Why does healthcare cost so much?

1. Why does healthcare cost so much? Understanding the real cost drivers and why Americans pay so much more for care Presented by: Michigan Consumers for Healthcare www.healthreformtruth.com

2. U.S. Healthcare costs are out of control in comparison to the world Source: International Federation of Health Plans, CHRT graphic

3. It’s because we are obese, right? • Or older? • Or because of lawyers? • Or because of the poor? • Or because we spend more on technology?

4. Americans are surprisingly healthy! • America is healthier than peer nations in 7 out of the top 10 disease classifications! • Institute of Medicine study • Lower relative disease prevalence saves the U.S. $70 billion in medical costs annually

5. It must be because we are older? Japan Median Age: 45.8 Per capita spending: $3,035 USA Median Age: 37.2 Per capita spending: $8,233

6. It must be because of the lawyers! • Litigation costs and malpractice insurance account for 1 to 1.5 percent of total medical costs. -Towers Perrin study • As healthcare costs have doubled, medical liability costs have stayed fairly constant.

7. But our technology is more advanced and expensive, right? • All modern healthcare systems have access to the very same pharmaceuticals, medical devices, surgical procedures and imaging equipment. • Profits drive the use of imaging equipment

8. The poor are to blame, right? 21.0% The bottom 50% of Americans account for only 2.7% of healthcare spending

9. So why is believing in myths bad? • It allows the real drivers of high costs to shift the blame • It takes pressure off politicians to act • It will ultimately lead to fiscal crisis

10. So what are the real drivers? Unit Prices and Administrative Costs!

11. What do we get for $140 billion?

12. Example: Surgeon fee for hip replacement

13. U.S. Hospital spending is 3 times the global average Source: OECO Health Data, 2011

14. So who’s on my side • Policymakers engage in blame shifting to avoid making tough decisions • Unlike in other countries, policymakers create few leverage points to control costs for consumers

15. Examples of policymakers punting • Medicare Part D was prohibited by Congress from negotiating on behalf of the recipients for lower rates. The results: billions in unnecessary out of pocket costs! • Medicare physician services are supposed to be capped. Every year Congress succumbs to AMA pressure and overrides the caps.

16. Balance billing practice continues • ACA requires that health plans pay something for out-of-network • But ACA allows hospitals to “balance bill” anything the insurance doesn’t pay.

17. Why no public option? • The House passed version of the ACA would have created a public option to compete with private insurance • Reimbursement rates would be capped at Medicare plus 10%

18. Challenges ahead for consumers • How do we message (or counter-message) on cost drivers? • How to we create a unified consumer policy agenda around cost drivers? • How do we move policymakers to act?

19. What You Can Do Join MCH’s email list, find us on Twitter @MIChealthcare or http://Facebook.com/consumersforhealthcare Visit us on the web at www.consumersforhealthcare.org Or find a navigator to assist you in getting enrolled at www.EnrollMichigan.com www.healthreformtruth.com