US Healthcare System Prelim 1

Patient have become more insulated and public insurance programs have become more important

% US medical spending by source 1960-2017 Out of pocket decreased from 52.6% in 1960 to 11% in 2017 (38.7% medicare and medicaid) -Medicaid and medicare have increasingly grown as a proportion of all medical spending

Personal consumption expenditure in 2017

- Measure of national consumer spending --> how much money Americans spend on goods and services - Broken down into categories: medical care, housing and utilities, food, transportation, recreation, clothing and shoes, other goods and services -Medical care is the largest percent of expenditures at 21% ---> $2735 billion (different from National Health Expenditure/NHE because NHE includes money that goes into research spending, investments, net exports

National Health expenditure as a share of GDP. 2017

- US GDP: $19,485 billion - US Population: 325.2 million - US national health expenditure: %3492 billion - US health care expenditure as a % of GDP= 17.9% - US health care expenditure per capita= $10,739

Medical Societies trying to distinguish wasteful/harmful medicine from useful medicine

-choosing wisely campaign--> convince MDS to reduce their use of common tests and procedures when they have no value -2012 Institute of Medicine report: an estimated $210 billion of medical care (8% of total) is not necessary.

Public Health Programs: Big health improvement for relatively little money

- for the first part of the exponential curve - as medical expenditures increase, eventually health plateaus ---> will we reach the flat part of the curve with rapidly growing medical spending in the future, or will there be large gains in health? ---------> breakthroughs or small marginal gains in health?

ERA 3- Why did life expectancy continue to increase after 1950?

-10.4 year increase over a 66 year period -Medical care started contributing meaningfully to health improvements in the mid 1930s ex. first effective antibacterial agents produced in a lab (sulfa drugs) were produced in 1932 and tested successfully in 1926 ex. maternal mortality ratio dropped significantly, bc of sulfa drugs so did influenza, pneumonia, scarlet fever - Us infant mortality rate dropped after 1950 from 3% to .6% today

Expected Age of Death can be separate into 3 eras

-1st era: 1751-1845 -2nd era: 1845-1945 -3rd era: 1945-present

Case Study: Should Medicare pay $83000 per year per patient for avastin to treat colon cancer?

-Avastin is significantly higher priced for like 5 more months of survival -use qualy ---> other countries have approved Avastin but UK did not because QALY was too high so if citizens want to use it, they have to pay full price by themselves--> as a result, much lower percentage of patients with colon cancer use avastin Countries can also drive the price of a drug down by threatening to bar/restrict the technology.

(ERA 1) Argument for importance of nutrition

-Average adult height increased: agricultural yields and caloric intake increased during the 18th century, average adult height in Europe increased by 10 centimeters. -Mortality is U shaped: Mortality is u-shaped in a person's body mass index -Direct impact of nutrition: medical care and public health are not likely to explain mortality reductions before 1850. Ex. mortality from TB fell 80% before there was any effective treatment for the disease.

Gawande highlights spending differences

-Between McAllen, El Paso TX and Rochester, MN. Average spending per medicare beneficiary in McAllen was significantly higher almost double the national average and the other two locations -Improved from 2006 to 2016 but still the third highest in 2016 -ACA could be responsible for the cost reversal in McAllen -In McAllen, rates of cardiovascular disease, asthma, HIV, infant mortality, and cancer were all relatively low -The quality of medical care in McAllen was worse than El Paso and Mayo Why? ---> overutilization Compared to El Paso, McAllen patients received -50% more specialist physician visits -20% more abdominal ultrasounds -30% more bone density studies -60% more stress tests -550% more urine flow studies -100-200% more pacemakers, implantable defibrillators, cardiac bypass operations etc. Gawane: Health care costs ultimately arise from the accumulation of individual decisions doctors make about which services and treatments to order Why do doctors do it so differently in different places?

How important is medical care relative to other inputs that produce good health

-Clean air and water -genetics -health behaviors (ex. smoking, drinking) -Good nutrition -Exercise -Access to high-quality medical care *** -Education -neighborhood conditions

Despite this information, it's still likely that increases in medical spending have been worth it on average

-Cutler was looking at the returns to large increases in spending over a long period of time (yaxis to d on medical expenditures vs health graph) -Possible to have large positive health gains to large changes in spending but small/no returns to small changes (from D to E on the same graph)

Factors that affect life expectancy the most on the life expectancy calculator (in order)

-Driving habits -Smoking -Drugs -Genetics -Drinking -Exercise -Diet -Weight -Stress

ERA 2: US infant mortality rate started dropping sharply and steadily around 1890 (MA)

-Dropped from around 150-200/ 1000 to 100 by 1910 then continued to drop -Was lower for rural areas in general than for urban even after drop started Public health Programs were effective against infectious disease -Macro: big works projects Filtering and chlorinating water supplies vaccination campaigns building sanitation systems pasteurizing milk draining swamps -Micro: people's behavior Protecting Food from insects boiling bottles and milk washing hands ventilating rooms These things helped--> water and food-borne diseases eliminated in 1848- 60% of deaths due to infectious disease 95% decrease in infectious disease mortality from 1848 to 1971 Public Health programs have changed the common causes of death since 1900 ---2010: cerebrovascular, respiratory, cancer, heart disease ---1900: flu/pneumonia, tuberculosis, GI infections

MDs appear to have widely varying treatment styles in different locations

-Example: large difference in inpatient knee replacement rate per 1000 medicare enrollees between different regions like manhattan and des moines

Physicians differ greatly in how they respond to patients experiencing chest pain

-Had ER physicians see case histories of 20 patients complaining of chest pain and estimate from 0-100 how likely it was that each patient was having a heart attack or a major life threatening complication and the answers ranged from 0-100.

Health care costs are growing in all countries

-Health care spending as a percentage of GDP from 1980 to 2016 has grown from 6-18% in the US and from 5-11% in comparable countries

Summary of Health Insurance Basics

-Main benefit of health insurance is protecting people from the financial risk with hard to predict, low probability, expensive medical conditions Problems: -adverse selection: unhealthy, high-cost people are unprofitable under community rating, so health insurers may try to avoid signing them up. healthy, low-cost people may drop out of the market, driving up premiums for everybody else -moral hazard: because medical care is somewhat inexpensive once a person is insured, insurance increases their demand for medical care and they may use too much low-value medical care

% of personal health spending by sector of health system 2017

-Majority of medical spending goes to hospital and physician care ----> Hospital care, physician and clinical care, prescription drugs, nursing homes and day care, dental, other

Source of health insurance among the non-elderly, 2017

-Most non-elderly in the US receive health insurance through their employer -63.9% private insurance via employer -27.2% public (medicaid, medicare, military) -10.2% uninsured -6.2% private/individual (non-employer) some people have multiple plans

Spending difference do not seem to be driven by health of population or preferences for care

-Nationally, high spending in a particular area does not appear to be driven by poor population health. -National Study: End of life spending in a region is not correlated with patients' preferences regarding how they would like to be treated -No relationship nationally between spending and quality

Is the UK rationing medical care? What's so bad about rationing in a world where we can't afford everything?

-Rationing can also be referred to as the UK practicing principled value enhancement -The UK promotes/allows high value medical care when expected value of medical care> cost of medical care -The UK restricts/rejects low value medical care when expected value of medical care<cost of medical care -All countries and health insurers need to develop some way to discourage the use of low-value medical care -Countries differ in how much they value medical care, and people within a country differ as well.

Community Rating can cause adverse selection

-Same premium regardless of health level promotes equity/fairness ---> but can lead to adverse selection -Adverse selection: 1) Health insurers enroll people whose medical costs are higher than the population's average medical cost because the enrollees are sicker than average (sick people are more likely to buy community-rated insurance than healthy people) 2) premiums rise as a result, causing more healthy people to stop buying a health plan ----> Result of Adverse selection 1) some young healthy people find health insurance too expensive, drop out. This raises the premiums for those remaining (older and sicker) 2) Insurers might not want to sell policies to older sicker people 3) Under community rating, sick people more likely to have health insurance than healthy people

Health care spending has a percent of GDP has increased in all sectors of the US health care system

-Sectors include hospitals, physicians, nursing home/home care, Rx drugs. -Graph displays growth rates for sets of 10 years and all values are positive

Minimizing, but not eliminating, adverse selection

-The Affordable Care Act (ACA): in 2014, mandated that individuals either purchase health insurance or pay a fine if they decide not to (low income people exempt). in return, health insurers agreed they would no longer deny sick people coverage due to pre-existing health conditions. -Premiums on the new ACA exchanges are "modified community rated": can only vary by age, location, family size, and smoking status (can't vary by health status) -Expanded coverage: under the ACA, an estimated 90% of people in the US have health insurance coverage--> risk is spread over a broader population than it was before 2014 -Young people stay off: some young healthy people would rather pay the fine than buy health insurance, which raises premiums for all others. ACA mitigates but doesn't solve the adverse selection problem -Individual mandate: penalty for not having health insurance was eliminated in 2017, effective in 2019

Growing medical costs and growing health insurance premiums are cutting into workers' wages

-The amount of money that employers devote to health insurance has increased from 6% of total wages in 1988 to 12% in 2018 ----> this means that workers are foregoing higher take home pay because of rising medical costs. If medical spending had increased more slowly, people would hav ea lot more money for other needs because insurance costs wouldn't be cutting form salary

Overall takeaways about differences in spending and medical value

-Today's medical care and today's prices is better than the 1950s but the Us can do better by identifying and eliminating low value, wasteful care ---> not easy to do because it involves taking away physicians' income of hospitals' profits -There are large differences in the amount of medical care people receive and the cost of medical care between regions -There is little evidence that health outcomes are better in high-cost regions and they may actually be worse -High costs appear to be driven by 1) greater availability of physicians and hospital beds 2) uncertainty regarding the best way to treat patients 3) belief that more care is better, combined with financial incentives for MDs and hospitals to do more

International Care Rankings Comparison

-US Health care system ranks 5/11 in a broad measure of quality, still worst overall. -Measures included care process (quality), access, administrative efficiency, equity, health care outcomes

Medical care has been the catalyst behind more recent improvements in infant survival rates

-more for babies of a certain weight (lower- premies?)

Fee for service means hospitals/physicians get paid more when they provide more services to a patient

-so then hospitals and physicians provide more services to make more money

Medical Care played a major role in reducing cardiovascular disease mortality

-the deaths as a result of heart disease peaked around 1950 (went up until then) then dropped after then For 55 and older : 1971 to 1975: -high BP 63% -high cholesterol 45.7% 1999-2002: -high bp 34% -high cholesterol 22.6%

Health care spending is highly concentrated amon a small portion of the US population

-top 1% of spenders account for more than 1/5 of all spending -top 5% of spenders account for half of all spending -Top 10% of spenders account for 2/3 of spending -Bottom 50% of spenders account for only 3% of spending -top 1% of users receive an average of $107,000 of medical care per year

However, hospital admissions cots much more in the US on average. Same with Physician fees+prices and drug prices

1) Hospital spending per discharge measured in USD (2015) -$21186 in US compared to values below $17,000 for other countries ---> this is due to greater use of expensive technologies ex. more coronary artery bypass surgeries per 10000 in the US compared to other countries in 2017. 2) In most countries, for both primary care and orthopedic surgery, both the public and private payer is paying less. 3) Drug prices in the US are higher than in peer countries (2005) ex. for a hip replacement, US prices for hospital care, physician's work, and the implant are much higher than in Belgium

Should we accept Cutler's conclusion for all other diseases and types of medical care? Have health outcomes improved for other common and expensive health conditions?

1) Improved preventive care has reduced health problems stemming from diabetes -Acute myocardial infarction, stroke , amputation, ESRD (kidney failure), and death from hyperglycemic crisis have all decreased. Myocardial infarction decreasing the most and hyperglycemic crisis decreasing the least. 2) Cancer death rates are falling by 1.5-2.0% per year overall across many types of cancer

Dartmouth group explanation for varying medical spending/ decisions by doctors

1) Lack of scientific evidence to guide many clinical decisions creates uncertainty for physicians 2) When in doubt, patients and physicians believe that more care means better care 3) Physicians and hospitals are rewarded for being busy in a fee-for- service health care system 4) in areas where there are plenty of specialist physicians and hospital beds, primary care physicians are more likely to refer patients to specialists, specialists then use expensive medical technology Dartmouth Atlas Conclusion: some regions have gone past the flat part of the curve where medical expenditures aren't necessarily improving health. -Eventually, more medical care may actually harm patients.

How Premiums are set for Most Americans

1) Non-Elderly insurance: most non-elderly in the US receive health insurance through their employer, not on ACA exchanges 2) Employers are typically experience rated: health insurers charge a higher price/premium to companies/firms with relatively sick employees vs those with relatively healthy employees 3) Most health insurers community rate within a firm: each employee at a firm is asked to pay the same premium, regardless of whether a person is healthy or sick, old or young 4) Adverse selection: adverse selection is not a major problem at large firms, although the young workers are subsidizing the older/sicker workers

First Era: How did indemnity health insurers operate?

1) Physician Choice: allowed enrollees to see any physician and be admitted to any hospital in an area (broad provider network) 2) Fee for service payment model: paid physicians and hospitals fee-for-service: after medical care was provided to an enrollee, the provider submitted a claim based on what services/procedures the provider actually performed, and the health insurer paid the claim. 3) Physician autonomy: indemnity insurers did not scrutinize the medical care its enrollees were receiving 4) control moral hazard: controlled moral hazard through patient cost sharing (required patients to pay a % of the claim) 5) providers adopt new technology: physicians and hospitals had incentives to adopt new medical technologies, which drove up premiums

Why does the US spend so much more on health care than other developed countries? (answer)

1) US prices are high: US pricers per unit of care are high (ex per drug, per day in hospital, per visit) ---> foreign governments set lower prices 2) Multiple insurers: having multiple insurers in the US creates complexity and high administrative costs 3) Ability to pay: GDP per capita- higher ability to pay for health care in the US leaders to more spending on health care 4) Limited rationing: US does not ration expensive medical technology as much as other countries. Our hospital and physician visits involve more expensive inputs (surgery, imaging, drugs)

Terminology/Building blocks on how to evaluate quality of medical care

1) Value of a year of life: -dollar value of a single year of life -dollar value of improvements in the quality of life 2) Monetary value of a year of health -Cutler and others use $100,000 as an estimate of the value of one extra year of life in perfect health 3) QALY: -one year of perfect health is considered to have a Quality-Adjusted Life Year (QALY) value of 1. 4) Medical Event Impact: -a medical condition can reduce a person's health and quality of life so it has a QALY value below 1 5) Medical Care Impact -Medical care can increase the QALY associated with having a particular condition by ameliorating the symptoms

Fundamental Policy Questions

1) Who decides and who "should" decide whether a new, safe medical technology is available in a country and is widely used? --> the government --> consumers by picking different health insurance plans (the market) 2) Who should determine the price that a new medical technology sells for: ---> the government? ---> the market?

Leading determinants of overall health are not medical

1) behavioral (40%) 2) Genetic (30%) 3) socioeconomic (15%) 4) Health care (10%) 5) environment (5%) --> so why do we spend $10,500 (17.9% of GDP) per person per year on health care?? (used to be $500 in 1950 --> 4% GDP)

3 primary benefits of health insurance

1) protects against financial risk: can't predict when a low probability+ expensive medical condition will occur 2) risk aversion: small but certain payment preferred to chance at large financial loss 3) spreading risk: insurance shifts financial risk from an individual to the group by pooling resources among all enrollees, losses are shared by all members of the group

Second Era: How did managed care reduce medical costs and premiums in mid/late 1990s?

1) received large discounts from physicians and hospitals by contracting selectively and channeling patients to in-network provider 2) tried to ration expensive medical care with utilization management tactics (ex permission before being referred to a specialist) 3) Encouraged some primary care physicians to ration low-value care by paying them capitation instead of fee-for-service

Most Managed Care Plans used a variety of tactics to control utilization of medical services

1) required patients to initiate treatment with their primary care physician 2) required prior authorization for a primary care physician to refer a patient to a specialist or for a prescription 3) required pre-certification for a hospital admission 4) step therapy for drugs: patient had to fail on less expensive drug before being allowed to try the more expensive drug 5) required generic substitution 6) denied hospital days that were necessary

Patient Cost- Sharing is the most common way to reduce/control moral hazard

1. Deductible: dollar amount per year that a patient has to pay before the insurer begins paying for any medical expenses 2. Co payment: fixed dollar amount (ex. $25) a patient pays per physician office visit or per prescription 3. Co-insurance: the insurer pays a percentage of a bill and the patient pays the remainder (ex 80/20). usually have co-insurance or a copayment not both 4. Out of pocket maximum: is the maximum amount a patient would ever have to pay out of pocket (deductible plus all other co pays and co insurance payments) over the course of a year. Doesn't control moral hazard but is necessary to protect patients financially.

Insurer strategies

1. Determine which providers to include in the network 2. determine how and how much to provide providers 3. manage the medical care provided to minimize low value, high cost care 4. set cost sharing rules when patient receives medical care (co pay, deductible)

Summary of important drivers in reducing mortality by historical phase

1750-1850: 4 year expectancy increase - ***improved nutrition and economic growth - early public health programs - medical care 1850-1950: 27 year increase - ***public health programs ----> largest gain, most cost effective - nutrition and economic growth - medical care 1950-Today : 10 year increase - ***Medical care: vaccinations and antibiotics, then expensive 1-on-1 interventions ----> most expensive solution -Public health -Nutrition and economic growth

Case Study 2: Major Depression Affects 10 million adults

1950-> no treatment/ little treatment/ poor treatment for the very ill 1959-> (tricyclic antidepressant drug) drug approved with serious side effects, people didn't take the medication 1987-> Prozac: a selective seratonin reuptake inhibitor (SSRI) drug, approved ----as effective as tricyclic drug minus the side effects ----removed the stigma associated with depression- more people could be treated buuuttttt treatment costs doubled Cutler's Calculation: -Treatment reduces time being depressed by 10 weeks relative to no treatment -Depression has a QALY of .60 versus 1 for perfect health, so 10 extra weeks in perfect health means a .08 QALY improvement -QALY value: $100,000 for a year in perfect health -Productivity Impact: effective treatment increases income by about $600 every year Treatment cost: $600 Benefit today: $4000 (accounting for patients who don't respond to drug treatment )

Case Study: Low birthweight babies

1950s: $0 Today: drugs to delay labor, to speed up infant development, neonatal intensive care units, artificial surfactant, ventilators, feeding tubes ---> $70,000 -->medical care is the catalyst behind more recent improvements in infant survival rates (significant for low birthweight babies) ----> the average low birthweight baby lives 15 years longer today than in 1950 - technically 15 QALYs but actually 13 because quality of each year of life is slightly worse due to developmental problems Cost: $70,000 Benefits: $350,000 after accounting for ~$100000~ per year minus additional non-medical spending and discounting lifetime benefits to birth year

Nurses in the US also earn much more than nurses in the UK

2015 -US: $73,000 -UK: $53,200

Proportional Causes of growth in real per capita medical spending 1960-2007

48% technological change (including new tech and increased intensity of care) 29% increased personal income 11% insurance (more generous coverage) 7% aging (aging of population) 5% (medical price inflation) Proof that new (expensive) technology is the engine driving increases in medical spending

Percent of the US population uninsured in 2017:

9%

Managed care had only a 27% share of the health insurance market in 1988

??

Why does the US spend so much more on health care than other developed countries? (accounting exercise)

Accounting Medical spending= (Quantity of Medical care x Price) + admin costs example: Medical spending= (# MD visits x Fee per visit)+ cost of processing payment Drivers in increases: 1) Quantity of medical care -health -health behaviors -cost sharing -supply/queues 2) Price - # of payers/insurers - role of private market - regulation - political decisions - technologies 3) admin costs -# of payers -rules for MDs and hospitals

Health Insurance Premium

Actual premium paid by consumer= Pure premium+ Loading charge -Pure premium (actuarially- fair premium): expected medical spending for a person or group of people with the same risk level (same age, gender, health, etc. ). If they didn't have insurance, this is around what they would have to pay every year. -Loading charge: amount of money the insurance company charges in addition to the pure premium -----> covers administrative cost, cost of establishing a network of providers, processing the medical claims/bills, marketing cost, profit

Child Mortality in the US

Also higher (Deaths per 10000)

4 Distinct Health Insurance Eras

Average Annual % Change in Private Health Insurance Premiums 1) Claims processing (increase) (91-93) 2) height of managed care (decrease/small increase) (94-99) 3) providers strike back (large increase) (00-06) 4) self-managed care (small increase) (07-17)

Moral Hazard

Behaving differently when insured vs uninsured -If a health insurance company pays for all of a person's medical care, once a person gets sick, he may demand more medical care once its free to him anyways -ex. choosing a new expensive prescription rather than an old generic drug or no drug at all, and also seeing a physician the moment you aren't feelings well rather than waiting a few days Why is this a problem? -Exposure to cost: patients who have to pay the full price of medical care will only receive medical care when the value of medical care is greater than the cost inefficient care: Patients who pay nothing or a small % of the cost will sometimes decide to receive medical care when value < cost ( low value medical care)

Technically, US demographics and health behaviors should lead to lower health care costs in comparison to other countries

Behaviors: -population over 65: lower (14.8%) -percent of adults who smoke: lower (11.4%) -percent who are obese: higher (38.2%) median for last two are around 18%

US Looks good on some quality measures

Breast Cancer survival rates are significantly higher in the US. This is because the screening rates are the highest out of OECD countries. Increase in flu immunization rates in the US while there is a decrease in most OECD countries.

Most experts believe persistent growth of US health care spending is due to convergence of four factors

Called the Perfect Spending Storm 1. Technology/ Innovation: development of new medical technologies 2. Insurance: expansion of public insurance programs to pay for them 3. Fee for service Reimbursement: Physicians and hospitals are paid to "do stuff" rather than produce health, so they are usually eager to adopt new medical technologies 4. Cost Sharing: Patients don't face the full price of medical care at the point of care (at the doctors office or the pharmacy) so they are usually willing to use the new technologies.

The US spends relatively little on social determinants of health

Chart is health care vs social care spending, % GDP 16% healthcare, 9% social care in the US Most other peer countries spend more on social care

Two general methods of limiting growth in medical spending without reducing quality (increasing value of medical care)

Demand Side -Allow private insurers to restrict access to technology if their customers agree -Ask patients to pay a substantial amount of the price of medical care -Let consumers/patients choose which technologies are valuable -Self rationing- the US favored method Supply Side -Government chooses which technologies are available, pay for high-value tech -govt negotiates and sets low prices -payer rationing: the European favored method

Most countries use a cost effectiveness threshold to decide whether a technology will be available and widely used

Cost difference between old and new treatment/QALY difference between old and new treatment= cost per QALY -UK nixes/restricts treatments with a ratio? $50,000 per QALY

Simple order on what a health insurer does

Employer and worker contribute to a premium (lets say $4000) to the health insurer regardless of if the person receives any medical care. Health insurer pays providers when an enrollee/worker receives medical care -providers: physicians, hospitals, pharmacies

Health insurance premiums are determined by 1 or 2 methods

Experience Rating -premium based on a person's previous medical costs or his/her predicted costs based on their specific age, gender, health conditions, health behaviors -premiums differ between people due to different levels of health Community Rating -Premium same for all people regardless of age, gender, behaviors, health conditions -financial risk spread among a larger group -healthy people subsidize sicker people (equity) ---> insurer loses money on elder sicker people and makes a profit off younger healthier people

US lags behind other industrialized countries on certain health care quality measures

Female Life Expectancy at Birth (2017)- lower Infant morality rate (2017)- higher

Lecture 6

Geographic Variations in Medical Spending -Spending: document the large differences in medical spending that exist between geographic areas in the United States -Explanations: discuss why spending varies so much across areas -More $, more care, better health?: discuss whether more medical care and greater spending make people healthier in the high spending areas -Conclusions about value: what does this tell us about the value of medical spending

Lecture 3

Health Care Expenditures in the US Part 1 -Medical Care Expenditures: Describe how much the US spends on medical care -Funding Mechanisms: describe where the money comes from and where it goes -Spending growth: discuss why medical spending has grown persistently and substantially over time

Lecture 4

Health Care Expenditures in the United States and Other countries Part 2 -Growth in medical expenditures: is it good or bad news that technology is the catalyst behind spending growth? -sustainability: can we afford to spend more on medical care into the future? -US vs Europe: why does the US spend so much more on medical care than high-income (mostly) European countries

Lecture 7

Health Insurance: The Basics -Look at the benefits of health insurance -Discuss the problems created by health insurance and how those problems are addressed

Lecture 8

Health Plans of the Past, Present, and Future -problems created by health insurance and how these problems are addressed -history of health insurance- the 4 different eras of health insurance over the last 35 years and how they shaped the health care market

Lecture 2

Health and Role of Medical Care -Change in population health: Describe how the health of the population, as measured by length of life, has changed over the last 270 years. - Impact of Medical Care: Discuss how important medical care has been in improving population health relative to other factors, and whether the impact of medical care has changed over time. -Social determinants of health: discuss whether the US should allocate money away from medical care to the social determinants of health.

HMO

Health maintenance organization HMO have narrower provider networks, receiving larger discounts from MDs and hospitals relative to PPOs

The Iron Triangle of Health Care

High Quality Broad Access Low Cost

Fisher et al. (2003) study

High spending regions have more capacity to provide care, more hospital beds, more teaching hospitals, and more physicians per capita than low spending regions

US has relatively low number of hospital admissions, physician office visits, prescription drugs per capita (2005)

Hospital Admissions: Compared to OECD countries around 125 per 1000 most are higher Doctor consultations per capita 2015: also lower =4 Prescription drugs per capita (2005): - Many countries have a higher quality index

The US Used to be in the middle of the pack

In terms of life expectancy growth, US was in the middle of the pack, growing with other nations, then fell below starting around 2005. In comparison to peer nations.

Lecture 1

Intro and overview -Three Key Objectives of Every Health Care System -Which of Those Key Objectives is the U.S. Health Care System Achieving?

Purposeful, principled rationing?

It's almost unfair that the UK gets a free ride of US almost for saving money? Or something along those lines. Rationing Economically: UK (or a US health insurer) could cover the full price of Oxaliplatin and allow individuals who want Avastin to pay the price difference Rationing clinically: could allow avastin to be only used by patients whose health is likely to improve substantially as a result

Can we afford to continue spending more and more on health care?

Key Questions: -What will the gains or benefits be from increased medical spending in the future? Small or large? -What will the US have to give up if we continue to allocate more and more money to medical care? How valuable are those things that we will have to give up?

What is Medical Technology?

Medical care: the goods and services that a patient receives when seeking treatment (like MRIs, drugs, nursing care, surgery, PT, medical devices). Ex. Heart attack care today vs in 1950s -Today, there is a Coronary Care unit, thrombolytic agents and angioplasty, vs just anticoagulant agents and postinfarction treatments like asprin in the past. Significantly more treatment but the postinfarction risk of reinfaction has gone down from 1 to .48 since the 1950s.

Medicare vs medicaid

Medicare: covers adults 65 and over Medicaid: covers low income individuals and families -did not exist in the mid 1960s

US Infant mortality rate dropped sharply between 1950 and 2015

Neonatal and Post Neonatal Mortality rates in the US : -Infant mortality rate has dropped from about 3% in 1950 to .6% in 2017.

Overall-> Cutler's Conclusion on cost benefit of medical advances and costs

Overall, the benefit to cost ratios were higher (just take the ratio of the benefit value and the treatment costs All medical care combined has a ratio of 1:1 Takeaway: benefit of medical advances > costs Medical care costs a lot, but it's worth it: most people would prefer today's medical care at today's cost to yesterday's medical care at yesterday's cost.

Growth in health spending is causing people to cut back on other items

Percent change in middle income households' spending on basic needs (2007-2014) -Health care increased 25% -Food at home, housing, transportation, total food, food away from home, and clothing all decreased significantly

PPO

Preferred Provider Organization selective contracting out of network providers with $500 deductible and co insurance if necessary

Overview of Medical Technology in the United States

Price Impact -In the US, all medical treatments that are safe and improve health are approved for use regardless of price Government influence -US government sets prices that physicians and hospitals receive for treating medicare and medicaid patients but these prices usually include the cost of new medical technologies. -The US government does not directly determine the price of technologies, it allowed manufacturers to pick a price and relies on competition to influence that price Insurance -Private insurance (higher income, non elderly patients)- prices for medical technologies are determined by market forces: consumer pick health plans that do or do not cover various medical technologies -If consumers flock to insurers that do not cover Avastin, or restrict its use in order to get a lower premium, the price of the drug will fall, and the US government will receive some of that savings. If consumers value Avastin highly, the price will remain high. -Insurers often ask patients to pay a substantial % of the cost of the expensive technology. more generally, than what European patients would have to pay at the point of care.

Why would anyone pay more than the pure premium for health insurance?

Reducing risk is valuable to consumers: -Risk averse people are willing to pay a loading charge to avoid large swings from year to year in the money they have available for non-medical spending Enables access: -Health insurance also allows people to receive medical care that they otherwise may not be able to afford in years when they are very sick (ex cancer )

Medicare spending varies widely across geographic areas

Seems to be more around south and east coast, below average in northeast and upstate ny/upper new england

Wait times for a specialist appointment (Adults age 65 or older)

Significantly less had to wait two months for a specialist appointment in the US in comparison to other countries.

Although medical care is expensive, few people face the full price at the point of care

Sources of medical spending chart (2017) -36% private insurance -21% Medicare -18% Medicaid -11% out of pocket -14% other

Lecture 5

The Value of Medical Spending - Cost benefit analysis: Evaluate the benefits and costs of medical technologies using case studies of three different diseases/medical conditions -Medical technology availability: Discuss who decides whether a medical technology is available, whether it is widely used, and how much it costs in various countries -US and UK comparison: compare how the US and the US approach the use of medical technology differently Question: Would you rather have 1950's medical care at 1950's costs or today's medical care at today's medical costs?

GDP (Gross Domestic Product)

The total value of all domestically produced good and services. A measure of a country's income or spending capacity- how many goods and services the country can buy.

Affordable Care Act Drove Down the Uninsured Rate

The uninsured rate used to be around 16-18% for Non-elderly population and then dropped to 10.5% around 2014/2015. It dropped significantly for lower income adults from 45-25% ish vs for not poor people who dropped from around 12-7.5%.

(ERA 1) 18th and 19th centuries: High Infant Mortality Due largely to rampant infectious diseases

Top 5 causes of death: consumption, flux infantile, stillborn, fever pulmonic, convulsions ---> few effective medical treatments existed in this time Detriments to health -Poor nutrition + children develop antibodies slowly -> kids were susceptible to: typhoid, small pox, cholera, dysentery, non-respiratory tuberculosis Improvement Factors -Economic growth -Nutritional improvements ---> children became more resilient to these diseases in 1750-1850 Outcome -Life expectancy at birth increased by 4 years in England and Wales between 1750 and 1850

National Health Expenditure

Total amount of all spending in the US on medical care in 2017 $3492 billion ($3.5 trillion) ---> per capita, this has increased from $500 to at least $10000 in 2017 ---> growth in health spending per capita has slowed down substantially in the last two decades ---> national health expenditures as a percent of GDP have increased, though growth has slowed per capita

Third Case Study: Cardiovascular Disease

Treatment for severe heart attack: 1950s: bed rest ($0) Today: drugs to thin blood + reduce clotting, dissolve clot, reduce heart's workload, lower cholesterol, lower BP, intensive diagnostics, revascularization, etc. ($30,000) Cutler's Calculation -Life expectancy at age 45 increased by 4.5 years since 1950, due to reduced cardiovascular disease (3 years because of medical advances and the remainder due to behavioral changes like reduced smoking) Treatment costs: $30,000 Benefits today: $120,000

Total Health Expenditures as a percent of GDP 1970-2017

United States has always been a little higher starting in 1970 then increased more compared to the increase in other comparable countries.

Percent of Adults Experiencing a Cost-Related Access Problem in Medical Care in the Past Year

United States is at 33% which is significantly higher than other high income countries. Next closest is Switzerland at 22%. Cost-Related Access Problem: had a medical problem but did not visit doctor, skipped medical test of treatment recommended by doctor, or did not fill prescription or skipped doses because of the cost.

Wealthy Americans can expect to live 10-15 years longer than poor americans

ranges from 75 ish-90 ish, pretty linear relation life expectancy for 40 year olds this is adjusted for race and ethnicity