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

U.S. Healthcare costs are out of control in comparison to the world

Source: International Federation of Health Plans, CHRT graphic

It’s because we are obese, right?

• Or older?

• Or because of lawyers?

• Or because of the poor?

• Or because we spend more on technology?

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

It must be because we are older?

JapanMedian Age: 45.8Per capita spending: $3,035

USAMedian Age: 37.2Per capita spending: $8,233

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.

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

The poor are to blame, right?

The bottom 50% of Americans account for only 2.7% of healthcare spending

21.0%

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

So what are the real drivers?

Unit Prices and Administrative Costs!

What do we get for $140 billion?

Example: Surgeon fee for hip replacement

U.S. Hospital spending is 3 times the global average

Source: OECO Health Data, 2011

So who’s 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

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.

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 doesn’t pay.

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%

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?

What You Can Do

Join MCH’s email list, find us on Twitter @MIChealthcare or http://Facebook.com/consumersforhealthcare

Visit us on the web at www.consumersforhealthcare.org

Or find a navigator to assist you in getting enrolled atwww.EnrollMichigan.com

www.healthreformtruth.com