Many of you may not know that Meals-on-Wheels Greater San Diego is actively involved in providing services in conjunction with the requirements of the Affordable Care Act. California obtained federal approval on March 27, 2013, for the largest state-based program yet aimed at testing a new way to care for people on both the Medicare and Medicaid government health programs. California is the fifth state–joining Washington, Massachusetts, Ohio and Illinois–to win approval for its demonstration project.
In specific, Meals-on-Wheels San Diego has been part of the testing grounds in California of service providers working with agencies such as Care1st Health Plan to provide meals to duel eligible patients (seniors and disabled individuals).  Critical to good health is proper nutrition.  This is most certainly the case for individuals recovering from an illness and returning home from a hospital stay. Many people in this vulnerable time cannot shop or cook for themselves, nor may they have the funds. Enter Meals –on-Wheels San Diego. For 10 days, and on a moment’s notice of discharge, we initiate meal and visitation service to help prevent patients from “bouncing back”, or returning to the hospital.

As we entered into this new service I become more intrigued with the Affordable Health Care Act and needed to know more. Before this pilot program I know very little about the health care reform besides the rhetorical I heard on often biased news stations. So, I decided to learn. In the next few weeks I will share what I am learning as a result of a course that I am taking from the University of Pennsylvania, taught by Ezekiel Emanuel, MD, PhD Chair of the Department of Medical Ethics & Health Policy. My first installment, “By the Numbers”, follows.

Luanne Hinkle

What We Spend As A Country:

A whopping total of $2.8 Trillion a year is spent on health care expenditures in the U.S. on a yearly basis. This is a mind-boggling number that can be difficult for the average person to comprehend. Let me share with you how I tried to make some sense of the behemoth numbers. One of every $6 is spent in this country on health care making it the 5^th largest economy in the world!

The share of economic activity for the health care sector has increased over time. Today the segment represents 17.9% of the nation’s total economic activity or gross domestic product (GDP) with expectations anticipated to reach nearly 1/5 of the GDP by 2020 (Centers for Medicare and Medicaid Services (CMS)). The average growth in health spending has exceeded the growth of the economy as a whole by between 1.1 and 3.0 percentage points.

What We Spend Individually:

National Healthcare costs per person has continued to grow to today’s rate of expenditures reaching over $8,000 a year.

What We Spend It On:

Various categories of healthcare services comprise the total dollars expended; however, the most significant contribution in the U.S. can be found in the cost of hospital care and physician services ($1,329.5 billion combined). And yet, when striped down further, hospital care costs significantly outweighs that of physician costs accounting for 1/3 (31.4 percent) of the total health care expenditures. The next closest contribution of physician care costs weigh in at 19.9%.

In a mind-boggling comparison, hospitals costs outspend both Social Security and the U.S. Defense budget!

And, these “hospital care costs” are also exclusive of prescription drug costs.  The rapid growth of 114% increase in costs from 2000 to 2010 for prescriptions has many consumers believing this category is the reason for increased health care costs. Instead, pharmaceuticals account for only 10% of overall health care expenditures.

In actuality, the distribution of spending is highly concentrated in the technology hospitals utilize for treatment and diagnostic purposes, often spending 38-65% of their total expenditures in acquiring new equipment.

What Other Countries Spend:

According to data representing countries throughout the world, the U.S. amount of $8,000 is highly disproportion in it’s per capita spending for healthcare as compared to other developed countries. The next highest countries being Norway and Sweden at nearly 50 less spending per capita than the U.S. ($4700 and $4,400 respectively).

Per Capita Influences:

There is a direct collation to the richer a country is per capita, the more purchasing power it has to spend on health care services and innovations. Not only does overall wealth of a country have an effect, data proves the converse, or lack of income, has a substantial impact on healthcare spending.

Data on health care spending reported during the recession in the US economy (December 2007 -June 2009), indicated a reluctance to spend money on health care services by people due to unemployment and/or lost insurance coverage or people who were simply cautious about overall spending. These factors held the per capita spending down significantly as compared to previous trends. Certainly a correlation can be made to less developed nations, with less “disposal” incomes per capita, where runaway inflation, currency devaluation or focus must be placed on basic needs of food, shelter, clothing, etc. and/or those countries were strive has caused defense to be a primary focus.

Certainly a correlation can be made on affluence amongst countries and proportion of health care spending per capita.  Less developed nations, with less “disposal” incomes per person, may need to focus on other, more basic needs such as runaway inflation, currency devaluation or focus on basic needs such as food, shelter, clothing, etc,. as well as those war-torn countries were strive rules.

More Money Better Care?

This graph below depicts the average amount a person spends in the various countries outlined country per capita expense as compared to life expectancy in that country, In the U.S,. the average life expectancy of a person is just under seventy-eight years of age and they will spend just under $8,000 annually, whereby Japan is at approximately 83 years of age life expediency and their average per capita health care expenditure is just under $3,000 (in U.S. Dollars).

While one would like to think that higher health care spending per capita in the U.S. would be associated with higher life expectancy, this relationship does not appear to be the case. Japan stands out as having the highest life expectancy and the United States has relatively low life expectancy in comparison with less than half the expenditures or dollars spent on health care. One could conjecture there appears to be diminishing returns to increased level of health care spending to outcomes, or living longer. Clearly, the U.S. appears not to receive added value for the higher spending.

Additionally, it should be noted that the higher expenditure in the U.S. may not be exclusively due to greater ‘need’ due to aging or sickness, but instead to a myriad of factors including higher prices for medical goods and services in the U.S. overall.

Myriad of Factors that Affect Longevity:

The discrepancy between spending and longevity may also be that the numbers are reporting averages and may mask overall factors that contribute to living longer. There are factors such as variations in averages in life expectancy among various ethnic groups, the availability of preventative care, clean water, clean air, life style, etc., that all play a part.

Costs of Services Rendered:

One should also look at the costs of services in the U.S. when making these overall comparisons to other countries. Are CAT-scans in the U.S. remarkably higher than CAT-scan costs in Japan? Are administrative costs higher, are prescription drugs more costly? Are the costs of physician services and specialists higher than in other countries? These factors and other costs contributors are not only important to evaluate when looking at these numbers in country to country comparisons, but also regionally within the U.S. as well. Certainly, there is room to take a closer look as to why costs are varied and higher and how to structure a program of savings in this regard.

Even if one factors out such cost-increasing influencers that affect current numbers, one can conjecture that the out-of-proportion health care spending per person in the U.S. can clearly be at least reduced without affecting overall life expectancy, and most likely, quality of care.

More to come soon as I delve in deeper!