Perfect Storm 15 For Nurse Symposium 1

“The Perfect Storm”The Current Crisis State of U.S. Healthcare

* * *34th National Primary Care

Nurse Practitioner Symposium

* * *

Vince Markovchick, MD, FAAEMVince Markovchick, MD, FAAEM

Director, Emergency Medical Services Director, Emergency Medical Services

Denver HealthDenver Health

Professor of SurgeryProfessor of Surgery

Division of Emergency MedicineDivision of Emergency Medicine

University of ColoradoUniversity of Colorado

Dr. Markovchick is the father of one of my fellow students. He, though now retired (as of the day he gave us this presentation), will continue to present this all across Colorado. The slides are his, though I have not included several of them and deleted some unsupported information from others. These footnotes are almost all my own, but a few are his (I have indicated which ones).

References are provided at the bottom of each page. I have made a note on any page that was without references.

2009 Nurse Practitioner SymposiumVince Markovchick, MD, FAAEM

Financial Disclosures

There are no relevant financial relationships with any commercial interests to disclose

Ben: The organization to which Dr. Markovchick belongs is a financially un-biased source for healthcare reform, made up of physicians and nurses alike who advocate for healthcare reformation.

Health care costs and inflation out of control Increasing demand for care Decreasing resources Poor health care outcomes Increasing number of uninsured Increasing number of underinsuredB: This is a brief synopsis of the following slides….

Health Insurance Costs Keep Rising

Health insurance premiums are rising 2-3 times as fast as inflation and wages.

0%

500%

1000%

1500%

2000%

2500%

3000%

1970 1975 1980 1985 1990 1995 2000

Physicians Administrators

Administration is the Fastest Growing job in Health Care

Source: Bureau of Labor Statistics and NCHS

Dr. Marko: The previous chart helps us explain why we can spend so much more for so much less. Among the nations we will look at, all of them have taken the fundamental step of rejecting the financing of care by for-profit insurance companies, excepting the United States.

The natural market behavior of insurance companies is to compete to cover healthy, profitable people while shunning anyone who actually needs care. To do this, they erect massive bureaucracies with no purpose other than to fight claims, issue denials and screen out the sick. They consume care dollars, but their main output is paperwork headaches. In response, hospitals and doctors’ offices must employ virtual armies of administrators to deal with the separate payment bureaucracies of thousands of different insurance companies. U.S. businesses are saddled with the costly burden of administering their own health benefits. Co-payment collection and processing, eligibility determinations, utilization reviews: the scope of the bloat is staggering.

This slide begins to give a idea of the explosion of administrative waste within our health system.

48+ MILLION UNINSURED

50+ MILLION UNDERINSURED

Reference: www.census.gov or http://www.medscape.com/viewarticle/567737 retrieved August 2, 2009. These numbers were true roughly three years ago; they have worsened since then.

B: Unemployed is probably closer to 8 or 9% now. Children have increased in coverage dramatically since this study, by about 22% due to the SCHIP program.

Unemployed is probably closer to 8 or 9% now. Children have increased in coverage dramatically since this study, by about 22% due to the SCHIP program.

18,314 Adult Deaths Annually Due to Uninsurance

Health care spending 2008 - $2.2 trillion

69% for health care 31% for other costs

Administrative overhead ProfitsNote: NO REFERENCE, though we know that overhead

costs and HMOs are a huge part of any health insurance company. It is essentially that the less care that is offered, the less the insurance company pays.

Who pays the costs? 66% - Government (taxpayers) – Federal/State/Local

Medicare - $431 billion (2007) Medicaid - $329 billion (2007) SCHIP - $8 billion (2007) Government Employee Insurance Premiums U.S. Public Health Services U.S. Military VA System (235,000 employees) Prisoners (3 million incarcerated) Public hospitals and clinics Tax subsidies Note: NO REFERENCE

Tax subsidies of private health insurance Premiums paid by employer and employee

are tax deductible In 2006 tax subsidy was $209 billion or 35%

of cost of health insurance premiums Tax subsidies are regressive and unfair

Higher tax bracket employee pays less for health insurance than lower paid employees

e.g. $1,000 premium

40% tax bracket - $600 cost

20% tax bracket - $800 cost

Our tax-financed health care spending is the highest of ANY NATION IN THE WORLD, without having a nationalized health care system. Our taxes currently pay for 59% of healthcare costs in the United States. Reference: Paying For National Health Insurance—And Not Getting It

Steffie Woolhandler and David U. Himmelstein, retrieved Aug 2 2009 from http://content.healthaffairs.org/cgi/content/full/21/4/88

Small Business Health insurance premiums rose 74% between 2001-2008

Companies offering health benefits1995 – 67%2000 – 51%2007 – 41%2008 – 38%

National Small Business Association SurveyKaiser Health Foundation

Cost of U.S. health care $2.2 trillion ($7,400 per capita in 2007) -

more than double any other developed country

Now it is closer to $7,700 per capita.

Source: Centers for Medicare & Medicaid Services

ProjectedActual

$3,604 $3,910 $4,257$4,729

$5,485$6,280

$7,129$8,090

$9,173

$10,339

$11,660

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Per capitaexpenditures

National Health Spending:Per Person

In comparison to other countries, why do we: Spend far more per capita? Have 100 million uninsured or underinsured? Have overall poorer outcomes?

Obviously we have lower numbers here, simply because our life expectancy is less.

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80

10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Source:Agency for Healthcare Research and QualityMEPS, 1999

Percentof health CareExpenditures

1% 1% 2% 4% 6%

13%

73%

0% 0% 0%

If you were in an insurance company CEO, who would you

want to insure?

Dr. Marko: This graph shows a population divided into 10ths. It shows how health care services are utilized in any one year in any population. Take even 1000 people in a population and you will find that the majority of them (80%) are healthy and use very little care. 30% of them in fact, use no care at all!. In actuality most of the services are used in any one year by a small percentage. 10% use 72 % of the health care dollars. If we add to that the 10% who use 13% of the care we find that 20% use 86% of health care services. It is worth keeping in mind that these are not the same people all the time. All of us move in and out of this group at one or many times in our lives. And when we are in that group ( birth of a baby, coronary bypass, cancer diagnosis) we expect health care services to be there waiting for us. Health care is not like other human needs. We all have the same basic needs for food. shelter, clothing etc. When you look at the population’s needs in regard to health care needs are vastly different. Because at any one time the healthy majority use very little care - 80% of the population in Vermont use only 14% of the health care dollars. On the other hand, 10% use 73% of the health care dollar. Another important point is that the most expensive services The NICU, the trauma unit, dialysis to name a few are used by a very small number of people. Dialysis is used by only 380 people per year in Vermont. Yet the infrastructure costs of sustaining these services are enormous.

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10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Source:Agency for Healthcare Research and QualityMEPS, 1999

Percentof health CareExpenditures

1% 1% 2% 4% 6%

13%

73%

0% 0% 0%

20% use 86% of the care

Most of the money is spent on a few people in any one year

Dr. Marko: Most people are not using care. 80% use around 15%. We could just look at their needs and adjust services according to the needs of the overwhelming majority. Go from $2 trillion to a mere $300 billion. Preposterous, of course, we all expect these services when we need them. Problem is, there is no health care system that guarantees adequate financing of these services.

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80

10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Source:Agency for Healthcare Research and QualityMEPS, 1999

Percentof health CareExpenditures

1% 1% 2% 4% 6%

13%

73%

0% 0% 0%

80% uses less than $1000 of care per year

If you were in an insurance company CEO, who would you

want to insure?

• Dr. Marko: This graph shows a population divided into 10ths. It shows how health care services are utilized in any one year in any population. Take even 1000 people in a population and you will find that the majority of them (80%) are healthy and use very little care. 30% of them in fact, use no care at all!. In actuality most of the services are used in any one year by a small percentage. 10% use 72 % of the health care dollars. If we add to that the 10% who use 13% of the care we find that 20% use 86% of health care services. It is worth keeping in mind that these are not the same people all the time. All of us move in and out of this group at one or many times in our lives. And when we are in that group ( birth of a baby, coronary bypass, cancer diagnosis) we expect health care services to be there waiting for us. Health care is not like other human needs. We all have the same basic needs for food. shelter, clothing etc. When you look at the population’s needs in regard to health care needs are vastly different. Because at any one time the healthy majority use very little care - 80% of the population in Vermont use only 14% of the health care dollars. On the other hand, 10% use 73% of the health care dollar. Another important point is that the most expensive services The NICU, the trauma unit, dialysis to name a few are used by a very small number of people. Dialysis is used by only 380 people per year in Vermont. Yet the infrastructure costs of sustaining these services are enormous.

Definitions to what happens in private insurance companies. HMOs perform these

actions in order to decrease costs. No reference provided for statistics on this page.

Recision – cancellation of an existing policy for a pre-existing, unreported condition or prior illness

Purging – pricing premiums to small businesses with high costs to insurers out of reach so they dump insurance coverage

20,000 cancellations with $300 million savings to insurers over 5 years

0%

500%

1000%

1500%

2000%

2500%

3000%

1970 1975 1980 1985 1990 1995 2000

Physicians Administrators

Administration is the Fastest Growing job in Health Care

Source: Bureau of Labor Statistics and NCHS

• This chart helps us explain why we can spend so much more for so much less. Among the nations we just looked at, all of them have take the fundamental step of rejecting the financing of care by for-profit insurance companies, except for the United States.

• Dr. Marko: The natural market behavior of insurance companies is to compete to cover healthy, profitable people while rejecting anyone who actually needs care. To do this, they erect massive bureaucracies with no purpose other than to fight claims, issue denials and screen out the sick. They consume care dollars, but their main output is paperwork headaches. In response, hospitals and doctors’ offices must employ armies of administrators to deal with the separate payment bureaucracies of thousands of different insurance companies. U.S. businesses are saddled with the costly burden of administering their own health benefits. Co-payment collection and processing, eligibility determinations, utilization reviews: the scope of the bloat is staggering.

• This slide begins to give a idea of the explosion of administrative waste within our health system.

69%

31%Clinical Care

Administrative Costs

Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004

($2000 per person)

One-Third of Health Spending is Consumed by

Administration

Dr. Marko: Does not guarantee health coverage- people get sick, especially very sick, get care, no way to payIs complicated and creates a massive bureaucracy that consumes 31% of the health care dollarWhen the fixed costs of the infrastructure aren’t paid, a deficit results.

Non-profit organizations typically spend between 1-5% on administrative costs, as opposed to the 15-31% of private healthcare organizations.

Essentially, our taxes going to pay private insurance companies.

Yet another example of how corrupted and inefficient are the bills passed by congress. They try to “improve” the current program, resulting in more costs that essentially get wasted.

For Profit Hospitals

Don’t they provide higher quality care and cost less?

B: This is a myth. Personally, I’m sick and tired of hearing this claim. You may be able to FIND higher quality, but as a general rule this is not true.

AMI stands for acute myocardial infarction and CHF is congestive heart failure.

Who are the underinsured? Most are working Employer, employee or individual cannot

afford increased premiums Accept high deductibles Higher co-pays Exclusions in policyReferences provided on previous slides; this is mainly a

summary.

Why is an unexpected medical bill the major reason for 62% of personal bankruptcies in the U.S.? Individual charged full costs for healthcare Insurers negotiate discounts Individual is “underinsured”Reference: see following slide

B: The individual is charged full-price, but the insurance company negotiates a discount. For example, if you are charged $20,000 for a three-day visit to the hospital for an appendectomy, then you will pay the full price. If you have insurance, they’ll usually have a negotiated price of between 40-70% of the normal price, and you pay the co-pay. In other words, the insurance company would have to pay only $10,000 and you would pay the $5,000 premium, leaving the insurance company to pay for $5,000 of your bill while increasing your premium or denying you coverage renewal at the end of the contract.

What is the current cost of health insurance? Over $13,000 for employer sponsored family

policy Individual policy (if it can be purchased) more

the $13,000 after tax dollars Median income was $48,000 in 2007.

Note: No reference

Can the average worker afford health insurance?

Do we have the “best health care system in the world”? Yes, if you are wealthy or have excellent

insurance and are in an area with access to our highest quality care.

No, if you are not in the above group.B: I would add that you also can have excellent healthcare if your are poor

and qualify for Medicaid or Medicare coverage

When compared to Canada, Australia,

Germany, New Zealand and the United Kingdom, the U.S. ranks last or next to last in: Quality Access Efficiency Equity Healthy lives

The Commonwealth Fund 5/2007

Healthcare inflation Cost of healthcare has risen at a rate 2-4

times that of inflation over the past 10 years

Largest factor is cost of pharmaceuticals $235 billion in 2008

This is EXACTLY why it would be so difficult to implement any sort of an effective NHP in the US….there are so many other factors, such as education and private businesses, etc. Because of this, the only way to really implement it would be to do it on a city or state level, because the people could vote and be represented according to their needs; changes would occur much more gradually, and corruption would be less evident.

U.S. Drug Spending, 1990-2003

Source: HCFA, Office of the Actuary

$40$46 $48 $51 $55

$61 $67$75

$104

$122

$142

$161

$182

$85

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This is simply unacceptable. The rise came when pharmaceutical companies began advertising on television and lobbyists and drug representatives began providing biased drug education to congress, physicians, and the public. For example, Plavix is something like 4 bucks a pop, whereas aspirin is maybe half a cent. Aspirin is MORE EFEFCTIVE at preventing an MI; Plavix is only indicated in the case of a stent. However, millions of people request Plavix because it is advertised with animations of atherosclerosis “dissolving” from the blood vessels! The people aren’t paying for it (insurance is), so they do it. Doctors prescribe it because drug representatives spend millions of dollars per year delivering their lunches and providing biased drug information. However, I believe that the system itself is to blame…not the individuals involved in the pharmaceutical companies.

How does PHARMA justify U.S.

citizens paying 2-3 times more for drugs than people in other countries?

R&D is expensive, and if we can’t change this, we will not develop new (life-saving) drugs.

What role do medical liability costs play? 3% of total costs ($66 billion) Majority of patients who are harmed are not

compensated Some not harmed are compensated Tort reform is not the comprehensive solution to

health care costs 54% of total costs are administrative overhead

(legal costs)Note: no reference provided

What is “socialized medicine”? Government health care system in which

the hospital and clinics are owned by the government and all providers are government employees

U.S. Military medical system Veteran’s Administration health system

What is a social insurance program? Government financed with

private/individual providers Medicare/Medicaid/SCHIP

What are the attributes of the ideal health insurance plan?

Affordable Minimal or no co pays

Comprehensive Basic medical coverage Cradle to grave

Universal Insure all

Between jobs Unemployed

Portable Same coverage throughout U.S.

Unrestricted choice of Provider Hospital

Colorado Medical Society - 2007

The challenge!

Can you buy comprehensive, quality, affordable health insurance on the open market that does not exclude you or your pre-existing medical condition?

Is there consumer legislature and physician support for single payer universal health insurance? HB 676 (Medicare for all) has 83 House

co-sponsors Sen. Sander’s single payer bill in Senate

has one sponsor

59% of over 2,000 AMA members

support single payer national social insurance

PCPs are probably about eighty percent, whereas specialty areas are probably about 15% (because, obviously, their salaries would be negatively impacted).

No Reference

How do we achieve the ideal? Dramatically reduce overhead costs. How? Eliminate “for profit” entities in delivery of

healthcare Create a risk pool of all citizens

Will make insurance affordable to all Reduce costs of pharmaceuticals

Allow Medicare to negotiate price Eliminate Medicare subsidies to private insurers

(Medicare Choice) Eliminate direct to consumer marketing of Rx drugs

How can this be funded?

Create a single payer tax supported fund administered by

U.S. government, e.g., Medicare for all If private health insurers are part of the

solution, they must: Be not-for-profit Agree to cover everyone at a reasonable and

affordable cost Have no exclusions for pre-existing conditions Have limits on administrative overhead costs

I don’t really understand this slide, but maybe you will….it’s twenty years old, anyway.

What positive results could result from a national tax supported single payer system?

Free choice of provider and hospital Universal coverage Equitable payment (based on income) Low cost due to universal risk pool Low overhead (31% to 5%) Transparent system Improved quality assurance and safety Improved access to primary/preventative

care

No premium paid by employer or employee

Should result in increased salaries No workmen’s compensation premiums

No need for workman’s compensation litigation for medical costs

Disabled veterans care now available everywhere without restriction of access to Veterans Administration

Elimination of auto insurance medical

premium Decrease in auto insurance premiums

Eliminate medical care portion of malpractice settlements

Eliminate personal bankruptcies for unpaid medical expenses

Increase competitiveness of U.S. companies Increase in U.S. jobs

“Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”

Martin Luther King, Jr.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

Declaration of Independence

July 4, 1776

We as a country must decide if health care is a right or a privilege?

If it’s a right, we must convince our political leaders to move toward COMPREHENSIVE reform.

What is the current status of U.S. Healthcare Reform?

“We need a uniquely American approach to

health care reform.”Robert Zirkelbach – spokesman

for America’s Health Insurance Plans

What is “uniquely American”?

Not single payor, which is the system almost all industrialized countries have

Keep our employer-based, private health insurance system

B: Essentially, President Obama’s plan.

What is the additional cost of covering our 50 million uninsured?

If the current cost of a family health care policy is $13,000/yr. and single coverage is $6,500/yr., assuming 25 million are families of 4 and 25 million are single, the cost equals $325 billion/yr.

Where do we get $325 billion new dollars?

Proposals for funding:

$600 billion new money over 10 years in current Senate bill

Cut “waste” in system – may be 30% ($600+ billion) of health care dollar – a great challenge

Tort reform – small change – approximately $30 billion/yr

PHARMA - $80 billion drug cost savings over 10 years

American Hospital Association - $155 billion over 10 years from Medicare and Medicaid

This “new money” DOES NOT EXIST. The current healthcare “reform” is not a reform at all, it is a black hole of debt. It just encourages private insurance companies to dump their sick people on the government while still charging exorbitant prices to the healthy.

Where are the “low hanging fruit?”

Reduce overhead from 31% to 5% $550 billion/yr

Eliminate subsidy to Medicare Advantage (currently adds 19% to Medicare costs)

Reform Medicare Part D Allow Medicare to negotiate pricing Remove private health insurers from system

Total in excess of $600 billion/yrThis is an enormous proposition, of reducing overhead costs (going from profit to non-

profit organizations).

What are the impediments to reform?

SPECIAL INTEREST $$$

From 1997-2008, health care sector has spent $3.4 billion on lobbying (Finance sector $3.6 billion)

Currently total health care lobbying cost = $1.4 million/day

Almost all members of Congress have received huge $$ from this lobby—some like Senator Baucus $1.5 million

Where does this lobbying money come from?

As of 7/13/09, total $$ from health insurance interests to Senators:

Baucus - $3,973,485Bayh - $1,565,088Conrad - $2,154,200Feinstein - $1,749,889Kerry - $8,994,077Landrieu - $1,653,943Lieberman - $3,308,621Nelson - $2,214,715

Is there any hope for real reform? Yes, if:

Private insurers are prohibited by meaningful legislation from “cherry picking”, i.e., cannot exclude pre-existing conditions

If a “public option” is available that cannot become the option of last resort to cover the most seriously ill; i.e., those private insurers can “dump” on this insurer

“Affordable” insurance is available to all – THE GREATEST CHALLENGE

RECOMMENDED READINGS:

Angell M. The Truth About the Drug Companies and How They Deceive Us and What To Do About It. Random House 2004

Barlett D, Steele J. Critical Condition - How Healthcare in America Became Big Business and Bad Medicine. Bradbury Books 2006

Kassirer J. On the Take – How Medicine’s Complicity with Big Business Can Endanger Your Health. Oxford University Press 2005

Arch Int Med 2006;166:2511AHRQ, MEPS 1999Carroll & Ackerman, Ann Int Med 2008;148:566