Health Economics, Healthcare
Finance, and Health Policy:
What Every Student Needs to Know About
the Health Care Field Before Entering It!
Howard P. Forman
Department of Diagnostic Radiology, Yale School of Medicine
Yale School of Management; Yale School of Public Health
Department of Economics, Yale College
Howard.Forman@Yale.edu
Agenda
•
•
•
•
Why is this important?
Key Issues in US Healthcare today
Key Crises, Globally
What is the current political healthcare
agenda?
• What key facts should students be familiar
with?
• Questions and Discussion
7/11/2016
AED-Tulsa
2
Why is this important?
• Interviewers will ask questions for a host of
reasons
– Uninformed, or unsophisticated, answers are
increasingly hard to defend
– Need to have some substantive understanding
of the healthcare climate and basic economics
– Making a decision to practice medicine without
understanding some of the basics of health
services and health economics is dangerous!
7/11/2016
AED-Tulsa
3
Key Domestic Crises
• 45 million people are uninsured and another 30+
million are under-insured
– As healthcare gets more expensive, more people are left
behind
•
•
•
•
Medicare – Under-funded and getting more costly
Medicaid – reliant on State’s Budgets
Torts; Malpractice Costs
New Healthcare Threats: Bio-terrorism
– Vaccines – What do you think about the Flu Vaccine?
– Infectious Disease; Response issues
• Moral/Ethical Issues – Cloning, Stem Cells
7/11/2016
AED-Tulsa
4
Health Care Spending (NHE) 2002:
Highlights
• $1.55 Trillion up by 9.3% from prior year. $5440 per
capita up by 8.3% (both are accelerations from 8.5 and 7.5% from 2001
data)
• GDP (nominal) growth 3.6%
• 14.9 % of GDP (highest ever, grew by 0.8% this year, matching fastest
rate of prior year)
• Healthcare, as percent of GDP, has been growing for 4+
years now
• Medicaid and SCHIP (11.7%) are both growing faster than
all other spending components
• Private spending grew at a 9.3% rate and public spending
at 9.4% (45.9% of NHE are PUBLIC)
– This is a multi-year trend of slight increases in public sector
spending- - - why?
7/11/2016
AED-Tulsa
5
Where it came from:
7/11/2016
AED-Tulsa
6
Where it went:
7/11/2016
AED-Tulsa
7
Footnotes to Pie Charts
• 1 "Other Public" includes programs such as workers'
compensation, public health activity, Department of
Defense, Department of Veterans Affairs, Indian Health
Service, and State and local hospital subsidies and school
health.
• 2 "Other Private" includes industrial in-plant, privately
funded construction, and non-patient revenues, including
philanthropy.
• 3 "Other Spending" includes dentist services, other
professional services, home health care, durable medical
products, over-the-counter medicines and sundries, public
health, research and construction.
• NOTE: Numbers shown may not add to 100 because of
rounding.
7/11/2016
AED-Tulsa
8
Components of Health Care Spending and Change
From Prior Year (thru 2002)
•
$ 56.7 B
11.9
•
•
•
•
Research and Construction
%1
Hospital Care
Home Health Care
Nursing Home Care
Physician Services
$ 486.5B
$ 36.1B
$ 103.2 B
$ 339.5 B
9.5%
7.2 %
4.1 %
7.7 %
•
Prescription Drugs
$162.4 B
15.3 %
•
$ 105
16.2
•
Administration
%*
Overall
•
•
•
•
CPI proxy (really CW-GDP-PD)
Population Growth
GDP
Personal Health Deflator (HC-CPI-proxy)
9.3%
1.1%
0.9%
3.6%
3.9%
•* Government administration and net cost of private health insurance
•1 Research and development expenditures of drug companies and other manufacturers and providers
of medical equipment and supplies are excluded from “research expenditures” but are included in the
expenditure class in which product falls.
National Health Care Expenditures Growth
•
•
•
•
•
•
•
•
7/11/2016
1970 - 10.6%
1980 – 12.9%
1990 – 11.7%
1991 - 9.5%
1992 - 8.6%
1993 - 7.3%
1994 - 5.5%
1995 - 5.4%
•
•
•
•
•
•
•
AED-Tulsa
1996 - 5.2%
1997 – 5.3%
1998 – 4.8%
1999 – 5.6%
2000 – 6.7%
2001 – 8.5%
2002 – 9.3%
10
7/11/2016
AED-Tulsa
11
Medicare Highlights(2003)
• 41.8 million people (35.1 M aged; 6.0 M
disabled) covered
• Combined expenditures growing faster than
GDP (from 2.6% of GDP in 2002 to 5.3% in
2035 and then 9.3 % in 2076)
• HI sources of income do not increase
automatically, while SMI do
7/11/2016
AED-Tulsa
12
Long Range – Total Medicare
7/11/2016
AED-Tulsa
13
HI-Medicare Part A (2003)
•
•
•
•
•
•
Hospice care (since 1982)
Inpatient Hospital services
Skilled nursing facility care
Home Health Agency (now transitioning to SMI)
22% of beneficiaries actually received HI services in 2002
BBA- 1997 slowed expenditures; depletion now predicted for
2019
• Average expenditure per enrollee increased by 3.4 % after three
years of declines (BBA-1997 effects); Now $3,689
• “Intermediate” estimates call for rates of growth of 1.4 – 5.6% per
year for the next decade
7/11/2016
AED-Tulsa
14
Part A “Trust Fund”
7/11/2016
AED-Tulsa
CMS, 2003
15
Medicare Part B - Supplemental Medical
Insurance (SMI)- 2003
• Physician services
• Durable medical equipment (DME)
• Outpatient medical services
– Clinical lab tests
– PT/OT
•
•
•
•
Ambulance transportation
Hep B, Flu, Pneumococcal vaccines
Pap smear and screening mammography
Prescription drugs which can not be selfadministered including certain anti-cancer drugs
7/11/2016
AED-Tulsa
16
SMI – Part B/2003 Highlights
• 93% of the 41.8 Million Medicare enrollees are enrolled in
Part B
• 11% increase in 2001 (some due to shift of HHC services,
etc.)
• SMI benefits will grow 1.5% faster than GDP going
forward (assumption)
• 95+% of enrollees received services (2000 data)
• Administrative costs are 2.1% of program costs, compared
with 1.7% for HI
• Average benefit per enrollee is $2915, increasing 10.1% in
past year
7/11/2016
AED-Tulsa
17
Part B Financing
7/11/2016
AED-Tulsa
CMS, 2002
18
Key Global Crises
• HIV in Lesser Developed Nations
• Landmines
• Starvation and Diarrheal Diseases in
Children
• Affording healthcare/prescription drugs
7/11/2016
AED-Tulsa
19
Current (2005/6 congressional term)
Domestic Healthcare Agenda
• Tort Reform – Politics vs. Policy
• Medicare reform – Constant and incremental;
What does it mean?
• Medicare Prescription Drug Benefit - Not til
2006 for most people
• Uninsured Problem
• Influenza Vaccine
• PBOR
7/11/2016
AED-Tulsa
20
Key Issues to be aware of…
• What is Medicare, Medicaid, S-Chip?
– Bonus points for Medicare part A and B
– Bonus points for understanding funding of any of this..
• How much does our nation spend on healthcare?
How much is too much? How does this compare
to other nations?
• What is Universal Health Coverage (Insurance)?
(Why should you not discuss this topic without
very very serious thought, in advance)?
7/11/2016
AED-Tulsa
21
Key Issues, continued
• What is the Patient’s Bill of Rights?
• What are the issues around stem cells/cloning?
• What is the fastest growing component of healthcare
costs? Why? What does this mean for you as a
provider-to-be?
• Disparities in healthcare, health services, and health
– Ethnic, racial, economic
• What is the main Health Problem in the US today?
• What is the main Healthcare Problem in the US
today?
• Be Prepared… Don’t fake it…
7/11/2016
AED-Tulsa
22
Questions?
7/11/2016
AED-Tulsa
23