Health care costs concern Americans most

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Health care costs concern Americans most

• By JIM ABRAMSAssociated Press Writer

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National Health Expenditures as a Share of Gross
Domestic Product (GDP)
Between 2001 and 2011, health spending is
projected to grow 2.5 percent per year faster
than GDP, so that by 2011 it will constitute 17
percent of GDP.
Actual
Projected
Percent of GDP
Calendar Years
Source CMS, Office of the Actuary, National
Health Statistics Group.
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Health Care Problems

• Most Americans see health care and insurance
  costs as a more pressing problem than malpractice
  lawsuits, a survey says, although the Bush
  administration often cites litigation as a reason
  for high medical bills.
• The Kaiser Family Foundation, a nonprofit
  organization that studies health care issues, and
  the Harvard School of Public Health said reducing
  malpractice jury awards ranked 11th on a list of
  12 items people thought should be health care
  priorities for the president and Congress.
• Named most often, by 63 of respondents, was
  lowering the cost of health care and insurance,
  followed closely by making Medicare more
  financially sound and increasing the number of
  Americans with insurance.

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Drug Expenditures

• The survey found that 73 favor changing the law
  to allow Americans to buy prescription drugs
  imported from Canada. That change is strongly
  opposed by the pharmaceutical industry, and the
  administration says it is too costly to do
  safely.
• Four out of five surveyed also want the
  government to negotiate with drug companies for
  lower prices, a practice expressly banned by the
  Medicare law enacted in 2003. Among those 65 and
  older, 46 viewed that new law unfavorably,
  against 29 with a favorable impression.
  Four-fifths of those seniors said the law was too
  complicated for people to understand.

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Expenditures for Health Services, by All Payers
In recent years, the hospital share of total
spending has decreased while the prescription
drug share has increased.
Calendar Years
Percent Share
Source Centers for Medicare Medicaid Services,
Office of the Actuary, National Health
Statistics Group.
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Factors Accounting for Growth in Personal Health
Care1 Expenditures Per Capita
The most important factor accounting for the
slowdown in personal health care
expenditure growth after 1993 was the decline in
medical price growth.
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Average Annual Percent Change
Selected Calendar Year Periods
1 Personal health care spending comprises
therapeutic goods or services rendered to treat
or prevent a specific disease or condition in a
specific person. 2 Utilization includes
quantity, quality, and mix of services. As a
residual, this factor also includes any errors in
measuring prices or total spending. Note
Medical prices are calculated using the personal
health care chain-type index constructed from the
producer price index for hospital care, nursing
home input price index for nursing home care, and
consumer price indexes specific to each of the
remaining personal health care components. Source
CMS, Office of the Actuary, National Health
Statistics Group.
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The Economics?

• What leads to changes in health care costs
  (expenditures)?
• Thought Process
• Expenditures Price x Quantity
• Suppose that Expenditures 900 billion
• If Price ? by 3.4, and Quantity ? by 2.0
• THEN
• New Exp (1.034 x Price) x (1.02 x Quantity)
• New Exp (1.034 x 1.02) x Old Expenditures
• New Exp (1.055) x Old Expenditures