Evan Christman September 17, 2009
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1 Context for Medicare policy Evan Christman September 17, 2009
2 Rising health care costs for all payers Rate of increase has exceeded GDP growth. Payer Per capita growth in excess of GDP, (percentage points) Medicare +2.4 Fed. share of +2.2 Medicaid All others +2.0 Source: CBO 2007 Excess growth is projected to continue in the future. 2
3 Health care will consume a growing share of fgross Domestic Product Percent of GDP 25% 20% 15% Private Other Public Medicare Medicaid 10% 5% 0% Source: National Health Expenditure Accounts 2009 Note: Medicaid spending includes both state and federal expenditures. Private includes out of pocket expenditures. 3
4 Medicare expenditures will exceed dedicated di d resources Percent of GDP 12% 10% Actual Projected Total Medicare spending 8% HI deficit 6% 4% State transfers General revenue transfers 2% 0% Tax on SS benefits Premiums Payroll taxes Source: 2009 Medicare Trustees Report; intermediate projections 4
5 Annual revenues are not covering expenses for Hospital Insurance Trust Fund Annual expenditures exceed annual income beginning g in Years of solvency remaining continues to decline. Years of solvency remaining i * 2011* 2012* 2013* 2014* 2015* 2016* 2017* Source: Office of the Actuary; intermediate projections of Medicare Trustees Reports ;2010 and later are estimated based on insolvency date of Size of payroll tax-paying workforce o will decline e relative e to number of enrollees. 5
6 Major factors in the growth of health care spending Technology Income Insurance Prices Changes in longevity and demographics Changes in health status Organization of delivery system 6
7 U.S. spends more per capita than international ti peers in ,000 United States Average per capita spending on health (U.S. dollars PPP*) 6, ,000 France Germany 4,000 United Kingdom 3,000 Japan OECD average 2,000 Source: Organisation for Economic Cooperation and Development Health Data 2009 *Purchasing Power Parity 7
8 Quality of care in U.S. suggests not all health care spending is valuable Many recommended services are not provided to patients (McGlynn). International comparisons are mixed, but lower spending countries have better quality on some measures. Higher spending does not always yield better quality. Differences in health care access and quality among populations, including Medicare beneficiaries. 8
9 Medicare beneficiaries are already facing growing financial i liability Cumulative percent change 100% 80% 60% 40% 20% Pt. B premium Social Security COLA 0% Note: COLA( (cost-of-living i adjustment). t) Source: Social Security Administration and Medicare trustees report. 9
10 Rising Medicare costs raise issues for beneficiaries i i and policymakers 75 percent of beneficiaries i i will not pay a higher premium in 2010 due to the holdharmless provision. 25 percent of beneficiaries will pay a higher premium to compensate for cost of revenue lost from hold harmless. 10
11 Seeking Better Value for Medicare - Pi Price accuracy and equity Problems High costs and rapid cost growth High utilization of services (esp. costly services) and rapid volume growth Directions for Reform Fiscal pressure on providers to constrain costs Price accuracy for physician, hospital, and imaging services Measuring resource use 11
12 Seeking Better Value for Medicare - Quality and coordination Problems No incentive for coordination Providers paid in silos No longitudinal accountability No penalties for poor quality or rewards for good quality High utilization of services Directions for Reform Payments for primary care Medical home Pay for performance Target readmissions Bundled payments Accountable Care Organizations Gainsharing Quality standards for imaging services 12
13 Seeking Better Value for Medicare - Information for patients and providers Problems No information on what works Directions for Reform Public reporting of quality No transparency on financial relationships that influence practice patterns Comparative effectiveness research Disclosure of physician financial relationships 13
14 Conclusion and Discussion Discussion: i Are there other aspects of reform, fiscal or economic challenges to include in chapter? 14
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