Healthcare Challenges

Part
01
of two
Part
01

Seniors - Issues Driving Increases In Medical Costs

The 5 issues that are driving up cost increases in medical costs for senior citizens in the US are 1) inflation of healthcare costs, 2) population growth, 3) concentrated costs before death, 4) rising disease incidence and 5) rising drug prices. We have outlined our key findings below.

JAMA 2017 STUDY ON FACTORS BEHIND HEALTHCARE COSTS INCREASE (US)

  • HealthData.org reported the findings of a 2017 study published in the Journal of the American Medical Association (JAMA) discussing the cost drivers of rising healthcare costs in the US.
  • These cost drivers are "(1) more people; (2) an aging population; (3) changes in disease prevalence or incidence; (4) increases in how often people use health care services; and (5) increases in the price and intensity of services."
  • The listed factors apply or are indirectly applicable to increases in senior healthcare costs as well, discussed individually below.

POPULATION GROWTH And aging

INFLATION (HEALTHCARE COSTS)

CONCENTRATED COSTS BEFORE DEATH

RISE OF DISEASE INCIDENCE

RISING DRUG PRICES

Part
02
of two
Part
02

Medicare For All - Pros And Cons

From a consumer's perspective, a pro of Medicare for All is that all people would have health coverage irrespective of their financial means. From an insurance company's perspective, the main and major con of Medicare for All is that it could, depending on the plan details, result in the whole private health insurance industry being eliminated altogether.

findings

1. CONSUMER VIEWPOINT

a. pROs

  • A pro of Medicare for All among consumers is that all people would have health coverage irrespective of their financial means. This is a pro because currently, more than 11% of people in the U.S. don't have health insurance. In contrast, many developed nations have their entire populations covered with health insurance.
  • Among consumers, a pro of Medicare for All is that it would likely result in better health among the U.S. population. This is a pro because one/third of people in the U.S. between 27 and 36 years of age chose to not get necessary medical attention due to being unable to afford it.
  • In working to achieve better health among the population, preventative services in particular are thought to be an area that would be bolstered through Medicare for All, as such services would be covered. Those preventative services could help to avert prospective health problems ahead of time.
  • A pro of Medicare for All among consumers is that job earnings might increase, as companies wouldn't have to provide employees' health insurance. This is a pro because currently, the amount of money U.S. employers spend on employees' health benefits is about $880 billion, which amounts to $14,800 for each employee, and earnings could rise with this system.

B. CONs

  • A drawback to Medicare for All from a consumer viewpoint is that taxes would increase in order to pay for the program. This is a drawback because of the added cost for it, as is demonstrated by the fact that just 37% of people surveyed said they support Medicare for All even if it means higher taxes.
  • From a consumer perspective, a drawback of Medicare for All is that wait times for seeing specialist doctors would likely increase, since more people would have health insurance coverage and that coverage would likely be the same. This is a drawback because it would mean that getting in to see a specialist could take longer. For example, Canada has a single-payer system and wait times to see a specialist increased from 20 weeks in 2016 to 21.2 weeks in 2017.
  • A drawback to Medicare for All among consumers is that the government would have to allocate more resources from other departments/programs in order to run it. For example, George Mason University's Mercatus Center found that federal spending would increase by $32.6 trillion over the course of 10 years in order to fund Bernie Sanders's Medicare for All plan. This is a drawback because less funding would be distributed to other programs that directly impact consumers' lives, such as infrastructure and education.

2. INSURANCE COMPANIES' VIEWPOINT

A. PROS

  • While it's difficult to find any pros for insurance companies regarding Medicare for All, one perceived pro is that private health insurance companies would likely expand/continue expanding into other business segments, as a result of insurance revenue either being significantly diminished or entirely eliminated (depending on the Medicare for All plan details). This is a pro because it could result in further innovation within the U.S. healthcare system.
  • In fact, some private health insurers have already begun doing so in anticipation of the continued push for Medicare for all. For example, UnitedHealth Group, which is the largest insurer in the U.S., acquired many physicians as part of "its OptumHealth unit."
  • The idea behind doing so is that private health insurance companies that are involved with "care delivery, analytics or other services" might be able to remain in business if revenue from insurance disappears as a result of Medicare for All.

B. CONS

  • The main and major con of Medicare for All for insurance companies is that "[t]he role of private health insurance" companies would essentially be eliminated altogether. This is a main and major con because (1) the industry's net value in the U.S. is $600 billion and (2) as Larry Levitt of the Kaiser Family Foundation stated: "The idea of eliminating an industry and companies that are this large is unprecedented."
  • In fact, the majority of the U.S. public doesn't like the idea of eliminating the private insurance industry, as just 37% support Medicare for All if it means that private insurance would be eliminated.
  • A con of Medicare for All for insurance companies is that if the details of a Medicare for All plan are such that private health insurance companies are allowed to remain in operation to some extent, Medicare could become an option for health insurance that people can choose from, in addition to private insurance choices. This is a con for insurance companies because if that occurs, private health insurance companies would face increased competition with their plans and pricing, as there would be more options available for consumers to choose from.

your research team applied the following strategy:

We found information about the pros and cons of Medicare for All from a consumer's perspective by looking for articles about such published by the industry source First Quote Health and reputable news publications that included CNBC and Fortune. We found information about the pros and cons of Medicare for All from an insurance company's perspective by looking for articles about such published by industry sources that included Modern Healthcare and reputable news publications such as the LA Times. There was less information available about the pros and cons for insurance companies because the scenarios of Medicare for All could mean a significant, if not complete, elimination of the private health care industry. In light of that, there really aren't many pros for those insurance companies and the cons, though few and straightforward, would have drastic business impacts. Some of the pros and cons about Medicare for All for both consumers and insurance companies could vary depending on the details for any such proposed plan. We focused our research on mainstream pros and cons, while noting plan specificity when applicable.
Sources
Sources

From Part 01
Quotes
  • "Five factors contribute to the rise in health care costs in the US: (1) more people; (2) an aging population; (3) changes in disease prevalence or incidence; (4) increases in how often people use health care services; and (5) increases in the price and intensity of services. "
  • "“Part of the reason we spend more on health care each year is the nation’s growing and aging population,” said Dr. Joseph Dieleman of the Institute for Health Metrics and Evaluation at the University of Washington and lead author of the study."
  • "The study, published today in JAMA, reveals that price and “intensity” (variety and complexity) of services accounted for 50% of the increase."
  • "Health care spending on outpatient care increased a dramatic 85% between 1996 and 2013, largely due to increasing use of services. Spending on inpatient care grew 59% because of price increases and service intensity."
  • "“People getting older led to a 12% increase in spending, and increases in price and service intensity, that is the variety and complexity of services, led to a 50% increase in spending.”"
Quotes
  • "Health care spending in the United States increased substantially from 1995 to 2015 and comprised 17.8% of the economy in 2015. "
  • "Increases in US population size were associated with a 23.1% (uncertainty interval [UI], 23.1%-23.1%), or $269.5 (UI, $269.0-$270.0) billion, spending increase; aging of the population was associated with an 11.6% (UI, 11.4%-11.8%), or $135.7 (UI, $133.3-$137.7) billion, spending increase."
  • "Changes in disease prevalence or incidence were associated with spending reductions of 2.4% (UI, 0.9%-3.8%), or $28.2 (UI, $10.5-$44.4) billion, whereas changes in service utilization were not associated with a statistically significant change in spending."
  • "Changes in service price and intensity were associated with a 50.0% (UI, 45.0%-55.0%), or $583.5 (UI, $525.2-$641.4) billion, spending increase. "
  • "The influence of these 5 factors varied by health condition and type of care. For example, the increase in annual diabetes spending between 1996 and 2013 was $64.4 (UI, $57.9-$70.6) billion; $44.4 (UI, $38.7-$49.6) billion of this increase was pharmaceutical spending."
Quotes
  • "“Older adults and those looking to plan their retirement need to be aware of the extent of out-of-pocket spending under Medicare and do their best to plan accordingly,” said Dr. Amy Kelley, lead author of the new study and assistant professor of geriatrics and palliative medicine at Mount Sinai."
  • "Not surprisingly, as people become more frail and need more help, their out-of-pocket expenses soar — so long as there are resources available to pay for these services."
  • "Of course, this has become a presidential campaign issue, as the Republicans have proposed a voucher system for Medicare that many analysts predict will end up increasing older adults’ out-of-pocket costs. "
  • "As Robert Moffit, senior fellow at the Heritage Foundation, a conservative research group, recently told Roni Caryn Rabin of The New York Times, all proposals being discussed by the Republicans “will require seniors to pay more.”"
  • "by 2020, median out-of-pocket spending is projected to reach 26 percent of all income,” the report predicted."
Quotes
  • "In the year 2050, there will be 83.7 million people in the United States who are 65 years old or older, according to estimates from the U.S. Census Bureau. That’s nearly twice as many senior citizens as there were in 2012."
  • "By 2050, the elderly population – especially those who are 85 years old and older – is predicted to start growing at a faster rate than the working age population. "
  • "Medical expenses for the elderly more than double between the ages of 70 and 90. The average amount spent on medical care for an American in his or her 90s exceeds $25,000 annually, a cost based primarily on nursing home costs."
Quotes
  • "Now it's no secret that inflation affects seniors across virtually all expense categories -- but when it comes to healthcare, that impact is particularly extreme. "
  • "That's because healthcare expenses are projected to rise at an average annual rate of 5.47%, which is almost triple the general U.S. inflation rate in recent years."
  • "Furthermore, that 5.47% is more than double the rate at which Social Security cost-of-living adjustments are expected to kick in. In other words, healthcare costs are likely to skyrocket, and those monthly benefits won't come remotely close to keeping up."
  • "Given the way healthcare costs are rising year over year, that 80% target might soon start to go up."
Quotes
  • "Existing research in the US has also reported average Medicare per-capita spending in 2011 more than doubling from $7566 at age 70 to $16,145 at age 96 before falling, with higher spending in mid-to-late 90s driven by spending on skilled nursing facilities, hospice care, and home health services [21]. "
Quotes
  • "We find that medical expenses more than double between ages 70 and 90 and that they are very concentrated: the top 10 per cent of all spenders are responsible for 52 per cent of medical spending in a given year."
  • "Those in the last calendar year of life are responsible for 4.9 per cent of total spending. "
  • "In the last 12 months of life, average medical spending is $59,000, accounting for 16.8 per cent of spending at ages 65 and over and for 6.7 per cent of spending at all ages. "
  • "Finally, while medical expenses before death can be large, on average they constitute only a small fraction of total spending, both in the aggregate and over the life cycle."
  • "https://onlinelibrary.wiley.com/doi/full/10.1111/j.1475-5890.2016.12106"
Quotes
  • "Chronic disease (rising rates of chronic disease and co-morbidities, as well as lifestyle factors and personal health choices)—the rapidly increasing number of individuals with chronic disease accounts for a disproportionate percentage of overall health spending."
  • "The study looked at five factors that drive healthcare spending: population growth, population aging, disease prevalence or incidence, service utilization, and service price and intensity."
Quotes
  • "Prescription drugs are expected to see the fastest annual growth over the next decade, rising an average of 6.3 percent per year, due to higher drug prices and more use of specialty drugs such as those for genetic disorders and cancer."
  • "Higher spending in Medicare and Medicaid, the government health insurance program for the poor and disabled, are also expected to contribute significantly to rising health spending as the population ages and relies more heavily on healthcare services."
Quotes
  • "Prescription drug prices continue to rise at alarming rates, leaving many older Americans struggling to afford the medications they need."
  • "AARP’s most recent Rx Price Watch Report found that the average price of brand-name drugs widely used by older Americans increased at four times the rate of inflation in 2017 alone. "
  • "These costs are especially burdensome for older adults, as the average senior takes 4½ medications each month."
  • "If these trends continue, older adults — particularly those on fixed incomes — will be unable to afford their prescription drugs, leading to poorer health outcomes and higher health care costs in the future."