Obama health care for all americans: practical implications
From: Pain Physician. 2009 Mar-Apr;12(2):289-304
Rapidly rising health care costs over the decades have prompted the application of business practices to medicine with goals of improving the efficiency, restraining expenses, and increasing quality. Average health insurance premiums and individual contributions for family coverage have increased approximately 120% from 1999 to 2008. Health care spending in the United States is stated to exceed 4 times the national defense, despite the wars in Iraq and Afghanistan. The U.S. health care system has been blamed for inefficiencies, excessive administrative expenses, inflated prices, inappropriate waste, and fraud and abuse. While many people lack health insurance, others who do have health insurance allegedly receive care ranging from superb to inexcusable. In criticism of health care in the United States and the focus on savings, methodologists, policy makers, and the public in general seem to ignore the major disadvantages of other global health care systems and the previous experiences of the United States to reform health care. Health care reform is back with the Obama administration with great expectations. It is also believed that for the first time since 1993, momentum is building for policies that would move the United States towards universal health insurance. President Obama has made health care a central part of his domestic agenda, with spending and investments in Children’s Health Insurance Program (CHIP), American Recovery and Reinvestment Act of 2009, and proposed 2010 budget. It is the consensus now that since we have a fiscal emergency, Washington is willing to deal with the health care crisis. Many of the groups long opposed to reform, appear to be coming together to accept a major health care reform. Reducing costs is always at the center of any health care debate in the United States. These have been focused on waste, fraud, and abuse; administrative costs; improving the quality with health technology information dissemination; and excessive regulations on the health care industry in the United States. Down payment on health care reform, American Recovery and Reinvestment Act, and CHIP include many provisions to reach towards universal health care.
Rapidly rising health care costs over the decades have prompted the application of business practices to medicine with goals of improving efficiency, restraining expenses, and increasing quality. Further, concern about escalating costs and the quality of health care delivered in the United States has led to an increase in focus on pay-for-performance, value-driven health care, and public reporting of quality and cost information. At the same time, employers fear cost of health insurance and individuals are also worried about soaring health care costs. Average health insurance premiums and worker contributions for family coverage. The employer contribution has soared from $4,247 in 1999 to $9,325 in 2008 with a 119% increase. During the same period employee contributions have increased from $1,543 to $3,354 in 2008 at 117% increase. Total expenses increased from $5,791 to $12,680 a 119% increase.
It has been quoted that health care spending is 4.3 times that for national defense, despite the wars in Iraq and Afghanistan. Further, our system has been blamed for inefficiencies, excessive administrative expenses, inflated prices, inappropriate waste, and fraud and abuse. While many people lack health insurance, others who do have health insurance allegedly receive care ranging from superb to inexcusable.
It was shown that per capita spending in the United States is the highest among Organisation for Economic Co-operation and Development (OECD) countries. The expenditures per capita in the United States were $5,635 on health care in 2003, whereas based on the analysis it should be $3,990 per capita. Consequently, the United States spent $1,645 per capita more than would have been expected. In absolute terms, the highest discrepancy was noted in hospital care of $224 billion, followed by outpatient care of $178 billion. However, the largest discrepancy was the category of administration of health care system, on which the United States spends 6 times more per capita than its peer countries ($412 versus $72) almost a quarter of excess spending in the United States.
In contrast, in 2006 the United States spent nearly $650 billion more on health care than peer OECD countries, even after adjusting for health. Of this amount, outpatient care, which includes same-day hospital visits and is by far the largest and fastest growing part of the U.S. health system. Four other cost categories – drugs; health administration and insurance; investment in health; and inpatient care – are responsible for $279 billion in spending above expected. In the remaining 2 categories of long-term and home care and durable medical equipment U.S. spending is $72 billion less than expected. Consequently, U.S. health spending totalled $2.1 trillion in 2006, an increase of $363 billion since 2003, and total nearly $6,800 per capita.
Outpatient care accounts for more than 40% of the overall health care spending and 68% of spending, expanding at 7.5% per annum from 2003 to 2006 – a faster pace of growth than observed in any other cost category – adding more than $166 billion in costs during this period. Same-day hospital care accounts for $245 billion, physician office visits account for $392 billion, and ambulatory surgery centers and diagnostic imaging centers contributed to $28 billion. However, same-day hospital care is the fastest growing of all outpatient cost categories at 9.3% per year.
Drugs account for 12% of overall health care costs and 15% of total spending above expected ($98 billion), growing 6.9% annually from 2003 to 2006, resulting in a $45 billion increase in costs. These increases are due to 3.5% a year prescription growth and 4.5% net price growth and a more expensive drug mix. However, it appears that the United States on average uses 10% fewer drugs per capita than other OECD countries, whereas prices are 50% higher than those in other countries for equivalent drugs.
Provider groups believe that outlandish administrative costs represent one of the biggest problems with our health care system. These costs accrue from insurers, both public and private, from medical groups and hospitals. Administrative expenses account for about 30% of the total costs of the health care in the United States. That translates to approximately $680 billion of $2.3 trillion spent in 2007 or $7,421 spent per person.
In fact, the study by McKinsey Global Institute shows that health administration and insurance expense category accounts for 7% of overall health care costs and 14% of total spending above expected ($91 billion), spending growing by 6.3% annually over the 3-year period, resulting in a $25 billion increase in costs. However, it appears that this report grossly underestimates administrative costs. Further, this report also shows that the administrative costs for Medicare enrollee grew by nearly 30% per year, which largely reflected payouts to private administrators or Medicare advantage plans and the Part D drug benefit. From 2005 to 2006 alone, administration for all Medicare programs increased by nearly $8 billion.
McKinsey Global Institute report shows that long-term and home care accounts for 9% of overall health care costs, but is $53 billion less than expected, reducing total spending by 8%. Even then, the report shows that from 2002 to 2006, this category grew by 6.2% annually, resulting in a $30 billion increase in costs. In contrast, a recent Government Accountability Office (GAO – 09 – 185) report shows that fraud and abuse helped boost Medicare spending on home health services 44% over 5 years as some providers exaggerated patients medical conditions and others billed for unnecessary services or care they did not provide. The GAO reviewed home care payments from 2002 to 2006, when spending reached $13 billion. Continuing with the increasing trend, during the past year, Medicare spent about $16.5 billion on home care for the services reviewed by the GAO out of the total budget of $455 billion.
“Change is in the air,” we have heard this on many, many occasions. There is always too much talk and very little action. Starting with Harry Truman in the 1940s, Richard Nixon in the 1970s, and Bill Clinton in the 1990s, all of them attempted change in the health care system and enacted some kind of national health insurance. Other health care mavericks such as Representative Stark bill with his calling for greater reliance on the government than the Clinton plan also failed. In addition, Representative Cooper’s plan with a bipartisan group of 80 representatives representatives in support of a more market-friendly plan, and Senators Breaux and Durenberger similar plan in the Senate also failed.
Health care reform is back with the Obama administration with great expectations. It is believed that for the first time since 1993, momentum is building for policies that would move the United States towards universal health insurance. President Obama has made health care a central part of his domestic agenda, coupled with promises from key members of Congress to introduce ambitious health care reform legislation in 2009 and nomination of Governor Kathleen Sebelius as secretary-designate of the United States Department of Health and Human Services (DHHS).
In May 2006, former Senate majority leader, Tom Daschle (the first nominee for secretary designate for DHHS — nomination withdrawn 2/3/2009), prophetically said that it may take a major fiscal emergency to make Washington deal with the health care crisis. Further, there is growing sentiment that the prospects for meaningful health care reform have never looked better. As many of the groups long opposed to reform, including the insurance industry and physician groups, are reportedly prepared to make a deal — willing to accept radical surgery. In fact, a budget for change has been proposed with down payment in health care reform.
However, Obama’s ambitious plan is not without criticism and negativity. The Obama plan has been described as more regulation with unsustainable spending. Further, Obama’s health plan is considered ambitious in any economy, but more so in present economy. The majority of the physicians have a negative view on Obama’s health plan.
While health care reform is not only essential but also mandatory, creation of a huge bureaucracy may not achieve the goals of increasing efficiency, improving the quality, and reducing the costs resulting in universal coverage. It would be ideal to study the effectiveness or lack thereof of the UK’s health care system, NICE, the demise of AHCPR, and the effectiveness of AHRQ.
Apart from the economic crisis, we will be watching, with great interest, the health care reform. It has been stated that the Obama administration’s chief of staff prior to taking office, remarked, “you never want a serious crisis to go to waste,” implying that the economic crisis has allowed the Obama administration to undertake far-reaching health care initiatives that it could not otherwise have launched quickly, if at all . However, now the government, public, and providers will have to determine how the reform will effect the health care system of the United States — is it radicular surgery, cosmetic surgery, or surgery gone bad.
A national study among 526 primary care physicians revealed that the majority (61%) reported that health care delivery will “get worse” in the next four years, after viewing video segments from President Obama’s speech to Congress. The study was conducted by HCD Research during February 26-27 to obtain physicians’ perceptions on President Obama’s new health care reform plan that was outlined in his speech to Congress on February 24, 2009. Nearly half (49%) of respondents indicated that skepticism was the emotion they felt most while watching President Obama outline his new health care reform plan. When asked how they thought their professional life would change in four years, the majority (64%) thought it would get worse.
