Policies that enhance access Social Insurance. Social Insurance Programs.
-
Upload
oswald-stokes -
Category
Documents
-
view
223 -
download
5
Transcript of Policies that enhance access Social Insurance. Social Insurance Programs.
Policies that enhance access
Social Insurance
Social Insurance Programs
National Health Care ExpendituresYear Total
Spending (in billions)
Percent change
Percent of GDP
Per capita spending
1950 $ 13 -- 4.5 $ 82
1960 28 8.8 5.2 148
1970 75 10.5 7.2 356
1980 254 13.0 9.1 1,100
1990 714 10.9 12.3 2,814
2000 1,353 5.9 13.6 4,789
2005 1,982 7.9 15.7 6,701
2006 2,113 6.7 15.8 7,071
2007 2,240 5.6 15.9 7,423
2008 2,339 4.3 16.2 7,681
Source: http://www.cms.hhs.gov/NationalHealthExpendData/
Personal Health Care Expenditures(in billions of dollars)
Private Spending Public Spending
Year Out of pocket
Private Insurance
Federal State
1960 $ 12.9 $ 5.9 $ 2.0 $ 2.9
1970 24.9 14.0 14.4 7.8
1980 58.1 61.2 62.3 23.9
1990 136.1 204.7 172.8 63.5
2000 192.6 402.8 369.8 117.1
2005 247.5 599.8 562.3 176.9
2006 254.9 634.6 620.1 178.7
2007 270.3 665.0 661.3 188.7
2008 277.8 691.2 718.0 189.8
Source: http://www.cms.hhs.gov/NationalHealthExpendData/
Private Health Insurance Coverage (under age 65, numbered in millions)
With Health Insurance* Without Health Insurance
Year Number Percent Number Percent
1999 161.2 68.3 38.5 16.1
2000 160.8 67.1 41.4 17.0
2001 162.4 67.0 40.3 16.4
2002 159.4 65.3 41.7 16.8
2003 157.5 64.4 41.6 16.5
2004 159.5 64.0 42.1 16.6
2005 160.1 63.6 42.1 16.4
2006 155.8 61.5 43.9 17.0
2007 157.9 61.6 43.3 16.6
* Employer-based.
Source: Health, United States, 2008, http://www.cdc.gov/nchs/hus/updatedtables.htm, Table 138 and 140.
Medicare Objective: improve access to medical care for elderly …and disabled persons
The elderly… 12.6% of US population 19% of personal health care spending 31% of hospital spending 20% of physician spending
The elderly… 12.6% of US population 19% of personal health care spending 31% of hospital spending 20% of physician spending
44 million voters
Percent of U.S. population age 65+P
erc
en
t o
f p
op
ula
tion
5
8
11
14
17
20
23
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
actual projected
Source: U.S. Census Bureau, 2004, "U.S. Interim Projections by Age, Sex, Race, and Hispanic Origin," Table 2a.
<http://www.census.gov/ipc/www/usinterimproj/>
Medicare Objective: improve access to medical care for elderly …and disabled persons
Institutional Features Part A—Hospital insurance (compulsory) Part B—Supplementary insurance (voluntary) Part C—Medicare Advantage (voluntary PPO or HMO) Part D—Outpatient prescription drugs (voluntary)
The elderly… 12.6% of US population 19% of personal health care spending 31% of hospital spending 20% of physician spending
The elderly… 12.6% of US population 19% of personal health care spending 31% of hospital spending 20% of physician spending
44 million voters
$468 billion in 2008$468 billion in 2008
Medicare SpendingYear Recipients
(millions)Total Spending
(billions)Annual Rate of
Change in Spending
1970 20.4 $ 7.5 --
1980 28.4 36.8 17.2
1990 34.2 111.0 11.7
2000 39.7 221.8 7.2
2005 42.6 336.4 8.7
2006 43.4 408.4 21.4
2007 44.1 431.5 5.7
2008 45.2 468.1 8.5
Source: http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2008.pdf
Medicare Part A: Hospital Insurance Plan:
Day 1-60: Deductible = 1 day @ hospital Day 61-90: daily coinsurance = 25% of deductible Day 91-150: daily coinsurance = 50% of deductible Day 151-?: nothing
Financed by 2.9% payroll tax
Medicare is not designed to provide protection against catastrophic illnesses
Medicare is not designed to provide protection against catastrophic illnesses
$1,100
$275
$550
Lifetime reserveLifetime reserve
Inpatient hospital careSkilled nursing facility careHome health agency care
Hospice care
Inpatient hospital careSkilled nursing facility careHome health agency care
Hospice care
Medicare Tax Rates and Bases (selected years)
Tax rate(% of taxable earnings)
Year Maximum tax base
Employees and employers, each
Self-employed
1966 $6,600 0.35% 0.35%
1970 7,800 0.60 0.60
1980 25,900 1.05 1.05
1984 37,800 1.30 2.60
1990 51,300 1.45 2.90
1993 135,000 1.45 2.90
1994-2009 No limit 1.45 2.90
Scheduled in current law: 2010 and later
No limit 1.45 2.90
Source: http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2009.pdf
Plan:
Annual deductible + monthly premium + 20% coinsurance
Financed by general tax revenues and premiums
Medicare Part B: Supplementary Insurance
Physicians’ servicesOutpatient hospital servicesER servicesLaboratory servicesOutpatient physical therapyDurable medical equipment
Physicians’ servicesOutpatient hospital servicesER servicesLaboratory servicesOutpatient physical therapyDurable medical equipment
$155 $96*
Optional program that allows elderly to receive Medicare benefits (Parts A and B) through private health insurance plans
Medicare Part C: Medicare Advantage
Part D: Prescription Drug Benefit Plan: (coverage is not standardized)
Medicare Part A + private stand-alone drug plan Medicare Advantage plan
Annual deductible + monthly premium + 25% coinsurance
Financed by general revenues and premiums
$30$310
Part D: Doughnut Hole
$310 $2,830 $6,440
25%
5%
100%
Percentage ofDrugExpendituresPaid byBeneficiary
Total Drug Expenditures
Deductible CatastrophicCoverage
46% 30% 14% 10%
Doughnut Hole
Payment Range Number of Enrollees (millions)
Percent of Total
Spending (billions)
Percent of Total
Average per enrollee
Over $20,000 4.1 12.4 $182.8 65.1 $44,585
$10,000-$19,999 2.8 8.5 40.2 14.3 14,357
$5,000-$9,999 3.6 10.9 25.1 8.9 6,972
$2,000-$4,999 6.4 19.3 20.6 7.3 3,219
$1,000-$1,999 5.1 15.4 7.4 2.6 1,451
$500-$999 4.2 12.7 3.1 1.1 738
Less than $500 6.9 20.8 1.5 0.5 217
Total 33.1 100.0 $280.7 100.0 $8,480
Medicare Payment Allocations, 2006
“80-20 Rule”20% of beneficiaries account for 80% of spending
“80-20 Rule”20% of beneficiaries account for 80% of spending
Source: Health Care Financing Review: Medicare and Medicaid Statistical Supplement, 2007, Table 3.6.
Part A Services (Hospitals) Prospective payment system (PPS) based
on diagnosis-related group (DRG)
Part B Services (Doctors) Fee schedule based on resource-based
relative value scale (RBRVS)
Medicare Reimbursement Payments
Upcoding: doctor makes more severe diagnosis to hedge against accidental costs
[RVU]*[GAF]*[CF] = payment
[5.46]*[1.13]*[$58.40] = $360.29CPT 45378
MedicaidObjective
Improve medical access for low income individuals
Institutional features Federal cost-sharing
Mandated coverage and services State administered
Eligibility standardsDetermine type, amount, duration, and scope of
servicesSet rate of payment for services
60% federal share on average
Medicaid SpendingYear Recipients
(millions)Total Spending
(billions)Average Payment
1966 10.0 $ 1.7 $ 170
1975 22.0 12.2 554
1980 21.6 23.3 1,079
1990 25.3 64.9 2,568
2000 42.7 168.4 3,928
2001 45.8 186.9 4,081
2002 49.7 213.5 4,291
2003 51.9 233.2 4,487
2004 55.0 257.7 4,685
Source: Health Care Financing Review, 2007, Table3 13.4 and 13.10.
Category Payment per capita
Number Eligible
(millions)
Percent of Total
Eligible population
Total spending (billions)
Percent of Total
Spending
Aged $ 13,837 4.3 7.8 $ 59.5 23.1
Disabled 14,127 7.9 14.4 111.6 43.3
Children 1,668 26.5 48.2 44.2 17.2
Adults 2,516 12.2 22.2 30.7 11.9
Other 2,853 4.1 7.5 11.7 4.5
Total $ 4,685 55.0 100.0 $ 257.7 100.0
Medicaid Spending by Eligibility Categories, 2004
Rising costs…• expanding enrollments• rising medical care costs• increased reimbursement rates
Rising costs…• expanding enrollments• rising medical care costs• increased reimbursement rates
Source: Health Care Financing Review: Medicare and Medicaid Statistical Supplement, 2007.
Medicaid: Large State Spending, 2004
StateTotal Payments
(in billions)Payment perBeneficiary
Number of Beneficiaries(in millions)
California $27.4 $2,740 10.0
Florida 12.8 4,267 3.0
Illinois 10.8 5,400 2.0
New York 37.3 7,936 4.7
Ohio 11.4 6,000 1.9
Pennsylvania 10.1 5,611 1.8
Texas 13.2 3,667 3.6
Seven-state total 123.0 4,556 27.0
Rest of the U.S. 134.7 4,811 28.0
Total U.S. 257.7 4,685 55.0
Source: Health Care Financing Review: Medicare and Medicaid Statistical Supplement, 2007.
Economic Impacts Health outcomes
Currie and Gruber (1996) 10% increase in eligibility for children resulted in 3.4% decrease in
child mortality rates 10% increase in eligibility for pregnant women resulted in 2.8%
decrease in infant mortality rates Baker and Royalty (2000)
10% increase in Medicaid fees resulted in 2.4% increase in office-based physician visits for poor patients
Enrollment in private insurance Cutler and Gruber (1996): “crowding-out” effect
Family structure Yelowitz (1998): Medicaid lowers the cost of childbearing
and favors single-parent families Savings
Gruber and Yelowitz (1999): Medicaid reduces incentive to save and encourages asset transfers
Other Government ProgramsSCHIP (State Children’s Health Insurance Program)
VA Hospitals 157 hospitals 860 clinics 137 nursing homes 15,000+ physicians
Objectives: Expand insurance coverage: + 32 million
Lower health care costs: - $143 billion over 10 years
Private InsuranceSocial InsuranceRevenue ProvisionsOther
Private Insurance Reforms
Insurance rules Community rating (age, area, family size, and tobacco use) Guaranteed issue (can’t deny for pre-existing condition) Prohibit lifetime limits on coverage Dependent children on parent’s plan until age 26 Establish health insurance exchanges
Individual Health Insurance Mandate Tax credit subsidies up to 400% poverty $695 fine (or 2.5% income) if you don’t buy
Employer Health Insurance Mandate $2000 fine per employee for firms N > 50 Tax credit subsidies to small employers High cost plan excise tax (t = 40%)
Social Insurance Reforms
Medicare “doughnut hole” eliminated by 2020 Prohibit physician-owned hospitals in Medicare Provide 10% bonus to primary care physicians in shortage
areas Medicaid
eligibility expanded to 133% poverty line Federal government assumes larger cost share
Revenue Provisions Medicare tax base expanded to include unearned
income and t = 3.8% (I > $250k) Medicare tax rate on individuals rises by 0.9 to
2.35% (I > $250k) Medical device excise tax (t = 2.9%) Excise tax on brand name pharmaceuticals Excise tax on indoor tanning salons (t = 10%) Limit Flexible Spending Accounts to $2500
Other Features Establish CLASS: voluntary, self-funded long-term care
insurance program Establish Patient-Centered Outcomes Research
Institute Establish value-based modifier for physician
payment formulas Expand supply of health care workers Grant 12 years exclusivity to biologics Promote preventive health care
Award grants for evidence-based public health programs Chain restaurants required to post caloric content
Policies To Contain Costs
Policy Options
TE = Σ Pi Qi
Price ControlsManaged Care (Quantity Controls)Market Alternatives
Economics of Price Controls
Competitive MarketsMonopoly Markets
Economics of Price ControlsCompetitive Market
Health Care
Price
D1
S1
P0
Q0
P1
QS QD
Shortage
Free Market: P0, Q0
Gov’t imposes price ceiling at P1
At P1: Qd > Qs
shortage results
Non-Price Rationing Black Market Bribes Discrimination Wait / Search
Free Market: P0, Q0
Gov’t imposes price ceiling at P1
At P1: Qd > Qs
shortage results
Non-Price Rationing Black Market Bribes Discrimination Wait / Search
P2
Economics of Price ControlsMonopoly Market
Health Care
Price
D1
MC1
P1
Q1
P0
Q0
Monopoly: P0, Q0
Gov’t imposes price ceiling at P1
At P1: there is no shortage; monopolist produces Q1
Monopoly: P0, Q0
Gov’t imposes price ceiling at P1
At P1: there is no shortage; monopolist produces Q1
MR1
Price Controls in Health Care
Mandated fee schedules Physician-induced demand shifts Unbundling of services
Global budgeting (capitation) Services delayed Personnel take unpaid vacations
Resource rationing Mandating primary care (gatekeepers) Limits on new facilities (CONs) Waiting lists
U.S. Cost-containment Strategies
Hospitals: Diagnosis-related groups (DRGs) Prospective payment based on point system
DRGs by Weight—Five Highest and Five Lowest
DRG DRG Title WeightsMean Length
of Stay
Highest Weights
103 Heart transplant 19.8195 57.5
483 Tracheostomy 15.2827 41.0
504 Extensive 3rd degree burns w/skin graft
13.8097 33.6
480 Liver transplant 10.6132 22.8
495 Lung transplant 8.8879 16.2
Lowest Weights
33 Concussion, age 0-17 0.2075 1.6
382 False labor 0.1607 1.3
343 Circumcision, age 0-17 0.1533 1.7
391 Normal newborn 0.1519 3.1
448 Allergic reactions, age 0-17 0.0970 2.9
Source: The Economics of Health and Health Care, Folland, Goodman, and Stano (2007), Table 20-2a.
U.S. Cost-containment Strategies
Hospitals: Diagnosis-related groups (DRGs) Prospective payment based on point system Economic impact of DRGs
Reduced hospitalization; shorter staysIncrease in outpatient careDRG creep
Physicians’ practices: Resource-based Relative Value Scale (RBRVS) Establishing a value scale
Work effortOverhead costLiability insurance premiums
Monetary conversion factor: (6 units) x $38 = $228
Managed Care Strategies
Types HMOs PPOs
Cost Control Strategies Practice guidelines
Restricted choice of providersSecond opinions requiredPrior authorizationCase management
Restricted choice of providersSecond opinions requiredPrior authorizationCase management
Market Alternatives
Managed competition Require employers to offer employees a
choice of health plansMedical savings accounts
Tax-free savings accounts for routine medical expenses
High deductible catastrophic insurance
Suppose employer pays $7000 for your family’s major medical and routine insurance coverage
Employer buys $3500 catastrophicinsurance policy and deposits other $3500 into MSA