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PAM 2070: Healthcare Expenditures Pt. 1, PAM 2070: Healthcare Expenditures…
PAM 2070: Healthcare Expenditures Pt. 1
How much does the United States spend on health care?
The total amount of all spending in the US on medical care was $4,124 Billion
Percentage of expenditures of personal consumption Expenditure in medical care is 22% / $3 Billion
NHE exceeds medical care personal consumption because latter excludes research spending
Where does majority of medical spending go?
Majority goes to hospital care and physician caree
What are the trends in health expenditures in the United States?
Spending per capita has slowed down substantially, however it is still increasing
What are the consequences of this expenditure?
Money employers devote to health insurance has increased from 6% to 12% of total wages
median household earned less in 2015 after paying for health insurance compared to 2000
Healthcare is cutting deeply into people's income
Spending on healthcare has cut back on other costs
What are the causes of the persistent growth of US Health care spending?
Technology/Innovation
increased intensity of healthcare; fueled by fee-for-service system
Insurance
How is insurance contributing to these issues?
Few people face full price point; patients are more insulated from cost and public insurance is more important;
Cost Sharing
Fee-for-Service Reimbursement
hospitals/physicians are paid more when they provide more services to patients
PAM 2070: Healthcare Expenditures Pt. 2
How does the healthcare system work?
Employer and enrollee pay premium regardless of medical care received; health insurer pay providers when enrollee gets medical care;
What is patient cost sharing?
the out of pocket payment AKA deductible and co-payment
What is the formula for Medical Spending?
([quality of medical care] X [price]) + Admin costs
What are the drivers for these costs?
Quantity of Medical Care - health behavior; underlying factors
Price - # of payers/insurers; private market; regulation
Admin costs - # of payers; rules for MDs
What is the Medical Care Ratio?
Full-risk Enrollees' Medical Expenses / Premium Revenue
What will give the biggest health improvements for relatively little money?
Public health programs; refer to Health vs Medical Expenditures graph
How does the US healthcare compare with the rest of the world?
drug prices inn US are about 150% higher than in other countries
Doctors and nurses are paid more/more debt
hospital visits costs more- mostly due to medical technology
higher administrative costs
SUMMARY: WHY IS US HEALTH MORE EXPENSIVE?
US prices per care unit are high
multiple insurers; high administrative costs
Higher ability to pay for health care leads to more spending
Hospitals do not ration expensive medical technology