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Session 7-- Financing Health Care in the US
Transcript of Session 7-- Financing Health Care in the US
Technology and Research
More sophisticated treatments and interventions are more costly
Funding of research expenses increases with these advances
Costs of treatment and research goes up as more and differently trained personnel are required to support both
In 2009, those 65 and older = 12.9% of the population or 39.6 million
By 2030 the numbers will increase to 72.1 million or 19% of the population
Older individuals require more care for more chronic conditions
End of life measures are often costly and many times, futile
Four Areas of Major Expense
Hospital care @ 36%
Provider fees @24%
Nursing and home health @7%
Drug costs @ 12%
Other @ 18% (public health, research, administration)
Providers attempt to maintain income levels with lower reimbursement rates.
Facilities update technology, infrastructure and services to remain competitive.
Drug companies increase research and marketing efforts to remain competitive.
Health Care Cost Drivers
Why does it cost so much these days?
Longer life expectancy
How is it all paid for now?
Insurance: employers, co-pays, self insured policy holders at about 46%
Government: Medicare, Medicaid, facility reimbursement at about 34%
Health/medical savings accounts at about 15%
Out of pocket at about 5%
3 Major Influences:
Economy--costs in general go up, healthcare costs go up
Life expectancy increasing
Technology/Research advances are costly
Types of Private Health Insurance
Group health insurance-- employer sponsored
Individual private --self employed
Self funded --company owned
Managed care --for administrative and services consolidation
Financial Objectives of Healthcare Organizations:
Net income to continue operation
Contracting with 3rd party payers
Cost control analysis
Meeting government regulations
Minimizing financial risks
Those financial drivers are missing:
Quality of care (other than for competitive reasons)
Accessibility for all
And, what do those three elements equate to?
Government Sponsored "Insurance"
Social Insurance-- Medicare for 65+ and disability
Public Welfare Insurance-- Medicaid for economically disadvantaged and for children, i.e. Children's Health Insurance Program or CHIP
Managed Care: system to reduce costs and control
utilization; patients stay in network and fees
HMO = Health Maintenance Organization
PPO = Preferred Provider Organization
POS = Point of Service
Enacted in 1973 as HMO Act as a method of cost
Financing Health Care:
How and What
2015 budget = $632 Billion covering 50 million people
Numbers increase with graying of America
Services are more expensive due to chronic conditions, long term care and end of life care
Medicare finances are covered by the contribution from employers/employee taxes and member premiums
2016 budget = $644 Billion covering 69 million people (taxpayer dollars and payroll taxes)
Significant barriers and challenges include: