Structural Inefficiencies in American Health Care

1. Structural Inefficiencies in American Health Care Eric Bernstein, MD, MPH New Mexico Cancer Care Associates Santa Fe, NM

4. Safe topics • Money • Politics • Cancer • Health care reform

5. National Health Expenditures and Their Share of Gross Domestic Product, 1960-2009 Dollars in Billions: 5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.0% 16.1% 16.2% 16.6% 17.6% Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip).

6. Insurance premiums are rising and fewer people can afford them • 1,516,971 Personal bankruptcies 2011 • 62% of these are classified as “medical” (Himmelstein D, et al, Am J Med 2009) • ~940,000 “medical bankruptcies” in 2011 • 8% of NSCLC patients bankrupt within 5 years of diagnosis (Ramsey SD, et al. 2011) Claxton G, et al. Health Aff (Millwood). 2010 Oct;29(10):1942-50.

7. Health care spending worldwide

8. Best Health Care in the World? For many specialized things, the USA is terrific BUT Average life expectancy at birth =33rd DALE (disability-adjusted life expectancy) =24th WHO World Health Report 2000 =37th United Kingdom WHO World Health Report 18th 6% of GDP spent on healthcare

10. Why Are Our Outcomes Not Better? Uninsured: • More ill when seek treatment= Breast cancer: 30-50% higher mortality Colon cancer: 50-60% higher mortality • Mortality of uninsured hospitalized children= 1.6 times that of the insured child Chronic conditions poorly managed; Not systematic JPUBHealth10/29/09 advance publication on line CalHealthReform.org accessed 11/14/2009

11. Budgets Cut • N.C. Division of Mental Health, Developmental Disabilities, and Substance Abuse Services • Community Care of North Carolina • N.C. Office of Rural Health and Community Care

12. Administrative Costs • USA: easily the world leader at 30% (6XOECD*) • France 4% • Canada 6% • Taiwan 1.5% In USA, 1 insurance employee for every two doctors 68K/year in billing costs per doctor in an office-based practice *Organization for Economic Co-operation and Development

13. Where Does Your Health Care Dollar Go? Hospitals 31 cents Administrative Costs 30 cents: - Insurance Company -20 cents -Doctors, Hospitals -5 cents each Doctors 21 cents Drugs 10 cents Other Going UP Going DOWN (as a percent)

15. 2010 Revenues of Top Insurers • 1. UnitedHealth Group - $87 billion (25)2. WellPoint - $65 billion 3. Aetna - $34.7 billion (85) 4. Humana - $30.9 billion (98)5. Cigna - $18.4 billion (141) 6. Health Net - $15.7 billion (179)7. Coventry Health Care - $13.9 billion • “Sometimes it’s good to be a health-care CEO. Health-care company chief executives had the highest median pay of any industry captured by the recent The Wall Street Journal CEO Compensation Study.” 2011

16. “…hired more than 350 former government staff members” “…At least ten others have been members of Congress”… Billy Tauzin Karen Ignagni Health Care Industry Spending 1.4 million/day on lobbying--The Washington Post 7/06/09, others

18. Magnetic Resonance Imaging (MRI) Machines per Million Population, 2008 * 2007. Source: OECD Health Data 2010 (Oct. 2010).

19. MRI Scan and Imaging Fees, 2009 Dollars US high-end 1,500 US average Source: International Federation of Health Plans, 2009 Comparative Price Report.

20. Why does the market fail? • Inelastic demand • Almost no one pays directly for care • Pricing is a mystery

21. Everything costs more

22. Los Alamos Medical Center • Population 12,000 • 20 bed hospital • 140 doctors

23. Depot Lupron • Lowers testosterone to control prostate cancer • Hospital bills $12,000 • Medicare pays $651.00 • Everybody else?

24. Los Alamos Medical Center • Population 12,000 • 20 bed hospital • 140 doctors

26. Cost per life year • Dialysis $87,561 per year • Bevacizumab ~ $600,000 per year

27. J Natl Cancer Inst. 2011 Jan 19;103(2):117-28.

28. US Healthcare • Most expensive • Outcomes mediocre • Many uninsured

29. Why So Expensive? • Expensive care is more profitable • Administrative costs very high • Lacks benefits of a single payer system or a free market system to control costs

30. Thought Leader • Lee Newcomber, MD, MHA • Head of Oncology for UnitedHealthcare

31. Providers Effecting Change • Memorial Sloan Kettering • Zaltrap (aflibercept) • Twice as expensive as Avastin (bevacizumab) • MSK doctors refused to use the drug and wrote an Op-Ed in the New York Times • Price subsequently cut by 50%

32. Affordable Care Act • Will increase the number of Americans that have health coverage • Economic impacts are yet to be determined • Most significant reform in health care since Medicare in 1965

33. Obvious downsides • Does not fix some of the fundamental barriers to controlling costs • Some gaps in coverage will remain • Had to listen to my talk

34. Opportunities • Public is aware and fed up with failure to do a better job • Fundamental reform is still needed, but perhaps more likely after the weeks events • Conversation is continuing

35. What is Needed • Campaign finance reform • Address the role of special interests in government and healthcare • Service minded individuals need to take back the reigns on a state and federal level

36. Life is short • Do good work • Be kind

39. Life is short • Do goodwork • Be kind • Have fun

40. Structural Inefficiencies in American Health Care Cancer as an example of why the worst cancer may be the system.