with most any change. One solid antipyretic for the fever and the challenges of change is knowledge. So let’s get out there, arm ourselves with facts, not anecdotes, understand the options and help drive the inevitable change to a positive outcome. As I wrap up this blog here is a start – a few basic definitions.
Universal access refers to the ability of all people to have equal opportunity and access to a service or product from which they can benefit, regardless of their social class, ethnicity, background or physical disabilities. It is a vision, and is in some cases a legal term, that spans many fields, including education, disability, telecommunications, and healthcare.
Preexisting condition is any illness, injury, or condition that existed prior to the effective date of an insurance policy.
The public option makes a public health insurance plan available in health insurance exchanges or gateways, alongside private plans, for some uninsured Americans.
Socialized Medicine is a term used to describe a system of publicly administered national health care.
Medicare serves people over age 65, independent of income, younger disabled people and dialysis patients (end stage renal disease). Patients do have to pay part of their costs through deductibles for hospitalizations and other services/costs. Monthly premiums are required for non-hospital coverage. There is a menu of services, policies and supplemental insurance. Medical bills are paid from trust funds. Everyone who pays into the system funds these trusts, currently that is all legally employed individuals via their FICA payment as well as tax on high-income Social Security recipients (retirees making > $44K annually). Medicare is a federal program ran by Centers for Medicare & Medicaid Services and it is basically the same everywhere in the United States. (Paraphrased from the www.hhs.gov website)
Medicaid is an assistance program. Medicaid is funded via a mix of federal, state and local tax funds. Medicaid serves low-income people independent of age. Usually patients pay nothing for covered medical expenses although sometimes a small co-payment is required. Medicaid services vary from state to state. Medicaid is governed by federal guidelines, but is run by state and local governments. (Paraphrased from the www.hhs.gov website)
Private Health Insurance is coverage by a health plan provided through an employer, labor union or is purchased by individuals directly from a private health insurance company. The following is some additional detail on these 3 types of private insurance:
- Employment-based plans
- Employment-based health insurance is coverage offered through an individual’s or relative’s place of employment. An employer or a union usually offers employment-based insurance.
- Self employed-based plans
- Self employed-based health insurance is coverage offered to individuals with self-employed status.
- Direct-purchase plans
- Direct-purchase health insurance is coverage through a plan purchased by an individual from a private company.
Dale Will
Associate Partner
[1] Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical, NHE summary including share of GDP, CY 1960-2005, file nhegdp05.zip; and Historical, Projected, NHE Historical and projections, 1965-2015, file nhe65-15.zip)
[2] http://www.nationmaster.com
[3] http://health.usnews.com/articles/health/healthday/2008/06/10/...