Why does healthcare cost so much?

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• Why does healthcare cost so much?
• Understanding the real cost drivers and why
  Americans pay so much more for care
• Presented by Michigan Consumers for Healthcare

www.healthreformtruth.com
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U.S. Healthcare costs are out of control in
comparison to the world
Source International Federation of Health Plans,
CHRT graphic
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Its because we are obese, right?

• Or older?
• Or because of lawyers?
• Or because of the poor?
• Or because we spend more on technology?

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Americans are surprisingly healthy!

• America is healthier than peer nations in 7 out
  of the top 10 disease classifications!
• Institute of Medicine study
• Lower relative disease prevalence saves the U.S.
  70 billion in medical costs annually

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It must be because we are older?
Japan Median Age 45.8 Per capita spending 3,035
USA Median Age 37.2 Per capita spending 8,233
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It must be because of the lawyers!

• Litigation costs and malpractice insurance
  account for 1 to 1.5 percent of total medical
  costs. -Towers Perrin study
• As healthcare costs have doubled, medical
  liability costs have stayed fairly constant.

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But our technology is more advanced and
expensive, right?

• All modern healthcare systems have access to the
  very same pharmaceuticals, medical devices,
  surgical procedures and imaging equipment.
• Profits drive the use of imaging equipment

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The poor are to blame, right?
21.0
The bottom 50 of Americans account for only 2.7
of healthcare spending
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So why is believing in myths bad?

• It allows the real drivers of high costs to shift
  the blame
• It takes pressure off politicians to act
• It will ultimately lead to fiscal crisis

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So what are the real drivers?
Unit Prices and Administrative Costs!
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What do we get for 140 billion?
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Example Surgeon fee for hip replacement
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U.S. Hospital spending is 3 times the global
average
Source OECO Health Data, 2011
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So whos on my side

• Policymakers engage in blame shifting to avoid
  making tough decisions
• Unlike in other countries, policymakers create
  few leverage points to control costs for consumers

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Examples of policymakers punting

• Medicare Part D was prohibited by Congress from
  negotiating on behalf of the recipients for lower
  rates. The results billions in unnecessary out
  of pocket costs!
• Medicare physician services are supposed to be
  capped. Every year Congress succumbs to AMA
  pressure and overrides the caps.

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Balance billing practice continues

• ACA requires that health plans pay something for
  out-of-network
• But ACA allows hospitals to balance bill
  anything the insurance doesnt pay.

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Why no public option?

• The House passed version of the ACA would have
  created a public option to compete with private
  insurance
• Reimbursement rates would be capped at Medicare
  plus 10

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Challenges ahead for consumers

• How do we message (or counter-message) on cost
  drivers?
• How to we create a unified consumer policy agenda
  around cost drivers?
• How do we move policymakers to act?

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What You Can Do

• Join MCHs email list, find us on Twitter
  _at_MIChealthcare or http//Facebook.com/consumersfor
  healthcare
• Visit us on the web at www.consumersforhealthcare.
  org
• Or find a navigator to assist you in getting
  enrolled at
• www.EnrollMichigan.com

www.healthreformtruth.com