Classen_HealthEcon_Class25

Classen_HealthEcon_Class25 - Hospitals Hospitals Class 25...

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Unformatted text preview: Hospitals Hospitals Class 25 Health Economics Loyola University Chicago March 30, 2011 Lecture Outline Lecture Outline Reforms in ACA Demand for Hospital Services Organization of Hospitals Competition among Hospitals Scheduled Reforms for expanding Scheduled Reforms for expanding health insurance coverage Expansions of Medicaid Mandated individual insurance Cover up to 133% of Federal Poverty Line Fines of $750 ­ $1,500 or 2.5% of income Subsidize purchase up to 400% FPL and create exchanges to offer plans outside of employer groups Eliminate denials of coverage for pre­existing conditions Requirements for larger employers to offer coverage and minimums for cost­sharing of premiums Require 1.5% – 12% of income for lowest cost plans Subsidies for smaller employers Shares of NHE by Payer 40% 35% 30% Payer Share 25% 20% 15% 10% 5% 0% 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 Year Employer-Sponsored Exchanges Medicare Medicaid/CHIP Out of Pocket Potential Effects of Proposals Potential for severe adverse selection Could also have positive selection Changes to pre­existing conditions coverage What is health of currently uninsured and how much health care will they use when insured? Mandating coverage for healthy, younger people Would help to control premium growth Cost estimates influenced by response of each group (~ $1 trillion for first 10 years) Savings generated from cuts to Medicare payments and taxes on high­end health insurance plans What is provider response? Federal & State Share of Medicaid 10% 20% 30% 40% 50% 60% 70% 80% 0% Federal State/Local Federal and State Shares of Medicaid Spending, 2000 - 2020 Year 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 Distribution of National Health Expenditures 45% 40% Percent of Expenditures 35% 30% 25% 20% 15% 10% 5% 0% 19 65 19 68 19 71 19 74 19 77 19 80 19 83 19 86 19 89 19 92 19 95 19 98 20 01 20 04 20 07 20 10 20 13 20 16 Hospitals Physicians Prescription Drugs Nursing Home Care Year Health Expenditures on Hospitals Hospital spending increased to $760 billion in 2009 and has averaged 7% annual growth over the last decade. This resurgence in hospital spending growth since 2000 followed a period of managed care expansion that dampened growth in inpatient hospital utilization. 56% of hospital spending comes from public funds, with 30% from Medicare Recent spending trends reflect growing demands for services, rising compensation and other input costs, and the increased ability of hospitals to negotiate higher prices from private payers. Large shift toward public financing during 1990s after PPS in 80’s Medicare forced to reduce cost­shifting for coverage of uninsured Percentage Share of Inpatient vs. Outpatient Surgeries, 1988 – 2008 Inpatient Surgeries Outpatient Surgeries Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2008, for community hospitals. Distribution of Outpatient vs. Inpatient Revenues, 1980 – 2008 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 198019821984198619881990199219941996199820002002200420062008 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2006, for community hospitals. Share of revenues from outpatient tripled over last 30 years G sInpa nt ros tie R ve e nue Gs ros O utpa nt tie R ve e nue Average Length of Stay in Community Hospitals 9 7.6 7.6 7.3 7.2 7.2 7.2 7.1 7.2 7.2 7.1 7.1 8 7 6 Days 5 4 3 2 1 0 7.6 Declined by 2 days over 20 year period (25% reduction), with quickest fall in mid-90’s. 7.0 6.7 6.5 6.2 6.1 6.0 5.9 5.8 5.7 5.7 5.7 5.6 5.6 5.6 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2006, for community hospitals. Average Length of Stay in Community Hospitals by State, 2008 RI 5.2 Days DE 5.9 Days DC 7.0 Days 4.0 to 4.9 Days 5.0 to 5.9 Days 6.0 to 7.9 Days > 8 Days Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2008, for community hospitals. Number of Beds and Number of Beds per 1,000 Persons, 1981 – 2006 1,200,000 1,000,000 800,000 Beds 600,000 400,000 200,000 0 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2006, for community hospitals. 5.0 4.5 Number of Beds 4.0 3.0 Number of Beds per 1,000 2.5 2.0 1.5 1.0 0.5 0.0 Beds per Thousand 3.5 Beds per 1,000 by State, 2006 RI 2.24 DE 2.50 DC 6.19 <2 2 – 2.99 3 – 3.99 4 – 4.99 > 5 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2006, for community hospitals. US Census Bureau: National and State Population Estimates, July 1, 2006. Link: http://www.census.gov/popest/states/tables/NST-EST2006-01.xls. Sources of Hospital Funding Sources of Hospital Funding Early 1900s, main source of hospital funding was typically community philanthropy supplemented by patient fees. Since 1940, hospital revenues have grown rapidly, but philanthropy and patient fees have drastically decreased as a percentage of the total. Today, the two largest sources of payment are Medicare and managed care organizations: Medicare provides government funding for the 60% of patient days used by the elderly. Managed care firms shop for low prices and good information systems to control costs. 45.0% 40.0% 35.0% 30.0% S hares of Hospital Revenue by Payer S ource Medicare 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 6 9 1 8 6 9 1 0 7 9 1 2 7 9 1 4 7 9 1 6 7 9 1 8 7 9 1 0 8 9 1 2 8 9 1 4 8 9 1 6 8 9 1 8 9 1 0 9 1 2 9 1 4 9 1 6 9 1 8 9 1 0 2 0 2 4 0 2 6 0 2 8 0 2 Medicaid Private Insurance Out of Pocket DoD/VA Percentage of Hospitals with Negative Total and Operating Margins, 1995 – 2008 Negative Operating Margin Negative Total Margin Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2008, for community hospitals. Annual Change in Hospital Operating Revenue and Expenses per Adjusted Admission,(1) 1988 – 2008 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2008, for community hospitals. (1) Uncompensated Care Costs for Hospitals $30 7% As % of Expenses $25 6% Uncompensated Care Costs (Billions) 5% $20 4% $15 Uncompensated Care Costs 3% $10 2% $5 1% $0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 0% Year As % of Total Expenses Hospital Payment Shortfall Relative to Costs for Medicare, Medicaid, and Other Government, 1997 – 2008 Medicare Medicaid Other Government Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2008, for community hospitals. (1) Hospital Emergency Department Visits Hospital Emergency Department Visits per 1,000 Persons, 1991 – 2008 Increased almost 15% in last 15 years Link: http://www.census.gov/popest/states/tables/NST-EST2006-01.xls. Percent of Hospitals Reporting Emergency Department Capacity Issues by Type of Hospital, March 2010 Source: American Hospital Association 2010 Rapid Response Survey, Telling the Hospital Story. ...
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