The Long-Term Outlook for Health Care Spending Peter R. Orszag - - PowerPoint PPT Presentation

Congressional Budget Office

The Long-Term Outlook for Health Care Spending

Peter R. Orszag Director

November 2007

Spending on Health Care as a Percentage of Gross Domestic Product

Percent

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2 4 6 8 10 12 14 16 18

Medicare Medicaid All Other Health Care

Excess Cost Growth in Medicare, Medicaid, and All Other Spending on Health Care

Medicare Medicaid All Other Total

1975 to 1990 2.9 2.9 2.4 2.6 1990 to 2005 1.8 1.3 1.4 1.5 1975 to 2005 2.4 2.2 2.0 2.1 Percentage Points

Excess Cost Growth in Medicare, Medicaid, and All Other Spending on Health Care

Percent

1976 1980 1984 1988 1992 1996 2000 2004

• 10
• 5

5 10 15 20

Total Medicare Medicaid Other

Spending on Health Care as a Percentage of Gross Domestic Product Under an Assumption That Excess Cost Growth Continues at Historical Averages

2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 2082 10 20 30 40 50 60 70 80 90 100 Medicare Medicaid All Other Health Care

Percent

Projected Spending on Health Care as a Percentage of Gross Domestic Product

Percent

2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 2082 5 10 15 20 25 30 35 40 45 50 All Other Health Care Medicaid Medicare

Federal Spending for Medicare and Medicaid as a Percentage of Gross Domestic Product Under Different Assumptions About Excess Cost Growth

Percent

2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 2082 5 10 15 20 25 30 35 40 CBO's Projection Excess Cost Growth of: 2.5 Percentage Points 1 Percentage Point Zero

CBO’s and the Trustees’ Projections of Spending on Medicare as a Percentage of Gross Domestic Product

2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 2082 2 4 6 8 10 12 14 16 18 CBO Trustees

Percent

Sources of Growth in Projected Federal Spending on Medicare and Medicaid

Percentage of GDP

2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 2082 5 10 15 20 Effect of Excess Cost Growth Effect of the Aging of the Population

The Medical Effectiveness Curve

Cost

Outcome Cost

Medicare Spending per Capita in the United States, by Hospital Referral Region, 2003

Source: www.dartmouthatlas.org.

$7,200 to 11,600 (74) 6,800 to < 7,200 (45) 6,300 to < 6,800 (55) 5,800 to < 6,300 (60) 4,500 to < 5,800 (72) Not Populated

The Relationship Between Quality and Medicare Spending, by State, 2004

73 78 83 88 4,000 5,000 6,000 7,000 8,000

Spending (Dollars)

Composite Measure of Quality of Care Source: Data from AHRQ and CMS.

What Additional Services Are Provided in High-Spending Regions?

Source: Elliot Fisher, Dartmouth Medical School.

Variations Among Academic Medical Centers

UCLA Medical Center Massachusetts General Hospital Mayo Clinic (St. Mary’s Hospital) Biologically Targeted Interventions: Acute Inpatient Care Care Delivery―and Spending―Among Medicare Patients in Last Six Months of Life CMS composite quality score 81.5 85.9 90.4 Total Medicare spending 50,522 40,181 26,330 Hospital days 19.2 17.7 12.9 Physician visits 52.1 42.2 23.9 Ratio, medical specialist / primary care 2.9 1.0 1.1

Use of Biologically Targeted Interventions and Care-Delivery Methods Among Three of U.S. News and World Report’s “Honor Roll” AMCs

Source: Elliot Fisher, Dartmouth Medical School.

Share of Personal Health Care Expenditures Paid Out of Pocket

1975 1985 1995 2005 2015 5 10 15 20 25 30 35

33% 26% 17% 15% 13%

Percent

Concentration of Total Annual Medicare Expenditures Among Beneficiaries, 2001

Percent

Beneficiaries Expenditures 10 20 30 40 50 60 70 80 90 100

3.8 11.2 23.5 18.4 43.1 5 5 15 25 50

Source: CBO based on data from CMS.