Component 1: Introduction to Health Care and
Public Health in the U.S.
1.5: Unit 5: Financing Health Care
(Part 2)
1.5c: Medical Expenditures: Costs Gone Wild
Objectives
• Review US healthcare expenditures and
medical inflation
• Examine the factors that contribute to the
increasing health care expenditures in the
United States
• Describe the EMTALA Act, its provisions
for care for the uninsured, and its
contribution to increasing medical costs
• The cost of care to the uninsured
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
Version 1.0/Fall 2010
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National Health Expenditures per Capita and Their
Share of Gross Domestic Product, 1960-2008
5.2%
7.2%
9.1%
12.3%
13.5%
13.6%
15.1%
15.6%
15.8%
16.2%
Adapted from: Healthcare Costs – A Primer 2009. Available at: http://www.kff.org/insurance/7670.cfm.
Slides. Last accessed 07/31/2010.
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
Version 1.0/Fall 2010
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Per Capita Health Care Expenditures, U.S. and
Selected Countries, 2007
Adapted from: Healthcare Costs – A Primer 2009. Available at: http://www.kff.
org/insurance/7670.cfm. Slides. Last accessed 07/31/2010.
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
Version 1.0/Fall 2010
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Distribution of National Health Expenditures,
by Type of Service, 2008
Adapted from: Healthcare Costs – A Primer 2009. Available at:
http://www.kff.org/insurance/7670.cfm. Slides. Last accessed 07/31/2010.
Component 1/Unit 5d
Health IT Workforce Curriculum
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Percent of Total Health Care Spending
Concentration of Health Spending in the
Total U.S. Population, 2007
Adapted from: Healthcare Costs – A Primer 2009. Available at: http://www.kff.
org/insurance/7670.cfm. Slides. Last accessed 07/31/2010.
Component 1/Unit 5d
Health IT Workforce Curriculum
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Factors Contributing to High
Healthcare Expenditures
• Technology
• Increased demand and utilization
• Administrative costs
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Healthcare IT Workforce Curriculum
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Technology
• Estimated 40-50% of total expenditures
• Technology in healthcare - procedures,
equipment, and processes by which
medical care is delivered
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Technology
• Previously untreatable conditions
– Repair of torn ligament of the knee
• New medical and surgical procedures
– Angioplasty
– Joint repairs/replacements
Adapted from: http://www.thehastingscenter.org/uploadedFiles/Publications/BriefingBook/
health%20care%20costs%20chapter.pdf
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Technology
• Medical devices
– CT scanners
– MRI imaging
– Implantable defibrillators
• Health Information Technology(HIT)
– Electronic medical records
– Telemedicine
Adapted from: http://www.thehastingscenter.org/uploadedFiles/Publications/BriefingBook/health%
20care%20costs%20chapter.pdf
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Pharmaceuticals
• Estimated 10% of total expenditures
– $234 billion 2008/$40.3 billion 1990
– Average ~12% increase over the last 10 years
– Drug costs inflated above CPI/other healthcare
sectors
• Increased availability
– Medications for chronic disease
• e.g. cholesterol, diabetes
• Increased demand
– Cancer chemotherapy
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Administrative Costs
• ~7% of annual healthcare expenditures
• Administrative costs account for more than
twice average of other western
industrialized nations
• Excessive expense = $91 billion
Adapted from: McKinsey Global Institute, Accounting for the cost of US health
care: A new look at why Americans spend more, November 2008 available at:
http://www.mckinsey.com/mgi/publications/US_healthcare/pdf/US_healthcare
_Chapter1.pdf; last accessed Aug 1, 2010
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Physician/Hospital Costs
• Increased demand
– Utilization
– Techniques
• Minimally invasive surgery
• Imaging techniques
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Chronic Disease
• 2005 – ~1 of 2 adults with chronic disease
• 7 of 10 deaths due to chronic disease
• CDC - four health risk behaviors
– Lack of physical activity
– Poor nutrition - obesity
– Tobacco use
– Excessive alcohol consumption
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Chronic Diseases
• Chronic Disease
–
–
–
–
–
–
–
–
–
Asthma
Chronic obstructive pulmonary disease
Chronic renal failure
Congestive heart failure
Coronary artery disease
Diabetes
Mood disorders/senility
Cancer
Hypertension
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Chronic Disease and Increased
Demand for Services
• Increased utilization of services
– Management/treatment to decrease risk of
complications
• e.g. aggressive treatment of diabetes to avoid such
complications as heart disease, kidney failure or
blindness
– Early intervention at risk groups
• e.g. weight loss, smoking cessation
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Early Detection and Prevention
• Increased preventive services
– Detection
• Screening mammograms
• Colonoscopy
– Prevention
• Immunizations
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Spending per Age Group
Average Spending
Per Person
Age (in years)
<5
$1508
5-17
1267
18-24
1441
25-44
2305
45-64
4863
>64
8776
Male
$3002
Female
3886
Sex
Adapted from: Healthcare Costs – A Primer 2009. Available at: http://www.kff.org/insurance/7670.cfm.
Slides. Last accessed 07/31/2010.
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Increased Demand: Aging
• 1946-1964 – 66 million children
• Medicare eligibility beginning in 2011
– Additional 10 million enrollees by 2018
– Costs projected>$13,000 per capita with
Medicare costs higher
• Increased utilization of services for chronic
illness above age 64
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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EMTALA
• Emergency Medical Treatment and Active
Labor Act
– Legal mandate to offer medical care to all
patients regardless of ability to pay
– Anyone presenting to an emergency department
(ED)
• Must be examined to determine if there is an
emergency
• Treated until stabilized, discharged to self care or
continuing care
• Transfer to a facility capable of providing care if the
facility is unable to provide the required care
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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The Uninsured
• 15% of the population = ~47 million people
• The Kaiser Commission on Medicaid and
the Uninsured 2010
– In 2004 - $125 billion cost = 7% total
healthcare costs
– $40.7 billion uncompensated
– Government paid the majority
• Uninsured poor use the ED as a safety net
for care
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Uninsured Spending
• Cost of care for insured twice as much as
uninsured
• Uninsured receive
– Less preventive care
– Diagnosed at more advanced disease states
– Once diagnosed, received less therapeutic
care
– Have higher mortality rates
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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ED Utilization and Uninsured
• Is uninsured care cause for overcrowding
of the ED?
• 2008 – Weber et al found
– Percent of uninsured using the ED did not
change over 10 years
– Most ED visits increase due to non-poor
insured with primary care physician as usual
source of care
Weber EJ, Showstack JA, Hunt KA, et al. “Are the Uninsured Responsible for the Increase in Emergency
Department Visits in the United States?” Annals of Emergency Medicine 52(2): 108–115, 2008.
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Emergency Department
Utilization and Capacity
• Lack of key clinical staff also has been
cited as a driver of ED overcrowding
• Care provided to the uninsured and
patients with non-urgent conditions is not a
driver of ED overcrowding
• Evidence links ED overcrowding to
reduced health care quality and patient
safety
Adapted from: DeLia, D., Cantor, J., Emergency department utilization and capacity; The Synthesis Project,
Robert Wood Johnson Foundation. Research Synthesis Report 17, July 2009
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Summary
• US healthcare expenditures highest ion
world
• Factors
– Technology
– Pharmaceutical costs
– Increase demand and utilization
• Aging and chronic disease
– Administration costs
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
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Summary
• Uninsured costs
– 7% of total healthcare expenditures in 2004
– Receive less care and treatment, sicker,
higher mortality rates
Component 1/Unit 5d
Healthcare IT Workforce Curriculum
Version 1.0/Fall 2010
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