Introduction to Healthcare and
Public Health in the US
Financing Healthcare (Part 2)
Lecture b
This material (Comp1_Unit5b) was developed by Oregon Health and Science University, funded by the Department of Health
and Human Services, Office of the National Coordinator for Health Information Technology under Award Number
[IU24OC000015)].
Financing Healthcare (Part 2)
Learning Objectives
• Describe the revenue cycle and the billing process undertaken by
different healthcare enterprises. (Lecture a)
• Understand the billing and coding processes, and standard code
sets used in the claims process. (Lecture a)
• Identify different fee-for-service and episode-of-care reimbursement
methodologies used by insurers and healthcare organizations in the
claims process. (Lecture a)
• Review factors responsible for escalating healthcare expenditures in
the United States. (Lecture b)
• Discuss methods of controlling rising medical costs. (Lecture c)
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
2
Financing Healthcare (Part 2)
Lecture b - Goals
• Review US healthcare expenditures and medical
inflation
• Examine the factors contributing to the increase
in health care expenditures in the United States
• Describe the Emergency Medical Treatment and
Active Labor Act (EMTALA)
• Discuss the cost of care to the uninsured
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
3
National Health Expenditures and Gross
Domestic Product, select years 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%
5.1 Chart: 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). (CMS, 2011, PD-US, CC BY-NC-SA 3.0)
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
4
US National Health Expenditures per
Capita, Select Years 1960-2009
5.2 Chart: The Kaiser Family Foundation, Kaiser Fast Facts. Data 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). Available at http://facts.kff.org/chart.aspx?ch=854. (KFF, CMS, 2011, PDUS, CC BY-NC-SA 3.0).
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
5
Per Capita Health Care Expenditures, U.S. and
Select Countries, 2008
5.3 Chart: Chart: The Kaiser Family Foundation, Kaiser Fast Facts. Data Source: Organisation for
Economic Co-operation and Development (2010), "OECD Health Data", OECD Health
Statistics (database). doi: 10.1787/data-00350-en (Accessed on 14 February 2011). Available at
http://facts.kff.org/chart.aspx?ch=1952. (KFF, CMS, 2011, PD-US, CC BY-NC-SA 3.0).
Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are
OECD estimates. Numbers are PPP adjusted.
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
6
Percent of Total Health Care Spending
Concentration of Health Spending
in the Total U.S. Population 2007
5.4 Chart: Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human
Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008. (HHS, MEPS,
KFF, 2008, PD-US, CC BY-NC-SA 3.0).
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
7
Factors Contributing to High
Healthcare Expenditures
• Technology
• Increased demand and utilization
– Chronic disease
– Aging population
• Administrative costs
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
8
Technology and National
Healthcare Expenditures
• Congressional Budget Office Estimates
– 40-50% of total expenditures
• Technology in healthcare
– procedures, equipment, and processes by
which medical care is delivered
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
9
Technology
• Previously untreatable conditions
– Repair of torn ligament of the knee
• New medical and surgical procedures
– Angioplasty
– Joint repairs/replacements
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
10
Technology
• Medical devices
– CT scanners
– MRI imaging
– Implantable defibrillators
• Health Information Technology(HIT)
– Electronic medical records
– Telemedicine
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
11
Pharmaceutical Costs
• 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
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
12
Administrative Costs
• Administrative costs
– Approximately 7% of annual US healthcare
expenditures
– Administrative costs more than twice average
of other western industrialized nations
– Estimated excess expense = $91 billion
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
13
Physician/Hospital Costs
• Increased demand
– Utilization
• Positron emission tomography
• Magnetic resonance imaging
– Techniques
• Minimally invasive surgery
– daVinci robotic surgery
• Imaging techniques
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
14
Chronic Disease
• Chronic disease
– Affects 1 of 2 adults in the US
– Accounts for 7 of 10 deaths
– Daily activity limitations for 1 in 4 with chronic
disease
– Obesity major concern and contributor
• 1 in 3 adults
• 1 in 5 children between ages 6 and 19
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
15
Chronic Disease and Health Risk
Behaviors
• CDC - four health risk behaviors
– Lack of physical activity
– Poor nutrition - obesity
– Tobacco use
– Excessive alcohol consumption
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
16
Chronic Diseases
• Chronic Disease
– Asthma
– Chronic obstructive pulmonary disease
– Chronic renal failure
– Congestive heart failure
– Coronary artery disease
– Diabetes
– Mood disorders/senility
– Cancer
– Hypertension
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
17
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
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
18
Early Detection and Prevention
• Increased preventive services
– Detection
• Screening mammograms
• Colonoscopy
– Prevention
• Immunizations
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
19
Spending by Age Group
5.5 Table: Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human
Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008. HHS, MEPS,,
KFF, 2008, PD-US, CC BY-NC-SA 3.0).
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
20
Increased Demand: Aging
• Increased utilization of services for chronic
illness above age 64
• 1946-1964 – 66 million children
• Medicare eligibility beginning in 2011
– Additional 10 million enrollees by 2018
– Projected costs > $13,000 per capita with
comparable increase in Medicare costs
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
21
The Uninsured
• Uninsured receive
– Less preventive care
– Diagnosed at more advanced disease states
– Once diagnosed, received less therapeutic
care
– Have higher mortality rates
• Cost of care for insured twice as much as
uninsured
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
22
The Uninsured 2009
• 17% of the population = ~50 million people
• The Kaiser Commission on Medicaid and the
Uninsured 2010
– In 2004 - $125 billion
• $40.7 billion uncompensated
– In 2008 - $87 billion
• $57 billion uncompensated
– Government pays the majority of
uncompensated care
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
23
Number of Nonelderly Uninsured Americans,
2000 – 2009
2000-2004 Method
50
39.6
40.9
43.3
44.7
45.5
2003
2004
2004 Revised Method
43.0
44.4
2004
2005
46.5
50.0
45.0
45.7
25
0
2000
2001
2002
2006
2007
2008
2009
5.6 Chart: Source: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of 2001-2010 ASEC
Supplements to the CPS. (KFF, PD-US, CC BY-NC-SA 3.0).
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
24
The Recession and Uninsured, 20082009
Impact of the Rise in Unemployment on Health
Coverage, 2008 to 2009
3.0
2.8
2.8%
=
Decrease in
Employer
Sponsored
Insurance
National
Unemployment
Rate Increase
since 2008
(from 7.2% in
Dec-08 to 10.0%
in Nov-09)
(million)
6.9
&
Medicaid Uninsured
/CHIP
Increase
(million)
Enrollment
Increase
(million)
Figure 5.7: The Recession and Uninsured, 2008-2009
5.7 Chart: Source: Based on John Holahan and Bowen Garrett, Rising
Unemployment, Medicaid, and the Uninsured, prepared for the Kaiser
Commission on Medicaid and the Uninsured, January 2009. (KFF, 2009, PD-US).
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
25
The Uninsured: Spending (2008)
• Annual Spending per person
– Uninsured: $1686
• One third out of pocket
– Insured (non-elderly): $4463
• Total spending (uninsured)
– $87 billion
• $57 billion uncompensated
– 75% uncompensated paid by government
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
26
EMTALA
• Emergency Medical Treatment and Active Labor Act
of 1986
– 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
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
27
ED Utilization and Uninsured
• Is uninsured care cause for overcrowding of the
ED?
– Uninsured poor use the ED as a safety net for
care
• 2008 – Weber et al examined ED use
– Percent of uninsured using the ED did not
change over 10 years
– Non-poor insured with PCP accounted for
most increase in ED visits
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
28
Emergency Department
Overcrowding
• 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
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
29
Financing Healthcare (Part 2)
Summary – Lecture b
• US healthcare expenditures highest worldwide
– Both per capita and % GDP
• Factors
– Increase demand and utilization
• Aging and chronic disease
– Technology
– Pharmaceutical costs
– Administration costs
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
30
Financing Healthcare (Part 2)
Summary – Lecture 5b
• EMTALA
– Not resulted in increased utilization by the
uninsured
– Not a major cause of increased utilization of
the ED
• Uninsured costs
– 7% of total healthcare expenditures in 2004
– Receive less care and treatment, sicker,
higher mortality rates
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
31
Financing Healthcare (Part 2)
References – Lecture b
References
•
•
•
•
•
•
•
Adapted from: DeLia, D., Cantor, J., Emergency department utilization and capacity; The Synthesis Project,
Robert Wood Johnson Foundation. Research Synthesis Report 17, July 2009.
Centers for Disease Control and Prevention>Chronic Disease Prevention and Health Promotion>Tools and
Resources. Recommendations, Best Practices, and Guidelines. Available from:
http://www.cdc.gov/chronicdisease/resources/guidelines.htm. Last accessed December 12,, 2011.
Fisher E, Bynum J, Skinner J. The Policy Implications of Variations in Medicare Spending Growth. The
Dartmouth Atlas: The Dartmouth Institute for Health Policy and Clinical Practice Center for Health Policy
Research, February 27, 2009. [cited 2010 July 31]. Available at:
http://www.dartmouthatlas.org/downloads/reports/Policy_Implications_Brief_022709.pdf. Last accessed March
22, 2011.
Fisher E, Goodman D, Skinner J, Bronner K. Health Care Spending, Quality, and Outcomes More Isn’t Always
Better. The Dartmouth Atlas: The Dartmouth Institute for Health Policy and Clinical Practice Center for Health
Policy Research, February 27, 2009. [cited 2010 July 31]. Available at:
http://www.dartmouthatlas.org/downloads/reports/Spending_Brief_022709.pdf Last accessed March 22, 2011.
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.
Nelson AR, Costs of Health Care: New Solutions for an Old Problem. The Commonwealth Fund. May 13, 2005
[cited August 3, 2010]. Available from:
http://www.commonwealthfund.org/Content/Publications/Commentaries/2005/May/Costs-of-Health-Care--NewSolutions-for-an-Old-Problem.aspx. Last accessed March 22, 2011
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
32
Financing Healthcare (Part 2)
References – Lecture b
References (continued)
•
•
•
•
•
•
•
•
Robert Wood Johnson Foundation. Available at: http://www.rwjf.org/. Source for health issue research and health
policy. Last accessed January 2012.
The Congress of the United States Congressional Budget Office. Washington DC: 2008 [cited July 31, 2010].
Technological Change And The Growth Of Health Care Spending. Available at:
http://www.cbo.gov/ftpdocs/89xx/doc8947/01-31-TechHealth.pdf. Last accessed December 12, 2011.
The Hastings Center (nd.). Health Care Costs and Medical Technology From Birth to Death and Bench to Clinic:
The Hastings Center Bioethics Briefing Book for Journalists, Policymakers, and Campaigns, available at:
http://www.thehastingscenter.org/uploadedFiles/Publications/Briefing_Book/health%20care%20costs%20chapter.p
df. Accessed December 12, 2011.
The Henry J Kaiser Family Foundation. Menlo Park, CA (2009) [cited 2010 August 1]. Healthcare Costs: A
Primer; available from: http://www.kff.org/insurance/ 7670.cfm. Key information on health care costs. Last
accessed March 22, 2011.
The Henry J Kaiser Family Foundation. Menlo Park, CA (2010) [cited 2010 August 1]. Kaiseredu.org > Cost and
Spending > US Healthcare Costs; Available from: http://www.kaiseredu.org/index.asp. Provides background
information, links to key data and policy information on US healthcare costs. Last accessed March 22, 2011.
The Henry J Kaiser Family Foundation. Menlo Park, CA (2010). [cited 2010 August 1]. Prescription Drug Trends.
Available at: http://www.kff.org/rxdrugs/index.cfm. Last accessed March 22, 2011.
The Henry J Kaiser Family Foundation. Menlo Park, CA (2010). [cited 2010 August 1]. The Kaiser Commission
on Medicaid and the Uninsured; Uninsured and Untreated: A Look at Uninsured Adults Who Received No Medical
Care for Two Years; Available at: http://www.kff.org/uninsured/8083.cfm. Last accessed March 22, 2011.
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.
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
33
Financing Healthcare (Part 2)
References – Lecture b
Charts, Tables and Figures
•
•
•
•
•
5.1 Chart: 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). (CMS, 2011, PD-US, CC BY-NC-SA 3.0).
5.2 Chart: The Kaiser Family Foundation, Kaiser Fast Facts. Data 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). Accessed 11 Dec 2011. Available at http://facts.kff.org/chart.aspx?ch=854. (KFF,
CMS, 2011, PD-US, CC BY-NC-SA 3.0).
5.3 Chart: Chart: The Kaiser Family Foundation, Kaiser Fast Facts. Data Source: Organisation for Economic Cooperation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data00350-en (Accessed on 14 February 2011). Available at http://facts.kff.org/chart.aspx?ch=1952. (KFF, CMS, 2011,
PD-US, CC BY-NC-SA 3.0).
5.4 Chart: Concentration of Health Spending in the Total U.S. Population 2007. Adapted from: Healthcare Costs –
A Primer 2009. Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and
Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008.
Available at: http://facts.kff.org/chart.aspx?ch=1344. (HHS, MEPS,, KFF, 2008, PD-US, CC BY-NC-SA 3.0).
5.5 Table: Distribution of Average Spending Per Person, 2008. Source: Kaiser Family Foundation calculations
using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality,
Medical Expenditure Panel Survey (MEPS), 2008. Adapted from: Healthcare Costs – A Primer, 2009. Available at:
http://facts.kff.org/chart.aspx?ch=1390. Last accessed December 12, 2011. (HHS, MEPS, KFF, 2008, PD-US, CC
BY-NC-SA 3.0)
Health IT Workforce Curriculum
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Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
34
Financing Healthcare (Part 2)
References – Lecture b
Charts, Tables and Figures (cotinued)
•
•
5.6 Chart: Number of Nonelderly Uninsured Americans, 2000 – 2009. Source: Kaiser Commission on Medicaid
and the Uninsured/Urban Institute analysis of 2001-2010 ASEC Supplements to the CPS. (KFF, PD-US, CC BYNC-SA 3.0).
5.7 Chart: The Recession and Uninsured, 2008-2009. Source: Based on John Holahan and Bowen Garrett, Rising
Unemployment, Medicaid, and the Uninsured, prepared for the Kaiser Commission on Medicaid and the
Uninsured, January 2009. (KFF, 2009, PD-US).
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Healthcare and Public Health in the US
Financing Healthcare (Part 2)
Lecture b
35