health policy week 3 & 4

How have total health expenditures changed over time?

They have increased substantially, reaching $5.3 trillion in 2024, up from $1.3 trillion in 1999 in the United States. We pay way more compared to other countries.

What contributes to high expenditures

• High administrative costs (15–20%)

• High service and hospital prices

• Use of technology

• Chronic disease

• Lifestyle factors

US spending compared to other countries

• The U.S. spends way more per person than other developed countries

• Per capita: thousands more per person than peer countries

• Also spends a higher % of GDP on health care

• GDP: ~18% vs ~10–12% in other countries

Which age group accounts for the most health spending?

People 55 and older, who account for about half of total spending.

recent trends in health care spending growth

• Growth slowed after 2008 (recession, cost-sharing)

• Increased again after 2014 (more coverage from ACA)

• Now growing at a moderate rate (~4–5%)

Most common coverage type:

Private health insurance (often employer-based)

• U.S. system is not universal

• Mix of private + public (Medicare/Medicaid)

Disparities in infant mortality?

U.S. has higher rates than similar wealthy countries
Indicates disparities in care and access

US compared to other countries in mortalities amenable (preventable deaths) to health care?

U.S. performs worse than other developed countries
Means people die from conditions that should be treatable due to:

• unequal access to care

• high costs

• fragmented health system ( not well coordinated leading to delays, errors, misinformation)

• less emphasis on preventative and primary

What source of funding contributes most to national health expenditures?

private health insurance
followed by

• Medicare

• Medicaid and CHIP

• other third party payer

• out of pocket

also for personal health care expenditure

key for cost containment strategies formulas

E = total health expenditures

P = unit price for services

Q = quantity/utilization of services

C = cost of all services per person in a given time period

N = number of persons

J = index representing each payer

Fee for service formula

E = P × Q

• E = total spending

• P = price of services

• Q = quantity of services

Capitation: formula

E = C × N

• C = cost per person

• N = number of people

Cost containment strategy - Quantity (Q)

Reduce how much care is used

• Utilization management (pre-approvals, reviews)

• Practice guidelines

• Technology controls

• Patient cost-sharing

Problem: may reduce necessary care too

Cost containment strategy - Prices (P)

Reduce Cost per service

• Physician fee controls

Problem: providers may increase volume instead

Cost containment strategy - Expenditure (E)

control total spending

• Global budgets

• National budgeting

• Capitation (HMOs)

What are the main hospital ownership types?

Nonprofit, for-profit, and government hospitals.
The most common in US is non-profit hospitals

What is a major trend in hospital ownership?

Increasing consolidation into health systems (more hospitals owned by large organizations)

• more resources

• improved coordination
  but…

• higher prices

• no major improvements

Better organization, but higher cost

What are the most recent trends in length of stay? What is the reason for these current trends in length of stay?

LOS is decreasing due to

• More care done outpatient

• New technologies speed recovery

• Faster mobilization after surgery

• Payment changes (Medicare/Medicaid pressures)

What is happening to outpatient care? Why?

Rapidly increasing, growth

• Medical advances (safer procedures outside hospital)

• Medicare reimbursement changes

• Hospitals competing for patients

• Patient preference (convenience)

What are hospitals investing in for outpatient care?

Urgent care, ambulatory surgery centers, imaging, primary care clinics

What do Registered Nurses (RNs) do?

• Deliver care

• Monitor patients

• Educate patients/families

• Coordinate care

• Advocate for patients

What are Advanced Practice Nurses?

Nurse practitioners, midwives, specialists (often master’s/doctoral level).

What causes nursing shortages?

• Aging population (more demand)

• Faculty shortages (limits training)

• Poor working conditions

• Burnout

Why are nurses important for patient outcomes?

• Better staffing → lower mortality, fewer infections, shorter LOS

• Poor staffing → higher death rates & complications

Strategies to fix nursing shortages?

• Increase wages

• Improve working conditions

• Expand education capacity

• Recruit internationally

What is the projected physician shortage? Where are they the worst?

US will face a shortage of ~139,000 physicians nationally by 2030
South and West U.S. look worse than Northeast

Key strategies to address physician shortages?

• Use Nurse Practitioners (NPs) & Physician Assistants (PAs)

• Team-based care

• Expand residency slots

• Telehealth

• Loan forgiveness programs

• Use foreign-trained physicians

What is telemedicine?

remote diagnosis and treatment of patients by means of telecommunications technology, subcategory of umbrella term.

What is telehealth?

Umbrella term: Broader—includes medical care, education, monitoring, and health services.

What accelerated Telehealth use?

COVID - 19 pandemic

Benefits of Telehealth

• Improves access (especially rural) transportation

• Helps address provider shortages

• Convenient for patients

Challenges of telehealth?

• Care fragmentation

• Licensing across states

• Insurance/payment variation

What are DSH hospitals? Disproportionate Share Hospitals (DSH)

Hospitals that treat a large number of low-income/uninsured patients or Medicaid patients

What are DSH payments (pre-ACA)?

Extra government funding to support these hospitals. because hospitals would lose money otherwise

How did the ACA change DSH payments?

Reduced DSH payments (because more people gained insurance under ACA).
Hospitals would have fewer uninsured patients
So they wouldn’t need as much extra funding

Whats the issue with DSH

• Not all states expanded Medicaid

• Many people are still uninsured

So:

• Hospitals still treat lots of unpaid care

• BUT now get less DSH money