I’m attending MHA Leadership Forum today and the agenda is packed with great speakers. Throughout the day I will share some of the information that has been presented.
In 1970 40% of health care costs were out-of-pocket, today only 12% of health care costs are paid out-of-pocket. The changes in patient cost sharing is one of the things that has driven up health care costs across the country and caused health care to consume a higher and higher percentage of GDP.
The Rand Research Group has shown that if health care costs had been kept in check over the past 40 years, median family income would be 13% higher than it is today.
Health care consumers are spending more money out-of-pocket due to high deductible health plans. Price shopping for health care is becoming more common. WalMart has 17 locations across the US that charge $40 for a physician visit and they will manage chronic and acute conditions. The service also charges $15 for lab work. The only reason they’ve not yet expanded to other markets is because they’re not sure how they will keep up with demand.
20% of Americans move every year which makes the medical home model very difficult to achieve.
The average American who retires today will have contributed close to $100,000 of funds to Medicare over the course of their working career. CMS actuaries predict that upon retirement a beneficiary will live 17 years and utilize $240,000 in health care costs.
The federal government’s desire is to reduce health care expenditures yet demand is increasing due to the aging of the population. This is driving the shift from volume to value payments but the ability to measure quality in health care is difficult. In terms of hospital payments a large portion of the value measure is tied to patient perception of care. A patient’s perception of care and the best care they need are not always the same.
The US government is broke and not 50%+ of the population is dependent upon government financing. The average US citizen has an over inflated perspective on the value of health care and has unrealistic expectations.
Over the next three years we will see significant innovation in the locus of where “care” is delivered and who pays – think WalMart.
The more people have to pay out-of-pocket the more they will focus on price and access. Quality will become less important. Increased out-of-pocket expenses will create less demand for health care services. What are people willing to buy as opposed to what health care services do people “think” they need.
Think about how we’ve moved from defined benefit pensions to defined contribution 401k’s. That change over the past 20 years has driven more awareness of retirement needs and more consumer driven decisions. The same will occur in the health care market as patients are responsible for a higher percentage of cost.
80% of the preventive wellness services required by the ACA have not been determined to actually reduce health care costs in the long run.